ANNUAL REPORT FOR THE FISCAL YEAR ENDING DECEMBER 31, 2007

As filed with the Securities and Exchange Commission on June 30, 2008

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2007

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . .. .

For the transition period from to

Commission file number 001-32305

CORPBANCA

(Exact name of Registrant as specified in its charter)

(Translation of Registrant’s name into English)

Republic of Chile

(Jurisdiction of incorporation or organization)

Rosario Norte 660
Las Condes
Santiago, Chile

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class		Name of each exchange on which registered
American Depositary Shares representing Common Stock Common Stock, no par value*		New York Stock Exchange New York Stock Exchange*

* Not for trading purposes, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None.

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None.

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

	226,909,290,577

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes x No

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in the filing:

o U.S. GAAP

o IFRS

x Other

Indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17 x Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

o Yes o No

CAUTIONARY LANGUAGE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F contains statements that constitute forward-looking statements. These statements appear throughout this Annual Report, including, without limitation, under “Item 3. Key Information—Risk Factors,” “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects” and include statements regarding our current intent, belief or expectations with respect to (1) our asset growth and financing plans, (2) trends affecting our financial condition or results of operations, (3) the impact of competition and regulations, (4) projected capital expenditures and (5) liquidity. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those described in such forward-looking statements included in this Annual Report as a result of various factors (including, without limitation, the actions of competitors, future global economic conditions, market conditions, currency exchange rates and operating and financial risks), many of which are beyond our control. The occurrence of any such factors, not currently expected by us, would significantly alter the results set forth in these statements.

Factors that could cause actual results to differ materially and adversely include, but are not limited to:

· changes in general economic, business or political or other conditions in Chile or changes in general economic or business conditions in Latin America,

· changes in capital markets in general that may affect policies or attitudes towards lending to Chile or Chilean companies or securities issued by Chilean companies,

· the monetary and interest rate policies of the Banco Central de Chile (the Central Bank of Chile), or the Central Bank,

· inflation,

· deflation,

· unemployment,

· unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms,

· unanticipated turbulence in interest rates,

· movements in currency exchange rates,

· movements in equity prices or other rates or prices,

· changes in Chilean and foreign laws and regulations,

· changes in taxes,

· competition, changes in competition and pricing environments,

· our inability to hedge certain risks economically,

· the adequacy of loss allowances or provisions,

· technological changes,

· changes in consumer spending and saving habits,

· successful implementation of new technologies,

· loss of market share,

· changes in, or failure to comply with banking regulations, and

· the factors discussed under “Item 3. Key Information—Risk Factors” in this Annual Report.

You should not place undue reliance on such statements, which speak only as of the date that they were made. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may make in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements after the date of this Annual Report to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

ENFORCEABILITY OF CIVIL LIABILITIES

We are a sociedad anónima (corporation) organized under the laws of the Republic of Chile. Nearly all of our directors or executive officers are not residents of the United States and a substantial portion of our assets are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon such persons or to enforce against them or us in the United States courts, judgment obtained in the United States predicated upon the civil liability provisions of the federal securities laws of the United States.

No treaty exists between the United States and Chile for the reciprocal enforcement of judgments. Chilean courts, however, have enforced final judgments rendered in the United States by virtue of the legal principles of reciprocity and comity, subject to the review in Chile of the United States judgment in order to ascertain whether certain basic principles of due process and public policy have been respected without reviewing the merits of the subject matter of the case. If a U.S. court grants a final judgment in an action based on the civil liability provisions of the federal securities laws of the United States, enforceability of this judgment in Chile will be subject to the obtaining of the relevant “exequatur” (i.e., recognition and enforcement of the foreign judgment) according to Chilean civil procedure law in force at that time, and consequently, subject to the satisfaction of certain factors. Currently, the most important of these factors are the existence of reciprocity, the absence of a conflicting judgment by a Chilean court relating to the same parties and arising from the same facts and circumstances, the Chilean courts’ determination that the U.S. courts had jurisdiction, that service of process was appropriately made on the defendant and that the defendant was afforded a real opportunity to appear before the court and defend its case and that enforcement would not violate Chilean public policy.

If an action is started before Chilean courts, there is doubt as to the enforceability of liabilities based on the U.S. federal securities laws and as to the enforceability in Chilean courts of judgments of United States courts obtained in actions based upon civil liability provisions of the federal securities laws of the United States.

TABLE OF CONTENTS

PART I

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	5
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	5
ITEM 3.	KEY INFORMATION	5
ITEM 4.	INFORMATION ON THE COMPANY	19
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	83
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	112
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	120
ITEM 8.	FINANCIAL INFORMATION	123
ITEM 9.	OFFER AND LISTING DETAILS	124
ITEM 10.	ADDITIONAL INFORMATION	126
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	141
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	156

PART II		156

ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.	156
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	156
ITEM 15.	CONTROLS AND PROCEDURES	156
ITEM 16.	[RESERVED]	158

PART III		160

ITEM 17.	FINANCIAL STATEMENTS	160
ITEM 18.	FINANCIAL STATEMENTS	160
ITEM 19.	EXHIBITS	160

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

We prepare our consolidated financial statements in accordance with generally accepted accounting principles in Chile and regulations of the Chilean Superintendencia de Bancos e Instituciones Financieras, or the Chilean Superintendency of Banks, collectively referred to as Chilean GAAP, which differ in certain respects from generally accepted accounting principles in the United States, or U.S. GAAP. Our consolidated financial statements have been translated into English, certain reclassifications have been made and certain subtotals and clarifying account descriptions have been added in order to present them in accordance with requirements of U.S. Securities Act of 1933, as amended, or the Securities Act, and the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. References to Chilean GAAP in this Annual Report are to Chilean GAAP as supplemented by the applicable rules of the Chilean Superintendency of Banks. See note 27 to our audited consolidated financial statements included herein for a description of the principal differences between Chilean GAAP and U.S. GAAP as they relate to us and our consolidated subsidiaries and a reconciliation to U.S. GAAP of net income for the years ended December 31, 2005, 2006 and 2007 and shareholders’ equity as of and for each of the years ended December 31, 2006 and 2007.

Our audited consolidated financial statements as of December 31, 2006 and 2007 and for each of the three years in the period ended December 31, 2007 are referred to herein as our financial statements. Pursuant to Chilean GAAP, unless otherwise indicated, financial data for all full-year periods through December 31, 2007 included in our audited consolidated financial statements and in the other financial information contained elsewhere in this Annual Report have been expressed in constant Chilean pesos as of December 31, 2007.

In this Annual Report, references to “$,” “US$,” “U.S. dollars” and “dollars” are to United States dollars, references to “pesos” or “Ch$” are to pesos, and references to “UF” are to Unidades de Fomento. The UF is an inflation-indexed, peso-denominated unit that is linked to and adjusted daily to reflect changes in the previous month’s Chilean consumer price index. As of December 31, 2007 one UF equaled US$39.41 and Ch$19,622.66 and as of June 3, 2008, one UF equaled US$41.20 and Ch$20,068.78. See “Item 5. Operating and Financial Review and Prospects.”

This Annual Report contains translations of certain peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the peso amounts actually represent such U.S. dollar amounts, were converted from U.S. dollars at the rate indicated in preparing our financial statements or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, such U.S. dollar amounts have been translated from pesos based on our exchange rate of Ch$497.87 as of December 31, 2007. See “—Exchange Rate Information” below.

Unless otherwise specified, all references in this Annual Report (except in our financial statements) to loans are to loans and financial leases before deduction for allowances for loan losses, and, except as otherwise specified, all market share data presented herein are based on information published periodically by the Chilean Superintendency of Banks. Non-performing loans include loans which either principal or interest is overdue, and which do not accrue interest. Past due loans include, with respect to any loan, the amount of principal and interest that is 90 days or more overdue, and do not include the installments of such loans that are not overdue or that are less than 90 days overdue, unless legal proceedings have been commenced for the entire outstanding balance according to the terms of the loan. This practice differs from that normally followed in the United States where the amount classified as past due would include the total principal and interest on all loans which have any portion overdue. See “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Classification of Loan Portfolio Based on Borrower’s Payment Performance.”

Certain figures included in this Annual Report and in our financial statements have been rounded for ease of presentation. Percentage figures included in this Annual Report have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this Annual Report may vary from those obtained by performing the same calculations using the figures in our financial statements. Certain other amounts that appear in this Annual Report may not sum due to rounding.

In this Annual Report, all macro-economic data related to the Chilean economy is based on information published by the Central Bank. All market share and other data related to the Chilean financial system is based on information published by the Chilean Superintendency of Banks as well as other publicly available information. Information regarding the consolidated risk index of the Chilean financial system as a whole is not available. The Chilean Superintendency of Banks publishes the unconsolidated risk index of the Chilean financial system on a monthly basis.

EXCHANGE RATE INFORMATION

Chile has two currency markets, the Mercado Cambiario Formal, or the Formal Exchange Market, and the Mercado Cambiario Informal, or the Informal Exchange Market. The Central Bank is empowered to determine that certain purchases and sales of foreign currencies must be carried out in the Formal Exchange Market. Pursuant to Central Bank regulations which are currently in effect, all payments, remittances or transfers of foreign currency abroad which are required to be effected through the Formal Exchange Market may be effected with foreign currency obtained outside the Formal Exchange Market. The Formal Exchange Market is comprised of the banks and other entities so authorized by the Central Bank. Current regulations require that the Central Bank be informed of certain transactions and that these transactions be effected through the Formal Exchange Market.

The reference exchange rate for the Formal Exchange Market is reset daily by the Central Bank, taking into account internal and external inflation, and is adjusted daily to reflect variations in parities between the peso and each of the U.S. dollar, the Euro and the Japanese yen. The observed exchange rate for a given date is the average exchange rate of the transactions conducted in the Formal Exchange Market on the immediately preceding banking day, as certified by the Central Bank.

Purchases and sales of foreign currencies which may be effected outside the Formal Exchange Market can be carried out in the Informal Exchange Market. The Informal Exchange Market reflects transactions carried out at informal exchange rates by entities not expressly authorized to operate in the Formal Exchange Market, such as certain foreign exchange houses and travel agencies. There are no limits imposed on the extent to which the rate of exchange in the Informal Exchange Market can fluctuate above or below the observed exchange rate. On December 31, 2007, the average exchange rate in the Informal Exchange Market was approximately the same as the published observed exchange rate for such date of Ch$495.82 per US$1.00. The average exchange rate in the Informal Exchange Market is widely used by the public in Chile. Prior to 2006, Chilean banks used the observed exchange rate as published by the Central Bank for conversion and valuation purposes as specified by the Chilean Superintendency of Banks. In accordance with Circular No. 3,345, during 2006, we began using foreign exchange rates obtained from market information. The method used to estimate the daily exchange rate is as follows:

a. Daily spot rates are obtained from the Datatec system, which contains all daily market foreign currency trading activities.

b. We only consider those transactions which occurred during the time frame of 12:45pm and 1:00pm.

c. The exchange rate is calculated using the simple average of transactions selected.

d. Alternatively, we can substitute the Datatec system with market information obtained from the Santiago Stock Exchange’s OTC trade system.

As of December 31, 2007 the U.S. dollar exchange rate used by us was Ch$497.87 per US$1.00.

The following table sets forth the annual low, high, average and period-end observed exchange rate for U.S. dollars for the periods set forth below, as reported by the Central Bank.

	Daily Observed Exchange Rate Ch$ per US$(1)
	Low(2)		High(2)		Average(3)		Period End

2003	Ch$	593.10	Ch$	758.21	Ch$	691.40	Ch$	599.42
2004	559.21		649.45		609.53		559.83
2005	509.70		592.75		559.77		514.21
2006	511.44		549.63		530.26		534.43
2007	493.14		548.67		522.69		495.82
December 2007	495.49		506.79		499.28		495.82
January 2008	463.58		498.05		480.90		465.30
February 2008	458.02		476.44		467.22		458.02
March 2008	431.22		454.94		442.94		439.09
April 2008	433.98		459.16		446.43		459.16
May 2008	461.49		479.66		470.10		479.66
June 2008(4)	479.54		483.17		481.36		483.17

(1) Nominal figures.

(2) Exchange rates are the actual low and high, on a day-by-day basis for each period.

(3) The average of the exchange rates on the last day of each month during the period.

(4) Through June 3, 2008.

The following table sets forth the annual low, high, average and period-end exchange rate for U.S. dollars for the periods under our new policy to calculate our own exchange rate:

	Bank’s Exchange Rate Ch$ per US$1
	Low(2)		High(2)		Average(3)		Period End

2006	Ch$	514.21	Ch$	547.31	Ch$	529.10	Ch$	532.07
2007	493.07		548.09		522.57		497.87
December 2007	495.24		507.04		498.73		497.87
January 2008	465.23		497.93		478.92		465.47
February 2008	454.78		476.44		466.74		454.78
March 2008	431.40		454.45		442.03		435.81
April 2008	434.06		462.82		447.46		462.82
May 2008	465.62		481.57		471.46		479.83
June 2008(4)	484.73		487.07		485.90		487.07

(1) Nominal figures.

(2) Exchange rates are the actual low and high, on a day-by-day basis for each period.

(3) The average of the exchange rates on the last day of each month during the period.

(4) Through June 3, 2008.

A. SELECTED FINANCIAL DATA

The following tables present our selected financial data as of the dates and for the periods indicated. You should read the following information together with our audited consolidated financial statements, including the notes thereto, included in this Annual Report and the information set forth in “Item 5. Operating and Financial Review and Prospects.”

The selected consolidated balance sheet data as of December 31, 2006 and 2007 and the selected consolidated income statement data for each of the three years in the period ended December 31, 2007 appearing herein have been derived from the audited consolidated financial statements for the year ended December 31, 2007 appearing elsewhere in this Annual Report, which have been audited by Deloitte & Touche Sociedad de Auditores y Consultores Ltda., or Deloitte.

Our selected consolidated balance sheet data for each of the three years in the period ended December 31, 2005 and the selected consolidated income statement data for each of the two years in the period ended December 31, 2004 have been derived from the audited consolidated financial statements for the years ended December 31, 2004 and 2005 and have been expressed in constant Chilean pesos as of December 31, 2007. These consolidated financial statements do not appear elsewhere in this Annual Report.

Our financial statements have been prepared in accordance with Chilean GAAP (including the regulations of the Chilean Superintendency of Banks), which differs in certain significant respects from U.S. GAAP. See notes 26 and 27 to our financial statements for a description of the principal differences between Chilean GAAP and U.S. GAAP as they relate to us, including the impact of such differences on our net income and shareholders’ equity. Net income and shareholders’ equity in U.S. GAAP are also included in the selected financial data as a reference.

	As of and for the Year Ended December 31,
	2003			2004			2005			2006			2007			2007
	(in millions of constant Ch$ as of December 31, 2007)(1)															(in thousands of US$) (1) (2)
CONSOLIDATED INCOME STATEMENT DATA

Chilean GAAP
Interest revenue	Ch$	180,989		Ch$	219,592		Ch$	272,669		Ch$	265,858		Ch$	379,096		US$	761,436
Interest expense	(69,659		)	(89,819		)	(142,481		)	(148,874		)	(214,328		)	(430,490		)
Net interest revenue	111,330			129,773			130,188			116,984			164,768			330,946
Provisions for loan losses	(29,744		)	(20,583		)	(15,167		)	(15,751		)	(25,991		)	(52,204		)
Fees and income from services (net)	25,603			21,420			25,411			30,297			36,865			74,045
Other operating income (net)	21,756			4,958			6,705			(4,205		)	(5,144		)	(10,331		)
Other income and expenses (net)	(1,902		)	(2,004		)	(1,179		)	251			(2,103		)	(4,224		)
Operating expenses	(63,650		)	(61,162		)	(64,902		)	(69,848		)	(82,069		)	(164,841		)
Net loss from price-level restatement	(2,606		)	(7,330		)	(11,576		)	(7,527		)	(25,946		)	(52,114		)
Income before income taxes	60,787			65,072			69,480			50,201			60,380			121,277
Income tax expense	(2,417		)	(7,398		)	(11,766		)	(8,203		)	(9,331		)	(18,742		)
Net income	Ch$	58,370		Ch$	57,674		Ch$	57,714		Ch$	41,998		Ch$	51,049		US$	102,535
Net income per share of common stock(6)	0.26			0.25			0.25			0.19			0.22			0.00045
Dividends per share of common stock (3)	0.08			0.12			0.13			0.13			0.10			0.00020
Dividends per ADS (4)	400.00			600.00			650.00			650.00			500.00			1.00
Shares of common stock outstanding (in thousands)	226,909,290.6			226,909,290.6			226,909,290.6			226,909,290.6			226,909,290.6			226,909,290.6

U.S. GAAP
Net interest income (5)	Ch$	108,725		Ch$	117,145		Ch$	118,612		Ch$	109,457		Ch$	138,822		US$	278,832
Provisions for loan losses	(23,839		)	(16,536		)	(12,181		)	(14,416		)	(25,955		)	(52,132		)
Long-term borrowings	497,895			618,832			772,766			849,957			994,094			1,996,694
Net income	64,090			66,614			48,805			44,814			54,511			109,488
Net income per share of common stock (6)	0.28			0.29			0.22			0.20			0.24			0.00048
Net income per ADS (6)	1,400			1,450			1,100			1,000			1,200			2.41
Weighted average ADS outstanding (in millions)	45			45			45			45			45			—

	As of and for the Year Ended December 31,
	2003			2004			2005			2006			2007			2007
	(in millions of constant Ch$ as of December 31, 2007)(1)															(in thousands of US$)(1)(2)
CONSOLIDATED BALANCE SHEET DATA
Chilean GAAP
Cash and due from banks	Ch$	134,244		Ch$	180,177		Ch$	80,724		Ch$	88,258		Ch$	100,083		US$	201,022
Investments	536,043			601,425			461,672			170,276			239,927			481,907
Total loans	2,436,931			2,776,059			3,123,269			3,578,380			4,345,436			8,728,053

Allowances for loan losses	(51,477		)	(47,271		)	(48,617		)	(49,967		)	(55,067		)	(110,605		)
Derivatives	—			—			8,663			4,781			34,055			68,401
Other assets (7)	189,439			126,707			164,676			177,584			168,054			337,547
Total assets	3,245,179			3,637,096			3,790,387			3,969,312			4,832,488			9,706,325
Deposits	1,884,435			2,127,131			2,117,051			2,123,576			2,756,910			5,537,410
Other interest-bearing liabilities	728,612			825,118			920,989			987,967			1,190,628			2,391,443
Derivatives	—			—			584			5,306			34,238			68,769
Shareholders’ equity	394,803			427,597			446,874			465,310			484,674			973,495
U.S. GAAP
Total loans	2,206,824			2,552,524			2,874,858			3,276,220			4,022,854			8,080,129

Allowances for loan losses	(51,477		)	(47,271		)	(48,617		)	(49,967		)	(55,067		)	(110,605		)
Total assets	3,004,702			3,401,808			3,530,048			3,658,849			4,504,210			9,046,960
Shareholders’ equity	358,040			391,478			412,214			430,605			460,304			924,947
SELECTED CONSOLIDATED RATIOS
Profitability and Performance
Net interest margin (8)	4.1		%	4.1		%	3.7		%	3.4		%	4.2		%	—
Return on average total assets (9)	1.6		%	1.5		%	1.2		%	1.1		%	1.2		%	—
Return on average shareholders’ equity (10)	15.8		%	14.6		%	13.7		%	9.4		%	11.6		%	—
Efficiency ratio (consolidated) (11)	40.1		%	39.2		%	40.0		%	48.8		%	41.8		%	—
Dividend payout ratio (12)	50.0		%	50.0		%	50.0		%	75.0		%	50.0		%
Capital
Average shareholders’ equity as a percentage of average total assets	10.2		%	10.1		%	9.1		%	11.2		%	10.5		%	—
Total liabilities as a multiple of shareholders’ equity	7.2			7.5			7.5			7.5			9.0			—
Asset Quality
Allowances for loan losses as a percentage of overdue loans(13)	105.8		%	122.9		%	108.4		%	97.2		%	164.1		%	—
Overdue loans as a percentage of total loans(13)	2.0		%	1.4		%	1.4		%	1.4		%	0.8		%	—
Allowances for loan losses as a percentage of total loans	2.1		%	1.7		%	1.6		%	1.4		%	1.3		%	—
Past due loans as a percentage of total loans(14)	1.2		%	0.8		%	0.9		%	0.6		%	0.5		%	—
U.S. GAAP
Profitability and Performance
Net interest margin(15)	4.0		%	3.7		%	3.3		%	3.2		%	3.6		%	—
Return on average total assets(16)	2.4		%	2.1		%	1.4		%	1.2		%	1.3		%	—
Return on average shareholders’ equity(17)	18.7		%	17.8		%	12.1		%	10.6		%	12.2		%	—
Asset Quality
Past due loans as a percentage of total loans(14)	1.2		%	0.8		%	0.9		%	0.6		%	0.5		%	—
OTHER DATA
Inflation rate	1.1		%	2.4		%	3.7		%	2.6		%	7.8		%	—
Revaluation (Devaluation) rate (Ch$/US$)	15.9		%	6.6		%	8.1		%	(3.5		)%	6.4		%	—
Number of employees	1,860			1,952			2,159			2,378			3,105			—
Number of branches and offices	66			63			68			71			84			—

(1) Except per share data, percentages and ratios, share amounts, employee numbers and numbers of branch offices.

(2) Amounts stated in U.S. dollars as of and for the year ended December 31, 2007 have been translated from pesos at our exchange rate of Ch$497.87 per US$1.00 as of December 31, 2007; for figures in US$ see Note 1 t. to our financial statements.

(3) Represents dividends paid in respect of net income earned in the prior fiscal year.

(4) Each ADS represents 5,000 shares of common stock.

(5) Net interest income and total assets on a U.S. GAAP basis have been determined by applying the relevant US GAAP adjustments to net interest income presented in accordance with Article 9 of Regulation S-X; for figures in US$ see notes 26 and 27 to our financial statements.

(6) Net income per share of common stock has been calculated on the basis of the weighted average number of shares outstanding for the period. One ADS equals 5,000 shares of common stock. We do not have outstanding convertible securities and therefore our diluted and undiluted earnings per share are the same.

(7) This line item is comprised primarily of bank premises and equipment, assets received in lieu of payment (repossessed assets), assets to be leased, amounts received under spot foreign exchange transactions, transactions in process, prepaid and deferred expenses, deferred income taxes and goodwill.

(8) Net interest margin is defined as net interest revenue divided by average interest-earning assets.

(9) Return on average total assets is defined as net income divided by average total assets.

(10) Return on average shareholders’ equity is defined as net income divided by average shareholders’ equity.

(11) Operating expenses as a percentage of operating revenue. Operating revenue is the aggregate of net interest revenue, fees and income from service (net) and other operating income (net).

(12) Represents dividends divided by net income.

(13) Overdue loans consist of all non-current loans.

(14) Past due loans include, with respect to any loan, the amount of principal or interest that is 90 days or more overdue, and do not include the installments of such loan that are not overdue or that are less than 90 days overdue, unless legal proceedings have been commenced for the entire outstanding balance according to the terms of the loan. Under U.S. GAAP, non-performing loans would include the total outstanding amount of the loan if any principal or interest payment was 90 days or more past due.

(15) Net interest margin on a U.S. GAAP basis has been determined by applying the relevant U.S. GAAP adjustments to net interest income presented in accordance with Article 9 of Regulation S-X. See Notes 26 and 27 to our financial statements.

(16) Net income divided by average total assets. Average total assets were calculated as an average of the beginning and ending balance for each year, and total assets on a U.S. GAAP basis have been determined by applying the relevant U.S. GAAP adjustments to shareholders’ equity. See notes 26 and 27 to our financial statements.

(17) Average shareholders’ equity was calculated as an average of the beginning and ending balance for each year. Shareholders’ equity on a U.S. GAAP basis has been determined by applying the relevant U.S. GAAP adjustments to shareholders’ equity. See notes 26 and 27 to our financial statements.

B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

D. RISK FACTORS

RISKS ASSOCIATED WITH OUR BUSINESS

The growth of our loan portfolio may expose us to increased loan losses.

From December 31, 2003 to December 31, 2007, the compounded annual growth rate of our gross loan portfolio was 19.9% in nominal terms to Ch$4,317,422 million (excluding interbank loans). Our business strategy seeks to grow profitably while increasing the size of our loan portfolio. The growth of our loan portfolio (particularly in the lower-middle to middle income consumer and small and medium-sized corporate business segments) may expose us, in an economic downturn, to a higher level of loan losses and require us to establish proportionately higher levels of provisions for loan losses, which offset the increased income that we can expect to receive as the loan portfolio grows.

Our loan portfolio may not continue to grow at the same rate.

There can be no assurance that in the future our loan portfolio will continue to grow at the same or similar rates as the growth rate that we historically experienced. Average loan growth has, however, remained significant in the last five years. According to the Chilean Superintendency of Banks, from December 31, 2003 to December 31, 2007, the compounded annual growth rate of aggregate amount of loans in the Chilean banking system (on an unconsolidated basis) was 17.9% in nominal terms to Ch$63,331,008 million as of December 31, 2007. A reversal

of the rate of growth of the Chilean economy could adversely affect the rate of growth of our loan portfolio and our risk index and, accordingly, increase our required allowance for loan losses.

Increased competition and industry consolidation may adversely affect the results of our operations.

The Chilean market for financial services is highly competitive. We compete with other Chilean private sector domestic and foreign banks, with BancoEstado (a public-sector bank) and with large department stores that make consumer loans to a large portion of the Chilean population. The lower-middle to middle income segments of the Chilean population and the small and medium-sized corporate segments have become the target markets of several banks, and competition in these segments is likely to increase. As a result, net interest margins in these segments have declined. Although we believe that demand for financial products and services from the lower-middle to middle income consumer market segments and for small and medium-sized companies will continue to grow during the remainder of the decade, our net interest margins may not be maintained at their current levels. We believe that our principal competitors are Banco de Crédito e Inversiones, or BCI, Banco Bilbao Vizcaya Argentaria, Chile S.A., or BBVA, and Scotiabank Sudamericano, but we also face competition from larger banks such as Banco de Chile and Banco Santander Santiago, among others.

We also face competition from non-bank and non-finance competitors with respect to some of our credit products, such as credit cards and consumer loans. Non-bank competition from large department stores has become increasingly significant in the consumer lending sector. Since 2001, three new private sector banks affiliated with Chile’s largest department stores have initiated operations mainly as consumer and medium-sized corporate niche banks. In addition, we face competition from non-bank finance competitors, such as leasing, factoring and automobile finance companies, with respect to loans and credit products, and from mutual funds, pension funds and insurance companies, with respect to savings products and mortgage loans. Banks continue to be the main suppliers of leasing, factoring and mutual funds in Chile, and the insurance sales business has seen rapid growth. Nevertheless, non-banking competition, especially department stores, may be able to engage in some types of advertising and promotion in which, by virtue of Chilean banking rules and regulations, we are prohibited from engaging.

The increase in competition within the Chilean banking industry in recent years has led to, among other things, consolidation in the industry. In 2002 Banco Santiago and Banco Santander-Chile, the then second and third largest private banks in Chile, respectively, merged to become Chile’s largest bank. In 2002, Banco de Chile and Banco de A. Edwards, then the third and fifth largest private banks in Chile respectively, merged to become the second largest Chilean bank. In 2004, BCI purchased 99.9% of the shares of Banco Conosur, becoming the third largest private bank in Chile. In 2007, Scotiabank Sudamericano acquired 100% of Banco Desarrollo and in January 2008, Banco de Chile and Citibank Chile were authorized to merge operations. Consolidation, which can result in the creation of larger and stronger competitors, may adversely affect our financial condition and results of operations by decreasing the net interest margins we are able to generate and increasing our costs of operation.

Our exposure to individuals and small and medium-sized businesses could lead to higher levels of past due loans and subsequent loan losses.

A substantial number of our customers consists of individuals and small and medium-sized companies (those with annual sales between Ch$600 million and Ch$5,999 million). As part of our business strategy, we seek to increase lending and other services to small and medium-sized companies and individuals. Our business results relating to our individual and small and medium-sized company customers are, however, more likely to be adversely affected by downturns in the Chilean economy, including increases in unemployment, than our business from large corporations and high-income individuals. For example, unemployment directly affects the capacity of individuals to obtain and repay consumer loans. Consequently, in the future we may experience higher levels of past due loans, which could result in higher provisions for loan losses. In 1997, the Chilean Superintendency of Banks increased the level of provisions required for consumer loans (including loans to high income individuals) due to concerns regarding the levels of consumer indebtedness and vulnerability of the banking sector in an economic downturn and in 2004 the Chilean Superintendency of Banks issued new regulations concerning how loans are categorized for purposes of assigning provisions. There can be no assurance that the levels of past due loans and subsequent loan losses will not be materially higher in the future.

Our results of operations are affected by interest rate volatility.

Our results of operations depend to a great extent on our net interest revenue. In 2005, 2006 and 2007, our ratio of net interest revenue to total operating revenues was 80.2%, 81.8% and 83.9%, respectively. Changes in market interest rates could affect the interest rates earned on our interest-earning assets differently from the interest rates paid on our interest-bearing liabilities leading to a reduction in our net interest revenue. Interest rates are highly sensitive to many factors beyond our control, including the reserve policies of the Central Bank, deregulation of the financial sector in Chile, domestic and international economic and political conditions and other factors. Over the period from December 31, 1998 to December 31, 2007, yields on the Chilean government’s 90-day note as reported on those dates moved from 13.49% to 6.15%, with a high of 13.59% in April 1999 and a low of 1.31% in 2004. This benchmark rate began to rise in the latter part of 2005 and through 2006 and 2007, reaching a high of 5.21% and a low of 4.39% in 2006 and a high of 6.15% and a low of 4.61% in 2007. Between January 1, 2008 and May 31, 2008, this rate reached a high of 6.68% and a low of 6.50%. In the latter part of 2005 and the first half of 2006, we liquidated a significant portion of our investment portfolio in order to avoid substantial mark-to-market losses relating to our investments in Chilean government and Central Bank bonds, the value of which decreased as interest rates increased. Any volatility in interest rates could adversely affect our business, our future financial performance and the price of our securities.

We may experience operational problems or errors.

We, like all large financial institutions, are exposed to many types of operational risks, including the risk of fraud by employees and outsiders, failure to obtain proper authorizations, failure to properly document transactions, equipment failures and errors by employees. Although we maintain a system of operational controls, there can be no assurances that operational problems or errors will not occur and that their occurrence will not have a material adverse impact on our business, financial condition and results of operations.

RISKS RELATING TO CHILE

Our growth and profitability depend on the level of economic activity in Chile and other emerging markets.

A substantial amount of our loans are to borrowers doing business in Chile. Accordingly, the recoverability of these loans in particular, our ability to increase the amount of loans outstanding and our results of operations and financial condition in general, are dependent to a significant extent on the level of economic activity in Chile. The Chilean economy has been influenced, to varying degrees, by economic conditions in other emerging market countries. Changes in Chilean economic growth in the future or future developments in or affecting the Chilean economy, including further consequences of economic difficulties in Brazil, Argentina and other emerging markets or a deceleration in the economic growth of Asian or other developed nations to which Chile exports a majority of its goods, could materially and adversely affect our business, financial condition or results of operations.

According to data published by the Central Bank, the Chilean economy grew at a rate of 5.7%, 4.0% and 5.1% in 2005, 2006, and 2007, respectively. Historically, lower economic growth has adversely affected the overall asset quality of the Chilean banking system and that of our loan portfolio. Below is a detail of the deteriorations and improvements of the unconsolidated risk index of the banks comprising the Chilean financial system according to information published by the Chilean Superintendency of Banks:

Year	Risk Index
December 31, 2003	1.82	%
December 31, 2004	1.99	%
December 31, 2005	1.61	%
December 31, 2006	1.48	%
December 31, 2007	1.58	%

See “Item 4. Information of the Company—Business Overview—Selected Statistical Information—Analysis of Our Loan Classification—Risk Index” for a definition of “risk index.” Our results of operations and financial condition could also be affected by changes in economic or other policies of the Chilean government, which has exercised and continues to exercise a substantial influence over many aspects of the private sector, or other political or economic developments in Chile.

Although economic conditions are different in each country, investors’ reactions to developments in one country may affect the securities of issuers in other countries, including Chile. For instance, the devaluation of the Mexican peso in December 1994 set off an economic crisis in Mexico that negatively affected the market value of securities in many countries throughout Latin America. The crisis in the Asian markets, beginning in July 1997, resulted in sharp devaluations of other Asian currencies and negatively affected markets throughout Asia, as well as many markets in Latin America, including Chile. Similar adverse consequences resulted from the 1998 crisis in Russia and the devaluation of the Brazilian real in 1999. In part due to the Asian and Russian crises, the Chilean stock market declined significantly in 1998 to levels equivalent to 1994.

Economic problems in Argentina and Brazil may have an adverse effect on the Chilean economy and on our results of operations and the share price of our ADSs and shares.

We are directly exposed to risks related to the weakness and volatility of the economic and political situation in Latin America, especially in Argentina and Brazil. If Argentina’s economic environment significantly deteriorates or does not improve, the economy in Chile, as both a neighboring country and a trading partner, could also be affected and could experience slower growth than in recent years. The recent cuts in gas exports from Argentina to Chile could also adversely affect economic growth in Chile. Our business could be affected by an economic downturn in Brazil. This could result in the need for us to increase our allowances for loan losses, thus affecting our financial results, our results of operations and the price of our securities. The crises and political uncertainties in other Latin American countries could also have an adverse effect on Chile, the price of our securities or our business.

Deceleration of economic growth in Asia and other developed nations may have an adverse effect on the Chilean economy and on our results of operations and the share price of our ADSs and shares.

We are directly exposed to risks related to the weakness and volatility of the economic and political situation in Asia and other developed nations, including the 2007 credit crunch and economic world crisis. If these nations’ economic environments deteriorate, the economy in Chile could also be affected and could experience slower growth than in recent years. This could result in the need for us to increase our allowances for loan losses, thus affecting our financial results, our results of operations and the price of our securities. The crises and political uncertainties in Asian nations or other developed countries could also have an adverse effect on Chile, the price of our securities or our business.

Currency fluctuations could adversely affect our financial condition and results of operations and the value of our shares and ADSs.

The Chilean government’s economic policies and any future changes in the value of the peso against the U.S. dollar could affect the dollar value of our securities. The peso has been subject to significant devaluations in the past and could be subject to similar fluctuations in the future. At December 31, 2003, 2004, and 2005 the value of the peso in relation to the U.S. dollar appreciated in value when compared to the prior year by approximately 15.9%, 6.6% and 8.1%, respectively. In 2006 the peso depreciated against the U.S. dollar by 3.5% as compared to 2005 and in 2007 appreciated in value by 6.4% as compared to 2006.

Our results of operations may be affected by fluctuations in exchange rates between the peso and the dollar despite our policy and Chilean regulations relating to the general avoidance of material exchange rate gaps. Entering into forward exchange transactions enables us to reduce the negative impact of material gaps between the balances of our foreign currency-denominated assets and liabilities. As of December 31, 2006 and 2007, the gap between foreign currency denominated assets and foreign currency denominated liabilities, including forward contracts, was Ch$423 million, and Ch$(432) million, respectively.

We may decide to change our policy regarding exchange rate gaps. Regulations that limit such gaps may also be amended or eliminated. Greater exchange rate gaps will increase our exposure to the devaluation of the peso, and any such devaluation may impair our capacity to service our foreign-currency obligations and may, therefore, materially and adversely affect our financial condition and results of operations. Notwithstanding the existence of general policies and regulations that limit material exchange rate gaps, the economic policies of the Chilean government and any future fluctuations of the peso against the dollar could affect our financial condition and results of operations.

Trading transactions in Chile of the shares of common stock underlying our ADSs are denominated in pesos. Cash distributions with respect to our shares of common stock are received in pesos by the depositary, which then converts such amounts to U.S. dollars at the then-prevailing exchange rate for the purpose of making payments in respect of our ADSs. If the value of the peso falls relative to the U.S. dollar, the dollar value of our ADSs and any distributions to be received from the depositary will be reduced. In addition, the depositary will incur customary currency conversion costs (to be borne by the holders of our ADSs) in connection with the conversion and subsequent distribution of dividends or other payments.

Inflation could adversely affect our financial condition and results of operations.

Although Chilean inflation has moderated in recent years, Chile has experienced high levels of inflation in the past. High levels of inflation in Chile could adversely affect the Chilean economy and have an adverse effect on our results of operations and, indirectly, the value of our securities. The following table shows the annual rate of inflation (as measured by changes in the Chilean Consumer Price Index, or CPI, and as reported by the Chilean Instituto Nacional de Estadísticas, or the Chilean National Institute of Statistics, during the last five years ended December 31, 2007 and through May 31, 2008.

