Bansander: Banks would help to improve social ins cover

The Chilean mandatory pension system would see affiliation coverage increase if banks were to be allowed into the system, local daily El Mercurio quoted Andrés Castro, CEO at pension fund manager AFP Summa Bansander, as saying. "Banks may contribute to increased coverage. You have to think about the banks' strong networks in Chile, which are much larger than AFPs. Banks also interact frequently and permanently with clients, which is something AFPs do much less, and they also cover sectors AFPs do not, such as independent workers and small and mid-sized firms," he said. Chilean pension fund managers AFPs are the only financial institutions that are allowed by law to offer mandatory pension plans to the public. Banks and other financial institutions such as insurance companies, mutual fund companies and stock brokerages are only allowed to offer voluntary pension plans. The local pension regulator SAFP recently slammed banks' intention to enter the mandatory pension system, but has said it will push for reforms of the AFP system to increase affiliation coverage and competition. Castro considers one of these measures, releasing under concession voluntary groups of affiliates to cut barriers to enter the market, to be "dreadful, as it further concentrates the market because larger AFPs are in better shape and have greater scale economies to compete with others". Out of the six AFPs operating in Chile, three are owned by foreign financial institutions Citigroup (NYSE: C) from the US and BBVA (NYSE: BBV) and Santander (NYSE: STD) from Spain.