Title: THE DEVELOPMENT OF CREDIT REPORTING IN THE PUBLIC AND PRIVATE SECTORS IN CHILE
1THE DEVELOPMENT OF CREDIT REPORTING IN THE PUBLIC
AND PRIVATE SECTORS IN CHILE
THE WORLD BANK CONFERENCE ON PUBLIC POLICY FOR
CREDIT REPORTING SYSTEMS Beijing, China
Gustavo Arriagada M. Intendente de Bancos Chile,
Sept 2004
2AGENDA
- Pre-conditions for a good development of a credit
reporting system - Banking market and information technologies.
- Legal framework for the treatment of information.
- Credit registry run by the banking supervisor
(SBIF). - Private company for the credit reporting
(SINACOFI). - Some future subjects access to banking services,
Basel II, SMEs , Services, others.
3PRE-CONDITIONS
- Development of appropriate telecommunication
systems and technology - Existence of a National Sole Number associated to
all activities and contracts. - History and quality of data at origin
- Enforcement of the regulatory body
- Respected legal institutional framework, and a
culture of honoring contracts - Competitiveness in information supply
- Credit culture
- An increasing participation of mass product
standardized supply - International standards adequacy (transparency)
4BANKING DEVELOPMENT BASED ON TECHNOLOGICAL
PROGRESS
1990
2004
AREA OF DEVELOPMENT
TECHNOLOGY
INTERNET (thousands of connected users)
720
-
ATM
311
3.932
-
DEBIT CARDS (thousands)
3.856
CREDIT CARDS (thousands)
433
2.876
ACCESS BANKING SERVICES (Debit Card / N of
inhab.)
3,2
17,5
PHYSICAL PLATFORM
POINTS OF SALE (Branches and others)
964
1.799
EMPLOYEES
35.487
39.994
ACCESS TO BANKING SERVICES (N inhab. per point
of sale)
13.847
8.403
ASSET OPERATIONS
DEBTORS (thousands)
1.269
2.600
20.638
56.043
CREDIT VOLUME (US1bn)
54
65
ACCESS TO BANKING SERVICES (Credit/GDP)
LIABILITY OPERATIONS/BORROWINGS
TIMESAVINGS ACCOUNTS (thousands)
6.652
12.575
646
1.574
CURRENT ACCOUNTS (thousands)
83
50
ACCESS TO BANKING SERVICES (Savings Acc / N of
inhab.)
EFFICIENCY
53
67
BACKSTOPPING COSTS OVER GROSS MARGIN
2,5
3,0
BACKSTOPPING COSTS OVER ASSETS
5 LEGAL FRAMEWORK
- Political Constitution of the Republic of Chile
Establishes The respect and protection for the
public and private life and the honor of the
people and their families (Art.19 NÂș4)
6LEGAL FRAMEWORK
- Law on private life protection (Law
19628-28/08/99) It regulates the use of personal
data pertaining to commercial banking, financial
or economic liabilities. It indicates which data
can be published and for how long. So, the
treatment of personal data can only be realized
when the law or the holder of the personal data
authorizes it. Natural or juridical persons have
the right to the protection of their background
treated by a third party, being responsible of
this that who manages a registry or a data base.
It is applied to the Bulletin of the Chamber of
Commerce of Santiago, Equifax, Sinacofi, and
others.
7LEGAL FRAMEWORK
- Sbif Debt Statement.(Art.13,LGB). It regulates
permanent and consolidated information kept by
the Superintendency with the list of the debtors
of the banks, the balances of their liabilities
and the collaterals they have pledged. It is
monthly prepared and then consolidated returned
to the banks. The detailed information per bank
can only be delivered directly to the holder or
to an authorized representative. The above
mentioned answers to what is stipulated under the
Art.154,LGB which covers banking secrecy and
confidentiality.
8PUBLIC REGISTER
- Laws and norms
- Superintendency Structure
- Information flows
- Debtors system
9LAW NORMS
- According to the Banking Act the Superintendence
must maintain a Central Credit Register for
monitoring the banking system. - The Superintendence must deliver information to
the banking entities.
10LAW NORMS
- Banking licences.
- Acquisition of 10 or more of the banks shares.
- Reserve requirements and technical reserves
- Loan limits.
- Collateral for the purposes of loan limits.
- Norms concerning the consolidation of debts.
- Prohibition of lending credits to directors of
the bank and their associates.
11STRUCTURE OF THE SUPERINTENDENCY
- Different Departments and Divisions of the
Superintendence take part in the activities of
the central credit register - The Supervision Division evaluates the management
of banks and the quality of their credit
portfolio relying on site inspections. - The Financial Analysis Department monitors the
financial statements of the institutions and
related information.
