Edgar Filing: BANCO SANTANDER CHILE

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

Commission File Number: 001-14554

Banco Santander Chile

Santander Chile Bank

(Translation of Registrant’s Name into English)

Bandera 140

Santiago, Chile

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F

Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

Table of Contents

Page
1.	Important Notice
5.	Unaudited Interim Financials for the six month period ended June 30, 2011 in English

Important Notice

Santander Chile is a Chilean bank and maintains its financial books and records in Chilean pesos. These Interim Unaudited Consolidated Financial Statements have been prepared in accordance with the Compendium of Accounting Standards issued by the Superintendency of Banks and Financial Institutions (SBIF). The SBIF is the banking industry regulator that according to article 15 of the General Banking Law, establishes the accounting principles to be used by the banking industry. For those principles not covered by the Compendium of Accounting Standards, banks can use generally accepted accounting principles issued by the Chilean Accountant’s Association AG and which coincides with International Financial Reporting Standards (IFRS) issued by the International Acocounting Standards Board (IASB). In the event that discrepancies exist between the accounting principles issued by the SBIF (Compendium of Accounting Standards) and IFRS, the Compendium of Accounting Standards will take precedence. The Notes to the consolidated financial statements contain additional information to that submitted in the Consolidated Statement of Financial Position, Consolidated Statement of Income, Consolidated Statement of Comprehensive Income, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows. These notes provide a narrative description of such statements in a clear, reliable and comparable manner.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BANCO SANTANDER-CHILE

	By:	/s/
	Name:	Juan Pedro Santa María
	Title:	General Counsel

Date: August 18, 2011

INDEX

Consolidated Financial Statements

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION	3
CONSOLIDATED INTERIM STATEMENTS OF INCOME	4
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME	5
CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY	6
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW	7

Notes to the Financial Statements

NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES	9
NOTE 02 – ACCOUNTING CHANGES:	34
NOTE 03 - SIGNIFICANT EVENTS:	37
NOTE 04 - BUSINESS SEGMENTS:	39
NOTE 05 - CASH AND CASH EQUIVALENTS	45
NOTE 06 - TRADING INVESTMENTS:	46
NOTE 07 - DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING:	47
NOTE 08 - INTERBANK LOANS	53
NOTE 09 - LOANS AND ACCOUNTS RECEIVABLE FROM CUSTOMERS:	54
NOTE 10 - AVAILABLE FOR SALE INVESTMENTS:	59
NOTE 11 - INTANGIBLE ASSETS:	60
NOTE 12 - PROPERTY, PLANT, AND EQUIPMENT	62
NOTE 13 - CURRENT AND DEFERRED TAXES:	66
NOTE 14 - OTHER ASSETS:	69
NOTE 15 - TIME DEPOSITS AND OTHER TIME LIABILITIES:	70
NOTE 16 – ISSUED DEBT INSTRUMENTS AND OTHER OBLIGATIONS:	71
NOTE 17 - MATURITIES OF ASSETS AND LIABILITIES:	76
NOTE 18 - OTHER LIABILITIES	78
NOTE 19 -CONTINGENCIES AND COMMITMENTS:	79
NOTE 20 - EQUITY:	81
NOTE 21 - CAPITAL REQUIREMENTS (BASEL):	84
NOTE 22 - NON CONTROLLING INTEREST	86
NOTE 23 -INTEREST INCOME AND EXPENSE:	89
NOTE 24 - FEES AND COMMISSIONS:	92
NOTE 25 - NET INCOME FROM FINANCIAL OPERATIONS:	92
NOTE 26 – NET FOREIGNS EXCHANGE PROFIT (LOSS):	92
NOTE 27 - PROVISION FOR LOAN LOSSES:	94
NOTE 28 - PERSONNEL SALARIES AND EXPENSES:	96
NOTE 29 - ADMINISTRATIVE EXPENSES:	97
NOTE 30 - DEPRECIATION AMORTIZATION AND IMPAIRMENT:	98
NOTE 31 – OTHER OPERATING INCOME AND EXPENSES:	98
NOTE 32 - TRANSACTIONS WITH RELATED PARTIES:	101
NOTE 33 - FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES:	106
NOTE 34 - SUBSEQUENT EVENTS	109

