Fitch Rates Banco Santander Chile's Upcoming Sr Bonds Totalling JPY27.3B 'A+'(exp)

NEW YORK & SANTIAGO, Argentina--()--Fitch Ratings has assigned a Long-term Foreign Currency rating of 'A+'(exp) to Banco Santander Chile's (BSC) senior unsecured Medium Term Notes Program of up to JPY2020 billion to be issued in the TOKYO PRO-BOND market and to the following tranches to be issued within the programme:

3 years JPY6.6 billion floating rate bonds

3 years JPY2 billion fixed rate bonds

5 years JPY18.7 billion fixed rate bonds

The bonds rank pari-passu with all of BSC's existing and future senior unsecured debt. The final rating is contingent upon the receipt of final documents conforming to information already received.

KEY RATING DRIVERS

The ratings assigned to BSC's new debt issuances correspond 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' (Jan. 31, 2014);

--'Assessing and Rating Bank Subordinated and Hybrid Securities Criteria '(Jan. 31, 2014);

--'Metodologia de Clasificacion de Acciones en Chile'(July 3, 2013);

--'Fitch Revises Rating Outlooks on BBVA and Santander Latam Subs' Ratings'(Nov. 12, 2013).

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

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

Assessing and Rating Bank Subordinated and Hybrid Securities Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732137

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=826991

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. 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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar
Director
+1-212-908-0396
Latin America Financial Institutions
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Santiago Gallo
Director
+56-2-499-33-20
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Diego Alcazar
Director
+1-212-908-0396
Latin America Financial Institutions
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Santiago Gallo
Director
+56-2-499-33-20
or
Media Relations:
Elizabeth Fogerty, New York, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com