Key Points

The Financial Supervisory Commission (FSC), Taiwan's top financial regulator, said on Monday that the total exposure of the island's banking, insurance and securities sectors to China fell by NT$201.3 billion, or nearly 20 per cent year-on-year, to NT$828.39 billion (US$28.25 billion).

Focus Taiwan noted that this figure also marked a NT$48.56 billion drop compared to April. Although the FSC did not confirm if currency changes played a role, officials said the decline was mainly due to reduced risk-taking as China's economy and property market remain uncertain.

Among the three sectors, banks made up the largest portion of exposure--NT$768.45 billion, or 92 per cent of the total. This was 18.67 per cent lower than a year ago. As a result, the banking sector's exposure-to-net-worth ratio with China fell to a record low of 15.9 per cent, Focus Taiwan reported.

Chang Chia-kuei, chief secretary of the FSC's Banking Bureau, said Taiwanese banks had especially reduced interbank loans to China, which dropped by 35 per cent year-on-year. "The decline highlights increasing caution among Taiwanese lenders regarding China's economic trajectory and property sector risks," Focus Taiwan quoted him as saying.

CTBC Bank had the highest exposure to China at NT$180 billion, followed by Taipei Fubon Bank at NT$85.8 billion, and Bank SinoPac at NT$62.5 billion. Their exposure-to-net-worth ratios were 49 per cent, 31.1 per cent, and 35.5 per cent respectively, according to Focus Taiwan.

The insurance sector also saw a 30 per cent drop in investments in Chinese marketable securities, which totalled NT$49.9 billion. All of this came from life insurance companies. Tsai Huo-yen from the FSC's Insurance Bureau said these investments made up only 0.15 per cent of the industry's disposable capital.

Meanwhile, securities and futures companies cut their exposure to China by 21 per cent, down to NT$10.04 billion. Focus Taiwan reported this was partly due to concerns over US tariff policies and market uncertainty.

- ANI