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

For periods ending as of

		As of June 30,			As of June 30,			As of December 31,
		2011			2011			2010
	NOTE	ThUS$			MCh$			MCh$

ASSETS
Cash and deposits in banks	5		2,098,669			980,813			1,762,198
Unsettled transactions	5		1,780,710			832,215			374,368
Trading investments	6		1,303,800			609,331			379,670
Investments under resale agreements	-		15,667			7,322			170,985
Financial derivative contracts	7		3,084,979			1,441,765			1,624,378
Interbank loans, net	8		187,564			87,658			69,672
Loans and accounts receivables from customers, net	9		36,195,900			16,916,154			15,175,975
Available for sale investments	10		5,621,853			2,627,373			1,473,980
Held to maturity investments	10		-			-			-
Investments in other companies	-		16,450			7,688			7,275
Intangible assets	11		154,901			72,393			77,990
Property, plant, and equipment	12		320,599			149,832			154,985
Current taxes	13		71,356			33,348			12,499
Deferred taxes	13		273,936			128,024			117,964
Other assets	14		1,660,388			775,982			640,937
TOTAL ASSETS			52,786,772			24,669,898			22,042,876

LIABILITIES
Deposits and other demand liabilities	15		9,522,392			4,450,290			4,236,434
Unsettled transactions	5		1,340,118			626,304			300,125
Investments under repurchase agreements	-		681,808			318,643			294,725
Time deposits and other time liabilities	15		18,949,791			8,856,185			7,258,757
Financial derivative contracts	7		2,888,407			1,349,897			1,643,979
Interbank borrowings	-		3,917,084			1,830,649			1,584,057
Issued debt instruments	16		9,703,237			4,534,808			4,190,888
Other financial liabilities	16		358,759			167,666			166,289
Current taxes	13		4,036			1,886			1,293
Deferred taxes	13		31,041			14,507			5,441
Provisions	-		323,218			151,056			235,953
Other liabilities	18		1,006,460			470,369			261,328

TOTAL LIABILITIES			48,726,351			22,772,260			20,179,269

EQUITY

Attributable to Bank shareholders:	-		3,993,724			1,866,467			1,831,798
Capital	20		1,907,142			891,303			891,303
Reserves	20		110,279			51,539			51,539
Valuation adjustments	20		(16,756	)		(7,831	)		(5,180	)
Retained Earnings	20		1,993,059			931,456			894,136
Retained earnings of prior years	20		1,606,909			750,989			560,128
Income for the period	20		551,642			257,810			477,155
Minus: Provision for mandatory dividends	20		(165,493	)		(77,343	)		(143,147	)
Non controlling interest	22		66,697			31,171			31,809

TOTAL EQUITY			4,060,421			1,897,638			1,863,607

TOTAL LIABILITIES AND EQUITY			52,786,772			24,669,898			22,042,876

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF INCOME

For periods ending as of

		As of June 30,			For the quarter ended on June 30						For the 6-month period ended on June 30
		2011			2011			2010			2011			2010
	NOTE	ThUS$			MCh$			MCh$			MCh$			MCh$

OPERATING INCOME

Interest income	23		1,819,940			472,132			368,919			850,549			690,157
Interest expense	23		(801,224	)		(224,718	)		(126,137	)		(374,452	)		(217,977	)

Net interest income			1,018,716			247,414			242,782			476,097			472,180

Fee and commission income	24		393,474			92,652			82,808			183,890			161,967
Fee and commission expense	24		(86,554	)		(20,602	)		(17,650	)		(40,451	)		(34,458	)

Net fee and commission income			306,920			72,050			65,158			143,439			127,509

Net income from financial operations (net trading income)	25		109,986			2,027			44,922			51,402			97,014
Foreign exchange profit (loss), net	26		8,274			27,049			(19,881	)		3,867			(42,400	)
Other operating income	31		12,537			3,309			19,160			5,859			24,898

Total operating income			1,456,433			351,849			352,141			680,664			679,201

Provisions for loan losses	27		(225,844	)		(56,874	)		(59,106	)		(105,548	)		(130,595	)

