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Credit Crising Coming?

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19 April 2010
Bart Narter
I was recently in Santiago, Chile and have a very unscientific view of the credit crisis in the US. I see the same thing happening in Chile. Banks are on every street corner in Santiago. The list of banks is impressively long and the branch density is astounding.
  • Banco de Chile
  • Banco de Desarrollo
  • Banco de Credito Inversiones (BCI)
  • Banco Internacional
  • Banco BICO
  • Banco Edwards (Citi)
  • Scotia Bank
  • Citi
  • Banco Falabella (retailer owned bank)
  • Banco Paris (retailer owned bank)
  • Itau
  • Santander (formerly Banco de Santiago)
  • BBVA
On one stretch of street not in a commercial area, but not the center banking area I saw four (4) bank branches in a row on a single street. I don't see this level of bank branch density even in Manhattan. Every single one of these branches was pushing consumer loans. It is true that the demand for loans has increased due to the recent earthquake, but has the ability to repay those loans also increased? It is unwise to ignore the 3 (or 4) C's of credit, as I outline in the Celent report The Banking Crisis: A Back to Basics Lesson December 2008.
  • Capacity (to pay)
  • Character (or Credit history)
  • Collateral
With so many banks pushing so much credit, I can only suspect that these three C's are being ignored in Chile.

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