What are the potential regulatory or operational risks associated with extending the loyalty program partnership?
Regulatory & operational risk snapshot
Extending the SantanderâLATâŻAirlines âLATAMâŻPassâ partnership deepens the bankâs exposure to a travelâcentric loyalty business that sits at the intersection of banking, consumerâtravel, and dataâservices regulation. The most salient risks are:
| Regulatory | Operational |
|---|---|
| ⢠Consumerâprotection & dataâprivacy rules â Chileâs new âDigital Services Actâ (effectiveâŻ2025) tightens consent, dataâstorage and crossâselling disclosures for financialâtravel loyalty schemes. A breach could trigger fines or force a redesign of the pointsâearning engine. ⢠Airlineâbanking nexus oversight â The Financial Market Commission (CMF) is scrutinising âbankâairlineâ alliances for potential conflicts ofâinterest and antiâmoneyâlaundering (AML) loopholes, especially where travelârelated spend can be used to launder funds. ⢠Crossâborder accounting â LATAM Pass points are a liability on Santanderâs balance sheet; any change in accounting treatment (e.g., IFRSâŻ9 reâclassification) could affect reported earnings and capital ratios. |
⢠Systems integration & scalability â The fiveâyear renewal will likely involve a larger, more complex pointsâprocessing platform. Any ITâglitch or latency in crediting points can erode member confidence and generate operational cost spikes. ⢠Liquidity of the points liability â As the program expands, the âunâredeemed pointsâ balance will rise, increasing the bankâs contingent liability. If redemption rates surge (e.g., postâpandemic travel rebound), cashâflow pressure could materialise. ⢠Partnerâdependency â LATAMâs own financial health (fuelâprice exposure, routeâcapacity constraints) directly impacts the volume of spend that fuels point accruals. A downturn for LATAM would compress the loyalty pipeline and compress Santanderâs ancillaryâincome upside. |
Trading implications
Fundamentals: The partnership underpins Santander Chileâs nonâinterestâbearing income and crossâsell potential, which has historically contributed ~3â4âŻ% of its net profit. However, the regulatory tailwinds in 2025 introduce a ârisk premiumâ that the market may not yet price in. Analysts should model a 0.5â1âŻ% earnings drag from compliance costs and a possible 0.2âŻ%â0.3âŻ% volatility in the pointsâliability balance sheet.
Technical: Santander Chile (BSAC) has been trading in a tight 20âday range (USDâŻ3.85â4.05) since the AugustâŻ11 announcement. A breakout above USDâŻ4.05 with volume could be an early âriskâonâ signal that the market is discounting the regulatory headwinds; a break below USDâŻ3.85 may price in heightened compliance or operational concerns.
Actionable:
- Longâbiased with a modest risk buffer â maintain a core long position but cap exposure at 2â3âŻ% of portfolio, given the upside from loyaltyâprogram cashâflow versus the regulatory drag.
- Protective stop â set a stop just below the recent low (ââŻUSDâŻ3.80) to guard against a sudden regulatory shock (e.g., CMF enforcement action).
- Watchlist triggers â monitor Chilean regulator filings, LATAMâs quarterly traffic reports, and any CMF press releases on âbankâairlineâ alliances. A material fine or a downgrade in LATAMâs credit rating should prompt a defensive trim.
In short, the extended loyalty partnership is a growth catalyst for Santander Chile, but the incremental regulatory and operational exposure warrants a slightly defensive stanceâlong with tight stops and a keen eye on complianceârelated news flow.