12STRUCTURE OF THE SUPERINTENDENCY
- The Research Department analyses current and
relevant topics that could affect the financial
system. - The Norms Department issues additional
regulations to the General Banking Law, mainly
addressed to solvency and stability of the
banking sistem. - The System Department processes, verifies and
informs relevant information submitted by banks
concerning their debtors.
13MODEL STRUCTURE
14ISSUES
- The Superintendence receives and processes
information from the banks, it verifies such
information and send it back to - Banks
- Other institutions
- The information is sent to the Superintendence
through magnetic means
15INFORMATION FLOW
D01
Ungrouped information
Institutions Information
Superintendency process
Grouped information
R04
16INFORMATION
- Flowing from banks to the Superintendence
- Debtors
- Individual debtors
- By product, for instance, commercial loans,
mortgage loans and others - Foreign debtors
- Related groups
- Ownership
- Management
- Presumption of related groups
- Financial statements
- Income and loss
- Assets and liabilities
- Coming from other entities
17INFORMATION
- Information sent back to banks by the
Superintendence has the particularity of being
in the following aggregated form - Name of the debtor
- Amount of debt
- Type of debt
- History of payment
- Number of banks in which the debtor has credits
outstanding - Unused lines of credit
- Information is updated monthly with a lag of one
to two months. - There are deadlines in which the information must
be handed in, otherwise fines would be imposed.
18INFORMATION
- The Superintendence keeps a thorough database of
debtors of the banking system. - The supervisor can examine in detail the database
through different categories. - There are several categories
- Debtors
- Accounting data base on credits and loans
- Type of credit and loans
19PROCESS FRAMEWORK
Deatiled information
Grouped information
WEB information
20SUPERINTENDENCE DEBTORS SYSTEM
- It allows to access to main banking assets loans
and investments. - It gives relevant features of all bank debtors
- Amount of debt
- Banks which hold the debt
- Payment behavior of debtors
- Risk index of debtors
- Etc.
21DEBTORS
- Database on bank debtors allows the
Superintendence to set policies and take actions. - Examples
- Verify of portfolio classification based on
samples - Analysis of connected loans
- Analysis of indebtedness of economic sectors
- Analysis of household indebtedness
- Gap Analysis shown by the difference risk
classification of two or more banks - Indicators of overdue loans, written-down loans
and others
22TECHNOLOGICAL FEATURES OF DATA BASE SYSTEM
23PRIVATE ENTERPRISE
- Association of Banks subsidiary
- Business Units
- Credit Registry
- Market share in information services to the bank
- Volumes of consultations
- Economies of scale
- Sources of information
- Services to banking system
- Unpaid flow
24SINACOFI
SUBSIDIARY OF THE ASSOCIATION OF BANKS
Mission To create, develop and operate products
and services granting competitive advantages to
the banking industry.
16 years of history in this market.
25BUSINESS UNITS
ELECTRONIC MAILING
CLEARING HOUSES
CREDIT REGISTRY
- It integrates the whole industry
- creating valuable solutions
26CREDIT REGISTRY
DEVELOPMENT STRATEGY
Systemic Development
Constituents
A
d
d
e
d
V
a
l
u
e
Assembling
Time
T1
Ownership
over
information
Beneficios para la Banca
27MARKET SHARE
Market share of services of Commercial
information in the banking system
28VOLUMES OF CONSULTATION
29TRANSFER OF ECONOMIES OF SCALE
PRICE PER CONSULTATION
The lower prices induced by SINACOFI in the
market already represent savings for the banking
of US7.6 million per year
30SOURCES OF INFORMATION
31BANKING SERVICES
LINES OF SERVICE
- On line consultations
- Batch consultations
- Portfolio follow up
- Sending and managing of DSF file
- Domicile checking
- Mail return
- InfoMAX
ACCESS MODALITIES
- Web Services
- Host to Host Conection
- E-transfer of files
32UNPAID FLOW
DICOM
SINACOFI
C C S
33SOME FUTURE ISSUES
- Capacity building in technology, information
processing and the availability of models that
raise value added. - Access to banking services To incorporate
growing segments of the population to banking
services - Small and medium sized enterprises (SMEs)
Reinforce the framework for accessing this
commercial segment to banking services. - Basel II Risk measurements in portfolio models
for provisions and capital requirements. - Behavior, willingness and payment capacity of
clients v/s quality of customer attention,
products or services. Banking credit v/s banking
services. Credit risk versus operational risk. - Leveling the playing field Information is
crossing from the supply side of credits to the
demand side. That means processing positive
information and through internet making it
available to SMEs and people to negociate better
conditions for their sole collateral, his
payment behavior.
34FROM CHILE
- GRACIAS
- FIN
- THANK YOU
- THE END