Taiwan’s banks have slashed their exposure to China to the lowest level in at least a decade as increasingly fraught ties across the Taiwan Strait deter lenders from expanding in the world’s second-largest economy.
Locally registered banks had reduced their total lending, investments and interbank transactions in China to NT$1.1 trillion (US$35.8 billion) as of the end of March, an 18 percent decline from the same time last year, data released by the Financial Supervisory Commission on Tuesday showed.
The figures show that local lenders’ exposure across the Taiwan Strait has fallen for eight straight quarters to the lowest amount since records begin in 2013.
Photo: George Tsorng, Taipei Times
Of those three areas of exposure, investments shrunk the most, down 28.3 percent over the past year.
Banks’ risk-management committees are focusing on diversifying their exposure in terms of country and industry, Banking Bureau Deputy Director-General Phil Tong (童政彰) told a briefing.
The COVID-19 pandemic might have also affected banks’ activities in China, with almost all travel links severed or severely restricted for three years from the beginning of 2020.
Taiwanese banks’ expansion into the fast-growing Chinese market, known as the “Go West” strategy, has gone into reverse in the past few years. The most recent Taiwanese bank to expand in China was Shanghai Commercial and Savings Bank (上海商業儲蓄銀行) when it opened a new branch in Wuxi in 2018, Tong said.
Land Bank of Taiwan (土地銀行), Cathay United Bank (國泰世華銀行) and Bank of Taiwan (臺灣銀行) have all previously received permission to open additional branches in China, but have yet to do so.
Taiwanese banks’ increased caution regarding the Chinese market is in line with other industries.
New investments in China by Taiwanese companies, predominantly manufacturers, declined by just more than 10 percent in the first quarter, the Investment Commission said last month.
That is in sharp contrast to a rapid increase in investment elsewhere.
Total overseas investment, excluding China, surged 240 percent to US$6.9 billion in the first quarter, government data showed.
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