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Taiwanese lenders expand to escape escalating margins

Taiwanese lenders expand to escape escalating margins

(21 May 2013 – Taiwan) Taiwanese lenders led by Bank of Taiwan have taken their highest share of syndicated loans in Asia since 2010 as they expand outside the island’s saturated market to escape the worst margins in Asia-Pacific.

Lenders in the region’s seventh-biggest economy have helped arrange 10.1 percent of syndicated deals in Asia excluding Japan since the end of 2012, compared with 8.1 percent in all of 2012 and 8.5 percent in 2011, according to a source.

Almost half of the lenders that participated in Qantas Airways Ltd.’s A$780 million refinancing and CT Corp.’s A$750 million loan to buy Carrefour SA were from Taiwan, the data showed.

Interest margins more than 90 basis points below the average in Asia Pacific are prompting Taiwan’s lenders to seek profits abroad.

Taiwan’s banks are getting margins of 156 basis points over the London interbank offered rate on credit facilities signed this year, versus 248 for lenders elsewhere, according to the source.

Taiwan had 38 domestic banks as of 31 March, compared with Hong Kong’s 21 lenders, according to data from Taiwan’s regulator, the Financial Supervisory Commission, and the Hong Kong Monetary Authority.

"Taiwanese banks are flush with liquidity," said Alan Lee, Chief Executive of Corporate Banking at Taipei-based Cathay United Bank Co.

"They’re looking for new business opportunities in other markets when high-grade borrowers at home are still paying low pricing due to their strong bargaining power."

Bank of Taiwan has been the most active lender from the island so far this year, helping to arrange 31 deals totalling A$1.4 billion in the Asia-Pacific region outside Japan, data showed.

Taishin Financial Holding Co. was the second-biggest arranger, with Land Bank of Taiwan third.

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