SANTIAGO, Chile--(BUSINESS WIRE)--Fitch Ratings has assigned an International Scale Asset Manager Rating of 'Highest Standards' to Bci Asset Management Administradora General de Fondos S.A. (BAM) and simultaneously, withdraws the national scale Asset Manager Rating of ' Highest Standards (cl)'. The Rating Outlook is Stable.
KEY RATING DRIVERS
The rating of 'Highest Standards' assigned to BAM reflects Fitch's view that the company's investment platform and operating framework are superior relative to the standards applied by international institutional investors.
The rating also considers the high level of experience of the key executives of the company and the strategic position that BAM represents for the parent bank, Banco de Credito e Inversiones (Bci); a positive considering the financial flexibility provided by the bank, as well as access to its extensive distribution network.
The entity's main challenge is to continue to develop its research area, and to achieve greater product diversification, primarily through the introduction of more complex products. In addition, BAM faces the challenge of continuing investment in and development of its technological platform, in order to support the increased volume and complexity of the investment of funds over the medium and long term.
BAM's 'Highest Standards' rating is based on the following assessments:
Company: High Standards
Controls: Highest Standards
Investments: Highest Standards
Operations: Highest Standards
Technology: High Standards
Established in 1988, BAM has extensive experience in the local market and a strong position in the mutual fund industry with USD6.5 billion in assets under management (AuM), ranking as the third largest asset manager in Chile. BAM is a strategic subsidiary of Bci and has a broad organizational structure that has been strengthened in recent years with the incorporation of new management departments. BAM also operates completely separate from the parent bank, and maintains strong corporate governance policies.
BAM's risk management, control framework and compliance departments are robust. The company has adequate systems and processes to identify, measure and control market credit and liquidity risk, as well as to ensure compliance with all regulatory requirements and group policies. Control procedures are highly automated, providing online follow up and control of all portfolios managed by the company.
BAM's investment process is disciplined and transparent, based on regular committees, and combines a top-down strategy for the international market and bottom-up for the domestic and MILA market, with regular reviews on the sources of returns. BAM's investment processes have been stable over time, and the management team has significant experience. However, Fitch believes that the company will need to continue to develop its research area for efficient development of investment strategies that focus on the MILA market.
BAM has its own middle- and back-office; its processes have a strong level of automation, and its operations are adequately controlled and supported by a stable and experienced team. The information BAM provides to the investor is adequately distributed, transparent, and extensive, and it is kept flexible to adapt to individual requirements.
BAM's technological platform is robust, with adequate risk management and control systems; highly integrated front-, middle-, and back-office systems; and well-prepared, strong, standardized contingency plans. BAM continues to make significant investments in its systems platform as it moves to attain full automation of its investment systems and processes. This will enable BAM to handle a higher volume of more complex funds over the medium- and long-terms.
With 26 years' experience, BAM is the asset management arm of Bci. As of end-March 2014, it is the third-largest asset management company in Chile, with AuM of USD6.9 billion. BAM covers all asset classes with approximately 87% of AuM in bond and money market funds. At end-March 2014, BAM had a staff of 178, including 18 investment professionals
RATING SENSITIVITIES AND SURVEILLANCE
The rating may be sensitive to material adverse changes to any of the aforementioned rating drivers, notably through weakened financial conditions, heightened staff turnover or deterioration of processes and policies. A material deviation from Fitch's guidelines for any key rating driver could cause the rating to be downgraded.
Additional information is available on www.fitchratings.com
Applicable Criteria and Related Research:
--'Asset Manager Rating Criteria', May 6, 2014.
Applicable Criteria and Related Research:
Asset Manager Rating Criteria