NET OPERATING PROFIT			1,230,589			294,975			293,035			575,116			548,606

Personnel salaries and expenses	28		(285,645	)		(70,655	)		(66,002	)		(133,496	)		(121,591	)
Administrative expenses	29		(173,397	)		(41,535	)		(35,707	)		(81,037	)		(71,760	)
Depreciation and amortization	30		(56,241	)		(12,944	)		(12,592	)		(26,284	)		(24,933	)
Impairment	12		(68	)		(27	)		(3,686	)		(32	)		(3,702	)
Other operating expenses	31		(62,936	)		(8,800	)		(13,703	)		(29,413	)		(24,630	)

Total operating expenses			(578,287	)		(133,961	)		(131,690	)		(270,262	)		(246,616	)

OPERATING INCOME			652,302			161,014			161,345			304,854			301,990

Income from investments in other companies	-		2,411			552			223			1,127			343

Income before tax			654,713			161,566			161,568			305,981			302,333

Income tax expense	13		(98,250	)		(19,416	)		(24,163	)		(45,917	)		(45,923	)

NET INCOME FOR THE PERIOD			556,463			142,150			137,405			260,064			256,410

Attributable to:
Bank shareholders (Equity holders of the Bank)	-		551,642			141,512			138,823			257,810			257,927
Non controlling interest	22		4,822			638			(1,418	)		2,254			(1,517	)

Earnings per share attributable to Bank shareholders: (expressed in Chilean pesos)
Basic earnings	-		0,00292			0.751			0.737			1.368			1.369
Diluted earnings	-		0.00292			0.751			0.737			1.368			1.369

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

For periods ending as of

		As of June 30,			For the quarter ended						For the 6-month period ended on June 30
		2011			2011			2010			2011			2010
	NOTE	ThUS$			MCh$			MCh$			MCh$			MCh$

CONSOLIDATED INCOME FOR THE PERIOD			1,882,099			142,150			137,405			260,064			256,410

OTHER COMPREHENSIVE INCOME

Available for sale investments	10		(2,300	)		6,607			142			(1,075	)		7,720
Cash flow hedge	7		(4,329	)		(529	)		17,518			(2,023	)		2,873

Other comprehensive income before income tax			(6,629	)		6,078			17,660			(3,098	)		10,593

Income tax related to other comprehensive income	13		1,406			(1,180	)		(3,002	)		657			(1,801	)

Total other comprehensive income			(5,223	)		4,898			14,658			(2,441	)		8,792

CONSOLIDATED COMPREHENSIVE INCOME FOR THE PERIOD			1,876,876			147,048			152,063			257,623			265,202

Attributable to:
Bank shareholders (Equity holders of the Bank)	22		545,970			146,377			153,250			255,159			266,538
Non controlling interest	-		5,272			671			(1,187	)		2,464			(1,336	)

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

For periods ending as of

			RESERVES					VALUATION ADJUSTMENTS									RETAINED EARNINGS
	Capital		Reserves and other retained earnings		Merger of companies under common control			Available for sale investments			Cash flow hedge			Income tax Income tax			Retained earnings of prior years			Income for the period			Provision for mandatory dividends			Total attributable to shareholders			Non controlling interest			Total Equity
	MCh$		MCh$		MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$			MCh$

Balances as of December 31, 2009		891,303		53,763		(2,224	)		(29,132	)		(3,162	)		5,490			440,401			431,253			(129,376	)		1,658,316			29,799			1,688,115
Distribution of income from previous period		-		-		-			-			-			-			431,253			(431,253	)		-			-			-			-
First Enforcement of Chapter B3		-		-		-			-			-			-			(52,662	)		-			-			(52,662	)		-			(52,662	)
Opening balances as of January 1, 2010		891,303		53,763		(2,224	)		(29,132	)		(3,162	)		5,490			818,992			-			(129,376	)		1,605,654			29,799			1,635,453
Increase or decrease of capital and reserves		-		-		-			-			-			-			-			-			-			-			-			-
Dividends distributions / Withdrawals made		-		-		-			-			-			-			(258,752	)		-			129,376			(129,376	)		-			(129,376	)
Other changes in equity		-		-		-			-			-			-			(112	)		-			-			(112	)		(3	)		(115	)
Provisions for mandatory dividends		-		-		-			-			-			-			-			-			(77,378	)		(77,378	)		-			(77,378	)
Subtotals		-		-		-			-			-			-			(258,864	)		-			51,998			(206,866	)		(3	)		(206,869	)
Other comprehensive income		-		-		-			7,502			2,873			(1,764	)		-			-			-			8,611			181			8,792
Income for the period		-		-		-			-			-			-			-			257,927			-			257,927			(1,517	)		256,410
Subtotals		-		-		-			7,502			2,873			(1,764	)		-			257,927			-			266,538			(1,336	)		265,202
Opening balances as of June 30, 2010		891,303		53,763		(2,224	)		(21,630	)		(289	)		3,726			560,128			257,927			(77,378	)		1,665,326			28,460			1,693,786

