Fitch: Santander Chile's Ratings Not Affected by Parent's Upgrade

Fri Jun 6, 2014 9:44am EDT

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(The following statement was released by the rating agency) NEW YORK, June 06 (Fitch) Banco Santander Chile's (BSC) ratings are not affected by the recent upgrade of its parent, Banco Santander (Santander), according to Fitch Ratings. (For additional details, see 'Fitch Upgrades Santander and BBVA to A-; Outlook Stable', dated May 29 2014 and available at www.fitchratings.com.) BSC's ratings are based on its 'a+' Viability Rating (VR), which is higher than that of its parent. A complete list of BSC's ratings is included at the end of this press release. On June 5, Fitch reviewed the ratings of some Latin American subsidiaries of Banco Bilbao Vizcaya Argentaria (BBVA) and Banco Santander following the upgrade of the two Spanish banks, which followed a similar rating action on the Sovereign. KEY RATING DRIVERS BSC's IDRs are driven by its 'a+' VR and do 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 be positive for banks. 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 is self-funded and its 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. BSC's stand-alone capital is adequate for its rating category and operating environment, its liquidity position is strong, while its exposure to the Santander group is negligible and constrained by stringent local regulations. BSC's Support rating (SR) and SRF of '1' and 'A-', respectively, reflect the fact that, as the second largest bank in Chile, Fitch considers there to be an extremely high probability that the Chilean government (Fitch Foreign and Local Currency IDRs 'A+'/'AA-'; Outlook Stable) will provide support, should it be required. RATING SENSITIVITIES The Rating Outlooks on BSC's Long-term IDRs are Stable. Downward pressure for BSC's VR and IDRs could arise from sustained pressure on its profitability stemming from a rise in loan loss provisions or from markedly lower liquidity or capitalization. More specifically, BSC's VR could be downgraded if its 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 liquidity cushion reduces below the level considered adequate by Fitch. There is limited upside potential in the near future for BSC's VR. BSC's SR or SRF could only be affected by a downgrade of Chile's sovereign IDRs, which is considered unlikely at the present time. 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 Fitch Ratings, Inc. 33 Whitehall St. New York, NY 10004 Secondary Analysts Santiago Gallo Director +562-2499-3320 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' (Jan. 31, 2014); --'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012). Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Rating FI Subsidiaries and Holding Companies 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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