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Related Party Transactions

12 Months Ended

Dec. 31, 2020

Disclosure of related party [text block] [Abstract]

39.

Related Party Transactions:

Related parties are considered to be those natural or legal persons who are in positions to directly or indirectly have significant influence through their ownership or management of the Bank and its subsidiaries.

According to the above, the Bank has considered as related parties those natural or legal persons who have a direct participation or through third parties on bank ownership, where such participation exceeds 5% of the shares, and also people who, regardless of ownership, have authority and responsibility for planning, management and control of the activities of the entity or its subsidiaries. There also are considered as related the companies in which the parties related by ownership or management of the Bank have a share which reaches or exceeds 5%, or has the position of director, general manager or equivalent.

(a)

Loans with related parties:

The following table details loans and accounts receivable and contingent loans, corresponding to related entities as of December 31, 2019 and 2020.

	Productive and Services Companies (*)						Investment Companies (**)						Individuals (***)						Total
	2019			2020			2019			2020			2019			2020			2019			2020
	MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$
Loans and accounts receivable:
Commercial loans		174,370			122,716			130,237			164,213			13,563			12,445			318,170			299,374
Residential mortgage loans		—			—			—			—			58,477			61,131			58,477			61,131
Consumer loans		—			—			—			—			9,862			8,743			9,862			8,743
Gross loans		174,370			122,716			130,237			164,213			81,902			82,319			386,509			369,248
Allowance for loan losses		(782	)		(1,264	)		(243	)		(802	)		(889	)		(390	)		(1,914	)		(2,456	)
Net loans		173,588			121,452			129,994			163,411			81,013			81,929			384,595			366,792

Contingent loans:
Guarantees and sureties		5,531			7,277			9,470			9,469			—			—			15,001			16,746
Letters of credits		2,365			2,885			328			—			—			—			2,693			2,885
Foreign letters of credits		—			—			—			—			—			—			—			—
Banks guarantees		32,650			25,129			43,478			35,733			57			—			76,185			60,862
Undrawn credit lines		52,916			46,887			14,364			14,308			21,519			20,306			88,799			81,501
Other contingencies loans		—			—			—			—			—			—			—			—
Total contingent loans		93,462			82,178			67,640			59,510			21,576			20,306			182,678			161,994
Provision for contingencies loans		(214	)		(218	)		(52	)		(55	)		(37	)		(51	)		(303	)		(324	)
Contingent loans, net		93,248			81,960			67,588			59,455			21,539			20,255			182,375			161,670

Amount covered by guarantee:
Mortgage		30,807			15,575			57,456			54,891			69,165			82,777			157,428			153,243
Warrant		—			—			—			—			—			—			—			—
Pledge		—			—			—			—			—			—			—			—
Others (****)		37,794			33,474			12,921			12,117			5,250			6,582			55,965			52,173
Total collateral		68,601			49,049			70,377			67,008			74,415			89,359			213,393			205,416

(*)	For these effects are considered productive companies, those that meet the following conditions:

(i)

They engage in operating activities and generate a separable flow of income;

(ii)

Less than 50% of their assets are trading securities or investments.

Service companies are considered entities whose main purpose is oriented to rendering services to third parties.

(**)	Investment companies include those legal entities that do not comply with the conditions for operating companies and are profit-oriented.

(***)

Individuals include key members of the management and correspond to those who directly or indirectly have authority and responsibility for planning, administrating and controlling the activities of the organization, including directors. This category also includes their family members who influence or are influenced by such individuals in their interactions with the organization.

(****)

These guarantees correspond mainly to warranty by endorsement and sureties, state guarantees and other financial guarantees.

(b)

Other assets and liabilities with related parties as of December 31, 2019 and 2020:

	2019		2020
	MCh$		MCh$
Assets
Cash and due from banks		99,802		261,386
Transactions in the course of collection		63,969		35,833
Financial assets held-for-trading		880		96
Derivative instruments		495,378		252,748
Investment instruments		12,141		31,548
Other assets		76,548		96,362
Total		748,718		677,973

Liabilities
Demand deposits		227,377		239,139
Transactions in the course of payment		16,202		37,799
Obligations under repurchase agreements		54,030		24,500
Savings accounts and time deposits		396,028		338,732
Derivative instruments		432,669		355,099
Borrowings from financial institutions		292,172		114,758
Lease liabilities		11,888		10,354
Other liabilities		151,335		14,699
Total		1,581,701		1,135,080

(c)

Income and expenses from related party transactions during the year ended December 31, 2018, 2019 and 2020:

	2018				2019				2020
	Income		Expense		Income		Expense		Income		Expense
Type of income or expense recognized	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$
Interest and revenue expenses		21,736		7,196		19,039		2,619		15,790		258
Fees and commission income		70,286		74,205		72,931		65,383		41,166		39,988
Net financial operating income
Derivative instruments (*)		85,500		42,365		124,967		73,252		12,219		46,593
Other financial operations		—		—		87		119		40		—
Release or established of provision for credit risk		—		34		—		106		—		1,226
Operating expenses		—		105,734		—		120,559		—		119,259
Other income and expenses		446		45		542		26		469		4

(*)

The outcome of derivative operations is presented net at each related counterparty level. Additionally, this line includes operations with local counterpart banks (unrelated) which have been novated by Comder Contraparte Central S.A. (Related entity) for centralized clearing purposes, which generated a net gain of Ch$4,997 million as of December 31, 2020 (net gain of Ch$123,461 million as of December 31, 2019 and net gain of Ch$71,297 million as of December 31, 2018).

(d)

Directors’ expenses and remunerations and payments to key management personnel:

	2018		2019		2020
	MCh$		MCh$		MCh$
Personnel remunerations		3,926		4,148		3,918
Short-term benefits		3,476		3,255		3,642
Severance pay		1,037		1,264		1,550
Directors’ remunerations and fees (*)		2,511		2,509		2,795
Total		10,950		11,176		11,905

(*)

It includes fees paid to members of the Advisory Committee of Banchile Corredores de Seguros Ltda, of Ch$14 million (Ch$13 million in December 2019 and Ch$12 million in December 2018).

No fees were paid to the advisors of the Board of Directors during the 2020 (Ch$90 million in 2019 and Ch$206 million in 2018). Travel and other related expenses amount to Ch$30 million in 2020 (Ch$104 million in 2019 and Ch$92 million in 2018).

Composition of key personnel:

	N° of executives
Position	2019	2020
CEO	1	1
CEOs of subsidiaries	6	6
Division Managers	13	14
Directors Bank and subsidiaries	19	19
Total	39	40