Fitch Expects to Rate Banco Santander Chile's 5 Year USD250MM Senior
Floating Rate Notes 'A+(exp)'
BUENOS AIRES, Argentina & SANTIAGO, Chile -- May 31, 2013
Fitch Ratings expects to assign a long-term foreign currency rating of
'A+(exp)' to Banco Santander Chile's (BSC) five year USD250 million senior
unsecured floating rate notes.
KEY RATING DRIVERS
The rating assigned to BSC's new debt issuance correspond 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, 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 underlying
profitability, albeit pressured in 2012, adequate funding and capital
position, and independent management. SAN Chile's liquidity benefits from a
sizeable, historically stable, and well-diversified retail deposit base. In
addition, SAN Chile 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. SAN Chile'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
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 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)';
-- USD5 billion U.S. commercial paper programme 'F1';
-- Subordinated bonds national long-term rating 'AA(cl)';
-- National equity rating 'Primera Clase nivel 1'.
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:
Global Financial Institutions Rating Criteria
Rating FI Subsidiaries and Holding Companies
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