Balances as of December 31, 2010		891,303		53,763		(2,224	)		(18,341	)		11,958			1,203			560,128			477,155			(143,147	)		1,831,798			31,809			1,863,607
Distribution of income from previous period		-		-		-			-			-			-			477,155			(477,155	)		-			-			-			-
Balances as of January 1, 2011		891,303		53,763		(2,224	)		(18,341	)		11,958			1,203			1,037,283			-			(143,147	)		1,831,798			31,809			1,863,607
Increase or decrease of capital and reserves		-		-		-			-			-			-			-			-			-			-			-			-
Dividends distributions / Withdrawals made		-		-		-			-			-			-			(286,294	)		-			143,147			(143,147	)		(3,122	)		(146,269	)
Other changes in equity		-		-		-			-			-			-			-			-			-			-			20			20
Provision for mandatory dividends		-		-		-			-			-			-			-			-			(77,343	)		(77,343	)		-			(77,343	)
Subtotals		-		-		-			-			-			-			(286,294	)		-			65,804			(220,490	)		(3,102	)		(223,592	)
Other comprehensive income		-		-		-			(1,328	)		(2,023	)		700			-			-			-			(2,651	)		210			(2,441	)
Income for the period		-		-		-			-			-			-			-			257,810			-			257,810			2,254			260,064
Subtotals		-		-		-			(1,328	)		(2,023	)		700			-			257,810			-			255,159			2,464			257,623

Opening balances as of June 30, 2011		891,303		53,763		(2,224	)		(19,669	)		9,935			1,903			750,989			257,810			(77,343	)		1,866,467			31,171			1,897,638

Period	Total attributable to shareholders		Allocated to reserves or retained earnings		Allocated to Dividends		Percentage distributed			Number of Shares		Dividend per share (in pesos)
	MCh$		MCh$		MCh$		%

Year 2010 (Shareholders Meeting April 2011)		477,155		190,861		286,294		60	%		188,446,126,794		1.519

Year 2009 (Shareholders Meeting April 2010)		431,253		172,501		258,752		60	%		188,446,126,794		1.373