Year	Inflation (CPI) (in percentages)
2003	1.1	%
2004	2.4
2005	3.7
2006	2.6
2007	7.8
2008 (through May 31, 2008)	2.8

Source: Chilean National Institute of Statistics.

There can be no assurance that our operating results will not be adversely affected by changing levels of inflation, or that Chilean inflation will not change significantly from the current level.

Banking regulations may adversely affect our financial condition and results of operations.

We are subject to regulation by the Chilean Superintendency of Banks. In addition, we are subject to regulation by the Central Bank with regard to certain matters, including interest rates and foreign exchange.

Pursuant to the Chilean Ley General de Bancos, Decreto con Fuerza de Ley No. 3 de 1997, or the General Banking Law, all Chilean banks, subject to the approval of the Chilean Superintendency of Banks, may engage in certain businesses other than commercial banking depending on the risk associated with such business and the financial strength of the bank. Such additional businesses include securities brokerage, asset management, securitization, insurance brokerage, leasing, factoring, financial advisory, custody and transportation of securities, loan collection and financial services. The General Banking Law also applies to the Chilean banking system a modified version of the capital adequacy guidelines issued by the Basle Committee on Banking Regulation and Supervisory Practices and limits the discretion of the Chilean Superintendency of Banks to deny new banking licenses. There can be no assurance that regulators will not in the future impose more restrictive limitations on the activities of banks, including us, than those currently in effect. Any change in applicable banking regulations could have a material adverse effect on our financial condition or results of operations.

Historically, Chilean banks have not paid interest on amounts deposited in checking accounts. However, effective June 1, 2002, the Central Bank allowed banks to pay interest on checking accounts. Currently, there are no applicable restrictions on the interest that may be paid on checking accounts. If competition or other factors lead us to pay interest on checking accounts, to relax the conditions under which we pay interest or to increase the number of checking accounts on which we pay interest, there may be a material adverse effect on our financial condition or results of operations.

Chile has different corporate disclosure and accounting standards than those you may be familiar with in the United States.

The accounting, financial reporting and securities disclosure requirements in Chile differ from those in the United States. Accordingly, the information about us available to you will not be the same as the information available to shareholders of a U.S. company.

Chilean financial statements and reported earnings generally differ from those reported based on U.S. accounting and reporting standards. See “Item 5. Operating and Financial Review and Prospects—Operating Results—Chilean and U.S. GAAP Reconciliation” and note 27 to our financial statements for a description of the principal differences between Chilean GAAP and U.S. GAAP as such differences relate to us, and a reconciliation to U.S. GAAP of our shareholders’ equity and net income as of and for each of the years ended December 31, 2006 and 2007.

As a regulated financial institution, we are required to submit to the Chilean Superintendency of Banks unaudited unconsolidated balance sheets and income statements, excluding any related footnote disclosure, prepared in accordance with Chilean GAAP and the rules of the Chilean Superintendency of Banks on a monthly basis. Beginning in 2008, we are required to submit both unaudited unconsolidated and consolidated balance sheets and income statements, excluding any related footnote disclosure, prepared in accordance with Chilean GAAP and the rules of the Chilean Superintendency of Banks on a monthly basis. The Chilean Superintendency of Banks also makes summary financial information available within three weeks of receipt. Such disclosure differs in a number of significant respects from information generally available in the United States with respect to U.S. financial institutions.

The securities laws of Chile, which govern open, or publicly listed, companies such as ours, have as a principal objective promoting disclosure of all material corporate information to the public. Chilean disclosure requirements, however, differ from those in the United States in some important respects. In addition, although Chilean law imposes restrictions on insider trading and price manipulation, applicable Chilean laws are different from those in the United States and in certain respects the Chilean securities markets are not as highly regulated and supervised as the U.S. securities markets.

Our status as a foreign private issuer allows us to follow alternate standards to the corporate governance standards of the New York Stock Exchange, limiting the protections afforded to investors.

We are a “foreign private issuer” within the meaning of the New York Stock Exchange corporate governance standards. Under the New York Stock Exchange rules, a foreign private issuer may elect to comply with the practice of its home country and not to comply with certain New York Stock Exchange corporate governance requirements applicable to U.S. companies with securities listed on the exchange. We currently follow Chilean practice concerning corporate governance and intend to continue to do so. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all New York Stock Exchange corporate governance requirements. See “Item 6. Directors, Senior Management and Employees—Board Practices—Comparative Summary of Differences in Corporate Governance Standards” for a comparison of the corporate governance standards of the New York Stock Exchange and Chilean practice.

Chile imposes controls on foreign investment and repatriation of investments that may affect your investment in, and earnings from, our ADSs.

Equity investments in Chile by persons who are not Chilean residents have generally been subject to various exchange control regulations which restrict the repatriation of the investments and earnings therefrom. In April 2001, the Central Bank eliminated the regulations that affected foreign investors except that investors are still

required to provide the Central Bank with information related to equity investments and conduct such operations within the Formal Exchange Market. See “Item 10. Additional Information—Exchange Controls” for a discussion of the types of information required to be provided.

Owners of ADSs are entitled to receive dividends on the underlying shares to the same extent as the holders of shares. Dividends received by holders of ADSs will be converted into U.S. dollars and distributed net of foreign currency exchange fees and fees of the depositary and will be subject to Chilean withholding tax, currently imposed at a rate of 35.0% (subject to credits in certain cases). If for any reason, including changes in Chilean laws or regulations, the depositary were unable to convert pesos to U.S. dollars, investors may receive dividends and other distributions, if any, in pesos.

Additional Chilean restrictions applicable to holders of our ADSs, the disposition of the shares underlying them or the repatriation of the proceeds from such disposition or the payment of dividends could be imposed in the future and we cannot advise you as to the duration or impact of such restrictions if imposed.

RISKS RELATING TO OUR ADSs

There may be a lack of liquidity and market for our shares and ADSs.

A lack of liquidity in the markets may develop for our ADSs, which would negatively affect the ability of the holders to sell our ADSs or the price at which holders of our ADSs will be able to sell them. Future trading prices of our ADSs will depend on many factors including, among other things, prevailing interest rates, our operating results and the market for similar securities.

Our common stock underlying the ADSs is listed and traded on the Santiago Stock Exchange and the Chilean Electronic Exchange, although the trading market for the common stock is small by international standards. As of June 6, 2008, we had 221,236,558,313 shares of common stock outstanding and 5,672,732,264 shares in our custody. The Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. In addition, according to Article 14 of the Ley de Mercado de Valores, Ley No. 18,045, or the Chilean Securities Market Law, the Superintendencia de Valores y Seguros, or the Chilean Superintendency of Securities and Insurance, may suspend the offer, quotation or trading of shares of any company listed on the Chilean stock exchanges for up to 30 days if, in its opinion, such suspension is necessary to protect investors or is justified for reasons of public interest. Such suspension may be extended for up to 120 days. If, at the expiration of the extension, the circumstances giving rise to the original suspension have not changed, the Chilean Superintendency of Securities and Insurance will then cancel the relevant listing in the registry of securities. Furthermore, the Santiago Stock Exchange may inquire as to any movement in the price of any securities in excess of 10% and suspend trading in such securities for a day if it is deemed necessary. These and other factors may substantially limit your ability to sell the common stock underlying your ADSs at a price and time at which you wish to do so.

There can be no assurance that any liquid trading market for our common stock in Chile will continue. Approximately 36.5% of our outstanding common stock was held by the public as of June 6, 2008. A limited trading market in general and our concentrated ownership in particular may impair the ability of an ADS holder to sell in the Chilean market shares of common stock obtained upon withdrawal of such shares from the ADR facility in the amount and at the price and time such holder desires, and could increase the volatility of the price of the ADSs.

Certain actions by our principal shareholder may have an adverse effect on the future market price of our ADSs and shares.

The individual controller of Corp Group Banking S.A. is Mr. Alvaro Saieh Bendeck. As of June 6, 2008, together with his family, Mr. Saieh Bendeck maintains in an indirect ownership of 59.11% of this company. In addition, Mr. Alvaro Saieh Bendeck with his spouse are indirect holders of 100% of the ownership rights of Compañía Inmobiliaria y de Inversiones Saga S.A. The sale or disposition by Mr. Saieh Bendeck of our shares or ADSs that he indirectly owns, or the perception in the marketplace that such a sale or disposition may occur, may adversely affect the trading price of our shares on the Santiago Stock Exchange and, consequently, the market price of the ADSs.

You may be unable to exercise preemptive rights.

The Ley Sobre Sociedades Anónimas, Ley No. 18,046 and the Reglamento de Sociedades Anónimas, which we refer to collectively as the Chilean Corporations Law, and applicable regulations require that whenever we issue new common stock for cash, we grant preemptive rights to all of our shareholders (including holders of ADSs), giving them the right to purchase a sufficient number of shares to maintain their existing ownership percentage. Such an offering would not be possible unless a registration statement under the Securities Act were effective with respect to such rights and common stock or an exemption from the registration requirements thereunder were available.

Since we are not obligated to file a registration statement with respect to such rights and the common stock, you may not be able to exercise your preemptive rights. If a registration statement is not filed and an applicable exemption is not available, the depositary will attempt to sell such holders’ preemptive rights and distribute the proceeds thereof, after deducting its expenses and fees, if a premium can be recognized over the cost of any such sale.

You may have fewer and less well defined shareholders’ rights than with shares of a company in the United States.

Our corporate affairs are governed by our estatutos, or by-laws, and the laws of Chile. Under such laws, our shareholders may have fewer or less well-defined rights than they might have as shareholders of a corporation incorporated in a U.S. jurisdiction. For example, under legislation applicable to Chilean banks, our shareholders would not be entitled to appraisal rights in the event of a merger or other business combination undertaken by us.

Holders of ADSs are not entitled to attend shareholders’ meetings, and they may only vote through the depositary.

Under Chilean law, a shareholder is required to be registered in our shareholders’ registry at least five business days before a shareholders’ meeting in order to vote at such meeting. A holder of ADSs will not be able to meet this requirement and accordingly is not entitled to vote at shareholders’ meetings because the shares underlying the ADSs will be registered in the name of the depositary. While a holder of ADSs is entitled to instruct the depositary as to how to vote the shares represented by ADSs in accordance with the procedures provided for in the deposit agreement, a holder of ADSs will not be able to vote its shares directly at a shareholders’ meeting or to appoint a proxy to do so. In certain instances, a discretionary proxy may vote our shares underlying the ADSs if a holder of ADSs does not instruct the depositary with respect to voting.

It may be difficult to enforce civil liabilities against us or our directors, officers and controlling persons.

We are organized under the laws of Chile, and nearly all of our directors, officers and controlling persons reside outside the United States. In addition, all or a substantial portion of our assets are located in Chile. As a result, it may be difficult for investors to effect service of process within the United States on such persons or to enforce judgments against them, including in any action based on civil liabilities under the U.S. federal securities laws. There is doubt as to the enforceability against such persons in Chile, whether in original actions or in actions to enforce judgments of U.S. courts, of liabilities based solely on the U.S. federal securities laws.

In order for ADS holders to enforce, in Chilean courts, judgments obtained in the U.S. courts against us or our directors and executive officers based on civil liability provisions of the U.S. federal securities laws, an exequatur (i.e., recognition and enforcement of the foreign judgment) must be obtained; provided, however, that a U.S. court granted a final judgment in the action based on the civil liability provisions of U.S. federal securities laws. Such exequatur shall be obtained in accordance with Chilean civil procedure law currently in force, and consequently, subject to the satisfaction of certain factors. The most important of these factors are the existence of reciprocity treaties between the countries, the absence of a conflicting judgment by a Chilean court relating to the same parties and arising from the same facts and circumstances and the Chilean courts’ determination that the U.S. courts had jurisdiction, that process was appropriately served on the defendant, that the enforcement is in full force in the foreign country and that enforcement would not violate Chilean public policy. Failure to satisfy any of such requirements may result in non-enforcement of your rights.

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

We are a sociedad anónima (corporation) organized under the laws of the Republic of Chile and licensed by the Chilean Superintendency of Banks to operate as a commercial bank. Our principal executive offices are located at Rosario Norte 660, Las Condes, Santiago, Chile. Our telephone number is 56-2-687-8000 and our website is www.bancocorpbanca.cl. Our agent in the United States is Josef Menajem Rebalski Hasson, located at 845 Third Avenue, 5th Floor, New York, NY 10022-6601. Information set forth on our website does not constitute a part of this Annual Report. CorpBanca and all our subsidiaries are organized under the laws of Chile. The terms “CorpBanca,” “we,” “us” and “our” in this Annual Report refer to CorpBanca together with its subsidiaries unless otherwise specified.

History

CorpBanca is Chile’s oldest currently operating bank. We were founded as Banco de Concepción in 1871 by a group of residents of the City of Concepción, Chile, led by Aníbal Pinto, who would later become President of Chile. In 1971, Banco de Concepción was transferred to a government agency, Corporación de Fomento de la Producción (the Chilean Corporation for the Development of Production, or CORFO). Also in 1971, Banco de Concepción acquired Banco Francés e Italiano in Chile, which provided for the expansion of Banco de Concepción into Santiago. In 1972 and 1975, the bank acquired Banco de Chillán and Banco de Valdivia, respectively. In November 1975, CORFO sold its shares of the bank to private business persons, who took control of the bank in 1976. In 1980 the name of the bank was changed to Banco Concepción. In 1983, control of Banco Concepción was assumed by the Chilean Superintendency of Banks. The bank remained under the control of the Chilean Superintendency of Banks through 1986, when it was acquired by Sociedad Nacional de Minería (the Chilean National Mining Society, or SONAMI). Under SONAMI’s control, Banco Concepción focused on providing financing to small- and medium-sized mining interests, increased its capital and sold a portion of its high-risk portfolio to the Central Bank. Investors led by Mr. Alvaro Saieh Bendeck purchased a majority interest of Banco Concepción from SONAMI in 1996. For over 19 years, Mr. Saieh Bendeck has directed the acquisition, creation and operation of a number of commercial banks, mutual fund companies, insurance companies and other financial entities in Chile and other parts of Latin America.

Following our acquisition in 1996, we began to take significant steps to improve our credit risk policies, increase operating efficiency and expand our operations. These steps included applying stricter provisioning and charge-off standards to our loan portfolio, cost cutting measures and technological improvements. We also changed our name to CorpBanca and hired a management team with substantial experience in the Chilean financial services industry. Several of our senior officers, prior to joining CorpBanca, were employed by Banco Osorno prior to its merger with Banco Santander-Chile in 1996. In addition, we significantly expanded our operations in 1998 through the acquisition of the Consumer Loan Division of Corfinsa (which was formerly a consumer loan division of Banco Sudamericano, currently Scotiabank Sudamericano) and the finance company Financiera Condell S.A. In November 2002, we completed the largest equity capital-raising transaction in Chile in that year, providing us with Ch$111,732 million (approximately US$153 million using the exchange rate that was in effect as of December 31, 2002) in capital to help implement our growth strategies. During this time, we consolidated our information technology systems into a single, integrated platform, Integrated Banking System, or IBS, a central information system that replaced a number of systems, providing us with a single, central electronic database that gives us up-to-date customer information in each of our business lines and calculates net earnings and profitability of each product and client segment.

As a result of the steps we have taken since the 1996 acquisition, we have developed a number of significant competitive strengths that we believe will continue to contribute to our growth potential. These include operating efficiencies, improved asset quality, an experienced management team, and a strong technological infrastructure. From 1996 to 2007, we were one of the fastest-growing banks in Chile in terms of loan portfolio size. In addition, our asset quality, as reflected by our risk index and our risk classification by the Chilean Superintendency of Banks, is comparable to that of our principal competitors, and our adequate capitalization places us in a strong position among Chilean banks in terms of ability to fund growth, especially with the placement of

subordinated bonds. In recent years, our cost of funding has decreased as a result of improvements in our ratings. We believe that these strengths position us well for continued growth in the Chilean financial services industry.

As of December 31, 2007, our gross loan portfolio amounted to Ch$4,317,422 million (excluding interbank loans), as compared to Ch$2,088,620 million as of December 31, 2003, representing a compounded annual growth rate of 19.9% in nominal terms (15.4% in real terms). During the past years, our consolidated efficiency ratio (operating expenses as a percentage of operating revenue which is the aggregate of net interest revenue, net fees and income from services and net other operating income) was 40.0%, 48.8%, and 41.8% in 2005, 2006, and 2007, respectively. These ratios are a significant improvement over our unconsolidated efficiency ratio of 81.3% for 1995 (when we were not required to present consolidated financial statements). In addition, during the period from 1995 through 2007, our return on average total assets increased from 0.5% to 1.2% as of December 31, 2007.

As of December 31, 2007, we had total assets of Ch$4,832,488 million (approximately US$9,706 million) and shareholders’ equity (excluding net income for the year to date) of Ch$433,625 million (approximately US$871 million). Our net income for 2007 was Ch$51,049 million (approximately US$103 million), our return on average total assets was 1.2% and our return on average shareholders’ equity was 11.6%.

Capital Expenditures

The following table reflects our capital expenditures in each of the three years ended December 31, 2005, 2006 and 2007:

	For the Year Ended December 31,
	2005		2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Land and buildings	Ch$	335	Ch$	313	Ch$	—
Machinery and equipment	100		1,053		1,446
Furniture and fixtures	1,384		1,696		1,452
Vehicle	59		—		—
Other	579		287		144
Total	Ch$	2,457	Ch$	3,349	Ch$	3,042

As of May 31 2008, capital expenditures totaled Ch$614 million which was mainly due to the purchase of telecommunications, computer equipment and software. Capital expenditures are financed through our own funds.

Strategy

Our primary business objectives include enhancing our market position in the Chilean financial services industry in terms of profitability, market share, service coverage and by providing high quality financial products and services through efficient distribution channels to our customer base. We intend to achieve these objectives through the following strategies:

Continue to grow our operations profitably

We seek to achieve organic growth by offering competitive products and services in all of our lines of business. Our capital structure currently provides us with a strong basis upon which to grow our loan portfolio and expand our operations and branch network. We believe that our strong franchise in the retail banking segment offers us the potential for significant growth in our loan portfolio. We are also focusing our marketing efforts on potential clients among small and medium-sized companies, large corporate clients and private banking customers. In addition, we may seek to expand through strategic acquisitions over the time.

Capitalize on customer loyalty through cross-selling

We intend to increase our market share and profitability by continuing to cross-sell services and products to our existing clients. We have instituted processes that facilitate our ability to offer additional financial services to

our clients, with an emphasis on increasing our revenues obtained from fees for services. For example, we aim to increase our portfolio of mortgage loans by cross-selling mortgage products to our banking clients. In addition, we cross-sell loan products to our checking and savings account customers that are tailored to their individual needs and financial situation. We plan to continue these and other cross-selling efforts.

Actively manage risk exposure

We have a dedicated risk management team that focuses on monitoring risks across all areas of our business. Our Commercial Risk, Companies Risk, and Risk Divisions participate actively in the establishment of credit policies, approvals, monitoring, collections, and operational risk associated with our business. Our Risk Committee meets on a weekly basis to review, approve or reject proposed loans. We intend to continue to maintain what we believe to be conservative credit approval standards and reserve policies, enabling us to minimize the risk of ultimate loss. As of December 31, 2007, we had allowances for loan losses of Ch$55,067 million, representing 1.3% of total loans, charge-offs for 2007 of Ch$27,124 million, representing 0.7% of average loans for the period, and direct charge-offs for 2007 of Ch$367 million, representing 0.01% of average loans for 2007.

Increase operating efficiency through technological advances

We seek to increase operating efficiency by continuing to reduce costs, broadening our array of distribution channels and enhancing our distribution network through the adoption of cost-saving technologies. We continue to update our branch operations to allow for an increased level of customer “self-help.” We are also working to increase use of internet banking by our customers. Currently, our customers are able to obtain account information, make bill payments, transfer funds and perform other transactions through our internet site. We have implemented a central information system that provides us with a single, central electronic database that gives us up-to-date customer information in each of our business lines and calculates net earnings and profitability of each product and client segment. This system has resulted in additional cost savings. Furthermore, we have implemented a management information system, or MIS. Through this tool we are able assess the profitability of our customer relationships by analyzing and monitoring our customers, products, branches and divisions individually or as a whole. We believe that these tools along with other technological advances will continue to improve our cost structure by minimizing the number of transactions that are initiated through our traditional branch network while at the same time responding to our customers’ evolving needs.

Focus on building customer satisfaction

The quality of service that we provide our customers is key to our growth strategy. This means that we are not only focused on gaining new customers but on strengthening and establishing long term mutual relationships. This requires that we identify and understand the needs of our clients and in turn measure their satisfaction, develop new processes and technological solutions to provide them with an excellent customer experience.

Ownership Structure

The following diagram shows our ownership structure as of June 6, 2008:

Share Repurchase Program

On April 15, 2008, at an extraordinary shareholders’ meeting, our shareholders approved a program for CorpBanca to purchase shares issued by us, or the Share Repurchase Program, to be purchased in the local Chilean market through one or more tender offers in accordance with article 198-5 of the Securities Market Law. The purpose of the Share Repurchase Program is to invest and trade our own shares depending on share price fluctuations experienced throughout the duration of the Program. The main terms and conditions of the Share Repurchase Program are set forth as follows:

· The maximum percentage of shares to be repurchased will be equivalent to 5% of the shares issued and paid and outstanding, or up to 11,345,464,528 shares. Shares may only be repurchased for up to the amount of retained earnings.

· The minimum repurchase price to be paid for the shares will be Ch$2.90 per share and the maximum repurchase price will be Ch$3.05 per share.

· The Share Repurchase Program will have a term of three years beginning on April 15, 2008.

· Shares repurchased must be sold within 24 months of acquisition. Any shares not resold during this time frame will be cancelled, resulting in a reduction of paid-in capital.

· If shares are resold, shareholders have a preemptive right to acquire the repurchased shares.

· Repurchased shares, although registered in our name, do not have voting or dividend rights.

On April 22, 2008, our Board of Directors, acting as authorized by our shareholders at the extraordinary shareholders’ meeting held on April 15, 2008, agreed to the following:

· To set the repurchase price of the shares at Ch$3.03 per share.

· That the number of shares to be offered in the Share Repurchase Program will be 5,672,732,264 shares, which represent 2.5% of our total issued and outstanding shares.

· The share acquisition process will be carried out in accordance with the terms and conditions approved by the Shareholders at the extraordinary shareholders’ meeting through one or more tender offers (Ofertas Públicas de Adquisicion de Acciones) in accordance with article 198-5 of the Securities Market Law, and Circular No. 1,514 of the Superintendency of Securities and Insurance and applicable law in the Securities Exchange of the Santiago Stock Exchange, through the System of Firm Block Offers (Sistema de Ofertas a Firme en Bloque).

· The offer commenced on April 30, 2008, for a period of 30 days.

· The tender offer expired on May 29, 2008, and 6,849,927,252 shares were tendered.

· As acceptance orders were received for more shares than the number of shares offered to be purchased, in accordance with the conditions of the offer, a pro rata factor of 0.828144892 was applied.

· The total number of shares repurchased and held as treasury stock was 5,672,732,264, reducing our total shares outstanding to 221,236,558,313.

Transition to International Financial Reporting Standards (IFRS)

The Chilean Superintendency of Banks, along with other agencies in Chile, agreed to implement IFRS to internationalize the reporting standards of public companies. The strategic plan for the Chilean Superintendency of Banks entails applying the new accounting standards for the banking industry beginning January 1, 2009.

In order to ensure the stability of the financial system and to consider certain peculiarities in relation to current laws or regulations, the Chilean Superintendency of Banks released the “Compendio de Normas Contables” (Compendium of Accounting Standards, or Compendium). The Compendium contains certain limitations and details for the implementation of the rules of the Colegio de Contadores de Chile (College of Chartered Accountants of Chile), which reflects IFRS.

Beginning 2008, Chilean banks have begun a process of applying IFRS in certain presentation and disclosure requirements. This involves reclassifying the balance sheet and income statement accounts as required by the Chilean Superintendency of Banks.

B. BUSINESS OVERVIEW

Principal Business Activities

We provide a broad range of commercial and retail banking services to our customers. In addition, we provide financial advisory services, mutual fund management, insurance brokerage and securities brokerage services through our subsidiaries. The following chart sets forth our principal lines of business:

(1) Also see “Item 5. Operating and Financial Review and Prospects—Operating Results” for a financial summary of our lines of business as of December 31, 2005, 2006 and 2007.

As of December 31, 2007, we operated 84 branch offices in Chile, which includes 33 branches operating as CorpBanca, 34 branches operating as Banco Condell, and 17 integrated branches which are registered as one branch office in Chile but operate under both the CorpBanca and Banco Condell names. These integrated branches are located in the same building but do not physically share the same space or facilities with one another. As a result, we operate 50 branches under the CorpBanca Brand name and 51 branches under the Banco Condell brand name. In addition, as of December 31, 2007, we owned and operated 102 ATMs in Chile, and our customers have access to over 6,000 ATMs (including BancoEstado ATMs) in Chile through our agreement with Redbanc S.A., or Redbanc. We utilize a number of different sales channels including account executives, telemarketing and the internet to attract new clients.

The following table provides information on the composition of our loan portfolio and other revenue-producing assets as of December 31, 2006 and 2007:

	As of December 31,
Loan/Asset Category	2006	2007	Variation		Variation (%)
	(in millions of constant Ch$ as of December 31, 2007)

Commercial loans
General commercial loans	1,618,753	2,137,335	518,582		32.0	%
Foreign trade loans	254,537	270,368	15,831		6.2
Interbank loans	21,486	28,014	6,528		30.4
Leasing contracts	243,364	257,140	13,776		5.7
Factored receivables	76,845	91,143	14,298		18.6
Other outstanding loans	200,031	372,073	172,042		86.0
Subtotal commercial loans	2,415,016	3,156,073	741,057		30.7

Mortgage loans
Residential	169,324	150,718	(18,606	)	(11.0	)
Commercial	203,110	182,647	(20,463	)	(10.1	)
Subtotal mortgage loans	372,434	333,365	(39,069	)	(10.5	)

Consumer loans	468,232	509,956	41,724		8.9
Past due loans
Commercial loans	16,523	18,121	1,598		9.7
Residential mortgage loans	2,401	2,577	176		7.3
Consumer loans	1,606	2,754	1,148		71.5
Past due loans	20,530	23,452	2,922		14.2
Subtotal	3,276,212	4,022,846	746,634		22.8

Contingent loans(1)	302,168	322,590	20,422		6.8
Total loans(2)	3,578,380	4,345,436	767,056		21.4	%

(1) For purposes of loan classification, contingent loans are considered as commercial loans.

(2) All of the above categories except mortgage loans, past due loans and contingent loans are combined into “Loans” as described in “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Average Balance Sheets, Income Earned from Interest Earning Assets and Interest Paid on Interest Bearing Liabilities.”

Commercial Banking

In October 2006, commercial banking was reorganized to provide a more specialized service to our commercial clients. The former Enterprise Division was renamed and separated into two business areas: Large Companies and Corporate Division, and Companies Division. In the 2003-2007 period, loans made to businesses, including commercial loans, trade finance, leasing agreements and contingent loans, experienced significant growth. The annual compounded growth rates for these products during the 2003-2007 period in nominal terms were 21.8%, 18.0%, 13.7%, 13.0%, respectively. As of December 31, 2007, our average commercial loans outstanding (including leasing, factoring, commercial mortgage and commercial past due loans) amounted to Ch$2,494,382 million, comprising 68.7% of our total average loan portfolio.

Large Companies and Corporate Division. This division serves businesses with annual sales in excess of US$10 million. Our Large Companies business area offers clients a broad range of services tailored to fit their specific needs. These services include deposit-taking and lending in both pesos and foreign currencies, trade financing,

general commercial loans, working capital loans, letters of credit, interest and exchange rate insurance and cash flow management, among others. Our Corporate business area is focused on offering its clients a broad range of products, including working capital loans, credit lines, financial services, special advisory services, trade finance, syndicated loans and currency forwards. As of December 31, 2007, we had over 800 Large Companies and Corporate banking customers.

Companies Division. Our Companies Division provides services to businesses with annual sales of less than US$10 million. This area also serves small and medium-sized businesses and our factoring and leasing clients. Greater detail of each of these business areas is provided in the paragraphs found below.

This division offers our customers a broad range of financial products, including general commercial loans, working capital loans, trade finance, on-lending of financing originated by CORFO, overdraft credit lines, letters of credit, and mortgage loans. We believe that the close relationships we have developed with our small and medium-sized business customers over the years provide us with a significant competitive advantage in this business area. As of December 31, 2007, we had over 6,500 customers.

Our leasing business area consists of providing leasing services relating to commercial real estate, vehicles, machinery and other items to our customers. As of December 31, 2007, we had a total outstanding balance under the lease contracts in our leasing area of Ch$257,140 million, comprising 6.0% of our total loan portfolio (excluding interbank loans).

Our factoring business area consists of purchasing outstanding debt portfolios, such as bills, notes or contracts, advancing a payment representing the future cash flows from such assets, and then performing the related collection function. As of December 31, 2007, we had total factoring loans outstanding of Ch$91,143 million, representing 2.1% of our overall loan portfolio (excluding interbank loans).

Retail Banking

Our retail banking strategy is to focus on meeting the financial services needs of individuals in Chile, which traditionally have had relatively low levels of interaction with banks and other financial services institutions and, accordingly, represent a significant prospect for future growth for us. Our retail banking division serves retail customers across all income levels. As of December 31, 2007, our retail banking division managed loans with an annual average balance of Ch$1,098,733 million.

We also provide time deposits and savings accounts in pesos, Euros, UF and U.S. dollars, with a minimum term of 30 days and a minimum amount of Ch$500,000 or, for foreign-currency accounts, US$10,000 or the equivalent. We also offer traditional savings accounts with funds available for immediate withdrawal, including certain specialized accounts such as a home savings account.

Our retail services are organized into two areas: traditional retail and private banking services and lower income retail banking services.

Traditional and private banking. Our traditional retail banking services are mainly oriented toward individuals with medium income levels (at least Ch$0.6 million per month in the metropolitan area and Ch$0.45 million per month throughout the rest of the country), to whom we offer products such as checking accounts, credit lines, credit and debit cards, automotive financing, mortgage loans, insurance banking and time deposits, among others. Our traditional banking services are marketed and operated under the CorpBanca name.

In 2002 we began to provide our “CorpBanca Privada” private banking services to high income and high net-worth individuals on an invitation-only basis. In the fourth quarter of 2007, we developed Corp Planes, a specialized sales force that seeks out these high net-worth individuals (previously outsourced). Each client under the “CorpBanca Privada” program is provided with a liaison officer who oversees the client’s entire relationship with us across all product lines. As of December 31, 2007, we had 3,847 “CorpBanca Privada” clients, an increase of 28.7% as compared to December 31, 2006. We offer the following products and services, among others, to our banking customers:

Checking and Deposit Accounts. Our main checking account product is our “Integral” checking account, through which customers are provided with a package of services including ATM cards, a credit line, Visa, MasterCard, American Express credit card with credit levels established pursuant to the creditworthiness of the individual, fraud insurance and access to internet and telephone banking. As of December 31, 2007 we had approximately 59,000 retail checking accounts, an increase of 23.1% as compared to December 31, 2006. Additionally, this strong growth in retail checking accounts has not reduced the average balance per account which remained relatively flat at Ch$1 million and in line with industry standards. In addition, this demonstrates our strategy to grow profitably by not sacrificing our risk policies in order to obtain more clients.

Credit and Debit Cards. We issue Visa, MasterCard and American Express credit cards to our individual clients. In addition to traditional cards, we offer cards issued under certain specialized customer loyalty programs and tailor our marketing of credit card services to different groups based on personal income. Annual fees are charged to those customers who do not hold “Integral” accounts with us. As of December 31, 2007, we had approximately 193,000 credit cards issued under the brand name CorpBanca, an increase of 30.0% as compared to December 31, 2006. Our promotions such as discounts on gasoline purchases and our no-interest option on purchases for up to 24 months has allowed us to excel in sales as well as usage-rates of this product. During the fourth quarter of 2007, the usage-rate for our cards (CorpBanca and Banco Condell brands) was above the market standard at 58.0% while the industry’s average was 48.7%.

We believe that, in addition to the other banks that operate in Chile, our main competitors in the credit card business are department stores and other non-banking businesses involved in the issuance of credit cards.

We also offer debit cards, which can be used for banking transactions at ATMs operating on the Redbanc network, as well as at retailers associated with the Redcompra program. Under this agreement we have access to over 6,000 ATMs (including BancoEstado ATMs) in Chile.

Mortgage Loans. We offer two types of mortgages: residential mortgages for the purchase of new and existing homes (including refinancing of existing residential mortgages) and other mortgages, which are loans for other purposes secured by real property owned by the customer. Our UF-denominated mortgage loans generally have maturities between five and 30 years. During 2007 we were the first bank to offer mortgage loans denominated in pesos with maturities between 5 and 12 years. In order to reduce our exposure to interest rate fluctuations and inflation with respect to our residential mortgage UF-denominated portfolio, the majority of these mortgages are funded through the issuance by us of mortgage finance bonds in the Chilean financial market, which bear a real market rate of interest plus a fixed spread over the rate of variation of the UF; regarding our mortgage portfolio denominated in pesos, we reduce our exposure to interest rate fluctuations and inflation through our growth in checking accounts and through liabilities denominated in pesos with durations of 2 to 5 years. Chilean banking regulations limit the amount of a residential mortgage loan that may be financed with a mortgage finance bond to 75% of the lesser of (a) the purchase price of the property securing the loan and (b) the appraised value of such property. In addition, we generally require that the monthly payments on a residential mortgage loan not exceed 25% of the borrower’s household after-tax monthly income.

We continue to increase our marketing efforts relating to our mortgage services. Our market penetration for mortgage products has historically been lower than our overall Chilean market share for all banking products, which as of December 31, 2007 was 6.8% (on an unconsolidated basis and excluding interbank loans). Historically this disparity has been due to the relatively high and non-competitive rates on our mortgage products. However, our strategy and recent results have made it possible for us to decrease our financing costs throughout time and, therefore, offer more competitive rates and terms. Accordingly, our market share of mortgage products has grown from 2.5%, 3.2% and 3.9% as of December 31, 2005, 2006 and 2007, respectively. We intend to continue to grow in this market.

Consumer Loans. We offer personal consumer loans for a variety of purposes, including personal loans (with automatic payments deducted from a checking or credit card account and with mandatory life, home and/or unemployment insurance); automotive financing and university and post-graduate education loans (with mandatory life insurance). Our consumer loans are generally installment loans denominated in pesos or UF, bear interest at fixed or variable rates and typically have maturities up to 36 months. However, in addition, we offer consumer loans to employees of our corporate clients which have maturities of up to 48 months.

Lower Income Retail Banking. In 2006, we re-branded our lower income retail banking business under the new name Banco Condell (formerly Bancondell). The importance of the re-branding is that we are now offer these customers a wider variety of products. Under the “Banco Condell” brand, we offer, among others, consumer lending, credit card services, mortgage loans, insurance, and time deposits to the traditionally underserved low-to-middle income segments of the Chilean population. Banco Condell represents a distinct delivery channel for our products and it maintains a separate brand identity and branch network. In this segment we compete with the consumer divisions of other banks as well as certain consumer credit providers, including department stores.

Improved economic conditions in Chile over the past decade have resulted in an increased demand for consumer credit by low- to middle-income individuals, whom we classify as persons with annual income between Ch$1.2 million and Ch$7.2 million. Many of these individuals have not had prior exposure to banking products or services. Through Banco Condell, we focus on developing and marketing products specifically oriented to individuals in this segment of the population while introducing them to the banking sector. We offer, among others, the following products and services to our lower income retail banking-Banco Condell customers:

Consumer Loans. We offer personal loans under the Banco Condell brand, including personal debt consolidation loans. These loans are generally denominated in pesos and repayable through equal monthly installments. Life and unemployment insurance are mandatory in connection with these loans.

Credit Cards. Under the Banco Condell brand, we provide Visa and MasterCard credit cards, which require the payment of an annual fee. However, this fee is waived if the card has transactions such as cash advances or purchases on a monthly basis. As of December 31, 2007, we had over 40,000 credit cards issued under the brand name Banco Condell, an increase of 68.9% as compared to December 31, 2006. We believe that, in addition to the other banks that operate in Chile, our main competitors in the credit card business are department stores and other non-banking businesses involved in the issuance of credit cards.

