Chinese exposure of Taiwanese banks dips as yuan tumbles

Claims by local lenders to the Mainland fell from $46.91b to $44.62b in June.

The consistently growing levels of exposure by Taiwanese banks to Mainland China fell after four straight quarters of growth as escalating trade tensions between China and US weakened the yuan, reports Focus Taiwan.

Outstanding international claims by Taiwanese banks to China fell from $46.91b in March to $44.62b in June on a direct risk basis. On an ultimate risk basis, which calculates a country's consolidated debts after risk transfers, Taiwanese banks' exposure to China also fell from $71.2b to $70.75b over the same period.

Also read: Can Taiwanese banks keep a lid on overseas exposure risks?

China remains the second largest debtor to Taiwan as of end-June, trailing only behind the US to which local bank exposure hit $69.35b on a direct risk basis. Luxembourg ranked as the third largest debtor whilst Hong Kong and Japan complete the top five.

Credit rating agency Fitch earlier flagged increasingly close ties with the Mainland as a growing risk to Hong Kong's banking performance especially since China's governance standards are "substantially lower" than the SAR's.