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BBVA Chile to continue benefiting from parent, government support, Moody's says

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BBVA Chile to continue benefiting from parent, government support, Moody's says

Moody's on Dec. 11 affirmed its ratings on Banco Bilbao Vizcaya Argentaria Chile SA after parent company Banco Bilbao Vizcaya Argentaria SA accepted an offer to sell its ownership stake in the Chilean unit to Bank of Nova Scotia.

The rating agency affirmed BBVA Chile's long- and short-term global local and foreign currency deposit ratings at A3/Prime-2, long- and short-term counterparty risk assessments at A2(cr)/ Prime-2(cr) and adjusted baseline credit assessment at "baa2."

The outlook on all the ratings remains stable.

Moody's believes that BBVA Chile's new owner will be as willing as BBVA has historically been to provide financial support to the Chilean bank in times of stress.

Furthermore, BBVA Chile is expected to continue benefiting from a high likelihood of government support for the bank's senior debt and deposits given its important franchise and visibility in the Chilean market.

BBVA Chile will be merged with Scotiabank Chile once the deal is approved by regulators. The transaction will double Scotiabank's market share in Chile to approximately 14%.

"Scotiabank Chile's main weakness will continue to be capitalization," the rating agency said. "While Moody's expects this will be enhanced under upcoming proposed Basel III requirements in Chile, no plans for the capitalization of Scotiabank Chile have been announced."