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Taiwanese banks have slashed their exposure to China to the lowest level in at least a decade as increasingly fraught ties across the Strait deter lenders from expanding in the world’s second-largest economy.
Locally registered banks in Taiwan have cut back their total lending, investments and interbank transactions in China to NT$1.1 trillion ($34.6 billion) as of the end of March, an 18% decline from the same time last year, according to data from Taiwan’s Financial Supervisory Commission. The figures show the lenders’ exposure across the strait has fallen for eight straight quarters to the lowest amount since records begin in 2013.
Among those three areas of exposure, investments shrunk most, down 28.3% over 2022.
Banks’ risk-management committees are focussing on diversifying their exposure in terms of country and industry, according to Tong Chen-chang, deputy chief of the FSC’s Banking Bureau.
The pandemic may have affected banks’ activities in China, with almost all travel links severed or severely restricted for three years from the beginning of 2020.