Taiwan banks can be expected to face higher systemic risk in the long
run due to increasing opportunities for credit exposure to Taiwanese
companies operating in China, according to a new report from ratings
agency Fitch Ratings. Cherry Huang, an analyst at Fitch, told Compliance
Complete that an increasing number of loans made by Taiwan banks to
Taiwanese companies operating in mainland China could increase systemic
risk in the island's banking system.
In a recent report on the outlook for banks in Asia-Pacific, Fitch said
that while Taiwanese banks' China-related credit would remain around
eight percent of total assets in the coming year, the condition could
become riskier in the longer term.
Banks in Taiwan are lobbying the island's financial regulator, the
Financial Supervision Commission (FSC), to lift the regulatory ceiling
for China-related credit exposure. However, the Fitch report pointed out
that China was ranked highest in terms of systemic risk, according to a
micro-prudential index (MPI), whereas Taiwan was ranked near the
bottom.
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