Fitch Affirms Banco Santander Chile's IDR at 'A+'; Outlook Stable

Business Wire, Nov 2, 2007

BUENOS AIRES, Argentina & SANTIAGO, Chile -- Fitch Ratings has affirmed Banco Santander Chile's (BSC) ratings as follows:

--Foreign and Local Currency Long-term Issuer Default Rating (IDR) at 'A ';

--Foreign and Local Currency Short-term IDR at 'F1';

--Long-term National Rating at 'AAA'(chl);

--Short-term National Rating at 'N1 (chl)';

--Individual at 'B';

--Support at '1'.

The ratings of BSC reflect the potential support from Spain's Banco Santander (Santander, rated 'AA/F1 ' by Fitch)given BSC's strategic importance and integration with its parent, as well as its strong historical profitability, healthy asset quality, significant market share and good capital adequacy.

BSC's profitability has historically been strong, backed by healthy operating revenues, strict cost control and good asset quality. Continued loan and fee growth in a stable and growing economy should continue to support the bank's solid profitability, although loan loss provisions are rising as the bank increases lending to individuals.

A strong economic environment in recent years has led to a steady improvement in asset quality ratios. However, the bank's strategy of focusing on riskier, yet more profitable, retail segments has led to a slight increase in its overdue/total loans ratio. This ratio was 0.95% at end-June 2007 as defined locally (i.e., installments overdue by 90 days), with a loan loss reserve coverage of almost 200%. Under the Spanish definition of overdue, which is more internationally comparable, the overdue loans ratio would be somewhat weaker, at around 2%, and coverage at around 130%, which is still sound in light of historic losses.

The bank complies with stringent domestic liquidity regulations and benefits from a historically stable and well diversified deposit base. Its capital base is good, with a capital/risk-weighted assets ratio of 13% (Tier 1: 9.1%) at end-June 2007. Subordinated debt, which has high equity-like features, represented around 22% of its eligible capital, which is within the 30% limit considered acceptable by Fitch.

BSC was the largest bank in Chile, with a market share of 21.3% in total loans at end-June 2007. At that date, it had 417 branches and 8,913 employees. Spain's Santander has majority control of the bank, with a 76.91% stake. The remainder is widely held.

Fitch's National Ratings provide a relative measure of creditworthiness for rated entities in countries where the sovereign's foreign and local currency ratings are below 'AAA'. National ratings are not internationally comparable since the best relative risk within a country is rated 'AAA' and other credits are rated only relative to this risk. They are signified by the addition of an identifier, for the country concerned, such as 'AAA(chl)' for national ratings in Chile.

The credit research on BSC is available on the Fitch Ratings web site, www.fitchresearch.com, or by contacting the Ratings Desk in London at 44 20 7417 6300.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.