Catherine Tornel, the new president of Chile's Financial Market Commission (CMF), announced plans to recruit a specialized team this year to validate banks' internal credit risk models under Basel III. The move could free up to $10 billion in capital, boosting lending capacity. She made the announcement at a Clapes UC seminar at UC's main campus.
Catherine Tornel made her public debut as CMF president at the Clapes UC seminar 'Capital markets: major challenges 2026-2030' held at UC's main campus. She revealed that the Ministry of Finance and Budget Directorate approved $100 million to hire a team focused on validating banks' internal credit risk models under Basel III.
Banks currently operate under standard models with a 67% Risk-Weighted Assets (RWA) density, higher than in other Basel III jurisdictions. Internal models could lower it to 53% on average, boosting capital adequacy ratios by 375 basis points. 'Internal models impact the entirety of the bank's assets. Therefore, those savings could indeed lead to greater capacity to grant all types of credits,' she said at a press point.
The process will take time: about two months to assemble the team, after which banks can submit proposals. The Banking Association (Abif) welcomed it: 'It is good news, as it allows progress in closing a relevant gap with the Basel framework.' Experts including PwC's Luis Figueroa and Deloitte's Franco Rizza praised the step, noting it optimizes capital use without loosening regulation.
Tornel described internal models as a long-standing CMF goal, now feasible after implementing Basel III's core requirements.
