Risk Exposure of Domestic Financial Institutions to Japan Tops NT$100 B.

Taipei, March 15, 2011 (CENS)--Taiwanese financial institutions have total risk exposure of NT$104.1 billion to the Japanese market, including investments and credit extensions, much higher than original expectation, according to statistics released by the Financial Supervisory Commission (FSC) yesterday (March 14).

The massive Japanese earthquake, however, doesn't have major influence on listed companies, except the closure of a factory of Elpida, which has Taiwan depository receipts listed on the local bourse, due to power outage, said the FSC.

The lion's share of the risk exposure is borne by domestic banks, which have extended NT$69.4 billion loans to Japanese enterprises and invested NT$5.2 billion in Japan, totaling NT$74.6 billion. Market players originally believed that the level of loans should be much lower, due to the low interest rates in Japan.

Meanwhile, securities, futures, and fund managements have invested NT$15.4 billion in Japan and insurance firms have sunk NT$14.1 billion.

Among domestic banks, Mega Bank is the largest creditor, boasting NT$15 billion of outstanding loans, which were extended by its Tokyo and Osaka branches. However, Osaka is outside the earthquake-stricken area and the bank still maintains close contact with its Tokyo clients.

The risk exposure of Cathay Financial Holding stands at NT$8.616 billion, including investment of NT$7.7 billion by Cathay Life Insurance and NT$910 million of loans extended by Cathay United Bank, both less than 1% of their investment portfolios. Japanese investment by Cathay Life Insurance consists mainly of exchange-traded funds (ETF) and discretionary-account operation, as well as financial bonds issued by leading Japanese financial institutions, including Mizuho, Mitsubishi, and Sumitomo.

Fubon Financial Holding has NT$270 million of investment in Japanese securities and extended NT$1 billion of loans to Japanese enterprises. It, however, may suffer some loss from the exposure of NT$300-500 million from reinsurance business.

Chinatrust has invested NT$1.416 billion in Japanese financial bonds and government bonds and its Tokyo branch has extended NT$9 billion secured loans. First Bank has exposure of NT$6.6 billion, followed by Chang Hwa Bank with NT$5 billion and Hua Nan Bank with NT$1.3 billion.