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW

For periods ending as of

		As of June 30
		2011			2011			2010
	NOTE	ThUS$			MCh$			MCh$

A – CASH FLOWS FROM OPERATING ACTIVITIES
CONSOLIDATED INCOME BEFORE TAX			654,715			305,981			302,333
Debits (credits) to income that do not represent cash flows			1,060,602			(495,673	)		(494,376	)
Depreciation and amortization	30		56,241			26,284			24,933
Impairment of property, plant, and equipment	12		68			32			3,702
Provision for loan losses	27		247,876			115,845			146,134
Mark to market of trading investments	-		(4,534	)		(2,119	)		(29,926	)
Income from investments in other companies	-		(2,411	)		(1,127	)		(343	)
Net gain on sale of assets received in lieu of payment	31		(8,268	)		(3,864	)		(1,698	)
Provisions for assets received in lieu of payment	31		2,732			1,277			2,300
Net gain on sale of investments in other companies	-		-			-			-
Net gain on sale of property, plant and equipment	31		(1,731	)		(809	)		(13,195	)
Charge off of assets received in lieu of payment	31		11,407			5,331			1,548
Net interest income	23		(1,018,716	)		(476,097	)		(472,180	)
Net fee and commission income	24		(306,920	)		(143,439	)		(127,509	)
Debits (credits) to income that do not represent cash flows	-		(36,350	)		16,988			(5,207	)
Changes in assets and liabilities due to deferred taxes	13		4			2			(22,935	)
Increase/decrease in operating assets and liabilities			(388,808	)		(181,709	)		(166,363	)
Decrease (increase) of loans and accounts receivables from customers, net	-		(3,554,343	)		(1,661,122	)		(871,161	)
Decrease (increase) of financial investments	-		(3,064,750	)		(1,432,311	)		536,934
Decrease (increase) due to resale agreements (assets)	-		357,278			166,974			5,000
Decrease (increase) of interbank loans	-		(38,485	)		(17,986	)		(18,067	)
Decrease of assets received or awarded in lieu of payment	-		45,508			21,268			10,348
Increase of debits in checking accounts	-		150,037			70,120			512,518
Increase (decrease) of time deposits and other time liabilities	-		3,304,404			1,544,313			49,681
Increase (decrease) of obligations with domestic banks	-		115,545			54,000			18,067
Increase of other demand liabilities or time obligations	-		179,388			83,837			66,371
Increase (decrease) of obligations with foreign banks	-		412,806			192,925			78,088
Decrease of obligations with Central Bank of Chile	-		(674	)		(315	)		(342	)
Increase (decrease) due to resale agreements (liabilities)	-		51,178			23,918			(991,494	)
Increase (decrease) of other short-term liabilities	-		3,381			1,580			(2,583	)
Net increase of other assets and liabilities	-		115,573			54,014			(143,848	)
Redemption of letters of credit	-		(81,132	)		(37,917	)		(71,721	)
Senior bond issuances	-		684,468			319,886			426,794
Redemption of senior bonds and payments of interest	-		(290,887	)		(135,946	)		(156,273	)
Interest received	-		1,814,920			848,203			481,545
Interest paid	-		(803,182	)		(375,367	)		(178,760	)
Dividends received from investments in other companies	-		1,489			696			954
Fees and commissions received	24		393,474			183,890			161,967
Fees and commissions paid	24		(86,554	)		(40,451	)		(34,458	)
Income tax paid	13		(98,250	)		(45,917	)		(45,923	)
Net cash from (used in) operating activities			(794,695	)		(371,400	)		(358,406	)

BANCO SANTANDER CHILE AND SUBSIDIARIES

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOW

For periods ending as of

		As of June 30,
		2011			2011			2010
	NOTE	ThUS$			MCh$			MCh$

B – CASH FLOWS FROM INVESTMENT ACTIVITIES:
Purchases of property, plant, and equipment	12		(10,365	)		(4,844	)		(4,122	)
Sales of property, plant, and equipment	-		12,545			5,863			14,197
Purchases of investments in other companies	-		-			-			-
Sales of investments in other companies	-		-			-			-
Purchases of intangibles assets	11		(23,314	)		(10,896	)		(8,033	)
Net cash used in investment activities			(21,134	)		(9,877	)		2,042

C – CASH FLOW FROM FINANCING ACTIVITIES:
From shareholders’ financing activities	-		(489,973	)		(228,989	)		(263,210	)
Increase of other obligations	-		-			-			-
Issuance of subordinated bonds	-		143,060			66,859			12,682
Redemption of subordinated bonds and payments of interest	-		(20,443	)		(9,554	)		(17,140	)
Dividends paid	-		(612,590	)		(286,294	)		(258,752	)
From non controlling interest financing activities	-		-			-			-
Increases of capital	-		-			-			-
Dividends and/or withdrawals paid	-		-			-			-
Net cash used in financing activities			(489,973	)		(228,989	)		(263,210	)

D – VARIATION OF CASH AND CASH EQUIVALENTS DURING THE PERIOD	-		(1,305,802	)		(610,266	)		(619,574	)

E – EFFECTS OF FOREIGN EXCHANGE RATE VARIATIONS	-		(84,414	)		(39,451	)		(33,956	)