Mortgage Loans. Under the Banco Condell brand, we offer mortgage loans for the purchase of new and existing homes denominated in UF. In addition, we generally require that the monthly payments on a residential mortgage loan not exceed 25% of the borrower’s household after-tax monthly income.

Treasury and International Division

The Treasury and International Division specializes in financial management and is largely responsible for funding and liquidity as well as management of gaps on the balance sheet.

The International area manages all international foreign-currency denominated loans, with the exception of those loans that are guaranteed by a Chilean company or individual. In addition, through a specialized team, this area manages most of the foreign currency operations of our clients. As of December 31, 2007 we had the equivalent of US$70 million in foreign currency-denominated loans outstanding granted to third parties outside of Chile. This area is also responsible for obtaining foreign currency-denominated credit lines from financial institutions outside Chile. As of December 31, 2007, we had the equivalent of US$1.263 million in credit lines available to us from 48 financial institutions located in the United States, Canada, Germany, England, Austria, France, Italy, Netherlands, Japan, Australia and other countries, a 13% increase over the amount available under credit lines from international sources available as of December 31, 2006.

Non-Banking Financial Services Offered through Subsidiaries

We have made several strategic long-term investments in non-banking financial services companies, which are engaged in activities complementary to our core banking activities. Through these companies, each of which is our wholly-owned subsidiary, we intend to continue to develop a comprehensive financial services group able to meet the diverse financial needs of our current and potential clients.

The following table sets forth certain financial information with respect to our financial services subsidiaries as of December 31, 2006 and 2007, in millions of pesos. Amounts relating to inter-company transactions have not been removed for purposes of this table.

	As of and for the year ended December 31, 2006						As of and for the year ended December 31, 2007
	Assets		Shareholder’s Equity		Net Income		Assets		Shareholder’s Equity		Net Income
	(in millions of Ch$ as of December 31, 2007)

CorpCapital Corredores de Bolsa S.A.	Ch$	81,808	Ch$	19,975	Ch$	2,065	Ch$	200,219	Ch$	21,842	Ch$	1,966
CorpCapital Administradora General de Fondos S.A.	4,773		3,778		2,056		7,427		6,380		2,601
CorpBanca Corredores de Seguros S.A.	4,067		3,081		3,018		5,014		4,425		4,308
CorpCapital Asesorías Financieras S.A.	340		250		84		632		516		346
Corp Legal S.A.	—		—		—		503		216		110

Insurance Brokerage. In accordance with our strategy of expanding the breadth of financial services that we offer, our subsidiary CorpBanca Corredores de Seguros S.A., or CCS, offers a full line of insurance products. Many of these products complement the various banking and loan services that we provide, such as unemployment and life insurance in connection with personal loans and insurance in connection with mortgage lending. Through CCS we also provide non credit-related insurance to existing clients and the general public. For the years ended December 31, 2006 and 2007, CCS had net income of Ch$3,018 million and Ch$4,308 million, respectively. CCS had total assets of Ch$4,067 million as of December 31, 2006 and Ch$5,014 as of December 31, 2007.

Financial Advisory Services. CorpCapital Asesorías Financieras S.A., or CAF, is the investment banking subsidiary of CorpBanca. CAF provides a broad range of financial advisory services to a variety of corporations and government agencies, including those services related to debt restructurings, bilateral grants, mergers and acquisitions, privatizations and company valuations. For the years ended December 31, 2006 and 2007, CAF had net income of Ch$84 million and Ch$346 million, respectively. CAF had total assets of Ch$340 million as of December 31, 2006 and Ch$632 million as of December 31, 2007.

Mutual Fund Management. We incorporated CorpCapital Administradora General de Fondos S.A., or CAGF, to complement banking services offered to individual and corporate clients. CAGF’s current function is to manage mutual fund assets for its clients in fixed and variable income instruments in both the local and foreign markets. For the years ended December 31, 2006 and 2007, CAGF had net income of Ch$2,056 million and Ch$2,601 million, respectively. CAGF had total assets of Ch$4,773 million as of December 31, 2006 and Ch$7,427 million as of December 31, 2007. As of December 31, 2007, CAGF managed 18 mutual funds including fixed income funds and had a total assets under management amounting to Ch$356,215 million, an increase of 73.8% (nominal) as compared to December 31, 2006. In order to grow our CAGF business, we intend to continue to offer new types of mutual funds tailored to our clients’ needs.

Securities Brokerage Services. Our subsidiary CorpCapital Corredores de Bolsa S.A., or CCB, is a member of the Santiago Stock Exchange and is registered with the Chilean Superintendency of Securities and Insurance as a securities broker. CCB’s primary activities are providing broker services in equities and fixed income securities, foreign currency exchange trading and proprietary trading. CCB’s net income was Ch$2,065 million, and Ch$1,966 million for 2006 and 2007, respectively. CCB had assets under custody of Ch$146,491 million as of December 31, 2006 and Ch$169,678 million as of December 31, 2007. In 2007, CCB’s operating income increased by Ch$828 million, or 31.7%, as compared to the prior year. This was mainly the result of increases in our fee income which increased by Ch$1,026 million, or 105.0%, and an increase of Ch$4,192 million in interest income from repurchase agreements, offset by other expenses.

Legal advisory services. The Chilean Superintendency of Banks granted us authorization for the creation of our subsidiary CorpLegal S.A., or CorpLegal, on January 26, 2007. CorpLegal exclusively addresses legal advisory services related to our business.

Distribution Channels, Electronic Banking and Technology

Our distribution network provides integrated financial services and products to our customers through several diverse channels, including ATMs, branches, internet banking, and telephone banking. We owned and operated 102 ATMs throughout Chile as of December 31, 2007, and are connected to over 6,000 ATMs through the Redbanc network (including BancoEstado ATMs). These ATMs allow customers to conduct self-service banking transactions during banking and non-banking hours.

As of December 31, 2007, we operated 84 branch offices in Chile, which include 33 branches operating as CorpBanca, 34 branches operating as Banco Condell, and 17 integrated branches which are registered as one branch office in Chile but operate under both the CorpBanca and Banco Condell names. These integrated branches are located in the same building but do not physically share the same space or facilities with one another. As a result, we operate 50 branches under the CorpBanca Brand name and 51 branches under the Banco Condell brand name. Consistent with our growth strategy, we plan to open approximately 8 CorpBanca branches and 6 Banco Condell branches by the end of 2008. Our branch system serves as the main distribution network for our full range of products and services.

We offer internet banking to our customers 24 hours a day through our password-protected internet site, www.bancocorpbanca.cl. Our internet site offers a broad range of services, including up-to-date information on balances in deposit, checking, loan, credit card and other accounts and transactional capabilities such as transfers and payments. As of December 31, 2007, we had over 41,000 customers with activated internet passwords, allowing them to access our internet banking services. We are a member of the Sociedad Interbancaria de Transferencias Electrónicas S.A., an organization that facilitates electronic banking transactions on behalf of our customers as well as other Chilean banks. We also provide our customers with access to a 24-hour phone-banking call center that grants them access to account information and allows them to effect certain payments by telephone.

We have developed a specialized internet-based service designed to facilitate and optimize the financial management of our commercial customers. This service, which we market under the name “Cash Management,” includes services such as payroll support and payments to suppliers.

We have entered into several service and lease agreements with IBM de Chile S.A.C., which provides us with the computer hardware and network buildout that we use in our headquarters and branch offices. We have entered into a software consulting and development agreement with Datapro, Inc., which provides consulting and development for the IBS.

Competition

Overview

The Chilean financial services market consists of a variety of largely distinct sectors. The most significant sector, commercial banking, includes a number of privately-owned banks and one public sector bank, BancoEstado (which operates within the same legal and regulatory framework as the private sector banks). The private sector banks include those that are Chilean-owned, i.e., controlled by a Chilean entity, as well as a number of foreign-owned banks which are operated in Chile but controlled by a foreign entity. The Chilean banking system is comprised of 24 private sector banks and one public sector bank. Three private sector banks along with the state-owned bank together accounted for 64.8% of all outstanding loans by Chilean financial institutions as of December 31, 2007: Banco Santander Santiago (21.1%), Banco de Chile (20.2%), BCI (12.4%) and BancoEstado (controlled by the Chilean government) (12.8%). All market share statistics in this paragraph are presented according to the Chilean Superintendency of Banks on an unconsolidated basis. The market share presented for Banco de Chile includes Citibank Chile’s outstanding loans as they concluded their merger during the first quarter of 2008.

We believe that our principal competitors are BCI, BBVA, and Scotiabank Sudamericano, but we also face competition from larger banks such as Banco de Chile and Banco Santander Santiago, among others.

The Chilean banking system has experienced a consolidation process in recent years with mergers and acquisitions of banking entities in line with a global trend. Currently, the largest Chilean bank is Banco Santander Santiago. In April 1996, Banco Santander acquired control of Banco Osorno, merging their operations. In January 1997, Banco Santiago and Banco O’Higgins merged into one entity. Also in 1997, Banco Santander absorbed the operations of Financiera Fusa. In 1999, following the international merger of Banco Santander de España and Banco Central Hispano, Banco Santander Central Hispano acquired control of Santander-Chile and Banco Santiago. During April 2002, the Chilean Superintendency of Banks authorized Banco Santander Central Hispano to increase its participation in Banco Santiago by way of acquisition of 35.45% of the shares of the latter owned by Banco Central de Chile. In May 2002, the Chilean Superintendency of Banks authorized Santander-Chile and Banco Santiago to merge. This merger enabled these banks to become the largest financial institution in Chile in terms of loans outstanding.

In September 1998, Banco Bilbao Viscaya (BBV) de España, subscribed a capital increase of Bank Bhif, thus controlling 55% of the bank. In 1998, we acquired the assets of Corfinsa, which pertained to the consumer loan division of Banco Sudamericano, and then acquired the Financiera Condell S.A., a finance company. In 1999, Citibank acquired Atlas financial company. In July 1999, Bank of Nova Scotia acquired control of Banco Sudamericano, by increasing its interest from 28.0% to 60.6%, and in late 2001 changed its name to Scotiabank Sudamericano. In early 2001, the Luksic group (which controlled Banco Edwards since 1999) acquired control of Banco de Chile, merging both banks in January 2002. In January 2004, Banco de Crédito e Inversiones acquired 99.9% of Banco Conosur. In early 2007, Itaú Holding Financiera S.A. acquired 100% of BankBoston Chile and authorized the sale of Banco Internacional to Inversiones del Rosario S.A.. Also in 2007, Rabobank was authorized to purchase HNS Banco and Scotiabank Sudamericano was authorized to acquire 100% of Banco Desarrollo. In January 2008, Banco de Chile and Citibank Chile were also authorized to merge operations.

In recent years, several applications for banking licenses have been filed before the Chilean Superintendency of Banks. In 2000, Deutsche Bank initiated operations in Chile. During 2001, the Chilean Superintendency of Banks authorized the formation of Banco HNS, which is oriented to small and medium sized businesses through leasing and factoring financing. In the same year, the Chilean Superintendency of Banks authorized the creation of Banco Monex, which is also oriented to small and medium sized businesses through trade finance, exchange transactions and financial derivatives. In 2001, Falabella, a Chilean department store, received authorization to commence its banking operations, which are primarily linked to its consumer credit business. In May 2002, Banco Ripley initiated operations of consumer loans to mid to low-income individuals. In September 2002, Financiera Conosur filed an application with the Chilean Superintendency of Banks to request its corporate conversion into a bank, which took place in 2003. In July 2003, Banco Paris, linked to the Almacenes Paris department store, was authorized to initiate operations. In 2004, Grupo Penta, linked to former shareholders of Banco de Chile, received a banking license for a new bank named “Banco Penta”, which has been operating ever since. It is expected that the trend to create niche banks will continue. In addition, the Chilean Superintendency of Banks authorized HSBC Bank Chile to convert its branch into a subsidiary bank. In May, 2008, DnB NOR Bank from Norway requested authorization from the Chilean Superintendency of Banks to open a banking branch.

Commercial banks, such as us, face increasing competition from other financial intermediaries who can provide larger companies with access to the capital markets as an alternative to bank loans. The enactment of the Reforma al Mercado de Capitales (Capital Markets Reform Bill) in 2001 has made it more tax-advantageous and easier for companies to issue commercial paper in Chile, adding an additional financing alternative. To the extent permitted by the General Banking Law, we seek to maintain a competitive position in this respect through the investment banking activities of our subsidiary CAF.

Loans

As of December 31, 2007, our gross loan portfolio (excluding interbank loans) of Ch$4,317,422 million (approximately US$8,671 million) was the fifth largest among private Chilean banks sixth place among all banks operating in Chile. Our gross loan portfolio (excluding interbank loans) represented 6.8% of the market for loans in the Chilean financial system (comprising all commercial banks) as of such date. During the period 2003 to 2007, the compounded annual growth rate of our unconsolidated loan portfolio in real terms was 15.4% as compared to an

increase of 13.4% in the average market loan portfolio. As of December 31, 2007, our loan portfolio in real terms grew by 21.4% as compared to December 31, 2006 while the average market loan portfolio increased by 12.7% as compared to December 31, 2006.

The following table sets forth the aggregate outstanding loans for us and the six other private sector banks with the largest market shares in Chile as of December 31 in each of the last three years:

	Bank Loans(1)(2)
	As of December 31,
	2005		2006		2007
Banco Santander Santiago	Ch$	11,118,327	Ch$	12,629,795	Ch$	13,442,328
Banco de Chile(3)	9,804,133		11,316,796		12,873,291
Banco de Crédito e Inversiones (BCI)	6,070,445		7,028,874		7,877,412
BBVA	3,924,752		4,597,857		5,310,119
CorpBanca	3,123,671		3,578,379		4,345,435
Scotiabank Sudamericano(4)	3,187,154		3,610,955		4,199,256
Others	11,933,809		13,925,475		15,687,255
Total	Ch$	49,162,291	Ch$	56,688,131	Ch$	63,735,096

Source: Chilean Superintendency of Banks.

(1) The information in this table is presented on an unconsolidated basis (taking into account only each entity’s banking operations) and includes interbank lending.

(2) All amounts stated in this table are in millions of constant Ch$ as of December 31, 2007.

(3) Includes Citibank. Banco de Chile and Citibank Chile merged operations in January 2008.

(4) Includes Banco Desarrollo. Scotiabank Sudamericano purchased Banco Desarrollo in 2007.

Deposits

We had consolidated deposits of Ch$2,756,910 million (approximately US$5,537 million) as of December 31, 2007, which consisted of our current accounts, bankers’ drafts, savings accounts, time deposits and other commitments. In unconsolidated terms, our market share of 5.4% for deposits and other obligations as of such date ranks us in sixth place among private sector banks in Chile.

The following table sets forth the aggregate deposits for us and the six other private sector banks with the largest market share as of December 31 in each of the last three years:

	Bank Deposits and Other Obligations (1)(2)
	As of December 31,
	2005		2006		2007
Banco Santander Santiago	Ch$	8,884,686	Ch$	10,245,740	Ch$	10,862,211
Banco de Chile(3)	7,903,321		9,373,989		10,032,551
Banco de Crédito e Inversiones (BCI)	5,000,896		5,846,590		6,310,273
BBVA	3,282,484		3,734,168		4,137,124
Scotiabank Sudamericano(4)	2,291,737		2,373,416		2,820,446
CorpBanca	2,117,262		2,122,800		2,762,528
Others	11,778,680		12,711,419		14,036,798
Total	Ch$	41,259,066	Ch$	46,408,122	Ch$	50,961,931

Source: Chilean Superintendency of Banks.

(1) The information in this table is presented on an unconsolidated basis (taking into account only each entity’s banking operations) and includes deposits in current accounts, bankers’ drafts, savings accounts, and other interest-bearing and non-interest bearing deposits.

(2) All amounts stated in this table are in millions of constant Ch$ as of December 31, 2007.

(3) Includes Citibank. Banco de Chile and Citibank Chile merged operations in January 2008.

(4) Includes Banco Desarrollo. Scotiabank Sudamericano purchased Banco Desarrollo in 2007.

Shareholders’ Equity

With Ch$433,625 million (approximately US$870,960 million) in shareholders’ equity (excluding net income), we were the fifth largest commercial bank in Chile by this measure as of December 31, 2007.

The following table sets forth the level of shareholders’ equity for us and the six largest private sector banks in Chile (measured by shareholders’ equity) as of December 31 in each of the last three years:

	Shareholders’ Equity (excluding net income)(1)
	As of December 31,
	2005		2006		2007
Banco Santander Santiago	Ch$	923,432	Ch$	1,030,779	Ch$	1,129,395
Banco de Chile(2)	923,977		990,707		1,108,588
Scotiabank Sudamericano(3)	306,158		321,804		886,677
Banco de Crédito e Inversiones (BCI)	433,347		502,037		568,559
CorpBanca	389,159		423,312		433,625
BBVA	284,117		286,656		334,913
Others	1,517,509		1,605,447		1,512,016
Total	Ch$	4,777,699	Ch$	5,160,742	Ch$	5,973,773

Source: Chilean Superintendency of Banks.

(1) All amounts stated in this table are in millions of constant Ch$ as of December 31, 2007.

(2) Includes Citibank Chile. Banco de Chile and Citibank Chile merged operations in January 2008.

(3) Includes Banco Desarrollo. Scotiabank Sudamericano purchased Banco Desarrollo in 2007.

Regulation and Supervision

General

In Chile, only banks may maintain checking accounts for their customers, conduct foreign trade operations, and together with financial companies, accept time deposits. The principal authorities that regulate financial institutions in Chile are the Chilean Superintendency of Banks and the Central Bank. Chilean banks are primarily subject to the General Banking Law and secondarily, to the extent not inconsistent with this statute, the provisions of the Chilean Corporations Law governing public corporations, except for certain provisions which are expressly excluded.

The modern Chilean banking system dates from 1925 and has been characterized by periods of substantial regulation and state intervention, as well as periods of deregulation. The most recent period of deregulation commenced in 1975 and culminated in the adoption of a series of amendments to the General Banking Law. That law, amended most recently in 2002, granted additional powers to banks, including general underwriting powers for new issues of certain debt and equity securities and the power to create subsidiaries to engage in activities related to banking, such as brokerage, investment advisory, mutual fund services, administration of investment funds, factoring, securitization products and financial leasing services. Following the Chilean banking crisis during 1982 and 1983, the Chilean Superintendency of Banks assumed control of 21 financial institutions representing approximately 51% of the total loans in the banking system. As part of the solution to this crisis, the Central Bank permitted financial institutions to sell to it a certain portion of their problem loan portfolios, at the book value of such loan portfolios. Each institution then repurchased such loans at their economic value (which, in most cases, was much lower than the book value at which the Central Bank had acquired the loans) and the difference was to be repaid to the Central Bank out of future income. Pursuant to Law No. 18,818, which was passed in 1989, this difference was converted into a subordinated obligation with no fixed term, known as deuda subordinada or subordinated debt, which in the event of liquidation of the institution, would be paid after the institution’s other debts had been paid in full.

Central Bank

The Central Bank is an autonomous legal entity created by the Chilean Constitution. It is subject to the Chilean Constitution and its own ley orgánica constitucional, or constitutional law. To the extent not inconsistent

with the Chilean Constitution or the Central Bank’s constitutional law, the Central Bank is also subject to private sector laws (but in no event is it subject to the laws applicable to the public sector). It is directed and administered by a board of directors composed of five members designated by the President of Chile, subject to the approval of the Senate.

The legal purpose of the Central Bank is to maintain the stability of the peso and the orderly functioning of Chile’s internal and external payment system. The Central Bank’s powers include setting reserve requirements, regulating the amount of money and credit in circulation, establishing regulations and guidelines regarding finance companies, foreign exchange (including the Formal Exchange Market) and banks’ deposit-taking activities.

Chilean Superintendency of Banks

Banks in Chile are supervised and controlled by the Chilean Superintendency of Banks, an independent Chilean governmental agency. The Chilean Superintendency of Banks authorizes the creation of new banks and has broad powers to interpret and enforce legal and regulatory requirements applicable to banks and financial companies. Furthermore, in case of noncompliance with such legal and regulatory requirements, the Chilean Superintendency of Banks has the ability to impose sanctions. In extreme cases, it can appoint, with the prior approval of the board of directors of the Central Bank, a provisional administrator to manage a bank. It must also approve any amendment to a bank’s bylaws or any increase in its capital.

The Chilean Superintendency of Banks examines all banks from time to time, generally at least once a year. Banks are also required to submit monthly financial statements to the Chilean Superintendency of Banks, and a bank’s financial statements are published at least four times a year in a newspaper with countrywide coverage. In addition, banks are required to provide extensive information regarding their operations at various periodic intervals to the Chilean Superintendency of Banks. A bank’s annual financial statements and the opinion of its independent auditors must also be submitted to the Chilean Superintendency of Banks.

Any person wishing to acquire, directly or indirectly, 10.0% or more of the share capital of a bank must obtain the prior approval of the Chilean Superintendency of Banks. The absence of such approval will cause the holder of such shares so acquired to lose the voting rights of such shares. The Chilean Superintendency of Banks may only refuse to grant its approval based on specific grounds set forth in the General Banking Law.

According to Article 35 bis of the General Banking Law, the prior authorization of the Chilean Superintendency of Banks is required for:

· the merger of two or more banks,

· the acquisition of all or a substantial portion of a banks’ assets and liabilities,

· the control by the same person, or controlling group, of two or more banks, or

· a substantial increase in the share ownership of a bank by a controlling shareholder of that bank.

Such prior authorization is required solely when the acquiring bank or the resulting group of banks would own a significant market share in loans, defined by the Chilean Superintendency of Banks to be more than 15.0% of all loans in the Chilean banking system. The intended purchase, merger or expansion may be denied by the Chilean Superintendency of Banks. Alternatively, a purchase, merger or expansion, when the acquiring bank or resulting group would own a market share in loans defined by the Chilean Superintendency of Banks to be more than 20.0% of all loans in the Chilean banking system, may be conditioned on one or more of the following:

· �� that the bank or banks maintain an effective equity (as defined under “—Capital Adequacy Requirements” below) higher than 8.0% and up to 14.0% of their risk weighted assets,

· that the technical reserve established in article 65 of the General Banking Law be applicable when deposits exceed one and a half times the resulting bank’s paid-in capital and reserves, or

· that the margin for interbank loans be diminished to 20.0% of the resulting bank’s effective equity.

If the acquiring bank or resulting group would own a market share in loans defined by the Chilean Superintendency of Banks to be more than 15% but less than 20%, the authorization will be conditioned on the bank or banks maintaining an effective equity not lower than 10% of their risk-weighted assets for the time set forth by the Chilean Superintendency of Banks, which may not be less than one year.

Pursuant to the regulations of the Chilean Superintendency of Banks, the following ownership disclosures are required:

· banks are required to inform the Chilean Superintendency of Banks of the identity of any person owning, directly or indirectly, 5.0% or more of such banks’ shares,

· holders of ADSs must disclose to the depositary the identity of beneficial owners of ADSs registered under such holders’ names, and

· the depositary is required to notify the bank as to the identity of beneficial owners of ADSs which such depositary has registered and the bank, in turn, is required to notify the Chilean Superintendency of Banks as to the identity of the beneficial owners of the ADSs representing 5.0% or more of such bank’s shares.

Limitations on Types of Activities

Chilean banks can only conduct those activities allowed by the General Banking Law: making loans, accepting deposits and, subject to limitations, making investments and performing financial services. Investments are restricted to real estate for the bank’s own use, gold, foreign exchange and debt securities. Through subsidiaries, banks may also engage in other specific financial service activities such as securities brokerage services, mutual fund management, investment fund management, financial advisory and leasing activities. Subject to specific limitations and the prior approval of the Chilean Superintendency of Banks and the Central Bank, Chilean banks may own majority or minority interests in foreign banks.

On March 2, 2002, the Central Bank authorized banks to pay interest on checking accounts. On March 20, 2002, the Chilean Superintendency of Banks published guidelines establishing that beginning on June 1, 2002, banks could offer a new checking account product that pays interest. The Chilean Superintendency of Banks also stated that these accounts may be subject to minimum balance limits and different interest rates depending on average balances held in the account. This product is optional and banks may charge fees for the use of this new product. For banks with a solvency score of less than A, the Central Bank imposed additional caps on the interest rate that can be charged.

Deposit Insurance

In Chile, the government guarantees up to 90.0% of the principal amount of certain time and demand deposits held by natural persons in the Chilean banking system. The government guarantee covers those obligations with a maximum value of UF 120 per person (Ch$2,354,719 or US$4,730 as of December 31, 2007) per calendar year.

Reserve Requirements

Deposits are subject to a reserve requirement of 9.0% for demand deposits and 3.6% for time deposits. Banks are authorized to deduct daily from their foreign currency denominated liabilities subject to the reserve requirement, the balance in foreign currency of certain loans and financial investments held outside of Chile. The deductions should be done as follows:

· first, term liabilities denominated in foreign currency and subject to reserve requirements,

· second, if there is any positive difference, demand liabilities denominated in foreign currency and subject to reserve requirements, and

· finally, foreign loans subject to reserve requirements. The total amount deductible cannot exceed 70.0% of a bank’s effective equity.

The Central Bank has statutory authority to increase these percentages to up to 40% for demand deposits and to up to 20% for time deposits, to implement monetary policy. In addition, we are subject to a reserve requirement applicable to Chilean banks pursuant to which we must hold a certain amount of assets in cash or in highly liquid instruments. This reserve is equal to the amount by which the daily balance of:

· deposits in checking accounts,

· other demand deposits or obligations payable on demand and incurred in the ordinary course of business,

· other deposits unconditionally payable immediately or within a term of less than 30 days, and time deposits payable within ten days in the aggregate exceeds 2.5 times the amount of our capital and reserves.

Chilean regulations also require that gaps between assets and liabilities maturing within less than 30 days not exceed a bank’s Net Capital Base (as defined below) and that gaps among assets and liabilities maturing within less than 90 days not exceed twice a bank’s equity.

Minimum Capital

Under the General Banking Law, a bank must have a minimum paid-in capital and reserves of UF800,000 (Ch$15,698 million or US$31.5 million as of December 31, 2007). However, a bank may begin its operations with 50.0% of such amount, provided that it has a total capital ratio (defined as effective equity as a percentage of risk weighted assets) of not less than 12.0%. When such a bank’s paid-in capital reaches UF600,000 (Ch$11,774 million or US$23.6 million as of December 31, 2007) the total capital ratio required is reduced to 10.0%.

Capital Adequacy Requirements

According to the General Banking Law, each bank should have an effective equity of at least 8.0% of its risk weighted assets, net of required allowances. Effective equity is defined as the aggregate of:

· a bank’s paid-in capital and reserves, excluding capital attributable to subsidiaries and foreign branches, known as capital básico, or Net Capital Base,

· its subordinated bonds, considered at the issuing price (but decreasing 20.0% for each year during the period commencing six years prior to maturity), but not exceeding 50.0% of its Net Capital Base, and

· certain allowances for loan losses, up to 1.25% of risk weighted assets to the extent these allowances exceed those required by law or regulation.

Banks must also have a Net Capital Base of at least 3.0% of its total assets, net of required allowances. An amendment enacted on November 7, 2001 to the General Banking Law eliminated the exclusion of the investment in subsidiaries and foreign branches from the calculation of Net Capital Base.

The calculation of risk-weighted assets is based on a five category risk classification system to be applied to a bank asset that is based on the Basel Committee recommendations.

Lending Limits

Under the General Banking Law, Chilean banks are subject to certain lending limits, including the following material limits:

· a bank cannot extend to any entity or individual (or any one group of related entities), directly or indirectly, unsecured credit in an amount that exceeds 10.0% (previously 5.0%) of the bank’s effective equity, or in an amount that exceeds 30.0% (previously 25.0%) of its effective equity if the excess over 10.0% (previously 5.0%) is secured by certain assets with a value equal to or higher than such excess. In the case of foreign export trade financing, the ceiling for unsecured credits is also 10.0% (previously 5.0%) and the ceiling for secured credits is also established

at 30.0%. In the case of financing infrastructure projects built through the concession mechanism, the 10.0% (previously 5.0%) ceiling for unsecured credits is 15.0% if secured by a pledge over the concession, or if granted by two or more banks or finance companies which have executed a credit agreement with the builder or holder of the concession, while the ceiling for secured credits remains at 30% (previously 25.0%),

· a bank cannot extend loans to another financial institution subject to the General Banking Law in an aggregate amount exceeding 30.0% of its effective equity,

· a bank cannot directly or indirectly grant a loan whose purpose is to allow an individual or entity to acquire shares of the lender bank,

· a bank cannot lend, directly or indirectly, to a director or any other person who has the power to act on behalf of the bank, and

· a bank cannot grant loans to related parties (including holders of more than 1.0% of its shares, except in the case of companies which are actively traded on the Santiago Stock Exchange, like CorpBanca, in which case the limit is 5.0%) on more favorable terms than those generally offered to non-related parties. Loans granted to related parties are subject to the limitations described in the first bullet point above. In addition, the aggregate amount of loans to related parties cannot exceed a bank’s effective equity.

In addition, the General Banking Law limits the aggregate amount of loans that a bank may grant to its employees to 1.5% of its effective equity, and provides that no individual employee may receive loans in excess of 10.0% of this 1.5% limit. Notwithstanding these limitations, a bank may grant to each of its employees a single residential mortgage loan for personal use once during such employee’s term of employment.

Regulations Relating to Classification of Banks and Loans; Allowances for Loan Losses Prior to January 1, 2004

Classification of Banks. Through December 31, 2003, the Chilean Superintendency of Banks classified banks and other financial institutions into three categories: I, II and III. Category I was reserved for institutions that fully complied with the then loan classification guidelines. Institutions were rated as Category II if their loan classification system had deficiencies that needed correction by the bank’s management. Category III indicated significant deviations from the Chilean Superintendency of Banks’ guidelines that clearly reflected inadequacies in the evaluation of the risk and estimated loan losses. We were classified as Category I from 1997 through 2003.

Prior to January 1, 2004, we were required to estimate the allowances for loan losses based on global and individual allowances.

Global Allowance. The global allowance was calculated by multiplying the amounts outstanding in our loan portfolio by the greater of our “risk index” or 0.75% (2.0% for factoring operations). The risk index was derived from our management’s classification of our loan portfolio according to certain criteria relating to performance of the loans or, in the case of commercial loans, management’s estimate of the likelihood of default. More specifically, the risk index is calculated based only on “classified” loans and computed by multiplying the aggregate amount of outstanding loans by the allowance percentage assigned to the relevant loan category. See “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Analysis of Our Loan Classification—Risk Index.”

Individual Allowance. We were also required to maintain an individual allowance for loans on which any payment of principal or interest is 90 days or more overdue. The individual loan allowance calculation was not changed by the new Chilean Superintendency of Banks regulations and remains in effect. Our policy was to recognize loan loss allowances equal to 100.0% of the unsecured past due portion of individual loans. The allowances recognized consisted of the global allowances for that individual loan plus an additional individual allowance such that the total allowances recorded (global and individual) equaled 100.0% of the unsecured past due portion of individual loans. In the event that non-payment of a portion of a loan permitted a bank to accelerate the loan, and the bank commenced legal proceedings against the debtor to collect the full amount of the loan, the individual loan loss reserve must have equaled 100.0% of the entire outstanding amount of the loan within 90 days

as of the filing of the lawsuit. The Chilean Superintendency of Banks has ruled that in the case of past due loans, individual loan loss reserves were to be made only for the difference between 100.0% of the past due portion of a past due loan (or the full amount of the loan if the preceding sentence applies) and the reserve made for such loan when calculating the global loan loss reserve.

Generally, for purposes of classification, loans are divided into consumer loans, residential mortgage loans and commercial loans (which for these purposes include all loans other than consumer loans and residential mortgage loans). In the case of commercial loans, loan classifications were based on the estimated losses on all of the loans outstanding of the borrower, as determined by us. In the case of consumer and residential mortgage loans, the extent to which payments were overdue determined the classification. Commercial and consumer loans were rated A, B, B-, C or D, while residential mortgage loans were rated only A, B or B-, except loans purchased from the former Asociación Nacional de Ahorro y Préstamo, or Chilean National Association of Savings and Loans, which may be classified as C or D.

Current Regulations Relating to Classification of Banks and Loans; Allowances for Loan Losses from January 1, 2004

According to current regulation effective January 1, 2004, banks are classified in Categories 1, 2, 3 or 4 depending on how the models and methods used by a bank to classify its loan portfolio and determine provisions for loan losses and probable losses vary from those determined by the Chilean Superintendency of Banks. Category 1 banks are those banks whose methods and models are satisfactory to the Chilean Superintendency of Banks. Category 1 banks will be entitled to continue using the same methods and models they currently have in place. A bank classified as a Category 2 bank must maintain the minimum levels of reserves established by the Chilean Superintendency of Banks. Once the board of directors of a Category 2 bank is made aware of any problems detected by the Chilean Superintendency of Banks it must take steps to correct the problems. Finally, banks classified in Categories 3 or 4 must maintain the minimum levels of reserves established by the Chilean Superintendency of Banks until they are authorized by the Chilean Superintendency of Banks to do otherwise. We have been classified in Category 1 since January 1, 2004.

Classification of Loans. For purposes of the current classifications, loans are divided into: (i) consumer loans (including loans granted to individuals for the purpose of financing the acquisition of consumer goods or payment of services), (ii) residential mortgage loans (including loans granted to individuals for the acquisition, construction or repair of residential real estate, in which the value of the property covers at least 100% of the amount of the loan), (iii) leasing operations (including consumer leasing, commercial leasing and residential leasing), (iv) factoring operations and (v) commercial loans (includes all loans other than consumer loans and residential mortgage loans).

In accordance with current regulations, the models and methods used to classify our loan portfolio must conform to the guiding principles summarized below, which have been established by the Chilean Superintendency of Banks.

Models Based on the Analysis of Commercial Borrowers of Ch$200 Million or More. Current regulations require that all commercial loans of Ch$200 million or more be assigned to a risk category level, determined by considering the following risk factors: the borrower’s (i) industry or sector, (ii) owners or managers, (iii) access to credit, (iv) payment capacity and (v) payment behavior (vi) net worth. Based upon the analysis of the risk factors, the loan will be assigned to one of the risk categories. If the borrower has no apparent credit risk, the loan will be classified as either A1, A2 or A3. The loan will be classified as B if the borrower has some credit risk but no apparent deterioration of payment capacity. Finally, if the borrower has diminished capacity to repay its loans, it will be classified as either C1, C2, C3, C4, D1 or D2.

For loans classified as A1, A2, A3 and B, the board of directors of a bank is authorized to determine the levels of required allowances. For loans classified in Categories C1, C2, C3, C4, D1 and D2, the bank must have the following levels of allowances:

Classification	Estimated range of loss	Allowance
C1	Up to and including 3%	2	%
C2	More than 3% up to 19%	10	%
C3	More than 19% up to 29%	25	%
C4	More than 29% up to 49%	40	%
D1	More than 49% up to 79%	65	%
D2	More than 79%	90	%

For further information relating to the classification system applicable to commercial loans of Ch$200 million or more, see “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Classification of Loan Portfolio Based on the Borrower’s Payment Performance.”

Models Based on Group Analysis. Under current regulations, the levels of required allowances for commercial loans less than Ch$200 million and all consumer loans and mortgage loans are to be determined by the bank. This determination is made according to the estimated loss that may result from the loans, by classifying the loan portfolio using one or both of the following models: (i) a model based on the characteristics of the borrower and its outstanding loans, and/or (ii) a model based on the behavior of a group of loans. For the first model, the borrowers and their loans with similar characteristics will be placed into groups and each group will be assigned a risk level. For the second model, loans with analogous past payment histories and similar characteristics will be placed into groups and each group will be assigned a risk level.

Additional Provisions and Allowances. Historically, a bank could also voluntarily maintain additional allowances for loan losses in excess of the minimum amounts required as global and individual allowances. However, current regulations in effect as of January 1, 2004 no longer permit this. Banks are now able to create provisions and allowances above the previously described limits only to cover specific risks that have been authorized by their board of directors.

We began provisioning in accordance with current regulations as of January 1, 2004. For further information, see “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Current Regulations Relating To Classification of Banks and Loans; Allowances for Loan Losses From January 1, 2004.”

Obligations Denominated in Foreign Currencies. Foreign currency denominated obligations of Chilean banks are subjects to three requirements:

· a reserve requirement of 9.0% for demand deposits and 3.6% for time deposits,

· exposures to market risk, including foreign currency risk, are incorporate into Basle Capital Requirements, and

· under Central Bank regulations applicable since August 31, 1999, (1) the aggregate amount of a bank’s net foreign currency liabilities having an original maturity of less than 30 days cannot exceed the bank’s Net Capital Base and (2) the aggregate amount of a bank’s net foreign currency liabilities having an original maturity of less than 90 days cannot exceed twice the bank’s Net Capital Base.

