SM-Chile

SM-Chile is a Chilean investment holding company whose principal corporate connection is with Banco de Chile. The entity's present form emerged from a major restructuring of the former parent company of Banco de Chile in 1996. That restructuring followed the transformation approved by the shareholders under Chilean Law No. 19,396. Rather than continuing solely as the operating parent of a commercial bank, the company became an investment company, while a separately created banking entity assumed the name Banco de Chile and received the bank's assets and liabilities, subject to the exclusion of a subordinated obligation owed to the Central Bank of Chile. The excluded obligation originated in the Chilean banking crisis of 1982–1984 and the associated support provided by the Central Bank. The 1996 arrangement therefore separated the operating bank from the corporate vehicle that retained the subordinated obligation and the investment relationship with Banco de Chile. After the restructuring, the newly established Banco de Chile was wholly owned by the parent company of Banco de Chile, the entity subsequently known as SM-Chile. Between 1996 and 2008, SM-Chile's participation in Banco de Chile declined. The change was connected with the redemption of Series E shares issued through the capitalization of the bank's profits and with later corporate developments involving Banco de Chile. Banco de Chile merged with Citibank Chile in January 2008, following the bank's earlier merger activity in January 2002. These transactions form part of the institutional and ownership history surrounding SM-Chile, although SM-Chile itself is principally a holding and investment vehicle rather than a consumer-facing banking brand. At December 2015, SM-Chile held 42.38% of Banco de Chile on a direct and indirect basis: 12.63% directly and approximately 29.7% through its subsidiary Sociedad Administradora de la Obligación Subordinada S.A., commonly referred to as SAOS. This structure reflects the continuing importance of the subordinated obligation created during the earlier banking crisis. SM-Chile's share capital is divided into four classes—Series A, B, D, and E. Its shares are traded on the Santiago Stock Exchange, the Chilean Electronic Stock Exchange, and the Valparaíso Stock Exchange. The company is subject to oversight by Chile's banking supervisory authority, identified in the reference material as the Superintendency of Banks and Financial Institutions of Chile. SM-Chile should therefore be understood as a specialized financial holding company embedded in Chile's banking sector, with its significance deriving from its historical role in the restructuring of Banco de Chile, its continuing ownership interest, and its management of the corporate consequences of the subordinated obligation inherited from the 1980s banking crisis.

SM-Chile's history is closely tied to the restructuring of Banco de Chile and to the resolution of obligations created during Chile's 1982–1984 banking crisis. During that crisis, the Central Bank of Chile provided support that resulted in a subordinated obligation connected with the banking system's rescue. The later corporate structure of SM-Chile preserved an interest in this obligation while separating it from the operating activities of the commercial bank. The decisive change occurred in 1996. The shareholders of the former parent company of Banco de Chile approved its transformation into an investment company under Law No. 19,396. In connection with that process, a new commercial bank was established under the name Banco de Chile. The new bank received the former bank's assets and liabilities, except for the subordinated obligation owed to the Central Bank. Following the transaction, the newly formed Banco de Chile was wholly owned by the parent company of Banco de Chile, which became the holding vehicle later identified as SM-Chile. From 1996 through 2008, SM-Chile's percentage participation in Banco de Chile decreased. The reference material associates this reduction with the redemption of Series E shares arising from the capitalization of the bank's profits. The ownership history also intersected with Banco de Chile's corporate combinations. Banco de Chile had merger activity in January 2002 and later merged with Citibank Chile in January 2008. These developments changed the operating and ownership context in which SM-Chile held its investment. By December 2015, SM-Chile retained a 42.38% interest in Banco de Chile when direct and indirect holdings were combined. The direct holding was stated as 12.63%, while approximately 29.7% was held through Sociedad Administradora de la Obligación Subordinada S.A. (SAOS). The SAOS relationship reflects the continuing institutional role of the subordinated obligation that had been excluded from the 1996 transfer of banking assets and liabilities. SM-Chile's capital is divided into Series A, B, D, and E shares. The company's securities are traded on the Santiago Stock Exchange, the Chilean Electronic Stock Exchange, and the Valparaíso Stock Exchange. It is supervised by Chile's banking supervisory authority, referred to in the source as the Superintendency of Banks and Financial Institutions. The available reference material does not establish a founding year, founder, headquarters address, current executives, corporate website, or a current ownership percentage after December 2015.

• 2015

  Reported 42.38% Banco de Chile interest

  [1]SM-Chileen.wikipedia.org

  At December 2015, SM-Chile held 42.38% of Banco de Chile through direct ownership and its SAOS subsidiary.

• 2008

  Banco de Chile merges with Citibank Chile

  [1]SM-Chileen.wikipedia.org

  Banco de Chile merged with Citibank Chile in January 2008. Over the broader 1996–2008 period, SM-Chile's participation in Banco de Chile was reduced.

• 2002

  Banco de Chile merger activity

  [1]SM-Chileen.wikipedia.org

  Banco de Chile undertook a merger in January 2002, contributing to the subsequent corporate history surrounding SM-Chile's investment.

• 1996

  Transformation into an investment company

  [1]SM-Chileen.wikipedia.org

  Shareholders approved the transformation of the former parent company of Banco de Chile into an investment company under Law No. 19,396, while a new Banco de Chile assumed the operating bank's assets and liabilities apart from the subordinated obligation.

• 1982

  Chilean banking crisis begins

  [1]SM-Chileen.wikipedia.org

  The banking crisis of 1982–1984 led to Central Bank support and the subordinated obligation that later shaped SM-Chile's corporate structure.

A specialized Chilean financial holding company rather than a retail banking or consumer-services brand.

• Financial investment

  Banco de Chile holding interest

  SM-Chile's principal economic exposure is its ownership interest in Banco de Chile. The holding is not a retail banking product sold to customers; it is a corporate investment position that links SM-Chile to the commercial bank's equity and governance structure. As reported for December 2015, the interest consisted of both direct ownership and an indirect holding through SAOS.

• Financial holding structure · 1996

  SAOS-related subordinated-obligation structure

  The Sociedad Administradora de la Obligación Subordinada S.A. structure is associated with the subordinated obligation left outside the transfer of assets and liabilities during the 1996 reorganization. It forms part of the mechanism through which SM-Chile maintained an indirect interest in Banco de Chile and managed the corporate legacy of the 1980s banking rescue.

• 2008

  Banco de Chile merger with Citibank ChileM&A

  Background

  Banco de Chile's corporate development included merger activity after the 1996 restructuring, including a merger with Citibank Chile in January 2008.

  Action taken

  Banco de Chile merged with Citibank Chile, while SM-Chile's participation in Banco de Chile had declined over the 1996–2008 period.

  Aftermath

  The merger became part of the ownership and corporate history surrounding SM-Chile's continuing interest in Banco de Chile.

  Source

• 1996

  Convert the former bank parent into an investment companyStrategy

  Background

  The restructuring followed the banking crisis and the need to separate the operating commercial bank from the subordinated obligation owed to the Central Bank of Chile.

  Action taken

  Shareholders approved a transformation under Law No. 19,396. A newly created Banco de Chile received the former bank's assets and liabilities except for the subordinated obligation, while the parent company became an investment vehicle.

  Aftermath

  The arrangement established the corporate structure associated with SM-Chile and left the company as a holding entity linked to Banco de Chile rather than as the bank's direct operating company.

  Source

1. 1SM-Chileen.wikipedia.org