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Moody's upgrades Itaú CorpBanca, withdraws ratings on Banco Itaú Chile

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Moody's upgrades Itaú CorpBanca, withdraws ratings on Banco Itaú Chile

Moody's on April 28 upgraded 's long-term globallocal and foreign currency deposit ratings and foreign currency debt rating toA3 from Baa3, and its short-term global local and foreign currency depositratings to Prime-2 from Prime-3.

Moody's also upgraded the bank's baseline credit assessment,or BCA, to "baa3" from "ba1," its adjusted BCA to"baa2" from "ba1," and its long- and short-term counterpartyrisk assessments to A2(cr)/Prime-1(cr) from Baa2(cr)/Prime-2(cr), respectively.

All the ratings have a stable outlook.

At the same time, all of the ratings and assessmentsassigned to Banco Itaú Chile were withdrawn.

The ratings actions follow the of Itaú Chile into CorpBanca,with the surviving entity renamed Itaú CorpBanca.

The upgrade of Itaú CorpBanca's ratings reflects the bank'ssubstantially higher capitalization levels and the increased probability thatit will receive support from the government if it faces financial stress.Moody's noted that as a result of the merger, the bank's market shares of loansand deposits have nearly doubled to 13%, considerably raising its systemicimportance.

The ratings also incorporate a very high probability thatthe bank will receive financial support from its new controlling shareholder,Itaú Unibanco HoldingSA.

Although the merger should allow the bank to achieve bettereconomies of scale and an improved funding structure, Moody's does notanticipate a significant boost in profitability in the short term.