Capital Markets

Under the General Banking Law, banks in Chile may purchase, sell, place, underwrite and act as paying agents with respect to certain debt securities. Likewise, banks in Chile may place and underwrite certain equity securities. Bank subsidiaries may also engage in debt placement and dealing, equity issuance advice and securities brokerage, as well as in financial leasing, mutual fund and investment fund administration, investment advisory services and merger and acquisition services. These subsidiaries are regulated by the Chilean Superintendency of Banks and, in some cases, also by the Chilean Superintendency of Securities and Insurance, the regulator of the Chilean securities market and of open-stock (public) corporations.

Legal Provisions Regarding Banking Institutions with Economic Difficulties

The General Banking Law provides that if specified adverse circumstances exist at any bank, its board of directors must correct the situation within 30 days from the date of receipt of the relevant financial statements. If the board of directors is unable to do so, it must call a special shareholders’ meeting to increase the capital of the bank by the amount necessary to return the bank to financial stability. If the shareholders reject the capital increase, or if it is not effected within the term and in the manner agreed to at the meeting, or if the Chilean Superintendency of Banks does not approve the board of directors proposal, the bank will be barred from increasing its loan portfolio beyond that stated in the financial statements presented to the board of directors and from making any further investments in any instrument other than in instruments issued by the Central Bank. In such a case, or in the event that a bank is unable to make timely payment in respect of its obligations or if a bank is under provisional administration of the Chilean Superintendency of Banks, the General Banking Law provides that the bank may receive a two-year term loan from another bank. The terms and conditions of such a loan must be approved by the directors of both banks, as well as by the Chilean Superintendency of Banks, but need not be submitted to the borrowing bank’s shareholders for their approval. In any event, a creditor bank cannot grant interbank loans to an insolvent bank in an amount exceeding 25.0% of the creditor bank’s effective equity. The board of directors of a bank that is unable to make timely payment of its obligations must present a reorganization plan to its creditors in order to capitalize the credits, extend their respective terms, forgive debts or take other measures for the payment of the debts. If the board of directors of a bank submits a reorganization plan to its creditors and such arrangement is approved, all subordinated debt issued by the bank, whether or not matured, will be converted by operation of law into common stock in the amount required for the ratio of effective equity to risk-weighted assets not to be lower than 12.0%. If a bank fails to pay an obligation, it must notify the Chilean Superintendency of Banks, which shall determine if the bank is solvent.

Dissolution and Liquidation of Banks

The Chilean Superintendency of Banks may establish that a bank must be liquidated for the benefit of its depositors or other creditors when such bank does not have the necessary solvency to continue its operations. In such case, the Chilean Superintendency of Banks must revoke a bank’s authorization to exist and order its mandatory liquidation, subject to agreement by the Central Bank. The Chilean Superintendency of Banks must also revoke a bank’s authorization if the reorganization plan of such bank has been rejected twice. The resolution by the Chilean Superintendency of Banks must state the reason for ordering the liquidation and must name a liquidator, unless the Superintendent of Banks assumes this responsibility. When a liquidation is declared, all checking accounts, other demand deposits received in the ordinary course of business, other deposits unconditionally payable immediately or that have a maturity of no more than 30 days, and any other deposits and receipts payable within 10 days, are required to be paid by using existing funds of the bank, its deposits with the Central Bank or its investments in instruments that represent its reserves. If these funds are insufficient to pay these obligations, the liquidator may seize the rest of the bank’s assets, as needed. If necessary and in specified circumstances, the Central Bank will lend the bank the funds necessary to pay these obligations. Any such loans are preferential to any claims of other creditors of the liquidated bank.

Investments in Foreign Securities

Under current Chilean banking regulations, banks in Chile may grant loans to foreign individuals and entities and invest in certain foreign currency securities. Chilean banks may only invest in equity securities of foreign banks and certain other foreign companies which may be affiliates of the bank or which would support the bank’s business if such companies were incorporated in Chile. Banks in Chile may also invest in debt securities traded in formal secondary markets. Such debt securities shall qualify as (1) securities issued or guaranteed by foreign sovereign states or their central banks or other foreign or international financial entities and (2) bonds issued by foreign companies. Such foreign currency securities must have a minimum rating as follows:

Rating Agency	Short Term	Long Term
Moody’s	P1	Baa3
Standard and Poor’s	A3	BBB-
Fitch IBCA	F2	BBB-

A Chilean bank may invest in securities having a minimum rating as follows, provided that in case the total amount of these investments exceeds 20%, (or 30% in certain cases), of the effective equity of the bank, a provision of 100% of the excess shall be established by the bank:

Rating Agency	Short Term	Long Term
Moody’s	P1	Ba3
Standard and Poor’s	A3	BB-
Fitch IBCA	F2	BB-

If investments in these securities and certain loans referred to below exceed 70% of the effective equity of the bank, a provision for 100% of the excess shall be established, unless the excess, up to 70% of the bank’s effective equity, is invested in securities having a minimum rating as follows:

Rating Agency	Short Term	Long Term
Moody’s	P1	Aa3
Standard and Poor’s	a-1+	AA-
Fitch IBCA	F1+	AA-

Subject to specific conditions, a bank may grant loans in dollars to subsidiaries or branches of Chilean companies located abroad, to companies listed on foreign stock exchanges authorized by the Central Bank and, in general, to individuals and entities domiciled abroad, as long as the Central Bank is kept informed of such activities.

In the event that the sum of the investments of a bank in foreign currency and of the commercial and foreign trade loans granted to foreign individuals and entities exceeds 70.0% of the effective equity of such bank, the excess is subject to a mandatory reserve of 100.0%.

Selected Statistical Information

The following information is included for analytical purposes and should be read in conjunction with our financial statements as well as “Item 5. Operating and Financial Review and Prospects.” Pursuant to Chilean GAAP, unless otherwise indicated, financial data in the following tables as of December 31, 2003, 2004, 2005, 2006 and 2007 has been expressed in constant pesos as of December 31, 2007. The UF is linked to, and is adjusted daily to reflect changes in, the previous month’s CPI.

Average Balance Sheets, Income Earned From Interest-Earning Assets and Interest Paid on Interest Bearing Liabilities

The average balances for interest-earning assets and interest bearing liabilities, including interest and readjustments received and paid, have been calculated on the basis of daily balances on an unconsolidated basis. Unless otherwise set forth herein, such average balances as they apply to the operations of our subsidiaries were calculated on the basis of month-end balances. Such average balances are presented in pesos, in UFs and in foreign currencies (principally US$).

The nominal interest rate has been calculated by dividing the amount of interest and principal readjustment due to changes in the UF index (gain or loss) during the period by the related average balance, both amounts expressed in constant pesos. The nominal rates calculated for each period have been converted into real rates using the following formulas:

Rp =	1 + Np	– 1	Rd =	(1 + Nd)(1 + D)	– 1
	1 + I			1 + I

Where:

Rp= real average rate for peso-denominated assets and liabilities (in Ch$ and UF) for the period,

Rd= real average rate for foreign currency denominated assets and liabilities for the period,

Np= average nominal rate for peso-denominated assets and liabilities for the period,

Nd= average nominal rate for foreign currency denominated assets and liabilities for the period,

D= devaluation rate of the peso to the U.S. dollar for the period, and

I= inflation rate in Chile for the period (based on the variation of the Chilean consumer price index).

The real interest rate can be negative for a portfolio of peso-denominated loans when the inflation rate for the period is higher than the average nominal rate of the loan portfolio for the same period. A similar effect could occur for a portfolio of foreign currency denominated loans when the inflation rate for the period is higher than the sum of the devaluation rate for the period and the corresponding average nominal rate of the portfolio. The formula for the average real rate for foreign currency denominated assets and liabilities (Rd) reflects a gain or loss in purchasing power caused by the difference between the devaluation rate of the peso and the inflation rate in Chile during the period.

The following example illustrates the calculation of the real interest rate for a dollar-denominated asset bearing a nominal annual interest rate of 10.0% (Nd = 0.10), assuming a 5.0% annual devaluation rate (D = 0.05) and a 12.0% annual inflation rate (I = 0.12):

Rd =	(1 + 0.10)(1 + 0.05)	– 1 = 3.125% per year
	1 + 0.12

In the example, since the inflation rate was higher than the devaluation rate, the real rate is lower than the nominal rate in dollars. If, for example, the annual devaluation rate were 15.0%, using the same numbers, the real rate in pesos would be 12.9%, which is higher than the nominal rate in U.S. dollars. Using the same numbers, if the annual inflation rate were greater than 15.5%, the real rate would be negative.

Contingent loans (consisting of guarantees and open and unused letters of credit) have been treated as interest-earning assets. Although the nature of the income derived from such assets is similar to a fee, Chilean banking regulations require that such income be accounted for as interest revenue. As a result of this treatment, the comparatively low rates of interest earned on these assets have a distorting effect on the average interest rate earned on total interest-earning assets.

The real rate for contingent loans has been stated as the nominal rate, since we do not have an effective funding obligation for these loans. The foreign exchange gains or losses on foreign currency denominated assets and liabilities have not been included in interest revenue or expense. Similarly, interest on financial investments does not include trading gains or losses on these investments. Interest is not recognized during periods in which loans are past due. However, interest received on past due loans includes interest on such loans from the original maturity date.

Non-performing loans that are not yet 90 days or more overdue have been included in each of the various categories of loans, and therefore affect the various averages. Non-performing loans consist of commercial loans included in Categories C4, D1 and D2 (equivalent to Categories C and D for 2003 and prior years) and loans (or portions thereof) that are overdue. We cease to accrue interest on loans as soon as they become overdue. Past due loans include, with respect to any loan, the portion of principal or interest that is 90 or more days overdue, and do not include the portion of such loan that is not overdue or that is less than 90 days overdue, unless legal proceedings have been commenced for the entire outstanding balance according to the terms of the loan. This practice differs from that normally followed in the United States where the amount classified as past due would include the total principal and interest on all loans which have any portion overdue.

Included in interbank deposits are accounts maintained in the Central Bank and foreign banks. Such assets have a distorting effect on the average interest rate earned on total interest-earning assets because currently balances maintained in peso amounts do not earn interest, and the only balances held in a foreign currency that earn interest

are those maintained in U.S. dollars, but those only earn interest on the amounts that are legally required to be held for liquidity purposes. Additionally, this account includes interest earned by overnight investments. Consequently, the average interest earned on such assets is comparatively low. We maintain these deposits in these accounts to comply with statutory requirements and to facilitate international business, rather than to earn income.

The monetary gain or loss on interest-earning assets and interest bearing liabilities is not included as a component of interest revenue or interest expense because inflation effects are taken into account in the calculation of real interest rates.

The following tables show, by currency of denomination, average balances and, where applicable, interest amounts, nominal rates and rates for our assets and liabilities for the year ended December 31, 2005, 2006 and 2007:

	Year ended December 31,
	2005								2006								2007
					Average		Average						Average		Average						Average		Average
	Average		Interest		Nominal		Real		Average		Interest		Nominal		Real		Average		Interest		Nominal		Real
	Balance		Earned		Rate		Rate		Balance		Earned		Rate		Rate		Balance		Earned		Rate		Rate
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)
ASSETS
INTEREST EARNING ASSETS
Interbank deposits
Ch$	Ch$	48,098	Ch$	986	2.1	%	(1.6	)%	Ch$	57,146	Ch$	589	1.0	%	(1.5	)%	Ch$	44,070	Ch$	1,423	3.2	%	(4.2	)%
UF	—		—		—		—		—		—		—		—		—		—		—		—
Foreign currency	12,471		526		4.2		(7.6	)	10,390		850		8.2		9.1		16,898		1,245		7.4		(6.8	)
Total	60,569		1,512		2.5		(2.8	)	67,536		1,439		2.1		0.1		60,968		2,668		4.4		(4.9	)
Financial investments
Ch$	105,345		6,427		6.1		2.3		96,531		9,300		9.6		6.9		86,261		5,368		6.2		(1.5	)
UF	290,181		28,372		9.8		5.9		69,769		4,598		6.6		3.9		109,732		8,622		7.9		0.1
Foreign currency	200,765		14,066		7.0		(5.2	)	44,009		3,683		8.4		9.3		20,336		1,678		8.3		(6.0	)
Total	596,291		48,865		8.2		1.5		210,309		17,581		8.4		6.4		216,329		15,668		7.2		(1.1	)
Loans
Ch$	1,109,322		102,276		9.2		5.3		1,281,346		131,369		10.3		7.5		1,490,413		157,438		10.6		2.6
UF	718,091		61,499		8.6		4.7		913,703		63,268		6.9		4.2		1,128,565		135,095		12.0		3.9
Foreign currency	408,720		16,425		4.0		(7.8	)	362,295		21,447		5.9		6.8		366,105		22,461		6.1		(7.8	)
Total	2,236,133		180,200		8.1		2.7		2,557,344		216,084		8.5		6.2		2,985,083		314,994		10.6		1.8
Mortgage loans
Ch$	—		—		—		—		—		—		—		—		121		6		5.0		(2.6	)
UF	414,771		38,344		9.2		5.3		347,605		26,695		7.7		5.0		335,955		41,236		12.3		4.2
Foreign currency	—		—		—		—		—		—		—		—		—		—		—		—
Total	414,771		38,344		9.2		5.3		347,605		26,695		7.7		5.0		336,076		41,242		12.3		4.1
Contingent loans
Ch$	44,204		—		—		—		50,091		—		—		—		64,353		—		—		—
UF	88,098		—		—		—		92,477		—		—		—		100,997		—		—		—
Foreign currency	95,547		362		0.4		(11.0	)	116,224		317		0.3		1.2		120,211		104		0.1		(13.1	)
Total	227,849		362		0.2		(4.6	)	258,792		317		0.1		0.5		285,561		104		0.0		(5.5	)
Past due loans
Ch$	9,246		2,429		26.3		21.8		11,439		2,687		23.5		20.4		11,966		3,431		28.7		19.4
UF	15,964		957		6.0		2.2		13,884		1,054		7.6		4.9		12,872		974		7.6		(0.2	)
Foreign currency	104		—		—		—		234		1		0.4		1.3		653		15		2.3		(11.2	)
Total	25,314		3,386		13.4		9.3		25,557		3,742		14.6		11.8		25,491		4,420		17.3		8.7
Total interest earning assets
Ch$	1,316,215		112,118		8.5		4.6		1,496,553		143,945		9.6		6.8		1,697,184		167,666		9.9		1.9
UF	1,527,105		129,172		8.5		4.6		1,437,438		95,615		6.7		3.9		1,688,121		185,927		11.0		3.0
Foreign currency	717,607		31,379		4.4		(7.5	)	533,152		26,298		4.9		5.9		524,203		25,503		4.9		(8.9	)
Total	Ch$	3,560,927	Ch$	272,669	7.7	%	2.2	%	Ch$	3,467,143	Ch$	265,858	7.7	%	5.5	%	Ch$	3,909,508	Ch$	379,096	9.7	%	0.9	%

	Year ended December 31,
	2005							2006							2007
						Average	Average						Average	Average						Average	Average
	Average			Interest		Nominal	Real	Average			Interest		Nominal	Real	Average			Interest		Nominal	Real
	Balance			Earned		Rate	Rate	Balance			Earned		Rate	Rate	Balance			Earned		Rate	Rate
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)
NON-INTEREST EARNING ASSETS
Cash
Ch$	Ch$	81,164				—	—	Ch$	20,134				—	—	Ch$	39,841				—	—
UF	—					—	—	—					—	—	—					—	—
Foreign currency	18,071					—	—	16,113					—	—	17,188					—	—
Total	99,235					—	—	36,247					—	—	57,029					—	—
Allowance for loan losses
Ch$	(48,035		)			—	—	(48,344		)			—	—	(51,692		)			—	—
UF	—					—	—	—					—	—	—					—	—
Foreign currency	—					—	—	—					—	—	—					—	—
Total	(48,035		)			—	—	(48,344		)			—	—	(51,692		)			—	—
Fixed assets (1)
Ch$	36,418					—	—	36,692					—	—	34,183					—	—
UF	—					—	—	—					—	—	—					—	—
Foreign currency	—					—	—	531					—	—	1,187					—	—
Total	36,418					—	—	37,223					—	—	35,370					—	—
Other assets
Ch$	589,933					—	—	276,339					—	—	198,090					—	—
UF	6,107					—	—	4,793					—	—	6,617					—	—
Foreign currency	374,131					—	—	181,234					—	—	53,880					—	—
Total	970,171					—	—	462,366					—	—	258,587					—	—
Total non-interest earning assets
Ch$	659,480					—	—	284,821					—	—	220,422					—	—
UF	6,107					—	—	4,793					—	—	6,617					—	—
Foreign currency	392,202					—	—	197,878					—	—	72,255					—	—
Total	1,057,789					—	—	487,492					—	—	299,294					—	—
Total Assets (2)
Ch$	1,975,695			112,118		—	—	1,781,374			143,945		—	—	1,917,606			167,666		—	—
UF	1,533,212			129,172		—	—	1,442,231			95,615		—	—	1,694,738			185,927		—	—
Foreign currency	1,109,809			31,379		—	—	731,030			26,298		—	—	596,458			25,503		—	—
Total Ch$	Ch$	4,618,716		Ch$	272,669	—	—	Ch$	3,954,635		Ch$	265,858	—	—	Ch$	4,208,802		Ch$	379,096	—	—

(1) According to accounting regulations issued by the Chilean Superintendency of Banks, fixed assets consist of traditional fixed assets and investment in other companies.

(2) Represents total of interest earning and non-interest earning assets.

	Year ended December 31,
	2005								2006								2007
					Average		Average						Average		Average						Average		Average
	Average		Interest		Nominal		Real		Average		Interest		Nominal		Real		Average		Interest		Nominal		Real
	Balance		Paid		Rate		Rate		Balance		Paid		Rate		Rate		Balance		Paid		Rate		Rate
	(in millions of constant Ch$as of December 31, 2007 except for percentages)
LIABILITIES
INTEREST-BEARING LIABILITIES
Savings accounts
Ch$	Ch$	—	Ch$	—	—	%	—	%	Ch$	—	Ch$	—	—	%	—	%	Ch$	—	Ch$	—	—	%	—	%
UF	13,898		541		3.9		0.2		12,478		242		1.9		(0.6	)	10,344		686		6.6		(1.1	)
Foreign currency	—		—		—		—		—		—		—		—		—		—		—		—
Total	13,898		541		3.9		0.2		12,478		242		1.9		(0.6	)	10,344		686		6.6		(1.1	)
Time deposits
Ch$	1,412,971		57,479		4.1		0.4		1,374,399		72,896		5.3		2.6		1,574,816		92,545		5.9		(1.8	)
UF	326,832		12,814		3.9		0.2		97,381		3,985		4.1		1.5		111,321		11,901		10.7		2.7
Foreign currency	197,199		6,022		3.1		(8.7	)	188,360		9,169		4.9		5.8		238,671		12,637		5.3		(8.6	)
Total	1,937,002		76,315		3.9		(0.6	)	1,660,140		86,050		5.2		2.9		1,924,808		117,083		6.1		(2.4	)
Central Bank borrowings
Ch$	6,612		250		3.8		0.1		1,403		59		4.2		1.6		12,199		653		5.4		(2.3	)
UF	—		—		—		—		—		—		—		—		—		—		—		(7.2	)
Foreign currency	20,445		676		3.3		(8.4	)	8,699		442		5.1		6.0		—		—		—		—
Total	27,057		926		3.4		(6.4	)	10,102		501		5.0		5.4		12,199		653		5.4		(2.3	)
Repurchase agreements
Ch$	61,384		7,901		12.9		8.8		72,327		9,939		13.7		10.9		86,810		4,089		4.7		(2.9	)
UF	17,820		2,296		12.9		8.9		2,927		397		13.6		10.7		4,802		283		5.9		(1.8	)
Foreign currency	22,511		2,900		12.9		—		13,552		1,856		13.7		14.7		17,857		1,050		5.9		(8.1	)
Total	101,715		13,097		12.9		6.9		88,806		12,192		13.7		11.4		109,469		5,422		5.0		(3.7	)
Mortgage finance bonds
Ch$	—		—		—		—		164		6		3.7		1.0		261		9		3.4		(4.0	)
UF	308,707		25,988		8.4		4.6		324,951		21,404		6.6		3.9		346,188		41,831		12.1		4.0
Foreign currency	—		—		—		—		—		—		—		—		—		—		—
Total	308,707		25,988		8.4		4.6		325,115		21,410		6.6		3.9		346,449		41,840		12.1		4.0
Other interest-bearing liabilities
Ch$	16,733		577		3.4		(0.2	)	52,922		2,734		5.2		2.5		50,806		2,635		5.2		(2.4	)
UF	119,839		16,151		13.5		9.4		253,163		15,410		6.1		3.4		302,123		32,981		10.9		2.9
Foreign currency	266,547		8,886		3.3		(8.4	)	215,645		10,335		4.8		5.7		246,315		13,028		5.3		(8.6	)
Total	403,119		25,614		6.4		(2.8	)	521,730		28,479		5.5		4.3		599,244		48,644		8.1		(2.3	)
Total interest-bearing liabilities
Ch$	1,497,700		66,207		4.4		0.7		1,501,215		85,634		5.7		3.0		1,724,892		99,931		5.8		(1.9	)
UF	787,096		57,790		7.3		3.5		690,900		41,438		6.0		3.3		774,778		87,682		11.3		3.3
Foreign currency	506,702		18,484		3.6		(8.1	)	426,256		21,802		5.1		6.0		502,843		26,715		5.3		(8.6	)
Total	Ch$	2,791,498	Ch$	142,481	5.1	%	(0.1	)%	Ch$	2,618,371	Ch$	148,874	5.7	%	3.6	%	Ch$	3,002,513	Ch$	214,328	7.1	%	(1.7	)%

	Year ended December 31,
	2005						2006						2007
					Average	Average					Average	Average					Average	Average
	Average		Interest		Nominal	Real	Average		Interest		Nominal	Real	Average		Interest		Nominal	Real
	Balance		Paid		Rate	Rate	Balance		Paid		Rate	Rate	Balance		Paid		Rate	Rate
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)
NON-INTEREST BEARING LIABILITIES AND SHAREHOLDERS’ EQUITY
Non-interest-bearing demand deposits
Ch$	Ch$	249,808			—	—	Ch$	223,199			—	—	Ch$	285,428			—	—
UF	—				—	—	—				—	—	—				—	—
Foreign currency	16,324				—	—	15,308				—	—	15,307				—	—
Total	266,132				—	—	238,507				—	—	300,735				—	—
Contingent obligations
Ch$	44,519				—	—	50,370				—	—	64,603				—	—
UF	87,779				—	—	92,181				—	—	100,732				—	—
Foreign currency	96,158				—	—	117,763				—	—	121,198				—	—
Total	228,456				—	—	260,314				—	—	286,533				—	—
Other non-interest-bearing
Ch$	429,292				—	—	224,073				—	—	127,926				—	—
UF	3,631				—	—	2,640				—	—	2,838				—	—
Foreign currency	479,414				—	—	166,052				—	—	46,733				—	—
Total	912,337				—	—	392,765				—	—	177,497				—	—
Shareholders’ equity (1)
Ch$	420,293				—	—	444,678				—	—	441,524				—	—
UF	—				—	—	—				—	—	—				—	—
Foreign currency	—				—	—	—				—	—	—				—	—
Total	420,293				—	—	444,678				—	—	441,524				—	—
Total non-interest-bearing liabilities and shareholders’ equity
Ch$	1,143,912				—	—	942,320				—	—	919,481				—	—
UF	91,410				—	—	94,821				—	—	103,570				—	—
Foreign currency	591,896				—	—	299,123				—	—	183,238				—	—
Total	1,827,218				—	—	1,336,264				—	—	1,206,289				—	—
Total liabilities and shareholders’ equity (2)																	—	—
Ch$	2,641,612		66,207		—	—	2,443,535		85,634		—	—	2,644,373		99,931		—	—
UF	878,506		57,790		—	—	785,721		41,438		—	—	878,348		87,682		—	—
Foreign currency	1,098,598		18,484		—	—	725,379		21,802		—	—	686,081		26,715		—	—

Total	Ch$	4,618,716	Ch$	142,481	—	—	Ch$	3,954,635	Ch$	148,874	—	—	Ch$	4,208,802	Ch$	214,328	—	—

(1) Consolidated shareholders’ equity of CorpBanca and its subsidiaries.

(2) Represents total of interest-bearing and non-interest bearing liabilities and shareholders’ equity.

Interest-earning Assets–Net Interest Margin

The following table analyzes, by currency of denomination, our levels of average interest-earning assets and net interest, and illustrates the comparative margins obtained, for each of the periods indicated:

	Year ended December 31,
	2005			2006			2007
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)
Total average interest earning assets
Ch$	Ch$	1,316,215		Ch$	1,496,553		Ch$	1,697,184
UF	1,527,105			1,437,438			1,688,121
Foreign currency	717,607			533,152			524,203
Total	Ch$	3,560,927		Ch$	3,467,143		Ch$	3,909,508

Net interest earned (1)
Ch$	Ch$	45,911		Ch$	58,311		Ch$	67,735
UF	71,382			54,177			98,245
Foreign currency	12,895			4,496			(1,212		)
Total	Ch$	130,188		Ch$	116,984		Ch$	164,768

Net interest margin, nominal basis (2)
Ch$	3.5		%	3.9		%	4.0		%
UF	4.7		%	3.8		%	5.8		%
Foreign currency	1.8		%	0.8		%	(0.2		)%
Total	3.7		%	3.4		%	4.2		%

(1) Net interest earned is defined as interest revenue earned less interest expense incurred.

(2) Net interest margin is defined as net interest revenue divided by average interest-earning assets.

Changes in Net Interest Revenue and Interest Expense—Volume and Rate Analysis

The following tables allocate, by currency of denomination, changes in our net interest revenue between changes in the average volume of interest-earning assets and interest bearing liabilities and changes in their respective nominal interest rates from 2005 to 2006 and from 2006 to 2007. Volume and rate variances have been calculated based on movements in average balances over the year and changes in nominal interest rates, average interest-earning assets and average interest bearing liabilities. The net change attributable to changes in both volume and rate has been allocated proportionately to the change due to volume and the change due to rate.

	Increase (Decrease)												Increase (Decrease)
	from 2005 to 2006												from 2006 to 2007
	due to changes in									Net change			due to changes in									Net change
							Rate and			from 2005									Rate and			from 2006
	Volume			Rate			Volume			to 2006			Volume			Rate			Volume			to 2007
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)
INTEREST EARNING ASSETS
Interbank deposits
Ch$	Ch$	185		Ch$	(490	)	Ch$	(92	)	Ch$	(397	)	Ch$	(135	)	Ch$	1,256		Ch$	(287	)	Ch$	834
UF	—			—			—			—			—			—			—			—
Foreign currency	(88		)	494			(82		)	324			532			(84		)	(53		)	395
Total	97			4			(174		)	(73		)	397			1,172			(340		)	1,229
Financial investments
Ch$	(538		)	3,722			(311		)	2,873			(989		)	(3,293		)	350			(3,932		)
UF	(21,550		)	(9,248		)	7,024			(23,774		)	2,634			884			506			4,024
Foreign currency	(10,982		)	2,736			(2,137		)	(10,383		)	(1,981		)	(52		)	28			(2,005		)
Total	(33,070		)	(2,790		)	4,576			(31,284		)	(336		)	(2,461		)	884			(1,913		)
Loans
Ch$	15,861			11,448			1,784			29,093			21,434			3,985			650			26,069
UF	16,752			(11,777		)	(3,206		)	1,769			14,877			46,115			10,835			71,827
Foreign currency	(1,866		)	7,770			(882		)	5,022			226			779			9			1,014
Total	30,747			7,441			(2,304		)	35,884			36,537			50,879			11,494			98,910
Mortgage loans
Ch$	—			—			—			—			—			—			6			6
UF	(6,209		)	(6,491		)	1,051			(11,649		)	(895		)	15,969			(533		)	14,541
Foreign currency	—			—			—			—			—			—			—			—
Total	(6,209		)	(6,491		)	1,051			(11,649		)	(895		)	15,969			(527		)	14,547
Contingent loans
Ch$	—			—			—			—			—			—			—			—
UF	—			—			—			—			—			—			—			—
Foreign currency	78			(101		)	(22		)	(45		)	11			(216		)	(8		)	(213		)
Total	78			(101		)	(22		)	(45		)	11			(216		)	(8		)	(213		)
Past due loans
Ch$	576			(257		)	(61		)	258			124			593			27			744
UF	(125		)	255			(33		)	97			(77		)	(3		)	—			(80		)
Foreign currency	—			—			1			1			2			4			8			14
Total	451			(2		)	(93		)	356			49			594			35			678
Total interest earning assets
Ch$	16,084			14,423			1,320			31,827			20,434			2,541			746			23,721
UF	(11,132		)	(27,261		)	4,836			(33,557		)	16,539			62,965			10,808			90,312
Foreign currency	(12,858		)	10,899			(3,122		)	(5,081		)	(1,210		)	431			(16		)	(795		)
Total	Ch$	(7,906	)	Ch$	(1,939	)	Ch$	3,034		Ch$	(6,811	)	Ch$	35,763		Ch$	65,937		Ch$	11,538		Ch$	113,238

	Increase (Decrease)												Increase (Decrease)
	from 2005 to 2006												from 2006 to 2007
	due to changes in									Net change			due to changes in									Net change
							Rate and			from 2005									Rate and			from 2006
	Volume			Rate			Volume			to 2006			Volume			Rate			Volume			to 2007
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)
INTEREST BEARING LIABILITIES
Savings accounts
Ch$	Ch$	—		Ch$	—		Ch$	—		Ch$	—		Ch$	—		Ch$	—		Ch$	—		Ch$	—
UF	(55		)	(272		)	28			(299		)	(41		)	582			(97		)	444
Foreign currency	—			—			—			—			—			—			—			—
Total	(55		)	(272		)	28			(299		)	(41		)	582			(97		)	444
Time deposits
Ch$	(1,569		)	17,464			(478		)	15,417			10,630			7,875			1,144			19,649
UF	(8,997		)	559			(391		)	(8,829		)	570			6,426			920			7,916
Foreign currency	(270		)	3,577			(160		)	3,147			2,449			804			215			3,468
Total	(10,836		)	21,600			(1,029		)	9,735			13,649			15,105			2,279			31,033
Central Bank borrowings
Ch$	(197		)	28			(22		)	(191		)	454			16			124			594
UF	—			—			—			—			—			—			—			—
Foreign currency	(388		)	363			(209		)	(234		)	(442		)	(442		)	442			(442		)
Total	(585		)	391			(231		)	(425		)	12			(426		)	566			152
Repurchase agreements
Ch$	1,408			535			95			2,038			1,990			(6,533		)	(1,307		)	(5,850		)
UF	(1,919		)	121			(101		)	(1,899		)	254			(225		)	(143		)	(114		)
Foreign currency	(1,154		)	183			(73		)	(1,044		)	590			(1,059		)	(337		)	(806		)
Total	(1,665		)	839			(79		)	(905		)	2,834			(7,817		)	(1,787		)	(6,770		)
Mortgage finance bonds
Ch$	—			—			6			6			4			—			(1		)	3
UF	1,367			(5,652		)	(299		)	(4,584		)	1,399			17,859			1,169			20,427
Foreign currency	—			—			—			—			—			—			—			—
Total	1,367			(5,652		)	(293		)	(4,578		)	1,403			17,859			1,168			20,430
Other interest bearing liabilities
Ch$	1,248			287			622			2,157			(109		)	11			(1		)	(99		)
UF	17,968			(8,856		)	(9,853		)	(741		)	2,980			12,225			2,366			17,571
Foreign currency	(1,697		)	3,889			(743		)	1,449			1,470			1,070			153			2,693
Total	17,519			(4,680		)	(9,974		)	2,865			4,341			13,306			2,518			20,165
Total interest bearing liabilities
Ch$	890			18,314			223			19,427			12,969			1,369			(41		)	14,297
UF	8,364			(14,100		)	(10,616		)	(16,352		)	5,162			36,867			4,215			46,244
Foreign currency	(3,509		)	8,012			(1,185		)	3,318			4,067			373			473			4,913
Total	Ch$	5,745		Ch$	12,226		Ch$	(11,578	)	Ch$	6,393		Ch$	22,198		Ch$	38,609		Ch$	4,647		Ch$	65,454

Return on Equity and Assets

The following table sets forth our return on average shareholders’ equity and average total assets and related information for each of the periods indicated.

	As of December 31,
	2005		2006		2007

Return on assets (net income divided by average total assets)	1.2	%	1.1	%	1.2	%
Return on equity (net income divided by average Shareholders’ Equity)	13.7	%	9.4	%	11.6	%
Dividend payout ratio (dividend declared per share divided by the total number of shares)(1)	50.0	%	75.0	%	50.0	%
Equity to assets ratio (average Shareholders’ Equity divided by average total assets)	9.1	%	11.2	%	10.5	%

(1) Dividend declared after year end

Investment Portfolio

Financial investments are classified at the time of the purchase, based on management’s intentions, as either trading or investment instruments, the latter of which are categorized as available-for-sale or held-to-maturity. As of December 31, 2005, 2006 and 2007 we have not classified any securities as held-to-maturity.

Financial investments as of December 31, 2005, 2006 and 2007 are as follows:

	As of December 31,
	2005		2006		2007
	(in millions of constant Ch$ of December 31, 2007)
Held-for-Trading:
Central Bank and government securities
Central Bank securities	Ch$	—	Ch$	49,741	Ch$	114,045
Chilean Treasury bonds	—		3,007		10,649
Other securities	—		2		2
Subtotal	—		52,750		124,696
Other financial securities
Time deposits in Chilean financial institutions	—		69,350		13,019
Mortgage finance bonds	—		4,095		3,504
Chilean financial institutions bonds	—		1,760		1,820
Chilean corporate bonds	—		—		83
Other Chilean securities	—		5,648		—
Subtotal	—		80,853		18,426
Total	—		133,603		143,122

Available-for-sale:
Central Bank and government securities
Central Bank securities	25,286		—		2,984
Chilean Treasury bonds	173		—		—
Other securities	2		—		—
Subtotal	25,461		—		2,984
Other financial securities
Time deposits in Chilean financial institutions	111,963		18,265		38,382
Mortgage finance bonds	120,637		1		—
Chilean financial institutions bonds	475		—		—
Chilean corporate bonds	85,213		6,721		—
Central Bank and government foreign securities	31,205		5,095		—
Other foreign securities	79,508
Subtotal	429,001		30,082		38,382
Total	454,462		30,082		41,366
Total financial investments	Ch$	454,462	Ch$	163,685	Ch$	184,488

We do not hold securities of any issuer other than the Chilean Central Bank, which the aggregate book value of the investment exceeds 10% of our shareholders’ equity as of the end of the latest reported period.

During the latter part of 2005, long-term interest rates prevailing in Chile began to rise. In particular, the benchmark interest rates applicable to Central Bank bonds with maturities of five and ten years experienced significant increases. As prevailing benchmark interest rates in Chile began to rise, the marked-to-market value of the peso- and UF-denominated bonds held in our investment portfolio began to decline. This increase in rates and concurrent decrease in value of our investment portfolio would have resulted in significant losses when such bonds were marked-to-market in connection with the preparation of our financial statements. In response to the magnitude of losses that would have been generated by maintaining our investment portfolio as it was constituted prior to October 2005, we began to gradually liquidate our investment portfolios through sales transactions carried out in the Chilean financial markets. We continued this liquidation process through the first half of 2006 and as a result our financial investments as of December 31, 2006 amounted to Ch$163,685 million as compared to Ch$454,463 million as of December 31, 2005. As of December 31, 2005 and 2006, our investment portfolio as a percentage of total assets decreased from 12% to 4%, respectively. As of December 31, 2007 our Trading and Available-for-Sale investment portfolio amounted to Ch$184,488 million, or 3.8% as a percentage of total assets. During 2007, there were no material changes in our Trading and Available-for-Sale investment portfolio. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Sources of Liquidity—Financial Investments.”

