Taipei: The United States maintained its position as the largest debtor nation of Taiwan’s banking sector for the 40th consecutive quarter by the end of June. This continued dominance occurred after Taiwanese banks increased their exposure to the U.S. market by more than 8 percent compared to the previous quarter.

According to Focus Taiwan, data compiled by the local central bank revealed that Taiwanese banks’ exposure to the U.S. reached US$194.87 billion as of the end of June. This figure marked an increase of US$14.80 billion or 8.22 percent from the previous quarter. Hsieh Jen-chun, deputy head of the central bank’s Department of Financial Inspection, stated that banks expanded their deposits and interbank loans in the U.S. market and increased investments in stock and bond mutual funds.

China ascended to become the second-largest debtor nation of Taiwanese banks at the end of June, as exposure increased by US$2.38 billion or 5.16 percent from the previous quarter, reaching US$48.50 billion. Hsieh explained that the rise in exposure to China was due to banks leveraging a stronger Chinese yuan to invest in the Chinese bond market and extending more interbank loans.

The disparity between Taiwanese banks’ exposure to the U.S. and China continued to grow, reaching an unprecedented level of US$146.4 billion at the end of June. At the same time, international claims by Taiwanese banks on a direct risk basis-including loans, investments, deposits, and other holdings-rose by 5.57 percent from the previous quarter to US$648.2 billion, primarily due to increased lending to nonbank firms.

Following the U.S. and China, Luxembourg ranked third at the end of June, dropping one position from the previous quarter, with exposure by Taiwanese banks reaching US$48.06 billion, an increase of 4.20 percent from the previous quarter. Australia and Japan followed, with exposures of US$40.22 billion and US$37.26 billion, respectively.

Completing the top 10 debtor areas were Hong Kong with US$32.29 billion, the United Kingdom with US$22.11 billion, Singapore with US$19.02 billion, France with US$18.86 billion, Vietnam with US$16.84 billion, and South Korea with US$16.29 billion. Exposure to the top 10 debtors totaled US$478.0 billion, which accounted for 73.75 percent of the total international claims held by Taiwan’s banks at the end of June.