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Fitch Rates Banco Santander Chile's CHF150MM Senior Floating Rate Notes Due 2017 'A+(exp)'
March 7, 2013 / 9:12 PM / 4 years ago

Fitch Rates Banco Santander Chile's CHF150MM Senior Floating Rate Notes Due 2017 'A+(exp)'

(The following statement was released by the rating agency) BUENOS AIRES/SANTIAGO, March 07 (Fitch) 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 unsecured debt. 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. RATING SENSITIVITIES 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'. Contact: Primary Analyst Santiago Gallo Director +54-11-5235-8137 Fitch Argentina Calificadora de Riesgo S.A. Sarmiento 663 - piso 7 - C1041AAM Buenos Aires, Argentina 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'. 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 13, 2012); --'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 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.

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