The following table sets forth an analysis of our investments, by time remaining to maturity and the weighted average nominal rates of such investments, as of December 31, 2007:

	Within one year	Weighted average Nominal Rate	After one year but within five years	Weighted average Nominal Rate	After five years but within ten years	Weighted average Nominal Rate	After ten years	Weighted average Nominal Rate	Total
	(in millions of constant Ch$ of December 31, 2007)
	Ch$	%	Ch$	%	Ch$	%	Ch$	%	Ch$
Held-for-Trading:
Central Bank and government securities
Central Bank securities	52,511	3.7	55,658	3.6	5,393	3.5	483	2.9	114,045
Chilean Treasury bonds	412	4.6	1,476	4.6	4,439	4.9	4,322	3.2	10,649
Other securities	—	—	2	6.7	—	—	—	—	2
Subtotal	52,923	3.7	57,136	3.6	9,832	4.1	4,805	3.2	124,696
Other financial securities
Time deposits in Chilean financial institutions	11,962	6.3	1,057	5.6	—	—	—	—	13,019
Mortgage finance bonds	536	3.9	1,190	3.6	1,658	3.9	120	4.3	3,504
Chilean financial institutions bonds	—	—	1,820	2.9	—	—	—	—	1,820
Other Chilean securities	—	—	83	6.2	—	—	—	—	83
Subtotal	12,498	6.2	4,150	3.9	1,658	3.9	120	4.3	18,426
Total	65,421	4.2	61,286	3.6	11,490	4.1	4,925	3.2	143,122

Available-for-sale:
Central Bank and Government Securities
Central Bank Securities	1,872	3.2	1,112	3.2	—	—	—	—	2,984
Subtotal	1,872	3.2	1,112	3.2	—	—	—	—	2,984
Others Financial Securities
Time deposits in Chilean Financial Institutions	38,382	6.1	—	—	—	—	—	—	38,382
Subtotal	38,382	6.1	—	—	—	—	—	—	38,382
Total	40,254	6.0	1,112	3.2	—	—	—	—	41,366
Total Financial investments	105,675	4.9	62,398	3.6	11,490	4.1	4,925	3.2	184,488

Loan portfolio

The following table analyzes our loans by type of loan. Except where otherwise specified, all loan amounts stated below are before deduction for the allowance for loan losses. Total loans reflect our loan portfolio, including past due principal amounts.

	As of December 31,
	2003		2004		2005		2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Commercial loans
General commercial loans	Ch$	1,129,883	Ch$	1,276,203	Ch$	1,428,717	Ch$	1,618,753	Ch$	2,137,335
Foreign trade loans	162,439		202,966		230,954		254,537		270,368
Interbank loans	4,658		22,724		32,908		21,486		28,014
Leasing contracts	179,283		203,360		230,195		243,364		257,140
Factored receivables	43,369		68,296		65,792		76,845		91,143
Other outstanding loans	47,183		97,575		134,486		200,031		372,073
Subtotal commercial loans	1,566,815		1,871,124		2,123,052		2,415,016		3,156,073

Mortgage loans
Residential	116,746		105,189		121,598		169,324		150,718
Commercial	239,114		228,066		216,133		203,110		182,647
Subtotal mortgage loans	355,860		333,255		337,731		372,434		333,365

Consumer loans	254,018		325,832		386,663		468,232		509,956
Past due loans
Commercial loans	27,135		19,486		24,056		16,523		18,121
Residential mortgage loans	1,796		1,713		2,241		2,401		2,577
Consumer loans	1,200		1,115		1,115		1,606		2,754
Past due loans	30,131		22,314		27,412		20,530		23,452
Subtotal	2,206,824		2,552,525		2,874,858		3,276,212		4,022,846

Contingent loans (1)	230,107		223,534		248,411		302,168		322,590
Total loans (2)	Ch$	2,436,931	Ch$	2,776,059	Ch$	3,123,269	Ch$	3,578,380	Ch$	4,345,436

(1) For purposes of loan classification, contingent loans are considered commercial loans.

(2) All of the above categories except mortgage loans, past due loans and contingent loans are combined into “Loans” as reported in the tables set forth under “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Average Balance Sheets, Income Earned from Interest Earning Assets and Interest Paid on Interest Bearing Liabilities.”

The loan categories are as follows:

Commercial loans are long-term and short-term loans granted to Chilean corporations and individuals in pesos, UF or US$ on an adjustable or fixed rate basis, primarily to finance working capital or investments. Commercial loans represent the largest portion of our loan portfolio. Interest accrues daily on a 30- or 360-day basis. Loan payments are scheduled monthly, biannually or yearly, depending on the terms of the loan. Although we determine the interest rate, it cannot exceed the maximum rate for commercial loans established by the Chilean Superintendency of Banks.

Foreign trade loans are fixed rate, short-term loans made in foreign currencies (principally US$) to finance imports and exports.

Interbank loans are fixed rate, short-term loans to financial institutions that operate in Chile.

Leasing contracts are contracts which include a clause granting a lessee a purchase option on leased assets at the end of the contract.

Factored receivables are derived from our factoring operations, which consist of purchasing outstanding debt portfolios, such as bills, notes, or contracts, advancing a payment representing the future cash flows from such assets, and then performing the related collection function.

Other outstanding loans include checking account overdrafts, bills of exchange and mortgage loans, which are financed by our general borrowings.

Mortgage loans are either inflation-indexed (denominated in UF) or denominated in pesos at a fixed rate. These loans are long-term with monthly payments of principal and interest secured by a real property mortgage. Mortgage loans denominated in UF are financed in two ways: traditional mortgages are financed by mortgage finance bonds that we issue and sell in the Chilean financials markets, and new flexible mortgages are financed by our own funds. Mortgage loans denominated in pesos are financed by our own funds and through liabilities denominated in pesos with durations of 2 to 5 years. At the time of approval, the amount of a mortgage loan cannot be more than 75% of the lower of the purchase price or the appraised value of the mortgaged property; otherwise, such loan will be classified as a commercial loan. Interest accrues daily based on a 360-day year. Although we have allowances for mortgage loan losses, mortgage loans are ultimately secured by the mortgaged property.

Consumer loans are loans to individuals, granted in pesos, generally on a fixed rate basis, to finance the purchase of consumer goods or to pay for services. They also include credit card balances subject to interest charges. Consumer loans represent the largest portion of our portfolio of loans to individuals. Interest accrues daily on a 30- or 360-day basis. Loan payments are scheduled monthly. Although we determine the interest rate, it cannot exceed the maximum rate for consumer loans established by the Chilean Superintendency of Banks.

Past due loans include, with respect to any loan, the amount of principal or interest that is 90 days or more overdue, and do not include the installments of such loan that are not overdue or that are less than 90 days overdue, unless legal proceedings have been commenced for the entire outstanding balance according to the terms of the loan.

Contingent loans consist of guarantees granted by us in Ch$, UF and foreign currencies (principally US$), as well as open and unused letters of credit. Unlike U.S. GAAP, Chilean GAAP requires such loans to be accounted for on our balance sheet.

Any collateral provided generally consists of a mortgage on real estate, a pledge of marketable securities, a letter of credit or cash. The existence and amount of collateral generally varies from loan to loan.

Risks Index of Our Loan Portfolio

Our risk index for 2003 and prior years was calculated using the methodology established by the Chilean Superintendency of Banks and did not include additional or voluntary allowances. From January 1, 2004, additional and voluntary allowances have been included in the calculation of our risk index resulting in a higher index. The risk index is calculated as total loans over allowances for loan losses.

Commercial loans. The risk index of our commercial portfolio was 1.45% as of December 31, 2003, but increased to 1.56% as of December 2004 because of changes in loan classification methods which were implemented during the year. Our risk index as of December 31, 2005, 2006 and 2007 was 1.39%, 1.08% and 0.77%, respectively. This decrease is mainly due to the better overall condition of the domestic economy and, accordingly, of our customers. The quality of our commercial loans depends on Chilean GDP growth, interest rates, changes in regulations, the general level of indebtedness and other economic conditions.

Mortgage loans. The risk index of our residential mortgages improved from 0.56% as of December 31, 2003 to 0.30% in December 2007 (0.41% and 0.35% as of December 31, 2004 and 2005, respectively) which was mainly due to improving economic conditions in Chile.

Consumer loans. The risk index of our consumer loans was at 2.95% as of December 31, 2003 (3.92% and 3.64% as of December 31, 2004 and 2005, respectively). This trend continued the following and reached 4.07% and

5.31% as of December 31, 2006 and 2007, respectively. This increase is principally due to our growth in more profitable products which are associated with greater risk.

Foreign trade loans. The risk factors of foreign trade loans include those that affect commercial loans and, additionally, risks such as fluctuations in real exchange rates, international foreign trade policies and international commodity prices.

Leasing. The risk index of our leasing operations was at 0.78% as of December 31, 2003. This index increased to 1.04%, 1.08%, 1.19% and 0.97% as of December 31, 2004, 2005, 2006 and 2007, respectively.

Factoring. The risk index of our factoring operations as of December 31, 2003 was 0.20%, This subsequently increased and remained flat. As of December 31, 2007 this index was at 1.00%.

In order to reduce the risks of the loan portfolio, our credit committee meets weekly to review and approve or decline new loan proposals. See “—Regulation and Supervision—Lending Limits” above and “—Credit Review Process.”

Maturity and Interest Rate Sensitivity of Loans

The following table sets forth an analysis of our loans by type and time remaining to maturity as of December 31, 2007:

	Balance as of December 31, 2007			Due within 1 month		Due after 1 month but within 6 months		Due after 6 months but within 12 months			Due after 1 year but within 3 years		Due after 3 years but within 5 years		Due after 5 years
			(in millions of constant Ch$ as of December 31, 2007)

Commercial loans	Ch$	2,137,335		Ch$	416,292	Ch$	490,842	Ch$	200,157	Ch$		365,426	Ch$	309,187	Ch$	355,431
Consumer loans	509,956			65,393		53,299		66,786		177,132			109,388		37,958
Mortgage loans	333,365			2,526		11,621		14,070		55,201			54,575		195,372
Foreign trade loans	270,368			68,486		165,350		26,152		4,075			4,106		2,199
Leasing contracts	257,140			5,608		29,463		32,814		91,413			43,708		54,134
Factored receivables	91,143			45,195		23,474		1,424		7,870			4,628		8,552
Interbank loans	28,014			28,014		—		—		—			—		—
Other outstanding loans	372,073			2,536		5,688		6,965		29,153			31,330		296,401
Past due loans	23,452			23,452		—		—		—			—		—
Subtotal	4,022,846			657,502		779,737		348,368		730,270			556,922		950,047
Contingent loans	322,590			60,649		116,405		75,150		66,155			3,740		491
Total loans	Ch$	4,345,436		Ch$	718,151	Ch$	896,142	Ch$	423,518	Ch$		796,425	Ch$	560,662	Ch$	950,538

The following tables present the interest rate sensitivity of our outstanding loans due after one year as of December 31, 2007.

	As of December 31, 2007
Variable rate:
Ch$	Ch$	213,021
UF	418,962
Ch$ indexed to US$	8,388
Foreign currency	95,519
Subtotal	735,890
Fixed rate:
Ch$	465,451
UF	1,038,645
Ch$ indexed to US$	6,730
Foreign currency	60,909
Subtotal	1,571,735
Total	Ch$	2,307,625

The following table sets forth an analysis of our foreign loans by type and time remaining to maturity as of December 31, 2007:

After

1 month

6 months

1 year

3 years

Due within

but within

Due after

Total

1 month

6 months

12 months

3 years

5 years

(in millions of constant Ch$ as of December 31, 2007)

Commercial loans

Ch$

78,731

Ch$

38,754

Ch$

25,107

Ch$

5,206

Ch$

4,608

Ch$

5,009

Ch$

Foreign trade loans

16,630

4,945

8,775

1,057

1,853

—

Total

Ch$

95,361

Ch$

43,699

Ch$

33,882

Ch$

6,263

Ch$

6,461

Ch$

5,009

Ch$

Loans by Economic Activity

The following table sets forth as of the dates indicated, and according to the categories set forth by the Chilean Superintendency of Banks, an analysis of our loan portfolio based on the borrower’s principal economic activity. Loans to individuals for business purposes are allocated to their economic activity including overdue and past due loans. The table does not reflect outstanding contingent loans.

	As of December 31,
	2005				2006				2007
	Loan		% of Loan		Loan		% of Loan		Loan		% of Loan
	Portfolio		Portfolio		Portfolio		Portfolio		Portfolio		Portfolio
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

Agriculture, Livestock, Agribusiness, Fishing
Agriculture and livestock	Ch$	57,890	2.0	%	Ch$	60,484	1.8	%	Ch$	63,043	1.6	%
Fruit	47,386		1.7		59,520		1.8		57,606		1.4
Forestry and wood extraction	46,923		1.6		28,249		0.9		27,618		0.7
Fishing	29,816		1.0		31,196		1.0		52,624		1.3
Subtotal	182,015		6.3		179,449		5.5		200,891		5.0
Mining and Petroleum
Mining and quarries	75,146		2.6		111,924		3.4		57,842		1.4
Subtotal	75,146		2.6		111,924		3.4		57,842		1.4
Manufacturing
Tobacco, food and beverages	57,465		2.0		79,769		2.4		71,772		1.8
Textiles, clothing and leather goods	17,587		0.6		17,881		0.5		17,729		0.4
Oil refining, carbon and rubber	109,797		3.8		114,785		3.5		136,828		3.4
Production of basic metal, non minerals, machine and equipment	1,881		0.1		1,545		0.1		2,574		0.1
Other	—		—		—		—		12,946		0.3
Subtotal	186,730		6.5		213,980		6.5		241,849		6.0
Electricity, Gas and Water
Electricity, gas and water	49,246		1.7		94,139		2.9		118,140		2.9
Subtotal	49,246		1.7		94,139		2.9		118,140		2.9
Construction
Residential buildings	17,857		0.6		10,987		0.3		5,108		0.1
Other constructions	187,251		6.5		213,583		6.5		233,829		5.8
Subtotal	205,108		7.1		224,570		6.8		238,937		5.9
Commerce
Wholesale	118,643		4.1		137,746		4.2		165,693		4.1
Retail, restaurants and hotels	134,190		4.7		114,728		3.5		140,127		3.5
Subtotal	252,833		8.8		252,474		7.7		305,820		7.6
Transport, Storage and Communications
Transport and storage	96,069		3.3		110,359		3.4		117,580		2.9
Communications	31,447		1.1		23,958		0.7		26,710		0.7
Subtotal	127,516		4.4		134,317		4.1		144,290		3.6
Financial services
Financial and insurance companies	508,196		17.7		499,085		15.3		795,087		19.8
Subtotal	508,196		17.7		499,085		15.3		795,087		19.8

	As of December 31,
	2005				2006				2007
	Loan		% of Loan		Loan		% of Loan		Loan		% of Loan
	Portfolio		Portfolio		Portfolio		Portfolio		Portfolio		Portfolio
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

Community, Social and Personal Services
Community, social and personal services	346,766		12.1		405,892		12.4		534,822		13.4
Subtotal	346,766		12.1		405,892		12.4		534,822		13.4
Consumer credit(1)	387,777		13.5		469,837		14.3		512,710		12.7
Residential Mortgage Loans(1)	257,185		9.0		369,935		11.3		523,467		13.0
Lease contracts(1)	230,310		8.0		243,456		7.4		257,275		6.4
Factoring(1)	66,031		2.3		77,154		2.4		91,716		2.3
Total	Ch$	2,874,859	100.0	%	Ch$	3,276,212	100.0	%	Ch$	4,022,846	100.0	%

(1) Figures prepared according to Superintendency standards. We classify our loan portfolio taking into account the debtor that receives the loan.

Foreign Country Outstandings

Our cross-border outstanding loans are principally trade-related. These loans include loans granted mainly to foreign financial institutions. The table below lists our total amounts outstanding to borrowers in foreign countries as of December 31 of each of the last three years. This table does not include foreign trade-related loans to Chilean borrowers.

	As of December 31,
	2005		2006		2007
	(in millions of constant Ch$ of December 31, 2007)

Argentina	Ch$	9,212	Ch$	14,129	Ch$	17,629
Bolivia	53		—		7
Brazil	7,054		2,481		16,592
Canada	409		566		—
Cayman Islands	—		1,182		11,248
China	571		593		11
Colombia	453		209		482
Italy	—		200		—
Korea	74		—		—
Ecuador	398		26		—
England	16		—		9
Japan	49		24		—
Mexico	54		—		3,879
New Zealand	—		—		199
Peru	3,433		3,475		4,953
Spain	405		—		128
Switzerland	—		4,092		51
United States	6,677		6,598		31,612
Uruguay	469		—		—
Venezuela	16,550		14,584		8,561
Total (1)	Ch$	45,877	Ch$	48,159	Ch$	95,361

(1) Foreign loans are mainly interbank or commercial loans.

We also maintain deposits abroad (primarily demand deposits) in foreign banks, as needed to conduct our foreign trade transactions. The table below lists the amounts of foreign deposits by country as of December 31, 2005, 2006 and 2007.

	As of December 31,
	2005		2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Australia	Ch$	—	Ch$	—	Ch$	59
Canada	220		64		317
Denmark	4		8		5
Germany	154		99		396
Italy	233		703		95
Japan	189		4,378		44
Norway	8		27		4
Spain	26		19		210
Sweden	1		—		2
Switzerland	41		9		—
United Kingdom	12		293		18
United States	11,015		13,606		20,457
Total	Ch$	11,903	Ch$	19,206	Ch$	21,607

Companies Credit Risk Division

The objective of the Companies Credit Risk Division is to maintain an adequate ratio of risk to return for the wholesale loan portfolio, provide a balance between commercial business goals, and to maintain sound acceptance criteria. These objectives are all in accordance with our strategic objectives.

To accomplish this goal, this division combines the following elements: (i) personnel with significant experience from various divisions; (ii) a sound, risk-conscious culture aligned with the Bank’s strategy; (iii) a well defined wholesale credit process, in terms of approval, monitoring and collection procedures; (iv) a regulatory and preventive outlook on risk; (v) active participation in the loan approval process, complete with a market-segmented structure; (vi) supervision of the loan approval process via Monitoring, Default and Ex-post Review Committees; (vii) dissemination of a risk-conscious culture throughout the Bank; (viii) continuous training for executives in the commercial and risk areas; and (ix) direct participation through the Risk Division in managing and collecting on deteriorated loans.

In addition, we have a number of Credit Committees with the ability to approve loans within certain amounts and terms depending on the credit risk rating of the potential borrower. Various risk managers of different levels of seniority participate in the credit approval process when certain predefined credit levels are surpassed (see “Item 4. Credit Review Process).

Commercial Risk

We are in the process of reorganizing our loan portfolio by increasing our share of the retail and small and medium-sized commercial market segments. As a result, managing risks in these segments is a key factor in our strategic development.

We continue to modernize and improve our risk management practices through a series of investments in technology. These investments have been made in order to improve loan evaluation, monitoring, and collecting processes as well as intelligence, modeling decision-making, forecasts, and reengineering of all associated processes.

The model used to manage commercial credit risk is based on a comprehensive analysis of risk and return, aimed at complying with projected indices and figures.

The specific objectives of the Commercial Risk Division are to: (i) plan, manage, forecast and control risks within each line of business; (ii) design and implement action plans to adjust relevant projections or deviations to the desired risk level for each line of business; (iii) provide the Bank with clear, simple, safe and systematic processes for credit flows and collections; (iv) develop the decision-making, segmentation, valuation and forecasting models as well as information systems necessary for methodical risk management; (v) maintain the Board of Directors informed as to the development of risk conditions affecting the Bank’s diverse areas of business and (vi) ensure compliance with numerous risk management standards and regulations.

The following methodologies are used by the Commercial Risk Division:

1. Admission and Initial Approval: Our main strategy for this stage is to develop and apply automated decision-making models that consider a prospective client’s demographics, credit history, net worth and ability to pay over other variables such as collateral, co-signers, etc. These same concepts are applied by the various committees in completing non-automated evaluations.

We have numerous local committees at branch offices, in regions outside Santiago and within central commercial areas, all of which have been delegated decision-making authority based on pre-defined profiles and amounts. In addition, we have specialized central risk units that analyze and resolve special cases.

Portfolio Management: Portfolio management is based on a comprehensive look at various factors, including, among others, a borrower’s credit behavior, ability to pay and net worth. This is carried out via continuous valuation with automated decision-making and forecast models.

Collection Management: We perform collection activities during the various phases of default, via companies with significant experience in these matters that are well integrated in the local market. Internally, we analyze, develop and monitor different collection strategies and tactics to implement any necessary changes and improvements to these processes in a timely manner. The collection strategy is based mainly on a thorough assessment of the borrower, with emphasis on early defaults so as to address problems in a timely manner.

2. Provision Models: We use a methodology for provisioning for consumer and mortgage loans. This methodology consists of statistical models based on the borrower’s credit behavior, including any noncompliance with other financial and commercial institutions, the length of default and the demographics of the client and its segment.

Credit Review Process

We perform a credit analysis of our entire commercial and retail (consumer) borrowers. Credit risk presented by our current or potential borrowers is evaluated in accordance to policies and standards which have been approved by our Board of Directors.

A potential commercial borrower’s evaluation focuses primarily on the credit history and reputation of its owners and management, its market position and the demand for its products or services, its production processes and facilities, its current and projected cash flows, its solvency and when it applies, the guarantees offered in connection with the loan. We also use tools such as sector reports, standard risk models for major industries, and reports relating to the potential commercial borrower’s sales patterns.

In the case of individual retail borrowers, the credit approval process is based primarily on an evaluation of the borrower’s credit behavior which combines the applicant’s commercial behavioral variables such as current debt levels, ability to pay and socio-economic level, among others, along with centralized evaluation and decision-making systems in cases where the applicant does not fit the standard model. The information presented by a prospective borrower is evaluated by considering the individual’s income, expenses, personal assets, credit history and our previous experience (if any) with the individual.

Prior to extending credit to a commercial borrower, we assign a credit risk rating to such potential borrower based on our analysis that helps identify each applicant’s risk profile. These ratings are based on a scale of 1 to 10, with a rating of 1 being excellent and rating of 10 corresponding to certain loss. In general, we consider ratings 1 through 6 to be acceptable ratings, and ratings 7 through 10 to be indicative of probable losses. Loan approvals are made at various levels and with varying degrees of involvement by different categories of executives (A through I) depending on the credit risk rating we have assigned to the potential borrower, the size of the loan under consideration and the collateral offered, if any. Collateral granted for loans generally consists of mortgages on real estate. In all cases, the approval of at least three officers is required in order to approve a loan.

Our evaluation of a potential transaction with a borrower is based on the concept of total customer risk. Total customer risk takes into account (i) the direct risk (actual and potential), (ii) the indirect risk, and (iii) the risks related to the client, such as having common partners, being part of an economic group or common guarantees.

The following table shows the category of executives that is required to approve secured and unsecured commercial borrowing transactions, according to the credit risk rating of the potential borrower and the U.S. dollar amount of the total customer risk based on exchange rates in effect at the time that the application for credit is made:

Category of Executives That	Maximum Amount of Total Customer Credit Risk in U.S. Dollars
May Approve Transaction	Rating 1 and 2		Rating 3		Rating 4 and 5		Rating 6 and above
Superior Committee	U.S.$	15,000,000	U.S.$	8,000,000	U.S.$	5,000,000	U.S.$	1,500,000
Divisional Committee	5,000,000		3,000,000		2,500,000		750,000
Manager Committee	3,000,000		1,500,000		1,500,000		500,000
A Executives	1,500,000		1,000,000		1,000,000		300,000
Risk Committee	1,000,000		1,000,000		850,000		300,000
B Executives	750,000		500,000		500,000		200,000

All transactions at the Risk Committee level or higher are reviewed by our credit risk managers.

All transactions resulting in total customer credit risk in excess of the amounts that can be reviewed by the Superior Committee as shown in the above table must be authorized by the Directors Committee of our Board of Directors, the Chief Executive Officer and three other members of the Board of Directors.

The following table shows the category of executives that is required to approve certain transactions resulting in customer credit risk in lower amounts. This table applies to all potential borrowers with credit risk ratings of 1 to 5 and varies according to whether the customer credit risk is comprised of secured or unsecured obligations.

	Maximum Amount of
	Total Customer Credit
Category of Executives That May Approve Transaction	Risk in U.S. Dollars
	Unsecured		Secured
C Executives	U.S$	120,000	US$	250,000
D Executives	80,000		200,000
E Executives	60,000		160,000
F Executives	30,000		120,000
G Executives	20,000		80,000
H Executives	10,000		40,000
I Executives	5,000		10,000

Our Credit Risk Department also monitors compliance with the terms of loans we have granted, such as payment dates, conditions and covenants. The monitoring process includes verification of the use of proceeds and contractual conditions, continuing financial analysis of the borrower and any guarantors, on-site visits to the

borrower’s place of business, confirmation of credit information and analysis of the economic environment as it affects the borrower or its sector, among other tools. Generally, the Credit Risk Department performs this monitoring on a yearly basis. If a debtor exhibits an elevated level of risk based on the results of our yearly monitoring, we may place such debtor on a special watch list. We monitor debtors on the watch list on a monthly basis. The Credit Risk Department regularly meets to decide whether to take any action (such as reducing outstanding loan amounts or requesting collateral) in respect of debtors on the watch list. In addition, our Credit Risk Department has a unit dedicated to administering the loan accounts of debtors with respect to which losses are expected or have occurred. This unit supervises the process of collections and legal proceedings.

We also monitor the quality of the loan portfolio on a continuous basis. The purpose of this special supervision is to maintain constant scrutiny of the portions of the portfolio that represent the greatest risk and to anticipate any deterioration. Based on this ongoing review of the loan portfolio, we believe we are able to detect problem loans and make a decision on a client’s status. This includes measures such as reducing or extinguishing a loan, or requiring better collateral from the client. The control systems require that loans be reviewed at least three times per year for those clients in the lowest category of credit watch.

Regulations Relating to Classification of Banks and Loans; Allowances for Loan Losses Prior to January 1, 2004

Classification of Banks. Through December 31, 2003, the Chilean Superintendency of Banks classified banks and other financial institutions into three categories: I, II and III. Category I was reserved for institutions that fully complied with the then loan classification guidelines. Institutions were rated as Category II if their loan classification system had deficiencies that needed correction by the bank’s management. Category III indicated significant deviations from the Chilean Superintendency of Banks’ guidelines that clearly reflected inadequacies in the evaluation of the risk and estimated loan losses. We were classified as Category I from 1997 through 2003.

Prior to January 1, 2004, we were required to estimate the allowances for loan losses based on global and individual allowances.

Global Allowance. The global allowance was calculated by multiplying the amounts outstanding in our loan portfolio by the greater of our “risk index” or 0.75% (2.0% for factoring operations). The risk index was derived from our management’s classification of our loan portfolio according to certain criteria relating to performance of the loans or, in the case of commercial loans, management’s estimate of the likelihood of default. More specifically, the risk index was computed by multiplying the aggregate amount of outstanding loans by the allowance percentage assigned to the relevant loan category.

Individual Allowance. We were also required to maintain an individual allowance for loans on which any payment of principal or interest is 90 days or more overdue. The individual loan allowance calculation was not changed by the new Chilean Superintendency of Banks regulations and remains in effect. Our policy was to recognize loan loss allowances equal to 100.0% of the unsecured past due portion of individual loans. The allowances recognized consisted of the global allowances for that individual loan plus an additional individual allowance such that the total allowances recorded (global and individual) equaled 100.0% of the unsecured past due portion of individual loans. In the event that non-payment of a portion of a loan permitted a bank to accelerate the loan, and the bank commenced legal proceedings against the debtor to collect the full amount of the loan, the individual loan loss reserve must have equaled 100.0% of the entire outstanding amount of the loan within 90 days as of the filing of the lawsuit. The Chilean Superintendency of Banks had ruled that in the case of past due loans, individual loan loss reserves were to be made only for the difference between 100.0% of the past due portion of a past due loan (or the full amount of the loan if the preceding sentence applies) and the reserve made for such loan when calculating the global loan loss reserve.

Generally, for purposes of classification, loans are divided into consumer loans, residential mortgage loans and commercial loans (which for these purposes include all loans other than consumer loans and residential mortgage loans). In the case of commercial loans, loan classifications were based on the estimated losses on all of the loans outstanding to the borrower, as determined by us. In the case of consumer and residential mortgage loans, the extent to which payments were overdue determined the classification. Commercial and consumer loans were rated A, B, B-, C or D, while residential mortgage loans were rated only A, B or B-, except loans purchased from the former

Asociación Nacional de Ahorro y Préstamo, or Chilean National Association of Savings and Loans, which may be classified as C or D.

The regulations in place through 2003 established the risk classification, and as a consequence the loan allowances, based upon each debtor’s most overdue loans. Accordingly, the classification system took into account the debtor’s payment behavior, instead of classifying each credit individually. Until December 31, 2003, the allowances required for each category of loans, as established by the Chilean Superintendency of Banks, were as follows:

	Commercial loans range of estimated losses				Consumer loans past due status (1)				Residential mortgage loans past due status (1)				Allowance as a percentage of aggregate
Category	From		To		From		To		From		To		exposure
	(Percentage)				(Percentage)				(Percentage)
A	—		—		—		—		—		—		—
B	1	%	5	%	1	%	30	%	1	%	180	%	1	%
B-	5	%	39	%	31	%	60	%	181	%	181	%	20	%
C	40	%	79	%	61	%	120	%	—		—		60	%
D	80	%	100	%	121	%	121	%	—		—		90	%

(1) In addition, we maintained a special provision for renegotiated consumer and residential mortgage loans during the periods indicated.

The loan classification guidelines of the Chilean Superintendency of Banks applicable to commercial loans prior to January 1, 2004 required that we classify the greater of (1) the commercial loans outstanding to our 400 largest debtors and (2) the commercial loans outstanding to the debtors whose commercial loans aggregate at least 75% of the total amount of loans included in our commercial loan portfolio. Such guidelines also required us to classify 100% of our residential mortgage and consumer loans. For these purposes, the loan amount includes outstanding principal (whether or not past due) and accrued and unpaid interest. The criteria for determining the range of estimated losses for purposes of the classification of commercial loans were as follows:

Category “A”: This category included loans outstanding to borrowers for whom there existed no doubt as to the ability to repay the loans except to the extent reflected in the loan’s original terms, including all interest due, and the revenues generated from the business of the borrower were sufficient to service the debt. If the borrower’s business did not generate the revenues needed for debt service, or if repayment depended on revenues generated by another entity, its loans would not be included in this category, even if fully secured.

Category “B”: This category included loans outstanding to borrowers who had shown some degree of non-compliance with their obligations under the original conditions of their loans, but whose past financial records and market history indicated that such non-compliance was temporary. Category “B” was also the highest category for loans outstanding to borrowers whose source of repayment depended on revenues generated by another entity, and loans outstanding to borrowers whose business did not generate the revenues needed for debt service, but only if the loans were fully secured. The expected loss assigned to the loans classified in this category was less than 5% of the outstanding amounts.

Category “B-”: This category principally included loans outstanding to borrowers who were experiencing severe financial difficulty, whose operational revenues or liquid assets were insufficient to service the loans. Also included in this category were loans outstanding to borrowers whose financial history was insufficient or difficult to establish. Loans bearing interest rates that, due to the bank’s cost of funds, generated a financial loss of between 5% and 39% of the outstanding amount were also included in this category.

Category “C”: This category included loans outstanding to borrowers who were experiencing severe financial difficulty and whose operational revenues or liquid assets were insufficient to service the loans. Loans bearing interest rates that, due to the bank’s cost of funds, generated a financial loss of between 40% and 79% of the outstanding amount were also included in this category.

Category “D”: This category included loans outstanding to borrowers for which the estimated recovery amount on all loans was 20% or less.

Current Regulations Relating to Classification of Banks and Loans; Allowances for loan losses from January 1, 2004

According to current regulation effective January 1, 2004, banks are classified in Categories 1, 2, 3 or 4 depending on how the models and methods used by banks to classify their loan portfolio and determine provisions for loan losses and probable losses vary from those established by the Chilean Superintendency of Banks. Category 1 banks are those banks whose methods and models are satisfactory to the Chilean Superintendency of Banks. Category 1 banks are entitled to continue using the same methods and models they currently have in place. Banks classified as Category 2 banks must maintain the minimum levels of reserves established by the Chilean Superintendency of Banks. Once the board of directors of a Category 2 bank is made aware of any problems detected by the Chilean Superintendency of Banks it must take steps to correct the problems. Finally, banks classified in Categories 3 or 4 must maintain the minimum levels of reserves established by the Chilean Superintendency of Banks until they are authorized by the Chilean Superintendency of Banks to do otherwise. We have been classified in Category 1 since January 1, 2004.

Classification of Loans. For purposes of these current classifications, loans are divided into: (i) consumer loans (including loans granted to individuals for the purpose of financing the acquisition of consumer goods or payment of services), (ii) residential mortgage loans (including loans granted to individuals for the acquisition, construction or repair of residential real estate, in which the value of the property covers at least 100% of the amount of the loan), (iii) leasing operations (including consumer leasing, commercial leasing and residential leasing), (iv) factoring operations and (v) commercial loans (includes all loans other than consumer loans and residential mortgage loans).

Models Based on the Analysis of Commercial Borrowers of Ch$200 million or More

Current regulations require that all commercial loans of Ch$200 million or more be assigned to a risk category level, determined by considering the following risk factors: the borrower’s (i) industry or sector, (ii) owners or managers, (iii) financial situation, (iv) payment capacity and (v) payment behavior. Based upon the analysis of the risk factors, the loan will be assigned to one of the risk categories. If the borrower has no apparent credit risk, the loan will be classified as either A1, A2 or A3. The loan will be classified as B if the borrower has some credit risk but no apparent deterioration of payment capacity. Finally, if the borrower has diminished capacity to repay its loans, it will be classified as either C1, C2, C3, C4, D1 or D2.

Classification	Estimated range of loss	Allowance
C1	Up to and including 3%	2%
C2	More than 3% up to 19%	10%
C3	More than 19% up to 29%	25%
C4	More than 29% up to 49%	40%
D1	More than 49% up to 79%	65%
D2	More than 79%	90%

Models Based on Group Analysis

Under current regulations, the levels of required allowances for commercial loans less than Ch$200 million and all consumer loans and mortgage loans are to be determined by the bank. This determination is made according to the estimated loss that may result from the loans by classifying the loan portfolio using one or both of the following models: (i) a model based on the characteristics of the borrower and its outstanding loans, and/or (ii) a model based on the behavior of a group of loans. For the first model, the borrowers and their loans with similar characteristics are placed into groups and each group is assigned a risk level. For the second model, loans with similar past payment histories and similar characteristics are placed into groups and each group is assigned a risk level.

Additional Provisions and Allowances

Historically, a bank could voluntarily maintain additional allowances for loan losses in excess of the minimum amounts required by global and individual allowances. However, current regulations in effect as of January 1, 2004 no longer permit these additional allowances. Banks are now able to set provisions and allowances above the previously described limits only to cover specific risks that have been authorized by their board of directors.

Our current classification system includes 11 categories (1, 2, 3, 4, 5, 5D, 6, 7, 8, 9 and 10, which correspond to the ten categories set forth by the Chilean Superintendency of Banks’ for loans A1, A2, A3, B, C1, C2, C3, C4, D1 and D2), as more fully described below.

Category 1:	“Excellent”	This category includes commercial borrowers with excellent management, social character, asset quality, payment capability, and low debt levels with excellent debt service coverage capability. This typically includes companies that are leaders in their respective industries with ample access to domestic and international capital markets and stable margins that are in line with those prevalent in their industry. In particular, this category is reserved solely for corporate borrowers with domestic debt ratings equal to or exceeding AA-, provided that if several debt ratings exist with respect to the borrower, the lowest will be considered for purposes of classification. Category 1 corresponds to category A1 of the Chilean Superintendency of Banks.

Category 2:	“Strong”	This category includes commercial borrowers with good management and without problems relating to social character. These borrowers have high asset quality and liquidity, a solid capacity to make required payments and service their debt, and stable net margins. These borrowers also have a strong position in the domestic market in their respective industries with good access to domestic capital markets. Category 2 corresponds to Category A2 of the Chilean Superintendency of Banks.

Category 3:	“Good”	This category includes borrowers with good liquidity levels and asset quality, good payment capacity and debt service coverage ability. These borrowers also have good management capabilities and margins with a normal degree of stability. These companies have a minimal probability of financial deterioration. Borrowers in this category are normally solid regional companies, leaders in local markets with good access to the financial system, or medium-size companies within their industry or sector. Category 3 corresponds to Category A3 of the Chilean Superintendency of Banks.

