THE DEVELOPMENT OF CREDIT REPORTING IN THE PUBLIC AND PRIVATE SECTORS IN CHILE - PowerPoint PPT Presentation

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THE DEVELOPMENT OF CREDIT REPORTING IN THE PUBLIC AND PRIVATE SECTORS IN CHILE

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Title: THE DEVELOPMENT OF CREDIT REPORTING IN THE PUBLIC AND PRIVATE SECTORS IN CHILE


1
THE 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
2
AGENDA
  • 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.

3
PRE-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)

4
BANKING 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)

6
LEGAL 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.

7
LEGAL 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.

8
PUBLIC REGISTER
  • Laws and norms
  • Superintendency Structure
  • Information flows
  • Debtors system

9
LAW 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.

10
LAW 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.

11
STRUCTURE 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.

12
STRUCTURE 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.

13
MODEL STRUCTURE
14
ISSUES
  • 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

15
INFORMATION FLOW
D01
Ungrouped information
Institutions Information
Superintendency process
Grouped information
R04
16
INFORMATION
  • 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

17
INFORMATION
  • 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.

18
INFORMATION
  • 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

19
PROCESS FRAMEWORK
Deatiled information
Grouped information
WEB information
20
SUPERINTENDENCE 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.

21
DEBTORS
  • 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

22
TECHNOLOGICAL FEATURES OF DATA BASE SYSTEM
23
PRIVATE 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

24
SINACOFI
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.
25
BUSINESS UNITS
ELECTRONIC MAILING
CLEARING HOUSES
CREDIT REGISTRY
  • It integrates the whole industry
  • creating valuable solutions

26
CREDIT 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
27
MARKET SHARE
Market share of services of Commercial
information in the banking system
28
VOLUMES OF CONSULTATION
29
TRANSFER 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
30
SOURCES OF INFORMATION
31
BANKING 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

32
UNPAID FLOW
DICOM
SINACOFI
C C S
33
SOME 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.

34
FROM CHILE
  • GRACIAS
  • FIN
  • THANK YOU
  • THE END
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