F – INITIAL BALANCE OF CASH AND CASH EQUIVALENTS	-		3,929,477			1,836,441			2,236,118

FINAL BALANCE OF CASH AND CASH EQUIVALENTS	5		2,539,261			1,186,724			1,582,588

	As of June 30
Reconciliation of provisions for Consolidated Statements of Cash Flow	2011			2010
	MCh$			MCh$

Provisions for loan losses for cash flow		115,845			146,134
Recovery of loans previously charged off		(10,297	)		(15,539	)
Expenses on provisions for loan losses		105,548			130,595

BANCO SANTANDER CHILE AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED INTERIM STATEMENTS OF INCOME

As of June 30, 2011 and 2010, and December 31, 2010

NOTE 01 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Corporate Information

Banco Santander Chile (formerly Banco Santiago) is a corporation (sociedad anónima bancaria) organized under the laws of the Republic of Chile, headquartered at 140 Bandera St., Santiago, that provides a broad range of general banking services to its customers, from individuals to major corporations. Banco Santander Chile and its affiliates (collectively referred to herein as the “Bank” or “Banco Santander Chile”) offer commercial and consumer banking services, besides other services, including factoring, collection, leasing, securities and insurance brokerage, mutual and investment fund management, and investment banking.

A Special Meeting of Shareholders of Banco Santiago was held on July 18, 2002, the minutes of which were notarized as a public deed on July 19, 2002 at the Notarial Office of Santiago before Notary Nancy de la Fuente Hernández, and there it was agreed to merge Banco Santander Chile with Banco Santiago by merging the former into the latter, which acquired the former’s assets and liabilities. It was likewise agreed to dissolve Banco Santander Chile in advance and change the name from Banco Santiago to Banco Santander Chile. This change was authorized by Resolution No.79 of the Superintendence of Banks and Financial Institutions, adopted on July 26, 2002, published in the Official Journal on August 1, 2002 and registered on page 19,992 under number 16,346 for the year 2002 in the Registry of Commerce of the Curator of Real Estate of Santiago.

In addition to the amendments to the bylaws discussed above, the bylaws have been amended on multiple occasions, the last time at the Special Shareholders Meeting of April 24, 2007, the minutes of which were notarized as a public deed on May 24, 2007 at the Notarial Office of Nancy de la Fuente Hernández. This amendment was approved pursuant to Resolution No.61 of June 6, 2007 of the Superintendence of Banks and Financial Institutions. An extract thereof and the resolution were published in the Official Journal of June 23, 2007 and registered in the Registry of Commerce for 2007 on page 24,064 under number 17,563 of the aforementioned Curator.

By means of this last amendment, Banco Santander Chile, pursuant to its bylaws and as approved by the Superintendence of Banks and Financial Institutions, may also use the names Banco Santander Santiago or Santander Santiago or Banco Santander or Santander.

Banco Santander Spain controls Banco Santander-Chile through its share in Teatinos Siglo XXI Inversiones Ltda. and Santander-Chile Holding S.A., which are subsidiaries controlled by Banco Santander Spain. As of June 30, 2011 Banco Santander Spain owns or controls directly and indirectly 99.5% of the Santander-Chile Holding S.A. and 100% of Teatinos Siglo XXI Inversiones Ltda. This grants Banco Santander Spain control over 75% of the Bank’s shares.

a)	Basis of preparation

These Consolidated Financial Statements have been prepared in accordance with the Compendium of Accounting Standards issued by the Superintendency of Banks and Financial Institutions (SBIF), a regulatory agency. Article 15 of the General Banking Law states that, in accordance with the laws, banks must use the accounting criteria issued by the Superintendence and that, in any situation not provided for therein, provided it is not contrary to its instructions, must abide by the generally accepted accounting principles, which correspond with the technical standards issued by the Colegio de Contadores de Chile AG (Association of Chilean Accountants), which coincide with the International Financial Reporting Standards(IFRS) adopted by the International Accounting Standard Board (IASB). In the event of discrepancies between the accounting principles and the accounting criteria issued by the SBIF (Compendium of Accounting Standard), the latter will prevail.

b)	Basis of preparation for the Consolidated Interim Financial Statements

The Consolidated Interim Financial Statements include the preparation of separate (individual) financial statements of the Bank and the companies that participate in the consolidation of June 30, 2011 and 2010, and include the adjustments and reclassifications needed to comply with the policies and valuation criteria established by the Compendium of Accounting Standards issued by the SBIF.

