Capitalización de BancoEstado Capitalización de BancoEstado
Why was it necessary to capitalize BancoEstado?

BancoEstado is and has been a universal bank that serves all Chileans without distinction. Its key functions include financial inclusion and the promotion of economic development, which imply seeking to ensure that all Chileans have access to the financial system through different means of payment and types of financing.    

The Bank is also an important player in the country’s financial system and, in 2014, accounted for close to 14% of total lending. In its commercial operations, the Bank maintains a healthy profitability that gives it sustainability over time.

As regards regulation, the Bank is subject to the country’s General Banking Law and is supervised by the Superintendency of Banks and Financial Institutions (SBIF). Other regulatory requirements include those related to capital (Basel Accords) which establish minimum ratios between a bank’s capital (equity) and the related level of activity.   

Over the years, the Bank had shown a gradual reduction in its capital indicators relative to the rest of the industry. In 2014, they were below the average for the system. This was the case of its Basel indicator (effective equity/risk-weighted assets) and its leverage ratio (capital/assets) which, in June 2014, were running at 11.05% and 3.97%, respectively. This situation, noted by credit rating agencies, threatened the Bank’s credit rating and, therefore, its capacity to raise resources in the market.

Thanks to its capital increase, BancoEstado was able to grow its total lending by some US$5,000 million and maintain around a 14% share of the lending market, allowing it to continue to play an important role in supporting public policies on the financing of economic development and to further increase its client base. 

Objectives of capital increase

The capitalization was designed to allow the Bank to:

1.- Improve its capital indicators, allowing it to ensure financing at attractive rates that would be passed on to clients and help to increase competition in the banking system;  

2.- Increase its lending, with a particular emphasis on supporting smaller companies and maintaining robust financing for mortgage borrowing;

3.- Increase the number of small businesses to which it provides financing and an increase of 50,000 in the number of micro-firms with loans;

4.- Continue to show a level of profitability comparable to the two previous years;

5.- Extend and deepen financial inclusion for lower-income segments by increasing the number of clients with CuentaRUT accounts, expanding the CajaVecina network of service points and boosting support for women entrepreneurs.

BancoEstado undertakings associated with capital increase

  • A. Smaller companies

    Increase of 100% (15,000) in the small businesses (annual sales of 2,400-40,000 UF) and of 50,000 in the micro-firms (annual sales of less than 2,400 UF) to which it provides financing:

    Increase of at least 862,500 million Chilean pesos (US$1,500 million at US$1=575 pesos) in its volume of lending to smaller companies (micro, small and mid-sized segments) over a period of four years. The growth of lending to this segment has to be gradual in order to maintain the risk of this portfolio at levels consistent with the sustainability of the business.

  • B. Maintain robust support for mortgage borrowing

    To continue to be the main provider of residential mortgages for lower-income segments of the population. To award at least the equivalent of 28,000,000 UF (US$1,200 million) in new mortgages in 2015-2016, with a focus on housing with a value below the limit of the housing subsidy policy (2,000 UF).

  • C. Increase financial inclusion in lower-income segments

    BancoEstado has been the principal vehicle of financial inclusion for lower-income segments of the population and will continue to develop products and services that facilitate access to financial services and foster their effective use at a reasonable cost. Its targets as regards financial inclusion are:

    - Reach 9 million CuentaRUT accounts by end-2016 (7,500,000 in 2015).

    - Reach 16,000 CajaVecina points of service (14,500 at end-2015).

    - Open at least 15 new branch offices in 2015, including at least 10 in small towns.

    - In 2015-2016, implement the investments necessary to provide a reasonable guarantee of the Bank’s operational continuity, taking into account its increasing role as a mass bank.

  • D. Strengthen support for women entrepreneurs

    Through its Microempresas subsidiary, BancoEstado will develop the “Women Entrepreneurs’ Bank”. In 2015, a specialized platform for this segment will be implemented.

  • E. Maintain a pre-tax profitability similar to current levels

    BancoEstado will seek to expand its operations without increasing its financing cost or significantly increasing its expenditure on risk and, therefore, negatively affecting its profitability. Its pre-tax ROE is expected to be similar to its current level (17-18%).

Compliance with Undertakings

Select Period

1. New micro and small businesses receiving financing

Target acumulado 2017 Progress acumulado 2017 % compliance with undertaking Status
65,500 67,000

2. Growth of lending to smaller companies (US$ million)

Target acumulado 2017 Progress acumulado 2017 % compliance with undertaking Status
1,500 1,995

3. Residential mortgages (millions of UF)

Target acumulado 2017 Progress acumulado 2017 % compliance with undertaking Status
28 44

4. New branches and CajaVecina points of service

Target acumulado 2017 Progress acumulado 2017 % compliance with undertaking Status
20 sucursales 47 sucursales
16,000 CajaVecina 22,147 CajaVecina

5. Opening of new CuentaRUT accounts (in thousands of accounts over stock)

Target acumulado 2017 Progress acumulado 2017 % compliance with undertaking Status
9,000 10,180