Fitch Ratings on Dec. 15 revised its outlook on Banco del Estado de Chile and Banco Santander Chile's long-term foreign and local currency issuer default ratings to negative from stable, while affirming the ratings of both banks.
The actions are part of a portfolio review of select Chilean banks following Fitch's recent revision of Chile's sovereign outlook to negative from stable. The review included Chilean banks with issuer default ratings or viability ratings equivalent to the sovereign.
Fitch affirmed BancoEstado's long-term foreign currency rating at A+ and its long-term local currency rating at AA-. The bank's short-term foreign and local currency ratings were affirmed at F1+ and its viability rating at "bbb."
Meanwhile, Santander Chile's long-term foreign and local currency ratings were affirmed at A+ and its short-term foreign and local currency ratings at F1. The bank's viability rating was maintained at "a+."
BancoEstado's ratings are driven by the extremely high likelihood of support from the Chilean government, as the company is an important state instrument in the development of credit and monetary policies. The bank benefits from a solid funding structure based on a wide customer base, ample liquidity and lower, albeit moderately improving, credit quality, Fitch said.
Santander Chile's ratings are "highly influenced" by its leading market position and strong franchise within Chile. The bank was the largest lender in Chile as of September in terms of total loans and deposits, with market shares of 19.5% and 18.9%, respectively.