The fact Chile’s economy, historically Latin America’s most stable, shrank over the last nine months of 2016 does not bode well for its banks. The Andean country’s lenders could suffer from a slowdown in business activity – but there are brighter developments on the horizon.
An incoming law should make it easier for authorities to intervene to help struggling banks. The government is also creating a new super-regulator, the Comisión para el Mercado Financiero (CMF), to supervise all bank and non-bank financial institutions. According to rating agency Moody’s, this is a credit positive for the banking sector as it “lays the groundwork for a more integrated and autonomous regulatory system”.
The sector is led by a handful of strong local and international names. Banco de Chile and Santander’s Santiago-headquartered subsidiary are the country’s biggest lenders by Tier 1 capital, holding $3.874bn and $3.866bn, respectively.
They are followed by Banco de Credito e Inversiones (BCI) with $2.828bn and government-owned Banco del Estado de Chile, better known as BancoEstado, with $2.103bn.
Rounding out the top five is Chile’s oldest bank CorpBanca, which has $1.673bn in Tier 1 capital. It is trailed by the local operations of three international names: Itaú, Scotiabank and BBVA.
All data sourced from www.thebankerdatabase.com
