Banco Santander Central Hispano (BSCH) is looking to securitize part of its loan portfolio in Chile before the end of the first half of the year. The decision, which could prompt other financial institutions in the country to tap the ABS market, is an attempt by the bank to comply with Chilean regulations.
BSCH controls Banco Santiago and Banco Santander, the country's two biggest private-sector financial institutions, which together represent more than 28% of the local loan market.
Apprehensive of such high concentration, the government requested that BSCH brings its market share closer to 20%. To that end, the bank is mulling a securitization of between 2% and 3% of its Chilean loan portfolio.
In addition, the bank is said to be exploring securitization possibilities that might include a transaction backed by credit-card receivables.
BSCH also agreed to issue monthly updates on its efforts to reduce its combined market share to the Superintendent of Banking.
Though details on the specific assets and amounts of the potential transactions are still unavailable, any deal would be good news for a so far sluggish market.
"If BSCH comes to market, it would be the first financial institution to do so," explained Jorge Chang, analyst with Duff & Phelps Credit Rating Co. in Santiago. "Other banks could follow suit, starting a wave of local securitizations."
BSCH representatives declined to comment.