Moody's affirms Banco de Chile

Moody's Investors Service said it affirmed the B- bank financial strength and Aa2 global local-currency deposit ratings of Banco de Chile following the announcement that its owner Quinenco agreed to merge the bank with Citigroup's operations in Chile.

Citigroup agreed to buy a 32.96% stake in LQIF, the unit through which Quinenco controls Banco de Chile. Citi also has an option to acquire up to 50% of LQIF within three years. The deal is expected to close in the first quarter of 2008.

Moody's said the global local-currency deposit rating assumes systemic support based on the bank's important deposit and loan market shares as the country's second largest bank. The agency said the rating does not get further lift from the proposed investment of Citigroup, which remains a minority shareholder.

The merger would have a neutral impact on the bank's financial strength rating due to the small size of the Citi operation relative to that of Banco de Chile, its profitability and management strengths, Moody's said.

Downside risks from the absorption of Citi's branch include undetermined portfolio or other integration risks, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.