Category 4:	“Acceptable”	This category includes borrowers with an acceptable credit capacity and an average risk level and acceptable asset portfolios and liquidity. Their capacity to pay is subject to business and financial cycles, and debt levels may be higher than average for their industry or sector. These borrowers maintain good access to the financial system, but in some cases may need to provide third party guarantees in order to obtain financing. Loans to these borrowers require some level of monitoring because they are not financially solid enough to handle strong economic downturns or market activity. Guarantees or other contractual protections are recommended with respect to loans made to borrowers in this category. Category 4 also corresponds to Category A3 of the Chilean Superintendency of Banks.

Category 5:	“Marginal”	This category includes borrowers with a higher than average risk level. These borrowers have low levels of liquidity and limited debt capacity. They are typically smaller companies than average for their sector or industry and have limited access to financing. Loans to these borrowers require a higher level of monitoring as they are probably unable to survive strong financial or economic crises. Adequate protections, such as of guarantees on real property, are required. Typical borrowers in this category include companies with high debt loads, start-ups, and all others that do not merit a higher classification. Category 5 corresponds to Category B of the Chilean Superintendency of Banks.

Category 5D:	“Weak”	This category includes debtors with poor payment history and weak financial condition, but that provide guarantees that result in an estimated loan recovery percentage of at least 97% of amounts due. Category 5D corresponds to Category C1 of the Chilean Superintendency of Banks.

Category 6: “Vigilance”		This category includes debtors under special vigilance. These borrowers have displayed serious deterioration and require constant monitoring. Loans to borrowers in this category require special strategies to either guarantee the amounts due, reduce the bank’s exposure, or terminate the credit relationship. This category includes borrowers with poor payment behavior but that provide guarantees that result in an estimated loan recovery of 81% to 96% of amounts due. Category 6 corresponds to Category C2 of the Chilean Superintendency of Banks.

Category 7:	“Vulnerable”	This category includes debtors with serious weaknesses in their business but that provide guarantees that result in an estimated loan recovery of 71% to 80% of amounts due. Category 7 corresponds to Category C3 of the Chilean Superintendency of Banks.

Category 8:	“Sub-Standard”	This category includes debtors with serious difficulty in paying the amounts due and for whom the debt is inadequately protected by the capital of the borrower, and the guarantees provided result in an estimated loan recovery of 51% to 70% of amounts due. Category 8 corresponds to Category C4 of the Chilean Superintendency of Banks.

Category 9:	“Doubtful”	This category includes debtors for whom serious doubts exist with respect to repayment in the normal course and for which guarantees provided result in an estimated loan recovery of 21% to 50% of amounts due. Category 9 corresponds to Category D1 of the Chilean Superintendency of Banks.

Category 10:	“Loss”	This category includes loans to debtors where total loan loss is expected and any guarantees result in an estimated loan recovery of up to 20% of amounts due. Category 10 corresponds to Category D2 of the Chilean Superintendency of Banks.

The required provisions relating to each loan category vary depending on whether the commercial loan is secured by real property, as shown in the table below:

		Required Provisions
Superintendency’s Categories	CorpBanca’s Categories	Commercial Loans		Commercial Mortgage Loans		Estimated Loan Recovery

A1 – Excellent	1 – Excellent	0	%	0	%	100	%
A2 – Strong	2 – Strong	0	%	0	%	100	%
A3 – Good	3 – Good	0	%	0	%	100	%
A3 – Acceptable	4 – Acceptable	0.45	%	0.35	%	100	%
B – Marginal	5 – Marginal	1.40	%	1.24	%	100	%
C1 – Weak	5D – Weak	2	%	2	%	97	%
C2 – Vigilance	6 – Vigilance	10	%	10	%	81% to 96	%
C3 – Vulnerable	7 – Vulnerable	25	%	25	%	71% to 80	%
C4 – Sub-Standard	8 – Sub-Standard	40	%	40	%	51% to 70	%
D1 – Doubtful	9 – Doubtful	65	%	65	%	21% to 50	%
D2 – Loss	10 – Loss	90	%	90	%	0% to 20	%

The provisions relating to loan categories 1 through 5 have been fixed by us, while the provisions relating to loan categories 5D through 10 have been set by the Chilean Superintendency of Banks. The provisions for categories 1 through 5 were determined on the basis of the default rate of the borrowers in those categories over a historical one year period. Under the new regulations, the concept of voluntary allowances above the limits set forth by the Chilean Superintendency of Banks has been eliminated.

With the goal of improving the quality of our risk assessment of large borrowers, the threshold at which the individual evaluations of loans is made was raised from Ch$100 million to Ch$200 million. This change was implemented in 2004 and it continues to apply.

The following table compares the provisions required of each category of loans under both the prior classification method as well as the current classification method.

Prior System		Current System
Category	Required Provision	Category	Required Provision
A	0.0%	1	0.0%
		2	0.0%
		3	0.0%
		4	0.45% / 0.35%(1)
B	1.0%	5	1.4% / 1.24%(1)
		5-D	2.0%
B-	20.0%	6	10.0%
		7	25.0%
C	60.0%	8	40.0%
		9	65.0%
D	90.0%	10	90.0%

(1) Related to the provisions required for Commercial Mortgage loans.

Analysis of our Loan Classification

The following tables provide statistical data regarding the classification of our loans as of the end of each of the last five years. Although the classification system applicable prior to 2004 differs from the currently applicable classification system, we have applied the pre-2004 system to the tables below, including with respect to the information as of December 31, 2004, 2005, 2006 and 2007, for ease of comparison to prior years.

	As of December 31, 2003
							Residential						Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A	Ch$	781,641		Ch$	207,426		Ch$	113,313		Ch$	1,102,380		49.2	%
B	1,045,518			33,073			11,135			1,089,726			48.6
B-	13,261			6,748			3,038			23,047			1.0
C	16,296			4,402			—			20,698			0.9
D	3,103			3,569			—			6,672			0.3
Total of evaluated loans	Ch$	1,859,819		Ch$	255,218		Ch$	127,486		Ch$	2,242,523		100.0	%
Total loans	Ch$	2,054,227		Ch$	255,218		Ch$	127,486		Ch$	2,436,931
Percentage evaluated	90.5		%	100.0		%	100.0		%	92.0		%

	As of December 31, 2004
							Residential						Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A	Ch$	1,174,402		Ch$	282,174		Ch$	185,810		Ch$	1,642,386		68.3	%
B	652,643			29,421			12,265			694,329			28.9
B-	34,208			6,301			3,216			43,725			1.8
C	15,439			4,717			—			20,156			0.8
D	950			4,334			—			5,284			0.2
Total of evaluated loans	Ch$	1,877,642		Ch$	326,947		Ch$	201,291		Ch$	2,405,880		100.0	%
Total loans	Ch$	2,247,821		Ch$	326,947		Ch$	201,291		Ch$	2,776,059
Percentage evaluated	83.5		%	100.0		%	100.0		%	86.7		%

	As of December 31, 2005
							Residential						Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A	Ch$	1,338,414		Ch$	340,107		Ch$	243,930		Ch$	1,922,451		70.3	%
B	708,756			33,527			9,913			752,196			27.5
B-	23,605			6,341			3,342			33,288			1.2
C	17,561			4,076			—			21,637			0.8
D	1,538			3,727			—			5,265			0.2
Total of evaluated loans	Ch$	2,089,874		Ch$	387,778		Ch$	257,185		Ch$	2,734,837		100.0	%
Total loans	Ch$	2,478,306		Ch$	387,778		Ch$	257,185		Ch$	3,123,269
Percentage evaluated	84.3		%	100.0		%	100.0		%	87.6		%

	As of December 31, 2006
							Residential			��			Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A	Ch$	1,616,444		Ch$	399,674		Ch$	356,350		Ch$	2,372,468		75.2	%
B	667,624			48,724			10,414			726,762			23.0
B-	20,228			10,002			3,172			33,402			1.1
C	9,171			6,647			—			15,818			0.5
D	1,551			4,791			—			6,342			0.2
Total of evaluated loans	Ch$	2,315,018		Ch$	469,838		Ch$	369,936		Ch$	3,154,792		100.0	%
Total loans	Ch$	2,738,606		Ch$	469,838		Ch$	369,936		Ch$	3,578,380
Percentage evaluated	84.5		%	100.0		%	100.0		%	88.2		%

	As of December 31, 2007
							Residential						Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A	Ch$	2,228,195		Ch$	420,270		Ch$	487,734		Ch$	3,136,199		80.8	%
B	598,718			56,691			31,972			687,381			17.7
B-	10,469			13,943			3,760			28,172			0.7
C	7,999			11,167			—			19,166			0.5
D	1,461			10,639			—			12,100			0.3
Total of evaluated loans	Ch$	2,846,842		Ch$	512,710		Ch$	523,466		Ch$	3,883,018		100.0	%
Total loans	Ch$	3,309,260		Ch$	512,710		Ch$	523,466		Ch$	4,345,436
Percentage evaluated	86.0		%	100.0		%	100.0		%	89.4		%

The following tables provide statistical data regarding the classification of our loans as of the end of each of the last four years, applying the classification system under the Chilean Superintendency of Banks regulations that has been in effect since January 2004:

	As of December 31, 2004
							Residential						Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A1	Ch$	151		Ch$	—		Ch$	—		Ch$	151		—	%
A2	65,626			—			—			65,626			2.7
A3	1,108,625			62,453			192,788			1,363,866			56.8
B	552,645			123,185			3,976			679,806			28.3
C1	99,999			118,767			2,600			221,366			9.2
C2	28,673			12,071			971			41,715			1.7
C3	5,535			4,242			769			10,546			0.4
C4	2,317			2,865			77			5,259			0.2
D1	13,121			1,561			110			14,792			0.6
D2	950			1,803			—			2,753			0.1
Total of evaluated loans	Ch$	1,877,642		Ch$	326,947		Ch$	201,291		Ch$	2,405,880		100.0	%
Total loans	Ch$	2,247,821		Ch$	326,947		Ch$	201,291		Ch$	2,776,059
Percentage evaluated	83.5		%	100.0		%	100.0		%	86.7		%

	As of December 31, 2005
							Residential						Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A1	Ch$	26,316		Ch$	—		Ch$	—		Ch$	26,316		1.0	%
A2	420,302			—			—			420,302			15.4
A3	891,796			79,036			249,049			1,219,881			44.6
B	603,361			137,136			3,547			744,044			27.2
C1	105,395			150,101			2,817			258,313			9.4
C2	22,644			12,120			686			35,450			1.3
C3	961			3,339			738			5,038			0.2
C4	4,536			2,506			220			7,262			0.3
D1	13,025			1,475			128			14,628			0.5
D2	1,538			2,065			—			3,603			0.1
Total of evaluated loans	Ch$	2,089,874		Ch$	387,778		Ch$	257,185		Ch$	2,734,837		100.0	%
Total loans	Ch$	2,478,306		Ch$	387,778		Ch$	257,185		Ch$	3,123,269
Percentage evaluated	84.3		%	100.0		%	100.0		%	87.6		%

	As of December 31, 2006
							Residential						Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A1	Ch$	6,020		Ch$	—		Ch$	—		Ch$	6,020		0.2	%
A2	570,513			—			—			570,513			18.1
A3	1,039,911			80,331			361,783			1,482,025			47.0
B	557,667			163,180			3,653			724,500			23.0
C1	109,957			194,607			2,400			306,964			9.7
C2	9,095			18,391			1,173			28,659			0.9
C3	11,133			4,966			579			16,678			0.5
C4	6,298			3,721			216			10,235			0.3
D1	2,873			2,351			132			5,356			0.2
D2	1,551			2,291			—			3,842			0.1
Total of evaluated loans	Ch$	2,315,018		Ch$	469,838		Ch$	369,936		Ch$	3,154,792		100.0	%
Total loans	Ch$	2,738,606		Ch$	469,838		Ch$	369,936		Ch$	3,578,380
Percentage evaluated	84.5		%	100.0		%	100.0		%	88.2		%

	As of December 31, 2007
							Residential						Percentage
	Commercial			Consumer			Mortgage			Total			of Classified
Category	Loans			Loans			Loans			Loans			Loans
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

A1	Ch$	23,259		Ch$	—		Ch$	—		Ch$	23,259		0.6	%
A2	1,262,036			—			—			1,262,036			32.5
A3	942,900			82,216			501,790			1,526,906			39.3
B	482,347			172,904			12,727			667,978			17.2
C1	116,371			210,479			6,449			333,299			8.6
C2	6,405			23,978			960			31,343			0.8
C3	4,064			6,870			1,215			12,149			0.3
C4	7,118			6,688			239			14,045			0.4
D1	881			4,509			86			5,476			0.1
D2	1,461			5,066			—			6,527			0.2
Total of evaluated loans	Ch$	2,846,842		Ch$	512,710		Ch$	523,466		Ch$	3,883,018		100.0	%
Total loans	Ch$	3,309,260		Ch$	512,710		Ch$	523,466		Ch$	4,345,436
Percentage evaluated	86.0		%	100.0		%	100.0		%	89.4		%

Risk Index. The bank’s risk index, which was used to calculate the global allowance through December 31, 2007, was based on its classified loans. More specifically, the index was computed as follows. First, the aggregate amount of classified loans in each category from A through D was multiplied by the corresponding required allowance percentage. Such percentages were as follows, applying in each case the classification system in effect prior to January 1, 2004:

Category	Allowance Percentage
A	0	%
B	1	%
B-	20	%
C	60	%
D	90	%

The risk index (allowances for loan losses over total loans) itself was then determined by dividing (1) the aggregate amount by (2) the aggregate amount (i.e., the outstanding principal (whether or not past due) and accrued and unpaid interest) of all classified loans.

The risk index for 2004, 2005, 2006 and 2007 was calculated using the same method as used in prior years in order to obtain comparable figures. Also, for purposes of the analysis, we used the categories in effect prior to January 1, 2004.

The following table sets forth our allowances for loan losses established by us in accordance with the regulations of the Chilean Superintendency of Banks. Amounts as of December 31, 2003 were determined under the regulations that were in effect at that time. Amounts as of December 31, 2004, 2005, 2006 and 2007 were determined under the current rules.

	As of December 31,
	2003			2004			2005			2006			2007
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

Required allowances	Ch$	51,477		Ch$	47,271		Ch$	48,617		Ch$	49,967		Ch$	55,067
Voluntary allowances	—			—			—			—			—
Total allowances for loan losses	51,477			47,271			48,617			49,967			55,067
Total loan allowances as a percentage of total loans	2.1		%	1.7		%	1.6		%	1.4		%	1.3		%

Classification of Loan Portfolio Based on the Borrower’s Payment Performance

Accrued interest and UF-indexation adjustments from overdue loans are recognized only when, and to the extent, received. Non-performing loans that are not yet 90 days or more overdue have been included in each of the various categories of loans, and therefore affect the various averages.

Under the regulations in place through 2003, non-performing loans consisted of commercial loans included in Category C for more than one year, all commercial loans included in Category D and loans (or portions thereof) that are overdue.

Under the current regulations in effect as of January 1, 2004, non-performing loans consist of commercial loans included in Category C4 for more than one year, all commercial loans included in Category D1 and D2 and loans (or portions thereof) that are overdue. According to the definition adopted by Management non-performing loans consist of commercial loans included in categories eight, nine and ten (or portions thereof) that are overdue. We cease to accrue interest on loans as soon as they become overdue. Past due loans include, with respect to any loan, the portion of principal or interest that is 90 or more days overdue, and do not include the portion of such loan that is not overdue or that is less than 90 days overdue, unless legal proceedings have been commenced for the entire outstanding balance according to the terms of the loan. This practice differs from that normally followed in the United States where the amount classified as past due would include the total principal and interest on all loans which have any portion overdue.

According to the regulations established by the Chilean Superintendency of Banks, we are required to charge off commercial loans not later than 24 months after being classified as past due, if unsecured, and if secured, not later than 36 months after being classified as past due. When an installment of a past due commercial loan (either secured or unsecured) is written off, we must charge off all installments which are overdue, notwithstanding our right, if any, to charge off the entire amount of the loan. Once any amount of a loan is written off, each subsequent installment must be written off as it becomes overdue, notwithstanding our right, if any, to charge off the entire amount of the loan. In the case of past due consumer loans, a similar practice applies, except that after the first installment becomes six months past due, we must charge off the entire remaining part of the loan. We may charge off any loan (commercial or consumer) before the first installment becomes overdue only in accordance with special procedures established by the Chilean Superintendency of Banks and we must charge off an overdue loan (commercial or consumer) before the terms set forth above in certain circumstances. Loans are written off against the allowance for loan losses to the extent of any required reserves for such loans; the remainder of such loans is written off against income.

In general, legal collection proceedings are commenced with respect to consumer loans once they are 90 days past due and with respect to mortgage loans once they are 150 days past due. Legal collection proceedings are always commenced within one year of such loans becoming past due, unless the bank determines that the size of the past due amount does not warrant such proceedings. In addition, the majority of our commercial loans are short-term, with single payments at maturity. Past due loans are required to be covered by individual specific loan loss allowances equivalent to 100% of any unsecured portion thereof; but only if and to the extent that the aggregate of all unsecured past due loans exceeds the global allowance for loan losses. See “—Regulations Relating to Classification of Banks and Loans; Allowances for Loan Losses Prior to January 1, 2004—Individual Allowance.”

The following tables set forth as of December 31 of each of the last five years the current and overdue principal and interest amounts, by domestic and foreign loans:

Domestic Loans

	As of December 31,
	2003		2004		2005		2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Current	Ch$	2,351,495	Ch$	2,709,559	Ch$	3,032,527	Ch$	3,478,848	Ch$	4,216,530
Overdue 1-29 days	12,594		6,502		10,686		24,507		4,668
Overdue 30-89 days	5,908		9,633		6,767		6,336		5,425
Overdue 90 days or more (“past due”)	30,131		22,314		27,412		20,530		23,452
Total loans	Ch$	2,400,128	Ch$	2,748,008	Ch$	3,077,392	Ch$	3,530,221	Ch$	4,250,075

We suspend the accrual of interest and readjustments on all overdue loans. The amount of interest that would have been recorded on domestic overdue loans had they continued to accrue interest was Ch$5,126 million, Ch$5,863 million and Ch$7,420 million for the years ended December 31, 2005, 2006 and 2007, respectively.

Foreign Loans

	As of December 31,
	2003		2004		2005		2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Current	Ch$	36,772	Ch$	28,051	Ch$	45,877	Ch$	48,142	Ch$	95,346
Overdue 1-29 days		32		—		—		17		15
Overdue 30-89 days		—		—		—		—		—
Overdue 90 days or more (“past due”)		—		—		—		—		—
Total loans	Ch$	36,804	Ch$	28,051	Ch$	45,877	Ch$	48,159	Ch$	95,361

Total Loans

	As of December 31,
	2003			2004			2005			2006			2007
	(in millions of constant Ch$ as of December 31, 2007)

Current	Ch$	2,388,267		Ch$	2,737,610		Ch$	3,078,404		Ch$	3,526,990		Ch$	4,311,876
Overdue 1-29 days	12,626			6,502			10,686			24,524			4,683
Overdue 30-89 days	5,908			9,633			6,767			6,336			5,425
Overdue 90 days or more (“past due”)	30,131			22,314			27,412			20,530			23,452
Total loans	Ch$	2,436,932		Ch$	2,776,059		Ch$	3,123,269		Ch$	3,578,380		Ch$	4,345,436

Overdue loans expressed as a percentage of total loans	2.0		%	1.4		%	1.4		%	1.4		%	0.8		%
Past due loans as a percentage of total loans	1.2		%	0.8		%	0.9		%	0.6		%	0.5		%

Analysis of Substandard Loans and Amounts Past Due

The following table analyzes our substandard loans and past due loans and the allowances for loan losses existing as of the dates indicated. For 2004, 2005, 2006 and 2007, substandard loans are all loans included in categories 6, 7, 8, 9 and 10. For previous years, substandard loans under the prior classification method are all of the loans included in categories B-, C and D. The information provided is related to domestic loans, because we did not have any significant non-accrual or past due foreign loans in the periods presented. All of our restructured loans (troubled debt restructurings under the definition of U.S. GAAP Financial Accounting Standard No. 15) are included in the following tables.

	As of December 31,
	2003			2004			2005			2006			2007
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

Total loans	Ch$	2,436,931		Ch$	2,776,058		Ch$	3,123,269		Ch$	3,578,380		Ch$	4,345,436
Substandard loans	50,419			75,066			65,981			64,770			69,540
Allowance for loan losses	51,477			47,271			48,617			49,967			55,067
Substandard loans as a percentage of total loans	2.1		%	2.7		%	2.1		%	1.8		%	1.6		%

Amounts past due(1)	Ch$	30,130		Ch$	22,315		Ch$	27,412		Ch$	20,530		Ch$	23,452
To the extent secured(2)	23,361			14,818			22,930			16,788			17,037
To the extent unsecured	6,769			7,497			4,482			3,742			6,415

Amounts past due as a percentage of:
Total loans	1.2		%	0.8		%	0.9		%	0.6		%	0.5		%
To the extent secured(2)	1.0		%	0.5		%	0.7		%	0.5		%	0.4		%
To the extent unsecured	0.3		%	0.3		%	0.1		%	0.1		%	0.1		%
Total loans for which at least one payment is past due(1)	Ch$	65,024		Ch$	56,188		Ch$	61,469		Ch$	54,192		Ch$	59,676

Loans for which at least one payment is past due as a percentage of total loans(1)	2.7		%	2.0		%	2.0		%	1.5		%	1.4		%
Allowance for loans losses as a percentage of:
Total loans	2.1		%	1.7		%	1.6		%	1.4		%	1.3		%
Total loans excluding contingent loans	2.3		%	1.9		%	1.7		%	1.5		%	1.4		%
Total substandard loans	102.1		%	63.0		%	73.7		%	77.1		%	79.2		%
Total amounts past due	170.8		%	211.8		%	177.4		%	243.4		%	234.8		%
Total amounts past due-unsecured	760.5		%	630.5		%	1084.7		%	1335.3		%	858.4		%

	(1)		Past due loans that are 90 days or more overdue as to any payments of principal or interest (in accordance with Chilean regulations). We continue to accrue interest and indexation on the principal payments not yet overdue for those loans that have installments overdue unless we believe those amounts are uncollectible. Accrued interest and indexation adjustments are included in our recorded investment in the loan for the purpose of determining the required allowance for loan losses.

	(2)		Security generally consists of mortgages on real estate, pledges of marketable securities, letters of credit or cash.

Analysis of Allowances for Loan Losses

The following table analyzes our provisions for loan losses charged to income and changes in the allowances attributable to charge-offs, allowances released, recoveries, allowances on loans acquired and the effect of price-level restatement on provisions for loan losses. The amounts in the columns for 2004, 2005, 2006 and 2007 were determined based on the current loan classification system in effect from January 1, 2004. The amounts in the remaining columns were determined based on the prior loan classification system.

	As of December 31,
	2003			2004			2005			2006			2007
	(in millions of constant Ch$ of December 31, 2007, except for percentages)

Allowances for loan losses at beginning of period	Ch$	44,578		Ch$	51,477		Ch$	47,271		Ch$	48,617		Ch$	49,967
Allowances on acquired loans	—			—			—			—
Charge-offs	(22,778		)	(24,905		)	(17,818		)	(20,889		)	(27,124		)
Allowances established	35,748			31,032			24,198			28,330			40,724
Allowances released (1)	(5,656		)	(9,073		)	(3,392		)	(5,091		)	(5,057		)
Price-level restatement (2)	(415		)	(1,260		)	(1,642		)	(1,000		)	(3,443		)
Allowances for loan losses at end of period	Ch$	51,477		Ch$	47,271		Ch$	48,617		Ch$	49,967		Ch$	55,067
Ratio of charge-offs to average loans	1.4		%	1.0		%	0.6		%	0.7		%	0.7		%
Allowances for loan losses at end of period as a percentage of total loans	2.1		%	1.7		%	1.6		%	1.4		%	1.3		%

(1) Represents the aggregate amount of allowances for loan losses released during the year as a result of recoveries or a determination by management that the level of risk existing in the loan portfolio has been reduced.

(2) Reflects the effect of inflation on the allowances for loan losses at the beginning of each period, adjusted to constant pesos as of December 31, 2007.

Our policy with respect to charge-offs follows the regulations established by the Chilean Superintendency of Banks. Under Chilean GAAP and regulations of the Chilean Superintendency of Banks, we are required to charge off commercial loans, if unsecured, not later than 24 months after being classified as past due and, if secured, not later than 36 months after being classified as past due. When an installment of a past due commercial loan (either secured or unsecured) is written off, we must charge off all installments which are overdue, notwithstanding our right, if any, to charge off the entire amount of the loan. Once any amount of a loan is written off, each subsequent installment must be written off as it become overdue, notwithstanding our right, if any, to charge off the entire amount of the loan. In the case of past due consumer loans, a similar practice applies, except that after first installment has been classified as past due for six months, we must charge off the entire remaining part of the loan. We may charge off any loan (commercial or consumer) before the first installment becomes overdue only in accordance with special procedures established by the Chilean Superintendency of Banks, and must charge off an overdue loan (commercial or consumer) before the terms set forth above in certain circumstances. Under U.S. GAAP, loans or portions thereof must be charged off in the period in which they are deemed to be uncollectible.

We believe that our application of charge-off policies in accordance with Chilean GAAP and the rules and regulations of the Chilean Superintendency of Banks does not result in significant differences in our financial results as compared to our competitors, has enabled us to generally decrease charge-offs since 1999, and maintain them at an adequate level. The effects of these efforts can be seen in the following table, which shows the charge-offs breakdown by loan category.

	For the Year Ended December 31,
	2003		2004		2005		2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Consumer loans	Ch$	14,298	Ch$	14,373	Ch$	10,476	Ch$	12,134	Ch$	20,178
Residential mortgage loans	561		554		324		595		456
Commercial loans	7,209		9,438		6,884		8,081		6,366
Leasing contracts	710		540		134		79		124
Total	Ch$	22,778	Ch$	24,905	Ch$	17,818	Ch$	20,889	Ch$	27,124

The following table shows loan loss recoveries by loan category for the periods indicated.

	For the Year Ended December 31,
	2003		2004		2005		2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Consumer loans	Ch$	4,177	Ch$	5,887	Ch$	6,870	Ch$	6,065	Ch$	5,349
Residential mortgage loans	—		263		205		243		346
Commercial loans	3,131		2,411		2,543		3,267		4,349
Leasing contracts	—		—		—		—		35
Total	Ch$	7,308	Ch$	8,561	Ch$	9,618	Ch$	9,575	Ch$	10,079

Net provisions—i.e., new provisions adjusted by provisions reversed—have been determined so that provisions for loan losses as a percentage of total loans follow the overall loan quality and consequently the movement in the risk index. Total loan allowances consist of allowances for commercial loans, consumer loans and residential mortgage loans.

Based on information available regarding our debtors, we believe that our allowances for loan losses are sufficient to cover known probable losses and losses inherent in a loan portfolio of the size and nature of our loan portfolio.

Allocation of Allowances for Loan Losses

The following tables set forth, as of December 31 for each of the last five years, the proportions of our required minimum allowances for loan losses that were attributable to our commercial, consumer and residential mortgage loans as of each such date.

	As of December 31, 2003								As of December 31, 2004
	Allowance amount(1)		Allowance amount as a percentage of loans in category		Allowance amount as a percentage of total loans (2)		Loans in category as a percentage of total		Allowance amount(1)			Allowance amount as a percentage of loans in category		Allowance amount as a percentage of total loans (2)		Loans in category as a percentage of total

Commercial loans	Ch$	36,303	1.9	%	1.5	%	76.9	%	Ch$	31,521		1.5	%	1.1	%	73.6	%
Leasing loans	1,791		1.0		0.1		7.4		2,113			1.0		0.1		7.3
Consumer loans	12,664		5.0		0.5		10.5		12,817			3.9		0.5		11.8
Residential mortgage loans	719		0.6		—		5.2		821			0.4		—		7.3

Total allowances	Ch$	51,477	2.1		2.1		100.0	%	Ch$		47,272	1.7		1.7		100.0	%

	As of December 31, 2005								As of December 31, 2006
	Allowance amount(1)		Allowance amount as a percentage of loans in category		Allowance amount as a percentage of total loans (2)		Loans in category as a percentage of total		Allowance amount(1)		Allowance amount as a percentage of loans in category		Allowance amount as a percentage of total loans (2)		Loans in category as a percentage of total

Commercial loans	Ch$	31,114	1.4	%	1.0	%	72.0	%	Ch$	26,959	1.1	%	0.8	%	69.8	%
Leasing loans	2,495		1.1		0.1		7.4		2,890		1.2		0.1		6.8
Consumer loans	14,108		3.6		0.5		12.4		19,126		4.1		0.5		13.1
Residential mortgage loans	900		0.3		—		8.2		992		0.3		—		10.3

Total allowances	Ch$	48,617	1.6		1.6		100.0	%	Ch$	49,967	1.4		1.4		100.0	%

	As of December 31, 2007
	Allowance amount(1)		Allowance amount as a percentage of loans in category		Allowance amount as a percentage of total loans (2)		Loans in category as percentage of total

Commercial loans	Ch$	23,796	0.8	%	0.6	%	70.3	%
Leasing loans	2,507		1.0		0.1		5.9
Consumer loans	27,201		5.3		0.6		11.8
Residential mortgage loans	1,563		0.3		—		12.0
Total allowances	Ch$	55,067	1.3		1.3		100.0	%

(1) In millions of constant Ch$ as of December 31, 2007

(2) Based on our loan classification, as required by the Chilean Superintendency of Banks for the purpose of determining the loan loss allowance.

Composition of Deposits and Other Commitments

The following table sets forth the composition of our deposits and similar commitments as of December 31, 2005, 2006 and 2007.

	As of December 31,
	2005		2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Checking accounts	Ch$	163,657	Ch$	189,124	Ch$	202,601
Other demand liabilities	60,331		108,724		134,286
Savings accounts	13,243		11,524		9,813
Time deposits	1,875,474		1,809,709		2,400,855
Other commitments	4,345		4,495		9,355
Total	Ch$	2,117,050	Ch$	2,123,576	Ch$	2,756,910

Maturity of Deposits

The following table sets forth information regarding the currency and maturity of our deposits as of December 31, 2007, expressed in percentages. UF-denominated deposits are similar to peso-denominated deposits in all respects, except that the principal is readjusted periodically based on variations in the CPI.

	As of December 31, 2007
					Foreign
	Ch$		UF		Currency		Total

Demand deposits	14.87	%	0.63	%	4.73	%	12.56	%
Savings accounts	—		4.36		—		0.36

Time deposits:
Maturing within 3 months	55.92		7.33		87.95		55.59
Maturing after 3 but within 6 months	11.25		2.53		7.25		10.08
Maturing after 6 but within 12 months	11.58		28.17		0.07		11.63
Maturing after 12 months	6.38		56.98		—		9.78
Total time deposits	85.13		95.01		95.27		87.08
Total deposits	100.00	%	100.00	%	100.00	%	100.00	%

The following table sets forth information regarding the maturity of the outstanding time deposits in excess of US$100,000 (or its equivalent) issued by us as of December 31, 2007.

	As of December 31, 2007
					Foreign
	Ch$		UF		Currency		Total
	(in millions of constant Ch$ as of December 31, 2007)

Maturing within 3 months	Ch$	1,106,267	Ch$	9,171	Ch$	247,020	Ch$	1,362,458
Maturing after 3 but within 6 months	249,073		5,264		22,227		276,564
Maturing after 6 but within 12 months	256,328		63,232		—		319,560
Maturing after 12 months	141,296		127,873		—		269,169
Total time deposits	Ch$	1,752,964	Ch$	205,540	Ch$	269,247	Ch$	2,227,751

Minimum Capital Requirements

The following table sets forth our minimum capital requirements set by the Chilean Superintendency of Banks as of the dates indicated.

	As of December 31,
	2006			2007
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

Net capital base	Ch$	423,312		Ch$	433,625
3% total assets net of allowances	(119,518		)	(145,935		)
Excess over minimum required equity	Ch$	303,794		Ch$	287,690
Net capital base as a percentage of the total assets, net of allowances	10.6		%	8.9		%

Effective equity	Ch$	464,768		Ch$	470,393
8% of the risk-weighted assets	(273,556		)	(334,250		)
Excess over minimum required equity	Ch$	191,212		Ch$	136,143
Effective equity as a percentage of the risk-weighted assets	13.6		%	11.3		%

Short-term Borrowings

Our short-term borrowings (other than deposits and other obligations) totaled Ch$145,839 million as of December 31, 2005, Ch$134,830 million as of December 31, 2006 and Ch$193,041 million as of December 31, 2007.

The principal categories of our short-term borrowings are amounts borrowed under foreign trade lines of credit, domestic interbank loans and repurchase agreements. The table below presents the amounts outstanding at the end of each period indicated and the weighted average nominal interest rate for each such period by type of short-term borrowing.

	As of and for the Year Ended December 31,
	2005					2006				2007
		Year End Balance		Weighted Average Nominal Interest Rate		Year End Balance		Weighted Average Nominal Interest Rate		Year End Balance		Weighted Average Nominal Interest Rate
	(in millions of constant Ch$ as of December 31, 2007, except for rate date)

Investments under repurchase agreements		Ch$	69,552	5.0	%	Ch$	58,937	5.5	%	Ch$	54,255	5.6	%
Central Bank borrowings		—		—		34,404		5.3		45,824		6.0
Domestic interbank loans		49,303		4.7		3,868		5.3		83,220		4.1
Borrowings under foreign trade credit lines		26,984		2.9		37,621		5.5		9,742		4.9
Total short-term borrowings		Ch$	145,839	4.5	%	Ch$	134,830	5.4	%	Ch$	193,041	5.0	%

The following table shows the average balance and the weighted average nominal rate for each short-term borrowing category during the periods indicated:

	As of and for the Year Ended December 31,
	2005					2006				2007
		Average Balance		Weighted Average Nominal Interest Rate		Average Balance		Weighted Average Nominal Interest Rate		Average Balance		Weighted Average Nominal Interest Rate
	(in millions of constant Ch$ as of December 31, 2007, except for rate date)

Investments under agreements to repurchase		Ch$	101,715	12.9	%	Ch$	88,806	13.7	%	Ch$	109,469	5.0	%
Central Bank borrowings		27,057		3.4		10,102		5.0		12,199		5.4
Domestic interbank loans		16,733		3.7		52,751		5.2		68,244		5.3
Subtotal		145,505		10.1		151,659		10.2		189,912		5.1
Borrowings under foreign trade credit lines		61,059		4.3		11,556		5.7		2,351		4.8
Total short-term borrowings		Ch$	206,564	8.4	%	Ch$	163,215	9.9	%	Ch$	192,263	5.1	%

The following table presents the maximum month-end balances of our principal sources of short-term borrowings during the periods indicated:

	Maximum 2005 Month-End Balance		Maximum 2006 Month-End Balance		Maximum 2007 Month-End Balance
	(in millions of constant Ch$ as of December 31, 2007)

Investments under repurchase agreements	Ch$	90,075	Ch$	97,310	Ch$	144,675
Central Bank borrowings	17,339		34,405		45,824
Domestic interbank loans	100,340		156,456		182,564
Borrowings under foreign trade credit lines	88,909		37,620		10,996

C. ORGANIZATIONAL STRUCTURE

The following diagram presents our current corporate structure and includes each of our subsidiaries and the proportion of their respective ownership interests held by us:

All of our subsidiaries have their jurisdiction of incorporation in the Republic of Chile. See “Item 7. Major Shareholders and Related Party Transactions.”

D. PROPERTY

Our former principal executive offices which we own are located in downtown Santiago, Chile and are comprised of approximately 9,538 square meters (102,629 square feet). As of November 2006, our new principal offices which we rent are located in the Las Condes district of Santiago, Chile. As of December 31, 2007, we owned 37 of the 84 properties where our branches were located. The remaining 47 branch locations were leased. Total branch space as of December 31, 2007 aggregates approximately 40,150 square meters (432,175 square feet). Our branches are located throughout Chile, including the Santiago Metropolitan Region.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. OPERATING RESULTS

The following discussion should be read in conjunction with our financial statements, together with the notes thereto, included elsewhere in this Annual Report. Our financial statements have been prepared in accordance with Chilean GAAP, which differs in significant respects from U.S. GAAP. See notes 26 and 27 to our financial statements for a description of the principal differences between Chilean GAAP and U.S. GAAP as they relate to us, and a reconciliation to U.S. GAAP of net income and shareholders’ equity.

General Conditions

We are a “sociedad anónima” organized under the laws of Chile and our stock is quoted on the Santiago Stock Exchange and the Chilean Electronic Exchange. We are regulated by the Chilean Superintendency of Banks. We offer general commercial and consumer banking services and provide other services, including factoring, collection, leasing, securities and insurance brokerage, asset management and investment banking.

