Chilean Regulator- Local Operations of Spanish Banks Not a Source of Concern
06/14/2012| 02:06pm US/Eastern
SANTIAGO--Chile's banking superintendent Raphael Bergoeing said Thursday that local operations of Spanish banks aren't a source of concern, despite recent ratings downgrades of the parent companies.
Fitch Ratings downgraded Spain's Banco Santander SA (STD, SAN.MC) and Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC) to BBB+, from A, in line with Chile's ratings downgrade.
Banco Santander-Chile (BSAC, BSANTANDE.SN) is one of the largest banks in Chile in terms of loans and assets, while BBVA also controls a 51.6% stake in Chile's largest pension-fund manager, AFP Provida SA (PVD, PROVIDA.SN).
Santander-Chile and Banco Bilbao Vizcaya Argentaria Chile SA (BBVACL.SN) operate independently from their parents in Spain, which isolates them from Spain's debt crisis.
In Chile, both of these banks are funded through local capital and must meet strict banking regulations in place since the local financial system melted down in the early 1980s.
"I'm confident regarding the solvency of Spanish banks in Chile," said Mr. Bergoeing, who heads the SBIF banking regulator.
Those banks' model along with the Chilean regulatory system contribute to reducing jitters regarding Spanish bank's solvency in Chile, Bergoeing said.
This week, Fitch Ratings changed Santander-Chile's outlook to negative from a previous stable watch, while it moved BBVA Chile's outlook to stable from negative.
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