BUENOS AIRES, Argentina & SANTIAGO, Chile--(BUSINESS WIRE)--Fitch Ratings has placed the following ratings for Banco Santander Chile (BSC) on Rating Watch Negative:
--Foreign and local currency Long-term Issuer Default Rating (IDR) 'A+';
--Viability Rating 'a+';
--Senior unsecured bonds foreign currency long-term rating 'A+'.
Fitch has affirmed the rest of BSC's ratings as detailed at the end of this release. Today's rating actions follow Fitch's placement of Spain's Banco Santander (Santander) on Rating Watch Negative on Dec. 20, 2011. (For additional details, see 'Fitch Places 8 Spanish Banks on RWN Following Sovereign Action'.)
The rating action on Santander's ratings followed Fitch's placement of Spain's 'AA-' Long-term IDR on Rating Watch Negative on Dec.16, 2011 (For additional details, see 'Fitch Places Belgium, Spain, Slovenia, Italy, Ireland and Cyprus on Rating Watch Negative'.) In most instances, Fitch expects to resolve the Rating Watches shortly after the Watch on the sovereign rating has been resolved. The Rating Watches reflect Fitch's opinion that pressure on the banks' earnings, funding, liquidity, asset quality and capitalisation is likely to increase further in the increasingly difficult operating environment and strained financial markets. There is a link between sovereign and bank creditworthiness in any country, which strengthens as sovereign ratings weaken. Rating linkages occur, for example, through bank holdings of sovereign bonds and the impact of market sentiment on funding access and cost. In addition, fiscal austerity measures put pressure on banks' customers, causing asset quality and earnings deterioration. Concerns are elevated in Spain because of the severe strains in the domestic real estate market to which domestic banks are exposed to varying degrees.
At their current levels BSC's IDRs are derived from the support of its parent, and reflect the above mentioned rating actions.
However, the Rating Watch Negative reflects the linkage of BSC's viability rating and IDR with those of its parent and the fact that further rating actions on Spain's sovereign ratings or on Santander's ratings could affect BSC's ratings. This is consistent with the action taken on other highly rated subsidiaries of European banks located in investment grade countries. BSC's viability rating, as its individual rating, is supported by its leading market share in Chile and its track record of strong and consistent profitability, healthy asset quality and good capital adequacy.
BSC is the largest bank in Chile, with a market share of 20.3% in total loans. Spain's Santander has majority control of the bank, with a 67% stake; the rest is widely held.
Fitch affirms the following ratings for Banco Santander Chile:
--Foreign and local currency short-term IDRs at 'F1';
--Individual rating at 'B';
--Support rating at '1';
--Long-term national rating at 'AAA(cl)'; Outlook Stable;
--Short-term national rating at 'N1+(cl)';
--Senior unsecured short-term notes foreign currency short-term rating of 'F1';
--National long term rating of its senior unsecured bonds at 'AAA(cl)';
--National long term rating of its Subordinated bonds at 'AA(cl)';
--National equity rating at '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. 16, 2011).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
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