Subsidiaries

“Subsidiaries” are defined as entities over which the Bank has the ability to exercise control, which is generally but not exclusively reflected by the direct or indirect ownership of at least 50% of the investee’s voting rights, or even if this percentage is lower or zero when the Bank is granted control pursuant to agreements with the investee’s shareholders. Control is understood as the power to significantly influence the investee’s financial and operating policies, so as to profit from its activities.

The Interim financial statements of subsidiaries are consolidated with those of the Bank. According to this, all balances and transactions between consolidated corporations will be eliminated through the consolidation process.

In addition, third parties’ shares in the Consolidated Bank’s equity are presented as “Non controlling interests” in the Interim Consolidated Statement of Financial Position. Their shares in the year’s income are presented under “Non controlling interests” in the Interim Consolidated Statement of Income.

BANCO SANTANDER CHILE AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED INTERIM STATEMENTS OF INCOME

As of June 30, 2011 and 2010, and December 31, 2010

NOTE 01 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

The following companies are considered “Subsidiaries” in which the Bank holds equity and accounts for it through the equity method:

	Percentage share
	As of June 30						As of December 31						As of June 30
Subsidiaries	2011						2010						2010
	Direct %		Indirect %		Total %		Direct %		Indirect %		Total %		Direct %		Indirect %		Total %

Santander Corredora de Seguros Limitada		99.75		0.01		99.76		99.75		0.01		99.76		99.75		0.01		99.76
Santander S.A. Corredores de Bolsa		50.59		0.41		51.00		50.59		0.41		51.00		50.59		0.41		51.00
Santander Asset Management S.A. Administradora General de Fondos		99.96		0.02		99.98		99.96		0.02		99.98		99.96		0.02		99.98
Santander Agente de Valores Limitada (former Santander S.A. Agente de Valores)		99.03		-		99.03		99.03		-		99.03		99.03		-		99.03
Santander S.A. Sociedad Securitizadora		99.64		-		99.64		99.64		-		99.64		99.64		-		99.64
Santander Servicios de Recaudación y Pagos Limitada		99.90		0.10		100.00		99.90		0.10		100.00		99.90		0.10		100.00

Special Purpose Entities

According to IFRS, the Bank must continuously analyze its perimeter of consolidation. The key criterion for such analysis is the degree of control held by the Bank over a given entity, not the percentage of ownership interest in such entity’s equity.

In particular, as set forth by International Accounting Standard 27 “Consolidated and Separate Financial Statements” (IAS 27) and by the Standard Interpretations Committee 12 “Consolidation – Special Purpose Entities” (SIC 12), issued by the IASB, the Bank must determine the existence of Special Purpose Entities (SPEs), which must be included in its perimeter of consolidation. The following are its main characteristics:

·	The SPEs’ activities have essentially been conducted on behalf of the company that presents the Interim Consolidated Financial Statements and in response to its specific business needs.

·	The necessary decision making authority is held to obtain most of the benefits from these entities’ activities, as well as the rights to obtain most of the benefits or other advantages from such entities.

·	The entity essentially retains most of the risks inherent to the ownership or residuals of the SPEs or its assets, for the purpose of obtaining the benefits from its activities.

This assessment is based on methods and procedures which consider the risks and profits retained by the Bank, for which all the relevant factors, including the guarantees furnished or the losses associated with collection of the related assets retained by the Bank, are taken into account. As a consequence of this assessment, the Bank concluded that it exercised control over the following entities, which therefore are part of the consolidation perimeter:

-	Santander Gestión de Recaudación y Cobranza Limitada.

-	Multinegocios S.A.

-	Servicios Administrativos y Financieros Limitada.

-	Fiscalex Limitada.

-	Multiservicios de Negocios Limitada.

-	Bansa Santander S.A.

Associates

Associates are those entities over which the Bank may exercise significant influence but not control or joint control, usually this capacity is manifested by holding 20% or more of the entity’s voting power. Investments in associated entities are accounted for pursuant to the “equity method.”