We have prepared this operating and financial review in a manner consistent with the way our management views our business as a whole (see “Item 4. Information on the Company” – Business Overview – and note 27.2 g.). As a result we present the following key sections to the operating and financial review:

The following classification of revenues and expenses is based on our consolidated financial statements.

Revenues. We have three main sources of revenues, which include both cash and non-cash items:

· Interest revenue. We earn interest income from our interest-earning assets, which are mainly represented by loans to customers.

· Fees and income from services. We earn service fee and commission revenues related to checking accounts, loans, mutual funds, credit cards and other financial services.

· Other income. We earn income relating to changes in the fair value of our securities portfolio, other trading activities and foreign exchange transactions.

Expenses. Our main expenses, which include both cash and non-cash items, are:

· Interest expense. We incur interest expense on our interest bearing liabilities, such as deposits, short-term borrowings and long-term debt.

· Provisions for loan losses. We establish provisions for loan losses based on the size of our loan portfolio and our expectations regarding the ability of our customers to repay their loans.

· Other expenses. We incur expenses relating to salaries and benefits, administrative expenses and other non-interest expenses.

The Chilean Economy

All of our operations and substantially all of our customers are located in Chile. Accordingly, our financial condition and results of operations are substantially dependent upon economic conditions prevailing in Chile. Chile experienced profound economic reforms during the 1970s and 1980s. The Chilean economy grew at rates averaging more than 7% per annum from 1985 until the onset of the Asian economic crisis in 1997. Since then, the average rate of growth from 1998-2006 stagnated to only 3.6%. However, 2007 marked a period of recovery. According to the Central Bank of the Chilean economy grew by 5.1% during the year.

While official projections from the Chilean Copper Commission (Cochilco) from the beginning of 2007 projected an average copper price of US$2.80 per pound for the year, the actual closing price reached US$3.23 per pound, producing significant solvency in external accounts (current account surplus was 4.2% of GDP), playing a part in the appreciation of the Chilean peso against the U.S. dollar.

In 2007, the consumer price index (CPI) grew by 7.8%. After eliminating the effect of price increases in fuel and perishable goods, the CPI grew by 6.3% in 2007. Both of these CPI growth rates are significantly higher than the inflationary target of 3.0% established by the Central Bank. Thus, 2007 marked an important turn in the various inflationary indicators of the local economy. Inflation was affected by rises in international fuel, grain and dairy prices as well as increases in local prices of perishable goods produced by a series of frosts during the previous winter. Consequently, and in response to decreased economic activity and high inflation, 2007 presented an unusual scenario in which the Chilean Central Bank decided to modify its monetary policy by repeatedly raising its benchmark rate.

Recent Developments in the Banking Industry

During 2007, the Chilean banking industry experienced growth that, although inferior to 2006 levels, significantly surpassed GDP growth. Loans showed a 12.8% increase over twelve months, which can be further divided into 12.8% growth in commercial loans and 13.0% in retail loans. Within the retail banking segment, consumer loans showed decreased growth as compared to prior years, achieving an increase of only 7.8% as compared to the same period of the preceding year. On the other hand, retail mortgage loans grew 16.2% as compared with the same period of the previous year.

In loan financing, time deposits grew by 8.9% as compared to 2006. In terms of loan quality, during 2007 the risk index experienced an increase of 6.1%, which reflects deterioration in credit quality, particularly for retail loans. The increase in risk explains the 19.3% rise in provisions as compared with 2006. Consequently, the level of past-due loans increased by 12.9%. However, the coverage ratio, which measures the relationship between provisions and the past-due portfolio, has remained practically stable at 211%.

Earnings in 2007 were less favorable than the prior year. The banking industry experienced an average return-on-equity of 16.2%, a decrease of 239 basis points when compared to 2006. Increases in operating income stemming from higher trading volumes were not able to compensate the increase in operating expenses and provisions which were incurred during the year.

UF-denominated Assets and Liabilities. The UF is revalued by the Chilean National Institute of Statistics in monthly cycles. Every day in the period beginning the tenth day of the current month through the ninth day of the succeeding month, the nominal peso value of the UF is indexed up (or down in the event of deflation) in order to reflect each day a proportional amount of the prior calendar month’s change in the CPI. One UF was equal to Ch$17,562.02, Ch$18,336.38 and Ch$19,622.66 as of December 31, 2005, 2006 and 2007, respectively. The effect of any changes in the nominal peso value of our UF-denominated assets and liabilities is reflected in our results of operations as an increase (or decrease, in the event of deflation) in interest revenue and expense, respectively. Our net interest revenue is positively affected by increases in inflation to the extent that our average UF-denominated assets exceed our average UF-denominated liabilities. Conversely, our net interest revenue will be negatively affected by inflation in any period in which our average UF-denominated liabilities exceed our average UF-denominated assets. Our average UF-denominated assets exceeded our average UF-denominated liabilities by

Ch$654,706 million, Ch$656,510 million and Ch$816,390 million during the years ended December 31, 2005, 2006 and 2007, respectively. See “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Average Balance Sheets, Income Earned from Interest Earning Assets and Interest Paid on Interest Bearing Liabilities.”

Peso-denominated Assets and Liabilities. Rates of interest prevailing in Chile during any period reflect in significant part the rate of inflation during the period and expectations of future inflation. The responsiveness to such prevailing rates of our peso-denominated interest-earning assets and interest bearing liabilities varies. See “—Interest Rates,” “—Results of Operations,” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk.” We maintain a substantial amount of non-interest bearing peso-denominated demand deposits. The ratio of the average balance of such demand deposits to average interest-earning assets was 7.0%, 6.4% and 7.3% during the years ended December 31, 2005, 2006 and 2007, respectively. Because such deposits are not sensitive to inflation or changes in the market interest rate environment, any decline in market rates of interest or the rate of inflation adversely affects our net interest margin on assets funded with such deposits and any increase in the rate of inflation increases the net interest margin on such assets.

Price-level Restatement. Chilean GAAP requires that financial statements be restated to reflect the full effects of gain or loss in the purchasing power of the peso on the financial position and results of operations of reporting entities. Chilean GAAP also prescribes that the historical cost of all non-monetary accounts be restated for general price-level changes between the date of origin of each item and the year-end. We generally maintain a negative net monetary position and, therefore, we have realized losses from price-level restatement in our results of operations. See note 27 to our financial statements for a discussion of principal differences between U.S. GAAP and Chilean GAAP as they apply to us and a reconciliation to U.S. GAAP of net income and shareholder’s equity.

Our consolidated financial statements have been price-level restated in order to reflect the effects of the changes in the purchasing power of the Chilean currency during each year. All non-monetary assets and liabilities and all equity accounts have been restated to reflect the changes in the CPI from the date they were acquired or incurred to year-end. Consistent with general banking practices in Chile, no specific purchasing power adjustments of income statement amounts are made. The purchasing power gain or loss included in net income reflects the effects of Chilean inflation on the monetary assets and liabilities held by us.

For comparative purposes, the year-end financial statements and their accompanying notes have been presented in constant pesos as of December 31, 2007. This presentation does not change the prior years’ statements or information in any way except to update the amounts to constant pesos of similar purchasing power.

The price-level adjusted consolidated financial statements do not purport to represent appraised values, replacement cost, or any other current value of assets at which transactions would take place currently and are only intended to restate all non-monetary consolidated financial statement components in terms of local currency of a single purchasing power and to include in the net result for each year the gain or loss in purchasing power arising from the holding of monetary assets and liabilities exposed to the effects of inflation.

Interest Rates

Interest rates earned and paid on our assets and liabilities, respectively, reflect, to a certain degree, inflation, expectations regarding inflation, shifts in short-term interest rates set by the Central Bank and movements in long-term real rates. The Central Bank manages short-term interest rates based on its objectives of balancing low inflation and economic growth. Because our liabilities generally reprice to reflect interest rate changes more frequently than our interest-earning assets, changes in the rate of inflation or short-term rates in the economy are reflected in the rates of interest paid by us on our liabilities before such changes are reflected in the rates of interest earned by us on our assets. Therefore, when short-term interest rates fall, our net interest margin is positively impacted, but when short-term rates increase, our interest margin is negatively affected. At the same time, our net interest margin tends to be adversely affected in the short term by a decrease in inflation because generally our UF-denominated assets exceed our UF-denominated liabilities. See “—Inflation” and “—UF-denominated Assets and Liabilities” above. An increase in long-term rates also has a positive effect on our net interest margin, because our interest-earning assets generally have a longer duration than our interest bearing liabilities.

In addition, because our peso-denominated liabilities have relatively short repricing periods, they are generally more responsive to changes in inflation or short-term rates than our UF-denominated liabilities. As a result, during periods when current inflation or expected inflation exceeds the previous month’s inflation, customers often switch funds from peso-denominated deposits to more expensive UF-denominated deposits, thereby adversely affecting our net interest margin.

During the latter part of 2005, long-term interest rates prevailing in Chile began to rise and, in particular, interest rates applicable to Central Bank bonds with maturities of five and ten years experienced significant increases, and accordingly, the marked-to-market value of the peso- and UF-denominated bonds held in our investment portfolio began to decline. In response to the magnitude of losses that would have been generated by maintaining our investment portfolio as it was constituted prior to October 2005, we began to gradually liquidate our investment portfolios through sales transactions carried out in the Chilean financial markets. In December, 2007, we took a short position on nominal interest rates and a long position on long-term inflation rates. In January 2007, the Central Bank unexpectedly reduced interest rates from 5.25% to 5.00% which negatively affected our treasury business. Consequently, our net foreign exchange transactions and trading activities in January showed a loss of approximately Ch$2,103 million as a result of the decision of the Central Bank to reduce interest rates and its announcement that it projects lower than expected inflation for 2007. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Sources of Liquidity—Financial Investments.”

Currency Exchange Rates

A material portion of our assets and liabilities is denominated in foreign currencies, principally the U.S. dollar, and we historically have maintained and in the future may continue to maintain material gaps in the balances of such assets and liabilities. Currently, we do not maintain material gaps between the balances of these assets and liabilities. Our reported income is affected by changes in the value of the peso with respect to foreign currencies (principally the U.S. dollar) because such assets and liabilities, as well as interest earned or paid on such assets and liabilities, and gains (losses) realized upon the sale of such assets, are translated to pesos in preparing our financial statements. The Chilean government’s economic policies and any future changes in the value of the peso against the U.S. dollar could adversely affect our financial condition and results of operations. In the past, the peso has been subject to significant volatility when compared to the U.S. dollar. The peso appreciated against the U.S. dollar by 15.9%, 6.6% and 8.1% in 2003, 2004 and 2005, respectively. In 2006 the peso depreciated against the U.S. dollar by 3.5% as compared to 2005 and in 2007 appreciated in value by 6.4% as compared to 2006. Our exchange rate as of December 31, 2006 and 2007 was Ch$532.07 and 497.87 per US$1.00, respectively. The peso may be subject to significant fluctuations in the future. As previously described, we began calculating our foreign exchange rates in accordance with Circular No. 3,345 issued by the Chilean Superintendency of Banks and its related amendments. See “Item 3. Key Information—Exchange Rate Information.”

Entering into forward exchange transactions enables us to reduce the negative impact of material gaps between the balances of our foreign currency-denominated assets and liabilities. As of December 31, 2006 and 2007, the gap between foreign currency denominated assets and foreign currency denominated liabilities, including forward contracts, was Ch$423 million, and Ch$(432) million, respectively.

Critical Accounting Policies and Estimates

As a Chilean bank, we prepare our consolidated financial statements in conformity with accounting principles generally accepted in Chile and the rules of the Chilean Superintendency of Banks relating thereto, which, together, differ in certain significant respects from U.S. GAAP. See notes 26 and 27 to our financial statements for a description of the principal differences between Chilean GAAP and U.S. GAAP as they relate to us, a reconciliation to U.S. GAAP of net income and shareholders’ equity as of and for each of the three years in the period ended December 31, 2007, additional disclosures required under U.S. GAAP and a discussion of recently issued accounting policies as they relate to us.

In preparing our consolidated financial statements, we use estimates and assumptions to account for certain assets, liabilities, revenues, expenses and other transactions. The consolidated financial statements include various estimates and assumptions, including but not limited to the adequacy of the allowance for loan losses, estimates of the fair value of certain financial instruments, the selection of useful lives of certain assets and the valuation and recoverability of goodwill and deferred tax assets. We evaluate these estimates and judgments on an ongoing basis.

Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results in future periods could differ from those estimates and assumptions, and if these differences were significant enough, our reported results of operations would be affected materially.

Note 1 to our financial statements contains a summary of our significant accounting policies. We believe that the following are the more critical judgment areas or involve a higher degree of complexity in the application of the accounting policies that currently affect our financial condition and results of operations:

Allowance for Loan Losses

We have established allowances to cover probable loan losses in accordance with regulations issued by the Chilean Superintendency of Banks.

For purposes of the financial information presented in this Annual Report, as of and for the period ending December 31, 2007, and for periods ending earlier, we have applied regulations of the Chilean Superintendency of Banks applicable to such periods.

Although the level of detail in the statutory loan category schedules limits management’s discretion regarding the category to which a given loan should correspond, our management is required to make estimates and judgments about inherently subjective matters in determining the classification of individual loans and such classification affects the determination of the allowance for loan losses. The allowance for loan losses requires us to make estimates and, consequently, we regularly evaluate our allowance for loan losses by taking into consideration factors such as changes in the nature and volume of our loan portfolio, trends in forecasted portfolio credit quality and economic conditions that may affect our borrowers’ ability to pay. Increases in our allowance for loan losses are reflected as provisions for loan losses in our income statement. Loans are charged off when management determines that the loan or a portion thereof is uncollectible. Charge-offs are recorded as a reduction of the allowance for loan losses. See “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Regulations Relating to Classification of Banks and Loans; Allowances for Loan Losses From January 1, 2004.”

For a further description of the Chilean Superintendency of Banks regulations relating to loan classification and provisioning, see “Item 4. Information on the Company—Business Overview—Selected Statistical Information—Regulations Relating to Classification of Banks and Loans; Allowances for Loan Losses From January 1, 2004” and “Item 4. Information on the Company—Business Overview—Regulation and Supervision—Regulations Relating to Classification of Banks and Loans; Allowances for Loan Losses From January 1, 2004.”

We consider the accounting estimates related to allowance for loan losses to be “critical accounting estimates” because: (i) they are highly susceptible to change from period to period because our assumptions about the risk of loss used to classify our loans are updated for recent performance experience which may increase or decrease our risk index that is used to determine our global allowance, (ii) our specific allowances are also updated to reflect recent performance which may result in an increase or decrease in our specific allowances, (iii) it requires management to make estimates and assumptions about loan classification and the related estimated probable loss, if any, and (iv) any significant difference between our estimated losses (as reflected in the specific and general provisions) as of the balance sheet date and our actual losses will require us to adjust our allowance for loan losses that may result in additional provisions for loan losses in future periods which could have a significant impact on our future net income and/or financial condition. At December 31, 2007, our allowance for loan losses was Ch$55,067 million.

The Chilean Superintendency of Banks performs a yearly audit on each bank in the Chilean system to monitor, among other things, such bank’s loan categorization and provisioning practices and to assign such bank to a level of compliance. Banks that are assigned to “Category 1” are authorized by the Chilean Superintendency of Banks to assign their loans to the statutory loan categories based on management’s estimates, while banks that do not achieve Category 1 lose this ability. We have been assigned by the Chilean Superintendency of Banks to Category 1 since January 2004 and to its equivalent under the prior regulatory scheme, Category I, from 1997 through 2003.

Foreign Currency and Derivative Activities

We enter into forward foreign exchange contracts and spot exchange contracts for our own account and the accounts of our customers. Prior to January 1, 2006, Chilean GAAP required us to account for forward contracts between foreign currencies and U.S. dollars at fair value with realized and unrealized gains and losses recognized in income. Forward contracts between the U.S. dollar and the peso or UF were valued at the closing spot exchange rate at each balance sheet date with the initial discount or premium being amortized over the life of the contract. Our interest rate and cross-currency swap agreements were treated as off-balance-sheet financial instruments and the net interest effect, which corresponds to the difference between interest income and interest expense arising from such agreements, was accrued and recorded in net income in the period that such differences originated.

Effective January 1, 2006, new rules were issued for the accounting treatment of certain derivative instruments and hedges of financial assets. Traditional financial instruments which meet the definition of a “derivative” are initially recognized on the balance sheet at cost (including transaction fees) and, at subsequent period ends, at their fair value. When a derivative contract is signed, it must be designated by us as a trading contract or a hedge. Any changes in the fair value of trading financial derivative contracts are recorded in income under “Gains (losses) from trading activities”

Under U.S. GAAP, derivative financial instruments are recorded at fair value. Fair values are based on quoted market prices or, if not available, on internally developed pricing models informed by independently obtained market information. If market information is limited or in some instances, not available, management applies its professional judgment. Other factors that may also affect estimates are incorrect model assumptions, market dislocations and unexpected correlations. Notwithstanding the level of subjectivity in determining fair value, we believe our estimates of fair value are adequate. The use of different models or assumptions could lead to changes in our reported results.

In addition, we make loans and accept deposits in amounts denominated in foreign currencies, principally the U.S. dollar. Such assets and liabilities are translated at the applicable exchange rate at the balance sheet date.

Financial Investments

Prior to January 1, 2006, we recorded investments in financial instruments with a secondary market at market value. This required the recognition of the market value adjustments to be recorded against income for the year, unless permanent investments were involved, in which case, under certain limitations, the aforementioned adjustments could be made directly against equity in “Fluctuations in value of financial investments”. Investment securities maintained by our subsidiaries were carried at the lower of price-level restated cost or market value.

Effective January 1, 2006, the Chilean Superintendency of Banks established new rules for the classification and accounting treatment of financial instruments, summarized as follows:

i. Trading Instruments - Instruments for trading are securities acquired for which we have the intent to generate earnings from short-term price fluctuations or through brokerage margins, or that are included in a portfolio created for such purposes. Instruments for trading are valued at their fair value according to market prices on the closing date of the balance sheet.

ii. Investment Instruments - Investment instruments are classified into two categories: held-to-maturity investments and instruments available-for-sale. Held-to-maturity investments only include those instruments for which we have the intent and ability to hold-to-maturity. Investment instruments not classified as held-to-maturity or trading are considered to be available-for-sale.

Investment instruments are recorded initially at cost. Instruments available-for-sale are valued at each subsequent period-end at their fair value. Mark-to-market adjustments are reported in a separate component of shareholders’ equity.

All purchases and sales of investment instruments, to be delivered within the deadline stipulated by market regulation and conventions, are recognized on the commitment date, which is the date on which the commitment is made to purchase or sell the asset. Other purchases or sales are treated as forwards until they are liquidated.

We enter into security repurchase agreements as a form of borrowing. The liability for the repurchase of the investment is classified as “investments under agreements to repurchase” and is carried at cost plus accrued interest.

We also enter into resale agreements as a form of investment. Under these agreements we purchase securities, which are included as assets under the caption “investments purchased under agreements to resell” and are carried at cost plus accrued interest.

Recently Adopted and New Accounting Pronouncements

See note 2 and note 27 to our financial statements for a detailed description of recently adopted and new accounting pronouncements in Chilean and U.S. GAAP.

Results of Operations

Pursuant to Chilean GAAP and for comparative purposes, the financial information in this section is restated in constant pesos as of December 31, 2007.

Results of Operations for the Years Ended December 31, 2006 and 2007

The following table sets forth the principal components of our net income for the years 2006 and 2007:

	For the Year Ended December 31,						% Change from Prior Year
	2006			2007			2007
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Components of net income:
Net interest revenue	Ch$	116,984		Ch$	164,768		40.8	%
Provisions for loan losses	(15,751		)	(25,991		)	65.0
Fees and income from services, net	30,297			36,865			21.7
Other operating income (loss), net	(4,205		)	(5,144		)	22.3
Other income and expenses, net	251			(2,103		)	(937.8	)
Operating expenses	(69,848		)	(82,069		)	17.5
Loss from price-level restatement, net	(7,527		)	(25,946		)	244.7
Income before income taxes	50,201			60,380			20.3
Income taxes	(8,203		)	(9,331		)	13.8
Net income	Ch$	41,998		Ch$	51,049		21.6	%

The following table presents summary information related to our lines of business for the years ending December 31, 2006 and 2007.

	Year ended December 31, 2006
	Commercial Banking				Retail Banking
	Large Companies and Corporate		Companies		Traditional and Private Banking		Lower Income Retail Banking		Treasury and International (1)		Non- Banking Financial Services		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Net interest revenue	26,980		24,882		32,151		28,397		4,041		533		116,984
Fees and income from services, net	2,942		5,840		7,652		4,324		(249	)	9,788		30,297
Gain from trading activities	—		4,022		—		—		258		3,242		7,522
Foreign exchange transactions, net	609		1,427		107		—		(1,815	)	(4	)	324
Other operating income (expenses), net	(51	)	1,195		(2,851	)	(10,215	)	(554	)	425		(12,051	)
Provision for loan losses	455		(4,770	)	(7,998	)	(11,642	)	(1,371	)	—		(25,326	)
Gross Operational margin	30,935		32,596		29,061		10,864		310		13,984		117,750
Other income and expenses													9,826
Operating expenses													(69,848	)
Net loss from price-level restatement													(7,527	)
Income before income taxes													50,201
Average Loans	1,429,484		859,098		625,668		255,316		19,732		—		3,189,298
Average Investments	—		—		—		—		99,640		110,669		210,309

(1) Includes other non-segment items

	Year ended December 31, 2007
	Commercial Banking				Retail Banking
	Large Companies and Corporate		Companies		Traditional and Private Banking		Lower Income Retail Banking		Treasury and International (1)		Non- Banking Financial Services		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Net interest revenue	24,775		29,787		45,221		30,571		30,421		3,993		164,768
Fees and income from services, net	2,467		5,997		9,182		5,959		(666	)	13,926		36,865
Gain from trading activities	—		4,390		—		—		(5,473	)	(569	)	(1,652	)
Foreign exchange transactions, net	1,229		(188	)	210		—		4,869		1,455		7,575
Other operating income (expenses), net	(49	)	1,497		(3,923	)	(9,191	)	(318	)	917		(11,067	)
Provision for loan losses	333		(4,330	)	(12,575	)	(19,086	)	(412	)	—		(36,070	)
Gross Operational margin	28,755		37,153		38,115		8,253		28,421		19,722		160,419
Other income and expenses													7,976
Operating expenses													(82,069	)
Net loss from price-level restatement													(25,946	)
Income before income taxes													60,380
Average Loans	1,554,770		939,612		820,128		278,605		39,096		—		3,632,211
Average Investments	—		—		—		—		99,897		116,432		216,329

(1) Includes other non-segment items

Net Interest Revenue

The following table sets forth the elements of our net interest revenue for the years 2006 and 2007:

	For the year ended December 31,						% Change from Prior Year
	2006			2007			2007
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Interest revenue	Ch$	265,858		Ch$	379,096		42.6	%
Interest expense	(148,874		)	(214,328		)	44.0
Net interest revenue	Ch$	116,984		Ch$	164,768		40.8	%

Our net interest revenue increased by 40.8% in 2007 as compared to 2006. This is due to an increase in our interest revenue amounting to Ch$379,096 million (an increase of 42.6%), offset by greater interest expenses of Ch$214,328 million (an increase of 44.0%). The increase in interest revenue is mainly the result of two factors: our growth in average interest-earning assets, which increased by Ch$442,913 million in 2007 as compared to 2006, and the increase in our interest revenue from inflation indexed interest-earning assets. The accumulated inflation rate in 2007 rose above market expectations reaching 7.4% compared to the 2.1% recorded in 2006. Inflation positively affects our interest revenue because we have a greater amount of assets denominated in inflation indexed Chilean UF currency (unidad de fomento) than our UF denominated liabilities. As a result, our UF-denominated assets reprice quicker than our peso-denominated liabilities. The increase in interest expense is mainly due to the substantial increase in time deposits and other interest-bearing liabilities which were acquired in order to fund our growth in loans. Our total average interest-bearing liabilities as of December 31, 2006 and 2007 were Ch$2,618,371 million and Ch$3,002,513 million, respectively.

The following table sets forth information as to key elements of our interest revenue for the years 2006 and 2007:

	For the year ended December 31,				% Change from prior year
	2006		2007		2007
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Interest revenue	Ch$	265,858	Ch$	379,096	42.6	%
Average interest-earning assets:
Loans(1)	3,189,298		3,632,211		13.9
Financial investments	210,309		216,329		2.9
Interbank deposits	67,536		60,968		(9.7	)
Total average interest-earning assets	Ch$	3,467,143	Ch$	3,909,508	12.8	%

(1) Includes commercial, consumer, mortgage, contingent and past due loans.

Our average interest-earning assets (excluding interbank deposits) were Ch$3,848,540 million in 2007 as compared to Ch$3,399,607 million in 2006, representing an increase of 13.2%. The increase is mainly due to our strong growth in retail banking and our record year growth in wholesale banking. The main increases in the wholesale loan portfolio were seen in the financial services, community social and personal services, and commerce industries, increasing by 59.3%, 31.8% and 21.1% (end of year balances), respectively. Our results of operations and financial position have not suffered any direct impact as a consequence of the recent credit market instability in the U.S. resulting from concerns with increased defaults of subprime and certain other mortgage products and loss of

liquidity in markets for mortgage related securities. As of December 31, 2007, our investment portfolio did not contain instruments (i) backed by, or otherwise related to, U.S. subprime mortgages or (ii) with exposure to monoline financial guarantors. Moreover, we have not been materially affected by the high cost of funding in the global market, mainly because the liquidity available from the Chilean market enabled us to fund its operations and maintain its regular business activities.

The following table sets forth the key elements of our interest expense for the years ended December 31, 2006 and 2007:

	For the year ended December 31,				% Change from prior year
	2006		2007		2007
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Interest expense	Ch$	148,874	Ch$	214,328	44.0	%
Average interest-bearing liabilities:
Savings accounts	12,478		10,344		(17.1	)
Time deposits	1,660,140		1,924,808		15.9
Central Bank borrowings	10,102		12,199		20.8
Repurchase agreements	88,806		109,469		23.3
Mortgage finance bonds	325,115		346,449		6.6
Other interest-bearing liabilities	521,730		599,244		14.9
Total average interest-bearing liabilities	Ch$	2,618,371	Ch$	3,002,513	14.7	%

Our interest expense was Ch$214,328 million in 2007 compared to Ch$148,874 million in 2006, an increase of 44.0%. This increase was mainly the result of funding our growth in our average loan portfolio, which grew 13.9% in 2007 as compared to 2006.

Our funding strategy was mainly driven by growth in time deposits and the issuance of banking bonds. In 2007, we placed UF6 million in three bonds in the local market, representing approximately Ch$117,736 million as of December 31, 2007. Each of these bonds have a face value of UF2 million and were placed during April, July, and November of 2007. The successful bond placement and the increase in the average durations for time deposits were the main factors contributing to the reduced financing costs during 2007. Our time deposits and Mortgage finance bonds represent 64.1% and 11.5% of our total interest-bearing liabilities, respectively.

Net interest margin (net interest revenue divided by average interest-earning assets) was approximately 3.4% and 4.2% for 2006 and 2007, respectively. This increase was primarily the result of two factors, our growth in average interest-bearing assets and our revenue from inflation indexed interest-earning assets.

Provisions for Loan Losses

Provisions and charge-offs for loan losses (gross) were Ch$36,070 million in 2007 as compared to Ch$25,326 million in 2006, an increase of 42.4% due to our growth in the retail segment which is more profitable but also associated with greater risk. Charge-offs increased by 29.8% in 2007 amounting to Ch$27,124 million, representing 75.2% of provisions for loan losses charged to income during the period. Allowances for loan losses as a percentage of total loans was 1.3% as of December 31, 2007 which compares favourably to our risk index of 1.4% as of December 31, 2006. The improvement was mainly due to changes in the composition of our loan portfolio. In our management’s judgment, our allowances for loan losses as of December 31, 2007 were adequate to cover any known or probable losses in the loan portfolio.

The following table sets forth certain information relating to our allowances for loan losses as of December 31, 2006 and 2007:

	As of December 31,						% Change from prior year
	2006			2007			2007
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Total loans	Ch$	3,578,380		Ch$	4,345,436		21.4	%
Substandard loans	64,770			69,540			7.4
Allowances for loan losses	49,967			55,067			10.2
Allowances for loan losses as a percentage of total loans	1.4		%	1.3		%	(7.1	)
Allowances for loan losses as a percentage of past due loans	243.4		%	234.8		%	(3.5	)
Allowances for loan losses as a percentage of substandard loans	77.1		%	79.2		%	2.7	%

Net Fees and Income from Services

Fees and income from services for the year ended December 31, 2007 were Ch$36,865 million, an increase of Ch$6,568 million, or 21.7% when compared to last year. Throughout 2007, we maintained our strong growth in retail banking which allowed us to end the year with over approximately 220,000 retail customers. Furthermore, we continued our effort to expand cross-selling and product usage and raised fees in line with what we believe to be the market standard. As of December 31, 2007 we had approximately 59,000 retail checking accounts and 233,000 credit cards, an increase over the prior year of 23.1% and 35.4%, respectively. However, this strong growth in retail checking accounts has not resulted in a reduction of the average balance per account which remains flat at Ch$1 million and in line with industry standards. Our promotions such as discounts on gasoline purchases and our no-interest option on purchases for up to 24 months have improved sales and usage rates of this product. During the fourth quarter of 2007, the usage rate for our cards was above the market standard at 58.0% while the industry’s average was 48.7%.

Other Net Operating Income

The following table sets forth certain components of our other net operating income for 2006 and 2007:

	For the Year Ended December 31,						% Change from prior year
	2006			2007			2007
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Trading activities, net	Ch$	7,522		Ch$	(1,652	)	(122.0	)%
Foreign exchange transactions, net	324			7,575			2,238.0
Other operating income and expenses, net	(12,051		)	(11,067		)	(8.2	)
Total other operating income (loss), net	Ch$	(4,205	)	Ch$	(5,144	)	22.3	%

In 2007, we recorded a total other operating loss of Ch$5,144 million as compared to a total other operating loss of Ch$4,205 million in 2006. Net trading activities decreased by Ch$9,174 million as compared to the prior year. This decrease is a result of a decrease of Ch$2,680 million in our trading and available for sale investment activities, a decrease of Ch$7,184 million in derivatives designated as held-for-trading and an increase of Ch$690 million in other financial asset transactions. Net foreign exchange transactions increased by Ch$7,251 million, which were mainly offset by the losses in derivative trading transactions. We maintain positions which are reported as trading or foreign exchange transactions, even though they may provide an effective economic hedge for managing risk. The variance in other net operating income and expenses is mainly due to an increase in revenues from financial and legal advisory services performed through our subsidiaries.

Operating Expenses

The following table sets forth the principal components of our operating expenses for the years ended 2006 and 2007:

	For the Year Ended December 31,				% Change from prior year
	2006		2007		2007
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Personnel salaries and expenses	Ch$	43,962	Ch$	51,096	16.2	%
Administrative and other expenses	20,246		24,954		23.3
Depreciation amortization	5,640		6,019		6.7
Total operating expenses	Ch$	69,848	Ch$	82,069	17.5	%

Operating expenses increased by Ch$12,221 million, or 17.5% in 2007 as compared to 2006. This is a result of our strategy to focus on more profitable business segments (retail and small and medium sized companies (SMEs)) which require larger investment in terms of bank branches, personnel, and other operations. Personnel salaries and expenses increased by Ch$7,134 million, or 16.2%. This increase reflects the additional personnel hired to handle increased business activity in our commercial and operational areas. As of December 31, 2007 our roster was comprised of approximately 3,100 employees, an increase of 30.6% over last year. Administrative and other expenses increased by Ch$4,708 million, or 23.3%. As part of our strategy, this increase was primarily due to greater expenditures for marketing campaigns and for leases for additional branches. We also launched our new corporate image during the third quarter of 2007 and which was accompanied by a solid marketing campaign, orientated to reposition the bank. Additionally, administrative and other expenses include payments for a service agreement to our affiliate Corp Group Interhold S.A. Under this agreement, we pay fees of approximately UF6,250 per month. This agreement was signed on July 6, 2001 and had an initial five year term which is automatically renewable for one-year periods thereafter. Our efficiency ratio (operating expenses as a percentage of operating revenue which is the aggregate of net interest revenue, net fees and income from services and net other operating income) decreased to 41.8% in 2007 from 48.8% in 2006. This is mainly a result of our growth in our net interest revenue which increased by 40.8% offset by greater operating expenses.

Net Loss from Price-level Restatement

Chilean GAAP requires that financial statements be restated to reflect the full effects of loss in purchasing power of the peso on the financial position and the results of operations of reporting entities. The method prescribes that the historical cost of all non-monetary accounts be restated for general price-level changes between the date of origin of each item and the year-end. As such, under Chilean GAAP, the gain (or loss) from price-level restatement in results of operations is determined by subtracting the price-level restatement adjustment of net non-monetary assets from the price-level restatement adjustment of shareholders’ equity.

Our net loss due to price-level restatement increased from Ch$7,527 million in 2006 to Ch$25,946 million in 2007. This was due to the higher accumulated inflation rate in 2007, reaching at November 7.4% versus 2.1% in 2006.

Income Taxes

In 2007, we had a net tax liability of Ch$9,331 million as compared to Ch$8,203 million in 2006. This is due to our increase in our income before taxes in 2007 as compared to 2006.

Results of Operations for the Years Ended December 31, 2005 and 2006

The following table sets forth the principal components of our net income for the years 2005 and 2006:

	For the Year Ended December 31,						% Change from Prior Year
	2005			2006			2006
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Components of net income:
Net interest revenue	Ch$	130,188		Ch$	116,984		(10.1	)%
Provisions for loan losses	(15,167		)	(15,751		)	3.9
Fees and income from services, net	25,411			30,297			19.2
Other operating income, net	6,705			(4,205		)	(162.7	)
Other income and expenses, net	(1,179		)	251			(121.3	)
Operating expenses	(64,902		)	(69,848		)	7.6
Loss from price-level restatement, net	(11,576		)	(7,527		)	(35.0	)
Income before income taxes	69,480			50,201			(27.7	)
Income taxes	(11,766		)	(8,203		)	(30.3	)
Net income	Ch$	57,714		Ch$	41,998		(27.2	)%

The following table presents summary information related to our lines of business for the years ending December 31, 2005 and 2006.

	Year ended December 31, 2005
	Commercial Banking				Retail Banking
	Large Companies and Corporate		Companies		Traditional and Private Banking		Lower Income Retail Banking		Treasury and International(1)		Non- Banking Financial Services		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Net interest revenue	23,203		27,472		23,371		28,212		21,561		6,369		130,188
Fees and income from services, net	2,635		4,747		6,318		2,667		477		8,567		25,411
Gain from trading activities	2		3,532		—		—		7,224		2,301		13,059
Foreign exchange transactions, net	386		(2,222	)	4		—		4,146		(2,709	)	(395	)
Other operating income (expenses), net	(43	)	1,896		(2,545	)	(7,938	)	2,006		665		(5,959	)
Provision for loan losses	(369	)	(7,805	)	(5,978	)	(8,450	)	(2,183	)	—		(24,785	)
Gross Operational margin	25,814		27,620		21,170		14,491		33,231		15,193		137,519
Other income and expenses													8,439
Operating expenses													(64,902	)
Net loss from price-level restatement													(11,576	)
Income before income taxes													69,480
Average Loans	1,362,407		793,584		482,733		218,280		47,063		—		2,904,067
Average Investments	—		—		—		—		475,357		120,934		596,291

	Year ended December 31, 2006
	Commercial Banking				Retail Banking
	Large Companies and Corporate		Companies		Traditional and Private Banking		Lower Income Retail Banking		Treasury and International(1)		Non- Banking Financial Services		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Net interest revenue	26,980		24,882		32,151		28,397		4,041		533		116,984
Fees and income from services, net	2,942		5,840		7,652		4,324		(249	)	9,788		30,297
Gain from trading activities	—		4,022		—		—		258		3,242		7,522
Foreign exchange transactions, net	609		1,427		107		—		(1,815	)	(4	)	324
Other operating income (expenses), net	(51	)	1,195		(2,851	)	(10,215	)	(554	)	425		(12,051	)
Provision for loan losses	455		(4,770	)	(7,998	)	(11,642	)	(1,371	)	—		(25,326	)
Gross Operational margin	30,935		32,596		29,061		10,864		310		13,984		117,750
Other income and expenses													9,826
Operating expenses													(69,848	)
Net loss from price-level restatement													(7,527	)
Income before income taxes													50,201
Average Loans	1,429,484		859,098		625,668		255,316		19,732		—		3,189,298
Average Investments	—		—		—		—		99,640		110,669		210,309

(1) Includes other non-segment items

Net Interest Revenue

The following table sets forth the elements of our net interest revenue for the years 2005 and 2006:

	For the year Ended December 31,						% Change from Prior Year
	2005			2006			2006
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Interest revenue	Ch$	272,669		Ch$	265,858		(2.5	)%
Interest expense	(142,481		)	(148,874		)	4.5
Net interest revenue	Ch$	130,188		Ch$	116,984		(10.1	)%

Our net interest revenue was Ch$116,984 million in 2006 compared to Ch$130,188 million in 2005, a decrease of 10.1%. Our interest revenue fell from Ch$272,669 in 2005 to Ch$265,858 in 2006, a decrease of 2.5%. Our interest expense increased by 4.5%. The decrease in interest revenue is mainly due to the reduction of our average interest-earning assets as a result of the divestment of our securities portfolio to approximately 20% of its 2005 level. This divestment took place during the latter part of 2005 and the first half of 2006. In spite of this reduction of our investment portfolio, our total loan portfolio grew 15.1% as compared to the prior year. However, this growth took place mainly during the second quarter and the interest generated by this growth could not offset the decreased experienced during the first quarter. Also, the lower inflation rate in 2006 compared to 2005 resulted in a lower increase in the balance of our UF-denominated assets. The increase in interest expense of 4.5% was the effect of an increase in prevailing interest rates, as a result of the Central Bank’s monetary policy rate increasing from 4.50% in January 2006 to 5.25% in December 2006. Additionally, an upward trend in the monetary policy rate impacts our interest margin because our interest bearing liabilities reprice more frequently than our interest-earning assets.

