Chile`s Financial System 2010

September 12, 2010

This analysis is solely the work of the author. It has not been edited or endorsed by GLG.

Summary

 

Banks perfect timing for expanding operations in Chile 

Analysis

 

At the present time there are 25 established banks that are operating in the country. Of this banks there are 19 that are considered as Established Banks in Chile" that are the following ones: Banco de Chile (SCL:CHILE), Banco Internacional (LIN:INTERBC1), Scotiabank Chile (SCL:SUD AMER-A)(SCL:SUD AMER-A), Banco de credito e Inversiones (SCL:BCI), Corpbanca, Banco Bice, HSBC Bank (NYSE:HBA/PZ) (Chile), Bank Santander-Chile, The Royal Bank of Scotland (NYSE:RBS), Banco Security, Banco Falabella (LIN:BANFALC1), Deutsche Bank (Chile), Banco Ripley (SCL:ISANPA), Rabobank, Bank Consortium, Banco Penta, Banco Paris, Bank Bilbao Biscaya, BBVA (MCE:BBVA) and Banco Itaú (SAO:ITUB3) Chile. Besides the previous ones, there are 5 Branches of Foreign Banks that are: Bank do Brazil CORP., JP Morgan Chase Bank, N. A., Bank of the Nation Argentina, The Bank of Tokyo-Mitsubishi UFJ, LTD, Finally, a State Bank exists that corresponds to BancoEstado de Chile. And of course to add to all them is the Central Bank of Chile. All the banks except from the Central bank of Chile are subject to the supervision of a Superintendence of Values and Securities and they are governed by the D.F.L. N° 3, of November 26 1997 that it fixed the recast text of the General Law of Banks, as well as for the norms dictated by this organism, collections through their Modernized Summary of Norms.   The General Law of Banks defines what is a bank in its article N° 40. This definition points out that the basic turn is, to capture the public's money in order to giving it in loan, to discount documents, to carry out investments, to proceed to the financial intermediation, to make produce those money and, in general, to carry out all other operation that the law allows them. Also, the Law enumerates in its article N° 69 another series of operations that they can carry out in the country. The banks can also develop complementary activities and of support to their turn, by means of societies that are treated in the articles N° 70 to the N° 73 of the General Law of Banks. Some of these societies are subject to the supervision of the Superintendence of Values and Securities, in attention to the activity type that they develop. Although it seems that the mining sector is the stronger economic sector, the Finance sector is living a Greta momentum since from the 25 established banks only 10 are dealing with end consumers. Therefore if a foreign Bank is looking for expansion its operations to Latin America, Chile is the perfect target to enter the other markets.