Fitch Rates Banco Santander Chile's AUD125MM Senior Fixed Rate Notes Due 2017 'A+'

SANTIAGO, Chile & NEW YORK--()--Fitch Ratings has assigned a long-term foreign currency rating of 'A+' to Banco Santander Chile's (BSC) up to AUD125 million senior unsecured fixed rate notes due 2017.

The notes will mature on March 13, 2017 and carry a fixed annual interest rate equal to 4.5% and rank equal to the bank's existing and future senior unsecured debt.

KEY RATING DRIVERS

The rating assigned to BSC's new debt issuance corresponds to the bank's long-term Issuer Default Rating (IDR) of 'A+'.

BSC's IDRs are driven by its Viability Rating (VR) of 'a+' and does 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 perform well. 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's 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 without any apparent rise in funding costs.

BSC'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 local regulations.

RATING SENSITIVITIES

Downward pressure for BSC's VR and IDRs could arise from sustained pressure on profitability stemming from a further rise in loan loss provisions or from markedly lower liquidity or capitalization. More specifically, BSC's VR could be downgraded if its return on average assets (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 bank reduces its liquidity cushion significantly and it remains well below its current levels. 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 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'.

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:

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=822838

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Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar, +1-212-908-0396
Director
Latin America Financial Institutions
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Eduardo Santibanez, +56-2-499-33-07
Senior Director
or
Media Relations, New York
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar, +1-212-908-0396
Director
Latin America Financial Institutions
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Eduardo Santibanez, +56-2-499-33-07
Senior Director
or
Media Relations, New York
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com