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Fitch affirms Banco do Brasil Chile, with a negative outlook

Fitch Ratings on March 31 affirmed the long- and short-term national ratings of Banco do Brasil SA (Agencia Chile) at A-(cl) and N1(cl), respectively, with a negative outlook.

Fitch said the affirmation and outlook of the Chilean unit reflect those of the bank's parent company, Brazil-based Banco do Brasil SA, and are also sensitive to any sovereign risk movement in Brazil.

The Chilean unit focuses on financing bilateral trade loans and providing working capital for local companies and subsidiaries of the parent's corporate clients, Fitch noted, adding that the unit's decisions are highly centralized and there is strong parent participation in risk controls.

Overall, the entity has highly liquid credit positions that are short term and "exposure to market risk is low given the application of matrix limits and the use of derivatives to immunize the capital of exchange rate volatility," the rating agency said.