DAY ONE

Our first meeting for the week was with Señor Martin Perez, the Managing Director of Corporate and Investment Banking of Santander Bank, the largest bank in Chile and one of the top five in the world.  Mr. Perez talked about banking in Chile and the Chilean banking system. Impressively, when many other banks were in financial trouble and facing colapse in 2009, Banco Santander in Chile remained strong.  Why? For a combination of reasons.  First, they are a fiscally conservative and never made sub prime loans so the collapse of the housing market did not put such downward pressure on the value of their mortgage loans.  Second, Chilian business owners tend to be risk adverse and don't carry such large credit balances so that during the economic downturn the level of defaults were not dangerously hugh for the bank. Third, the bank has a very large cash reserve in the form of pension funds that allowed them to weather the economic storm, and finally, Chile has a strict set of banking regulations that help banks maintain their strong position. According to Señor Perez, a strong banking system is vital to the economic growth of a country, and he appeared to be very proud of the success of Banco Santander and its role in the growth of the Chilean economy.