Latin Finance - November/December 2012 - 50

2012

Growing at the top

Largest Chilean banks (bn pesos) Total Assets 2011 Santander Chile Banco De Chile BCI CorpBanca Banco De Chile Santander Chile BCI CorpBanca
Source: Banco de Chile

24.65 21.74 16.18 8.55 Total Loans 2011 17.38 17.35 11.38 6.81

In the first half of 2012, Banco de Chile led in development agency-backed Corfo (Chilean Economic Development Agency) guarantees, with 190 billion pesos in funding. Credit cards and retail mortgage loans are an emphasis as well, as they are key to relationship building with customers, the bank says. Banco de Chile’s commercial strategy is to keep growing its retail business and increasing its profitability in the wholesale segment, while on the retail side, it will continue to expand in consumer loans and fee products, he says. And on the wholesale side, the bank will look to increase cross-selling as it looks to grow in areas such as foreign trade letter of credit, cash management, and treasury products. “Our focus will continue to be to expand in the consumer segment, because we still have some room to grow,” Samhan says. “This is the most profitable business.” The bank will keep looking for new customer segments in retail and wholesale and establish metrics for measuring quality, and seek to provide competitive service, inclusive of best practices. As it grows, the bank’s funding has become more diversified. It registered a bond line for $720 million-equivalent in Mexican pesos, becoming one of the few foreign banks to tap the Mexican bond market, raising $110 millionequivalent in pesos at the end of last

billion levels seen in prior years. Banchile has worked on several large offerings during the period, including followTotal Assets 2010 % growth on transactions for Sigdo Koppers, 21.79 11.6 Quiñenco, Aguas Andinas and Essbio and 17.59 19.1 Essval. The local bond market, however, has 12.57 22.3 proceeded in spurts, but mostly in line 6.35 24.7 with the historical average. Bucher says the $3 billion expected Total Loans 2011 % growth in Chile’s local DCM is in line with 13.73 21.0 averages in recent years. Banchile-Citi 15.48 10.8 led deals for clients including Inversiones 9.17 19.4 Southwater, Quiñenco and Agrosuper, giving it a league table topping $960 5.13 24.6 million-equivalent volume during the awards period. A November 2011 sale for Movistar featured a $66 billion peso tranche that year. It will continue watching the market Banchile says is the largest-ever corporate for the right environment to issue debt, placement of debt denominated in pesos. Samhan says. The bank took advantage Local investors are still conservative, a fact of international interest in Chilean debt that limits the range of potential issuers, to place $50 million-equivalent in 2027 with lower-rated borrowers having access bonds trading on the Hong Kong market to the local bank loan market. in September. “The local bond market has It recently announced plans for an advantages for local companies,” Bucher equity capital increase of $530 millionsays. “Local issuers can always rely on it equivalent, aimed at solidifying the when the international market closes.” capital structure. LF However, Chilean companies typically enjoy good access to international ____________________________________ investment, with this year’s cross-border issuance to date already surpassing last year’s $6 billion total. Best investment bank: Banchile-Citi Lower rates should attract more ____________________________________ issuers. Higher-yielding Chilean names are increasingly welcome, as long as they oreigners, with regional integration issue dollar-denominated debt. Also of in their sights, staked out positions note is Chile’s emergence as an exporter in Chile’s investment banking market of capital, with a Santiago stop becoming in 2012. This is likely to shake up the customary on LatAm DCM and ECM domestic competition, especially with the issuers’ roadshows. welcome the country’s debt and equity “Maybe trading in the MILA platform issuers have received internationally. [the Andean stock exchange] is relatively Despite the backdrop, the longstanding small, but the concept of the MILA is one international partnership of Banchile-Citi, that is here to stay,” Bucher says. stands out as the most balanced provider Though not the region’s largest of investment banking services. market, Chile should continue to attract Chile has seen a relatively high level of M&A interest thanks to the perceived equity issuance over the awards judging quality of the economy and strong credit period, particularly when compared to rating, Buchers says. Strategic and other markets. Andrés Bucher, managing sovereign wealth funds are likely to play director at Banchile-Citi, says that total a role. ECM activity in 2012 will be $5 billion, Banchile-Citi advised Morgan lower than 2011’s $7.2 billion, but still Stanley Infrastructure Partners on the much higher than the $1.5 billion-$2 sale of 50% of the Inversiones Saesa

Chile

50 LatinFinance

November/December 2012

Latin Finance - November/December 2012

Table of Contents for the Digital Edition of Latin Finance - November/December 2012