Taiwan's Dubai debt risk 'not severe'

Taiwan’s Dubai debt risk ‘not severe’

Posted by Randal Rayborn on November 27, 2009 - Filed under Taiwan

Dubai, UAE

TAIPEI, Taiwan — Taiwan’s banking sector has a total of NT$6.3 billion (US$195 million) in financial risk exposure to Dubai-linked financial assets. The amount was higher than originally estimated but should not pose severe financial threats, according to officials.

“As of Friday, after several Taiwanese banks filed in their estimates, we calculate that the size of Taiwanese banks’ exposure to debts in Dubai stands at US$195 million,” said Hsiao Chang-jui, deputy chief of the Banking Bureau under the Cabinet-level Financial Supervisory Commission (FSC).

Taiwan’s major lender Cathay Financial Holdings said its Cathay United Bank has a stake of US$28.55 million (NT$923 million), including US$10 million (NT$323 million) in direct lending to Dubai World Group Finance Ltd.

The bank also lent US$18.55 billion to two of Dubai World Group’s affiliates — DP World Ltd. and Nakheel — by joining the international consortium loan programs.

In addition, Cathay United Bank has an exposure of US$3.5 million in lending to Dubai’s state-owned bank, Emirates Bank International, which is assigned an A- rating by S&P credit rating agency.

The Cathay group stressed the credit lines to institutions in Dubai will not weaken the overall financial viability of Cathay United Bank.

Taishin Holdings has an exposure of US$15 million and Shin Kong Financial Holding Co. has US$5 million exposed, due to participation in offering international consortium loans, according to the FSC.

Both said the risk exposures will no affect their financial standings. — read more at The China Post…

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