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Bankless in Chile

It's a sign of the times when a bank gives up a banking licence to a department store and buys a life insurer. But that's what ING Barings has done in Chile. Focused on corporate finance, ING Barings decided it didn't need a banking licence and approached local retailer Falabella about a deal.

Falabella, one of Chile's largest companies and oldest retailers, didn't have to look too hard at its own business to realize that finance is key. Its own credit card has 1.5 million holders, more than any of the Chilean banks, and a high percentage of revenues comes from consumer finance.

So Falabella shelled out an estimated $28 million for ING's bank including a treasury operation and is awaiting regulatory approval to gain a licence. Technically a licence cannot be sold in Chile but local observers say that the licence's value within that total figure is around $7 million to $10 million. With changes in Chilean banking law to make licences more widely available, the price may be headed lower - the Dutch bank may have sold at the right time.

But was it wise for ING to buy, last December, a life insurer Cruz Blanca now renamed ING Vida? Most banking/insurance tie-ups are founded on the idea that insurance can be distributed through banking channels.

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