Fitch Rates Banco Santander Chile's CHF150MM Senior Floating Rate Notes Due
BUENOS AIRES & SANTIAGO, Argentina -- March 7, 2013
Fitch Ratings has assigned a long-term foreign currency rating of 'A+(exp)' to
Banco Santander Chile's (BSC) CHF150 million senior unsecured floating rate
notes due 2017.
The notes will mature on March 28, 2017 and carry a floating interest rate
equal to 3-month CHF LIBOR plus 100 basis points.
KEY RATING DRIVERS
The rating assigned to BSC's new debt issuance corresponds to the bank's
long-term Issuer Default Rating (IDR) and ranks equal to other senior
BSC's IDRs and National Scale Ratings remain driven by its 'a+' Viability
rating (VR) and they do not factor in any support from its parent (Spain's
Banco Santander), although it remains a strategically important subsidiary for
Santander. BSC's IDRs, National Ratings and VR 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,
strong profitability and funding, independent management, and adequate capital
position. Liquidity has been strengthened and BSC 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 deposits by growing core deposits and building a liquidity
cushion while maintaining access to capital markets without any apparent rise
in funding costs.
In Fitch's view, BSC is, to a large degree, ring-fenced from the rest of the
Santander group thanks to strong regulatory oversight conducted by the Chilean
Banking Regulator. In addition, BSC's Board and management teams enjoy a high
degree of operating independence and the bank is not subject to interference
from Santander in its day-to-day decisionmaking procedures. BSC's standalone
capital is adequate for its rating category, and its liquidity position is
strong while its exposure to the Santander group is insignificant and
constrained by stringent local regulatory rules.
BSC's long-term IDR and National long-term rating have a Negative Outlook
mirroring that on Santander's ratings. A downgrade in Santander's ratings will
likely lead to a downgrade of BSC's VR and IDR. This reflects the inherent
linkage of a subsidiary and its parent, as BSC's IDR is currently three
notches above the rating of its parent, which is the maximum Fitch considers
prudent according to its rating criteria. In spite of its intrinsic strength,
BSC's VR could potentially be dragged down by a further deterioration of
Santander, particularly in its access to or cost of funding, although this has
not been the case so far.
Downward pressure on BSC's VR could also arise from a sustained pressure on
profitability stemming from a further rise in loan loss provisions (LLPs) or
from markedly lower liquidity or capitalization. In Fitch's view, 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 Negative;
--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 Negative;
--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'.
Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);
--'Fitch Takes Actions on Banco Santander's Latin American Subsidiaries' (June
--'Rating Foreign Banking Subsidiaries Higher than Parent Banks and Parent
Bank Holding Companies' (June 12, 2012).
Applicable Criteria and Related Research
Global Financial Institutions Rating Criteria
Rating FI Subsidiaries and Holding Companies
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