Santander Chile Suffers from Parental Downgrade

Fitch has cut Banco Santander Chile’s credit rating to A+ from AA minus, following the recent downgrade of its Spanish parent. The agency explains that credit risk for many large and currently highly rated banks face greater downside pressure due to factors including below-trend economic growth, ongoing sovereign risks, additional bank regulation, smaller returns, and political pressure to reduce or eliminate implicit state support. The outlook is negative. Similarly S&P lowered the outlook on Santander Chile’s A+ credit rating to negative from positive, following its own recent downgrade of the parent. S&P considers the 75% owned Chilean subsidiary to be especially important.