Taipei, March 30 (CNA) The United States remained the largest debtor country of Taiwan’s banking sector for the 34th consecutive quarter at the end of 2023, with exposure to the U.S. hitting another record high, according to Taiwan’s central bank.
As of the end of December, Taiwan-registered banks’ international claims on a direct risk basis, consisting of loans, investments, deposits and other holdings, totaled US$573.1 billion, up 6.36 percent from the end of September, central bank data showed.
The rise was largely due to an increase in exposure to the U.S., where claims by the local banking sector hit a new high of US$168.32 billion at the end of 2023, up US$15.69 billion, or 10.28 percent, from a quarter earlier, the data showed.
Exposure to the U.S. market accounted for 29.37 percent of Taiwanese banks’ total international claims at the end of last year, the central bank said.
Taiwanese banks have been increasingly drawn to U.S. financial assets because of closer economic ties between the two sides and the returns of U.S. bonds, pushed higher as the U.S. Federal Reserve raised key interest rates to between 5.25 and 5.50 percent, the highest level since March 2001.
A strong showing by U.S. stock markets and the importance of the U.S. as a global financial hub were also critical factors attracting the interest of Taiwanese banks, the central bank said.
China remained the second largest debtor country of Taiwan’s banking sector with Taiwanese banks’ exposure rising 4.84 percent from a quarter earlier to US$48.41 billion at the end of 2023, central bank data showed.
The central bank said the growth in exposure to China in U.S. dollar terms, which reversed a downtrend seen in recent quarters, largely resulted from a weaker greenback.
However, the central bank said the local banking system remained wary of China’s economy and financial markets despite the brief recovery, and it expected the general downtrend to continue.
After the U.S. and China, the third largest debtor was Luxembourg, with exposure from Taiwanese banks rising 6.43 percent from a quarter earlier to US$38.83 billion at the end of December, ahead of Australia (US$35.35 billion, up 9.00 percent), and Hong Kong (US$33.38 billion, up 6.90 percent), central bank data showed.
Rounding out the top 10 debtor areas were Japan, with exposure of US$33.37 billion at the end of December, up 10.01 percent from a quarter earlier, the United Kingdom (US$19.70 billion, up 5.83 percent), Singapore (US$16.85 billion, up 8.97 percent), South Korea (US$16.45 billion, up 5.31 percent) and Vietnam (US$15.92 billion, down 1.11 percent).
Singapore rose to No. 8 at the end of December from 11th at the end of September, and South Korea rose one notch to ninth at the end of 2023, according to the central bank.
The central bank said the growth in exposure to Singapore and South Korea came after the Singapore dollar and the South Korean won appreciated by 4.03 percent and 4.55 percent, respectively, against the U.S. dollar.
As for Vietnam, the central bank said, the country fell two places to No. 10 at the end of December after exposure to the country fell for a sixth consecutive quarter in the wake of weakening economy amid falling global demand.
Exposure to the top 10 debtors totaled US$426.58 billion, accounting for 74.43 percent of the total international claims of Taiwan’s banks at the end of 2023, the central bank said.
