Fitch Rates Banco Santander Chile's AUD125MM Senior Fixed Rate Notes Due 2017 'A+'

Thu Mar 6, 2014 5:17pm EST

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(The following statement was released by the rating agency) SANTIAGO/NEW YORK, March 06 (Fitch) Fitch Ratings has assigned a long-term foreign currency rating of 'A+' to Banco Santander Chile's (BSC) up to AUD125 million senior unsecured fixed rate notes due 2017. The notes will mature on March 13, 2017 and carry a fixed annual interest rate equal to 4.5% and rank equal to the bank's existing and future senior unsecured debt. KEY RATING DRIVERS The rating assigned to BSC's new debt issuance corresponds to the bank's long-term Issuer Default Rating (IDR) of 'A+'. BSC's IDRs are driven by its Viability Rating (VR) of 'a+' and does not factor in any extraordinary support from its parent, although it remains a strategically important subsidiary for Santander. BSC's VR and IDRs reflect its market-leadership position and its strong franchise within Chile, whose economy continues to perform well. The ratings also reflect the bank's healthy asset quality, adequate profitability (albeit pressured in the last two years), adequate funding capital position and independent management. BSC's liquidity benefits from a sizeable, historically stable, and well-diversified retail deposit base. In addition, BSC has significantly reduced refinancing risk and exposure to more price-sensitive institutional deposits by growing core deposits and building a liquidity cushion while maintaining access to capital markets without any apparent rise in funding costs. BSC's stand-alone capital is adequate for its rating category and its liquidity position is strong, while its exposure to the Santander group is negligible and constrained by stringent local regulations. RATING SENSITIVITIES Downward pressure for BSC's VR and IDRs could arise from sustained pressure on profitability stemming from a further rise in loan loss provisions or from markedly lower liquidity or capitalization. More specifically, BSC's VR could be downgraded if its return on average assets (ROAA) consistently remains below 1.3%, its Fitch Core Capital to Weighted Assets ratio falls and is maintained below 9%, together with asset quality deterioration and/or if the bank reduces its liquidity cushion significantly and it remains well below its current levels. There is limited upside potential in the near future for BSC's VR. Fitch currently rates BSC as follows: --Foreign and local currency long-term IDRs 'A+'; Outlook Stable; --Foreign and local currency short-term IDRs 'F1'; --Viability rating 'a+'; --Support rating '1'; --Support rating floor 'A-'; --Long-term national rating 'AAA(cl)'; Outlook Stable; --Short-term national rating 'N1+(cl)'; --Senior unsecured bonds 'A+' and national long-term rating 'AAA(cl)'; --Subordinated bonds national long-term rating 'AA(cl)'; --National equity rating 'Primera Clase nivel 1'. Contact: Primary Analyst Diego Alcazar Director +1-212-908-0396 Latin America Financial Institutions Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Secondary Analyst Eduardo Santibanez Senior Director +56-2-499-33-07 Media Relations: Elizabeth Fogerty, New York, Tel: +1 (212) 908 0526, Email: elizabeth.fogerty@fitchratings.com. Additional information is available at 'www.fitchratings.com'. Applicable Criteria and Related Research: --'Global Financial Institutions Rating Criteria' (Aug. 15, 2012); --'Fitch Affirms Santander's Latin American Subsidiaries' (May 28, 2013); --'Rating FI Subsidiaries and Holding Companies'(Aug. 10, 2012). Applicable Criteria and Related Research: Rating FI Subsidiaries and Holding Companies here Global Financial Institutions Rating Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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