The following table sets forth information as to key elements of our interest revenue for the years 2005 and 2006:

	For the year ended December 31,				% Change from prior year
	2005		2006		2006
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Interest revenue	Ch$	272,669	Ch$	265,858	(2.5	)%
Average interest-earning assets:
Loans(1)	2,904,067		3,189,298		9.8
Financial investments	596,291		210,309		(64.7	)
Interbank deposits	60,569		67,536		11.5
Total average interest-earning assets	Ch$	3,560,927	Ch$	3,467,143	(2.6	)%

(1) Includes commercial, consumer, mortgage, contingent and past due loans.

Our average interest-earning assets (excluding interbank deposits) were Ch$3,399,607 million in 2006 as compared to Ch$3,500,358 million in 2005, a decrease of 2.9 %. This decrease is mainly the result of liquidating a significant portion of our investment portfolio. In the latter part of 2005 and the first half of 2006, we began to liquidate our investment portfolio due to the negative effect of the increase in interest rates on these investments. Average financial investments held as of December 31, 2006 decreased by Ch$385,982 million, or 64.7% as compared to the previous year. The lower amount of financial investments was partially offset by an increase in loans during the year.

The following table sets forth information as to key elements of our interest expense for the years 2005 and 2006:

	For the Year Ended December 31,				% Change from Prior Year
	2005		2006		2006
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Interest expense	Ch$	142,481	Ch$	148,874	4.5	%
Average interest-bearing liabilities:
Savings accounts	13,898		12,478		(10.2	)
Time deposits	1,937,002		1,660,140		(14.3	)
Central Bank borrowings	27,057		10,102		(62.7	)
Repurchase agreements	101,715		88,806		(12.7	)
Mortgage finance bonds	308,707		325,115		5.3
Other interest-bearing liabilities	403,119		521,730		29.4
Total average interest-bearing liabilities	Ch$	2,791,498	Ch$	2,618,371	(6.2	)%

Our interest expense was Ch$148,874 million in 2006 compared to Ch$142,481 million in 2005, an increase of 4.5%. This increase was mainly the result of the effect of an increase in prevailing interest rates, as a result of the Central Bank’s monetary policy rate increasing from 4.50% in January to 5.25% in December 2006.

As previously explained, we liquidated a significant portion of our investment portfolio during the latter part of 2005 and the first half of 2006. As a result we were able to almost completely substitute this divestment in loan growth. Furthermore, as we increase the size of our loan portfolio, we will continue to seek to lower our cost of funding through the expansion of our retail deposit base.

Net interest margin (net interest revenue divided by average interest-earning assets) was 3.7% and 3.4% for 2005 and 2006, respectively. As previously explained, this decrease was mainly a result of the liquidation of our investment portfolio partially offset by our growth in loans. However, this growth took place mainly during the second quarter; thus the interest generated by this growth could not completely offset the decrease in interest-earning assets during the first quarter.

Provisions for Loan Losses

We recorded consolidated net loan growth of 14.6 % in 2006 as compared to 2005. This increase was attributable to our continued effort to increase the size of our loan portfolio. However, our growth strategy is to grow profitably and focus on more profitable business segments. As of December 31, 2006, residential mortgage and consumer loans showed the most significant growth as compared to December 31, 2005, growing by 39.3% and 21.1 %, respectively.

Provisions and charge-offs for loan losses were Ch$25,326 million in 2006 as compared to Ch$24,785 million in 2005, an increase of 2.2% due to our growth in the retail segment which is more profitable but also associated with greater risk. Total charge-offs increased by 17.2 % in 2006, representing 82.5 % of provisions for loan losses charged to income during the period. Allowances for loan losses as a percentage of total loans was 1.6% as of December 31, 2006 which compares favourably to our risk index of 1.4% as of December 31, 2005. The improvement was mainly due to changes in the composition of our loan portfolio, including a decrease in past due loans. In our judgment, our allowances for loan losses as of December 31, 2006 were adequate to cover any known or probable losses in the loan portfolio.

The following table sets forth certain information relating to our allowances for loan losses as of December 31, 2005 and 2006:

	As of December 31,					% Change from prior year
	2005			2006		2006

	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Total loans	Ch$	3,123,269		Ch$	3,578,380	14.6	%
Substandard loans	65,981			64,770		(1.8	)
Allowances for loan losses	48,617			49,967		2.8
Allowances for loan losses as a percentage of total loans	1.6		%	1.4		(12.5	)
Allowances for loan losses as a percentage of past due loans	177.4		%	243.4		37.2
Allowances for loan losses as a percentage of substandard loans	73.7		%	77.1		4.6	%

Net Fees and Income from Services

Our net fees and income from services increased 19.2% from Ch$25,411 million in 2005 to Ch$30,296 million in 2006, due primarily to our effort to increase fees in line with what we believe to be the market standard and to improve our fee collection processes to products oriented to retail banking customers (such as checking accounts and credit cards). We believe that our customers’ acceptance of these changes demonstrates a high level of loyalty to our products and services. In addition, this increase reflects the increase in our client base as of December 2006 as compared to December 2005. The increase in our fees and other services income was partially offset by a 30.8% increase in expenses, from Ch$4,190 million in 2005 to Ch$5,483 million in 2006. This escalation in costs is due to the increase of more than 50% in both the stock as well as transactions and consumption of our credit cards business.

Other Net Operating Income

The following table sets forth certain components of our other net operating income for 2005 and 2006:

	For the Year Ended December 31,						% Change from prior year
	2005			2006			2006
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Trading activities, net	Ch$	13,059		Ch$	7,522		(42.4	)%
Foreign exchange transactions, net	(395		)	324			(182.0	)
Other operating income and expenses, net	(5,959		)	(12,051		)	102.2
Total other operating income, net	Ch$	6,705		Ch$	(4,205	)	(162.7	)%

In 2006, we recorded a total other net operating loss of Ch$4,205 million as compared to income of Ch$6,705 million in 2005. This change was primarily the result of (i) losses experienced in the value of our investment portfolio towards the end of 2005 and early in 2006 due to increases in prevailing Chilean interest rates and the simultaneous decline in value of debt securities, especially with respect to Chilean government bonds. As a result, we liquidated the majority of the positions in our investment portfolio, thereby reducing our exposure to potential losses in connection with fluctuations in prevailing interest rates; (ii) the non-recurring income received in 2005 in connection with the liquidation of an asset received in lieu of payment, representing approximately Ch$2,148 million; and (iii) the increase in Ch$2,365 million in sales force expenses related to the growth in our consumer loan, credit card and residential mortgage loan portfolios.

Operating Expenses

The following table sets forth the principal components of our operating expenses for the years ended 2005 and 2006:

	For the Year Ended December 31,				% Change from prior year
	2005		2006		2006
	(in millions of constant Ch$ as of December 31, 2007 except for percentages)

Personnel salaries and expenses	Ch$	40,830	Ch$	43,962	7.7	%
Administrative and other expenses	18,422		20,246		9.9
Depreciation amortization	5,650		5,640		(0.2	)
Total operating expenses	Ch$	64,902	Ch$	69,848	7.6	%

Our total operating expenses were Ch$64,902 million in 2005 as compared to 69,848 million in 2006, an increase of 7.6%. This increase was mainly the result of higher personnel salaries and expenses, which grew by Ch$3,132 million, or 7.7%, from Ch$40,830 million as of December 31, 2005 to Ch$43,962 million for 2006. The increase reflects the additional personnel hired to handle increased business activity in our commercial and operational areas. Administrative and other expenses were Ch$20,246 million in 2006 compared to Ch$18,422 million in 2005, an increase of 9.9%. The increase was primarily due to greater expenditures for marketing campaigns and for leases for additional branches. Additionally, administrative and other expenses include payments for a service agreement to our affiliate Corp Group Interhold S.A. Under this agreement, we pay fees of approximately UF6,250 per month. This agreement was signed on July 6, 2001 and had an initial five year term which is automatically renewable for one-year periods thereafter. Our efficiency ratio (operating expenses as a percentage of operating revenue which is the aggregate of net interest revenue, net fees and income from services and net other operating income) increased to 48.8% in 2006 from 40.0% in 2005. This is due to two factors (i) increase in operating expenses which is mainly due to higher expenses related to our shift towards becoming a more retail oriented bank and (ii) the decrease in operating revenue which is mainly due to the decrease in net interest revenue.

Net Loss from Price-level Restatement

As described previously, Chilean GAAP requires that financial statements be restated to reflect the full effects of loss of in purchasing power of the peso on the financial position and the results of operations of reporting entities. As a result, the decrease in our net loss from price-level restatement from Ch$11,576 million in 2005 to Ch$7,527 million in 2006 was the lower inflation rate in 2006 versus 2005.

Income Taxes

Our income tax expenses in 2006 were a net tax liability of Ch$8,203 million as compared to a net tax liability of Ch$11,576 million in 2005. This decrease is due to our lower income before income taxes in 2006 as compared to 2005.

Chilean and U.S. GAAP Reconciliation

Significant differences exist between our net income under Chilean GAAP as presented in “Item 5. Operating and Financial Review and Prospects,” and our net income under U.S. GAAP as presented in notes 26 and 27 to our audited consolidated financial statements. Such differences involve certain methods for measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by U.S. GAAP. We prepare our financial statements in accordance with Chilean GAAP, which differs in certain significant respects from U.S. GAAP. See notes 26 and 27 to our audited consolidated financial statements for a detailed description of the material differences between Chilean GAAP and U.S. GAAP, as they relate to us and our consolidated subsidiaries, and a reconciliation to U.S. GAAP of net income and shareholders’ equity.

Our net income for the years ended December 31, 2005, 2006, and 2007 under Chilean GAAP and U.S. GAAP are as follows:

	Year Ended December 31,
	2005	2006	2007
	MCh$	MCh$	MCh$

Net Income (Chilean GAAP)	57,714	41,998	51,049
Net Income (U.S. GAAP)	48,805	44,814	54,511

Our shareholders’ equity for the years ended December 31, 2006 and 2007 under Chilean GAAP and U.S. GAAP are as follows:

	Year Ended December 31,
	2006	2007
	MCh$	MCh$

Total Shareholders’ Equity (Chilean GAAP)	465,310	484,674
Total Shareholders’ Equity (U.S. GAAP)	430,605	460,304

B. LIQUIDITY AND CAPITAL RESOURCES

We maintain adequate liquidity to ensure our ability to honour withdrawals of deposits, make repayments of other liabilities at maturity, extend loans and meet our own working capital requirements.

Sources of Liquidity

Our liquidity depends upon our (i) capital, (ii) reserves and (iii) financial investments, including investments in government securities and other financial institutions. To cover any liquidity shortfalls and to enhance our liquidity position, we have established lines of credit with foreign and domestic banks and also have access to Central Bank borrowings.

100

While we are continuing to use all available sources of funding as we believe appropriate, we are continuing to place special emphasis on increasing deposits from retail customers. These deposits consist primarily of checking accounts that do not bear interest and accordingly represent an inexpensive source of funding for us. In addition, to the extent that these types of deposits represent a larger percentage of our funding base, the percentage represented by time deposits is expected to decrease and, accordingly, we believe that the materiality to our business of uncertainties relating to rolling over deposits will be diminished. In April 2005, we issued UF8,000,000 (approximately US$315 million) of bonds in the Chilean market with the goal of using the proceeds to reduce our UF gap between assets and liabilities, improve our liquidity and reduce funding costs. Additionally, in 2006 and 2007, we issued UF 2 million and UF 6 million of bonds in the Chilean market using the proceeds to finance our normal business activities and to improve its liabilities structure. See “—Deposits and Other Borrowings and note 12 c. to our audited consolidated financial statements.”

Capital

We currently have shareholders’ equity in excess of that required by Chilean regulatory requirements. According to the General Banking Law, a bank should have an effective equity of at least 8% of its risk-weighted assets, net of required reserves, and paid-in capital and reserves (capital básico, or Net Capital Base) of at least 3% of its total assets, net of required reserves. For these purposes, the effective equity of a bank is the sum of (a) a bank’s Net Capital Base, (b) subordinated bonds issued by a bank valued at their placement price up to 50% of its Net Capital Base; provided that the value of the bonds shall decrease 20% for each year that lapses during the period commencing six years prior to their maturity and (c) loan loss allowances in an amount up to 1.25% of a bank’s risk-weighted assets. The calculation of the effective equity does not include the capital contributions made to subsidiaries of a bank. Amendments to the capital markets law, which became effective as of June 30, 2002, resulted in changes in the calculation of each bank’s regulatory capital. The amendments require the calculation of capital contributions to be made on a consolidated basis rather than on an unconsolidated basis. For purposes of weighing the risk of a bank’s assets, the General Banking Law categorizes assets based on the nature of the issuer, availability of funds, nature of the assets and existence of collateral securing such assets.

Reserves

Under the General Banking Law, a bank must have a minimum paid-in capital and reserves of UF800,000 (Ch$15,698 million or US$32 million as of December 31, 2007). However, a bank may begin operations with 50.0% of such amount, provided that it has a total capital ratio (defined as effective equity as a percentage of risk-weighted assets) of not less than 12.0%. When a bank’s paid-in capital reaches UF600,000 (Ch$11,773 million or US$24 million as of December 31, 2007) the total capital ratio required is reduced to 10.0%.

The following table sets forth our minimum capital requirements set by the Chilean Superintendency of Banks as of the dates indicated. See note 14 to our financial statements for a description of the minimum capital requirements.

	As of December 31
	2005					2006						2007
	(in millions of constant Ch$ as of December 31, 2007)

Net Capital Base	Ch$		389,160			Ch$			423,312		Ch$				433,625
3% total assets net of allowances	(113,741				)	(119,518				)	(145,935					)
Excess over minimum required equity	Ch$			275,419		Ch$		303,794			Ch$			287,690
Net Capital Base as a percentage of the total assets, net of allowances	10.3				%	10.6				%	8.9					%

Effective equity	Ch$		433,391			Ch$	464,768				Ch$		470,393
8% of the risk-weighted assets	(257,344				)	(273,556				)	(334,250					)
Excess over minimum required equity	Ch$	176,047				Ch$	191,212				Ch$		136,143
Effective equity as a percentage of the risk weighted assets	13.5				%	13.6				%	11.3					%

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Financial Investments

The following table sets forth our investment in Chilean government and corporate securities and certain other financial investments as of December 31, 2005, 2006 and 2007. Financial investments are classified at the time of the purchase, based on management’s intentions, as either trading or investment instruments, the latter of which are categorized as available-for-sale or held-to-maturity. As of December 31, 2005, 2006 and 2007 we have not classified any securities as held-to-maturity.

	As of December 31,
	2005		2006		2007
	(in millions of constant Ch$ of December 31, 2007)
Held-for-Trading:
Central Bank and government securities
Central Bank securities	Ch$	—	Ch$	49,741	Ch$	114,045
Chilean Treasury bonds	—		3,007		10,649
Other securities	—		2		2
Subtotal	—		52,750		124,696
Other financial securities
Time deposits in Chilean financial institutions	—		69,350		13,019
Mortgage finance bonds	—		4,095		3,504
Chilean financial institutions bonds	—		1,760		1,820
Chilean corporate bonds	—		—		83
Other Chilean securities	—		5,648		—
Subtotal	—		80,853		18,426
Total	—		133,603		143,122

Available-for-sale:
Central Bank and government securities
Central Bank securities	25,286		—		2,984
Chilean Treasury bonds	173		—		—
Other securities	2		—		—
Subtotal	25,461		—		2,984
Other financial securities
Time deposits in Chilean financial institutions	111,963		18,265		38,382
Mortgage finance bonds	120,637		1		—
Chilean financial institutions bonds	475		—		—
Chilean corporate bonds	85,213		6,721		—
Central Bank and government foreign securities	31,205		5,095		—
Other foreign securities	79,508
Subtotal	429,001		30,082		38,382
Total	454,462		30,082		41,366
Total financial investments	Ch$	454,462	Ch$	163,685	Ch$	184,488

In addition to the securities issued by the Central Bank and the Chilean government disclosed above, we also have a concentration of investments in time deposits and mortgage securities (Ch$6,915 million) issued by Banco del Estado de Chile, representing approximately 1.4% of our shareholders’ equity, at December 31, 2007. We do not hold securities of any issuer other than the Chilean Central Bank, which the aggregate book value of the investment exceeds 10% of our shareholders’ equity as of the end of the latest reported period.

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The following table shows interest rates per annum applicable to certain Central Bank bonds as of the dates indicated:

		Peso- denominated	Peso-denominated	UF-denominated	UF-denominated
As of the end of		five-year bond	10-year bond	five-year bond	10-year bond
2005	January	4.93	5.91	2.51	3.10
	February	4.94	5.83	2.32	2.89
	March	5.26	6.00	2.21	2.78
	April	5.45	6.05	2.17	2.61
	May	5.29	5.82	2.15	2.38
	June	5.13	5.60	2.00	2.30
	July	5.35	5.77	1.95	2.38
	August	5.38	5.73	1.87	2.21
	September	5.45	5.78	1.88	2.18
	October	6.02	6.25	2.57	—
	November	6.14	6.44	3.31	—
	December	6.01	6.39	3.17	—

2006	January	5.98	6.16	2.73	2.93
	February	5.91	—	2.73	2.96
	March	6.03	6.28	2.79	3.01
	April	6.06	—	2.63	2.94
	May	6.16	—	2.92	3.15
	June	6.21	6.42	3.17	3.33
	July	6.25	—	2.99	3.21
	August	6.01	—	2.94	3.05
	September	5.86	6.01	3.07	3.03
	October	5.66	—	2.93	2.94
	November	5.36	—	2.82	2.72
	December	5.62	5.50	2.54	2.54

2007	January	5.18	5.27	2.61	2.58
	February	5.31	—	2.61	2.81
	March	—	—	2.47	2.57
	April	5.28	—	2.37	2.59
	May	5.51	—	2.79	2.96
	June	5.86	—	2.99	3.21
	July	6.17	—	2.75	3.12
	August	6.20	—	2.92	3.14
	September	—	—	2.69	2.96
	October	6.23	—	2.85	3.01
	November	—	—	2.90	2.93
	December	6.21	—	—	—

2008	January	6.42	—	2.86	2.92
	February	6.36	—	2.69	2.84
	March	—	—	2.25	2.66
	April	6.42	—	2.21	2.67
	May(*)	6.88	7.05	2.71	3.15

(*) Through May 31, 2008

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Losses relating to the portion of our investment portfolio classified as “trading” are recorded as actual losses in our income statement as “Losses from trading activities.” Losses relating to the portion of our investment portfolio classified as “available for sale” are recorded in our balance sheet as “Other reserves,” which is a component of our shareholders’ equity. As of October 1, 2006, approximately 70% of our investment portfolio was classified as “available for sale,” so the marked-to-market losses relating to the increase in interest rates were reflected on our balance sheet.

In response to the magnitude of losses that would have been generated by maintaining our investment portfolio as it was constituted prior to October 1, 2005, we began to take certain actions aimed at diminishing the negative impact on our income statement of the rate increases discussed above. In October 2005 we began to gradually liquidate our investment portfolios through sales transactions carried out in the Chilean financial markets. As a result of these sales transactions, as of December 31, 2005, the balance of total financial investments in our consolidated portfolio had been reduced by Ch$119,378 million as compared to the balance as of December 31, 2004.

We continued this liquidation process through the first half of 2006. As a result, our total financial investments as of December 31, 2007, 2006 and 2005 amounted to Ch$184,488, Ch$163,685, and Ch$454,463, respectively. Our investment portfolio as a percentage of total assets decreased from 12% as of December 31, 2005 to 3.8% as of December 31, 2007As a result of these actions, the balance of our investment portfolio is currently significantly smaller than it has been historically. We do not currently intend to increase the size of our financial investment portfolio to historic levels. However, we expect to acquire additional investments, which would increase the size of the portfolio from its current level.

We have implemented certain structural changes that we believe will improve our ability to manage our exposure to market risks. For example, our Assets & Liabilities (A&L) Committee updated certain exposure limits applicable to our investment portfolio, including limits relating to potential losses. In addition, while we previously determined our potential loss and position limits on the basis of our free effective equity, which allowed us to establish relatively high limits due to our high level of capitalization, our A&L Committee has determined that such limits should be analyzed and determined on the basis of our net income. Furthermore, the Chief Executive Officer is informed on a daily basis the impact of investment decisions in a report that includes the principal financial results. As a result of these adjustments, we have enhanced our ability to effectively manage market risks. A description of the currently applicable limits, as well as information relating to other tools that we employ to manage market risk, are included under “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”

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The following table sets forth an analysis of our investments, by time remaining to maturity and the weighted average nominal rates of such investments as of December 31, 2007:

	Within one year	Weighted average Nominal Rate	After one year but within five years	Weighted average Nominal Rate	After five years but within ten years	Weighted average Nominal Rate	After ten years	Weighted average Nominal Rate	Total
	(in millions of constant Ch$ of December 31, 2007)
	Ch$	%	Ch$	%	Ch$	%	Ch$	%	Ch$
Held-for-Trading:
Central Bank and government securities
Central Bank securities	52,511	3.7	55,658	3.6	5,393	3.5	483	2.9	114,045
Chilean Treasury bonds	412	4.6	1,476	4.6	4,439	4.9	4,322	3.2	10,649
Other securities	—	—	2	6.7	—	—	—	—	2
Subtotal	52,923	3.7	57,136	3.6	9,832	4.1	4,805	3.2	124,696
Other financial securities
Time deposits in Chilean financial institutions	11,962	6.3	1,057	5.6	—	—	—	—	13,019
Mortgage finance bonds	536	3.9	1,190	3.6	1,658	3.9	120	4.3	3,504
Chilean financial institutions bonds	—	—	1,820	2.9	—	—	—	—	1,820
Other Chilean securities	—	—	83	6.2	—	—	—	—	83
Subtotal	12,498	6.2	4,150	3.9	1,658	3.9	120	4.3	18,426
Total	65,421	4.2	61,286	3.6	11,490	4.1	4,925	3.2	143,122

Available-for-sale:
Central Bank and Government Securities
Central Bank Securities	1,872	3.2	1,112	3.2	—	—	—	—	2,984
Subtotal	1,872	3.2	1,112	3.2	—	—	—	—	2,984
Others Financial Securities
Time deposits in Chilean Financial Institutions	38,382	6.1	—	—	—	—	—	—	38,382
Subtotal	38,382	6.1	—	—	—	—	—	—	38,382
Total	40,254	6.0	1,112	3.2	—	—	—	—	41,366
Total Financial investments	105,675	4.9	62,398	3.6	11,490	4.1	4,925	3.2	184,488

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Unused Sources of Liquidity

As part of our liquidity policy, we maintain at all times a diversified portfolio of highly liquid assets that can be quickly mobilized, including cash, financial investments and Central Bank and government securities.

Working Capital

The majority of our funding is derived from deposits and other borrowings from the public. In our opinion, our working capital is sufficient for our present needs.

Liquidity Management

We seek to ensure that, even under adverse conditions, we have access to the funds necessary to cover client needs, maturing liabilities and capital requirements. Liquidity risk arises in the general funding for our financing, trading and investment activities. It includes the risk of unexpected increases in the cost of funding the portfolio of assets at appropriate maturities and rates, the risk of being unable to liquidate a position in a timely manner at a reasonable price and the risk that we will be required to repay liabilities earlier than anticipated. See “Item 11. Quantitative and Qualitative Disclosures about Market Risk” for information relating to the methods we employ in managing our liquidity.

Cash Flow

The tables below set forth information about our main sources and uses of cash. Our subsidiaries do not provide a significant percentage of our consolidated cash flow. No legal or economic restrictions exist on the ability of our subsidiaries to transfer funds to us in the form of loans or cash dividends as long as these subsidiaries abide by the regulations in the Chilean Corporations Law regarding loans to related parties and minimum dividend payments.

Net Cash Provided by Operating Activities

	For the year ended December 31,
	2005		2006		2007
	(in millions of constant Ch$ of December 31, 2007)

Net cash provided by operating activities	Ch$	107,316	Ch$	87,094	Ch$	105,153

In 2007, our net cash provided by operating activities increased by Ch$18,059 million, or 20.7% when compared to 2006. The increase in operating activities was mainly due an increase in net income and provisions and charge-offs for loan losses by Ch$9,051 million and Ch$10,745, respectively. This was partially offset by increases in various other charges which do not generate cash.

Our net cash provided by operating activities decreased by Ch$20,222 million, or 18.8%, from 2005 to 2006. This was primarily due to a decrease in net income when compared to the prior year.

Net Cash Used in Investing Activities

	For the year ended December 31,
		2005			2006			2007
	(in millions of constant Ch$ of December 31, 2007)

Net cash used in investing activities		Ch$	(350,108	)	Ch$	(187,582	)	Ch$	(1,093,174	)

Our net cash used in investing activities increased by 482.8% from Ch$187,582 million in 2006 to Ch$1,093,174 million in 2007. This increase was mainly a result of an increase in the volume of our loan portfolio, as further explained under “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Sources of Liquidity—Financial Investments.”

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Our net cash used in investing activities decreased by 46.4% from Ch$350,108 million in 2005 to Ch$187,582 million in 2006. This decrease was mainly attributable to (i) our increased use in 2006 of available cash to finance loans to our customers and (ii) the liquidation of our investment portfolio during the first quarter of 2006, as further explained under “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Sources of Liquidity—Financial Investments.”

Net Cash Provided by Financing Activities

	For the year ended December 31,
	2005		2006		2007
	(in millions of constant Ch$ of December 31, 2007)

Net cash provided by financing activities	Ch$	146,843	Ch$	109,615	Ch$	996,445

Our net cash provided by financing activities increased by 809.0% from Ch$109,615 million in 2006 to Ch$996,445 in 2007. This was primarily the result of an increase in deposits and borrowings and a decrease in other short-term liabilities.

Our net cash provided by financing activities decreased by25.4% from Ch$146,843 million in 2005 to Ch$109,615 in 2006. This decrease was primarily the result of a decrease in deposits and borrowings, issuance of bonds, loans obtained abroad and an increase in other short-term liabilities. This was partially offset by an increase in other sight or term obligations, borrowings from the Central Bank and short-term foreign loans.

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Deposits and Other Borrowings

The following table sets forth our average daily balance of our liabilities for the years ended December 31, 2005, 2006 and 2007, in each case together with the related average nominal interest rates paid thereon.

	Year ended December 31,
	2005								2006								2007
							Average								Average								Average
	Average			Interest			Nominal		Average			Interest			Nominal		Average			Interest			Nominal
	Balance			Paid			Rate		Balance			Paid			Rate		Balance			Paid			Rate
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

Savings accounts	Ch$		13,898	Ch$		541	3.9	%	Ch$		12,478	Ch$		242	1.9	%	Ch$		10,344	Ch$		686	6.6	%
Time deposits	1,937,002			76,315			3.9		1,660,140			86,050			5.2		1,924,808			117,083			6.1
Central Bank borrowings	27,057			926			3.4		10,102			501			5		12,199			653			5.4
Repurchase agreements	101,715			13,097			12.9		88,806			12,192			13.7		109,469			5,422			5
Mortgage finance bonds	308,707			25,988			8.4		325,115			21,410			6.6		346,449			41,840			12.1
Other interest bearing-liabilities	403,119			25,614			6.4		521,730			28,479			5.5		599,244			48,644			8.1
Subtotal interest-bearing liabilities	2,791,498			142,481			5.1	%	2,618,371			148,874			5.7	%	3,002,513			214,328			7.1	%

Non-interest bearing liabilities:
Non-interest bearing deposits	266,132								238,507								300,735
Contingent liabilities	228,456								260,314								286,533
Other non-interest bearing liabilities	912,337								392,765								177,497
Shareholders’ equity	420,293								444,678								441,524
Subtotal non-interest bearing liabilities	1,827,218								1,336,264								1,206,289
Total	Ch$	4,618,716		Ch$	142,481				Ch$	3,954,635		Ch$	148,874				Ch$	4,208,802		Ch$	214,328

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Our current funding strategy is to continue to utilize all sources of funding in accordance with their cost, their availability and our general asset and liability management strategy. Our most important source of funding is our time deposits. Time deposits represented 64.1% of our average interest bearing liabilities for the year ended December 31, 2007. We are continuing to place special emphasis on increasing deposits from retail customers, which consist primarily of checking accounts that do not bear interest and accordingly represent an inexpensive source of funding for us. To the extent that these types of deposits represent a larger percentage of our funding base, the percentage represented by time deposits is expected to decrease and, accordingly, we believe that the materiality to our business of uncertainties relating to rolling over deposits will be diminished. We also intend to continue to broaden our customer deposit base, to emphasize core deposit funding and to fund our mortgage loans with the matched funding available through the issuance of mortgage finance bonds in Chile’s domestic capital markets. Management believes that broadening our deposit base by increasing the number of account holders has created a more stable funding source.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

We do not currently conduct any significant research and development activities.

D. TREND INFORMATION

Our net interest revenue in 2007 increased significantly when compared to 2006. This was principally due to a larger portfolio of average interest-earning assets when compared to 2006 and to the favourable effect that inflation has on our business. Core inflation calculated from November to November of each year reached 7.4% in 2007. This was 340 basis points over the Chilean Central Bank’s target inflation rate of 3.0%.

Our net interest revenue is positively affected by an inflationary environment to the extent that our average UF-denominated assets exceed our average UF-denominated liabilities, while our net interest revenue is negatively affected by inflation in any period in which our average UF-denominated liabilities exceed our average UF-denominated assets. Currently, we have more UF-denominated assets than liabilities.

Our operating revenues depend significantly on our net interest revenue. In 2005, 2006 and 2007 net interest revenue over total operating revenues represented 80.2%, 81.8% and 83.9%, respectively. Changes in market interest rates may affect the interest rates earned on our interest-earning assets and the interest rates paid on our interest bearing liabilities which may result in a further reduction in our net interest revenue.

Consolidation, which can result in the creation of larger and stronger competitors, may adversely affect our financial condition and results of operations by decreasing the net interest margins we are able to generate and increasing our costs of operation.

In addition, we expect to continue to face competition from non-banking financial entities such as department stores, leasing, factoring and automobile finance companies, mutual funds, pension funds and insurance companies.

Also see “Item 5. Operating and Financial Review and Prospects—Operating Results”

E. OFF-BALANCE SHEET ARRANGEMENTS

We are party to transactions with off-balance-sheet risk in the normal course of our business. These transactions expose us to credit risk in addition to amounts recognized in the consolidated financial statements and include commitments to extend credit not otherwise accounted for as contingent loans. These commitments include such items as overdraft and credit card lines of credit. Previously, our interest rate and cross-currency swap agreements were treated as off-balance-sheet financial instruments and the net interest effect, which corresponds to the difference between interest income and interest expense arising from such agreements, was recorded in net income in the period that such differences originated. As described in note 1g, beginning January 1, 2006, the Chilean Superintendency of Banks established new rules for the accounting treatment of certain derivative

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instruments and hedges of financial assets. Traditional financial instruments which meet the definition of a “derivative” such as forwards in foreign currency, UF, interest rate futures currency and interest rate swaps, currency and interest rate options and others, are initially recognized on the balance sheet at cost (including transaction fees) and, at subsequent period ends, at their fair value. The fair value is obtained from market quotes, discounted cash flow models and option valuation models, as applicable.

Such commitments are agreements to lend to a customer at a future date, subject to the customer’s compliance with contractual terms. Since a substantial portion of these commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent our actual future cash requirements. The amounts of these commitments is Ch$213,437 million as of December 31, 2007.

We use the same credit policies in making commitments to extend credit as we do for granting loans. In the opinion of our management, our outstanding commitments do not represent an unusual credit risk.

In terms of outstanding exposure to credit risk, the true measure of risk from derivative transactions is the marked-to-market value of the contracts at a point in time (i.e., the cost to replace the contract at the current market rates should the counterparty default prior to the settlement). For most derivative transactions, the notional principal amount does not change hands; it is simply an amount that is used as a reference upon which to calculate payments. As of December 31, 2007, the net unrealized gain or loss on our derivative portfolio, determined based on the marked-to-market value, was a loss of Ch$183 million.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

In addition to the scheduled maturities of our contractual obligations which are included under “—Liquidity and Capital Resources—Sources of Liquidity,” as of December 31, 2007, we also had other commercial commitments which mainly consist of open and unused letters of credit together with guarantees granted by us in Ch$, UF and foreign currencies (principally U.S. dollars). We expect most of these commitments to expire unused.

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The following table sets forth our contractual obligations and other commercial commitments by time remaining to maturity, as of December 31, 2007, including accrued interest:

			Due		Due
	Due		after 1 year		after 3 years		Due
	within		but within		but within		after
	1 year		3 years		6 years		6 years		Total
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)
Contractual Obligations
Time and other obligations(1)	Ch$	2,131,553	Ch$	164,117	Ch$	106,824	Ch$	1,198	Ch$	2,403,692
Mortgage finance bonds	38,294		56,898		82,970		175,269		353,431
Bonds	17,309		176,732		62,638		48,434		305,113
Subordinated bonds	6,352		11,318		11,967		14,245		43,882
Chilean Central Bank borrowings:
Credit lines for renegotiations of loans	—		—		—		—		—
Other Central Bank borrowings	45,824		—		—		—		45,824
Borrowings from domestic financial institutions	83,220		—		—		—		83,220
Investments sold under agreements to repurchase	54,255		—		—		—		54,255
Foreign borrowings	251,433		21,633		2,296		—		275,362
Other borrowings	15,935		7,744		4,842		1,020		29,541
Operating leases	3,681		6,914		8,177		9,671		28,443
Total contractual obligations	Ch$	2,647,856	Ch$	445,356	Ch$	279,714	Ch$	249,837	Ch$	3,622,763
Other Commercial Commitments					��
Letter of Credit	Ch$	32,573	Ch$	1,768	Ch$	—	Ch$	—	Ch$	34,341
Guarantees	203,457		51,839		4,218		13		259,527
Other commercial commitments	16,174		12,548		—		—		28,722
Total other commercial commitments	Ch$	252,204	Ch$	66,155	Ch$	4,218	Ch$	13	Ch$	322,590

(1) Excludes demand accounts, savings accounts and contingent liabilities.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

Our management is vested in our Board of Directors which, in accordance with our bylaws, consists of 11 directors and 1 alternate who are elected at annual shareholders’ meetings. Members of the Board of Directors are elected for three-year terms. Our current members of the Board of Directors were elected on February 27, 2007 and their term expires in February 2010. Cumulative voting is permitted for the election of directors. The Board of Directors may appoint replacements to fill any vacancies that occur during periods between elections. Our principal executive officers are appointed by the Board of Directors and hold office at its discretion. Scheduled meetings of the Board of Directors are held monthly. Extraordinary meetings can be held when called in one of three ways: by the Chairman of the Board of Directors, by one or more directors with the prior approval of the Chairman of the Board of Directors, or by six directors.

Our current directors are as follows:

Directors	Position	Age
Carlos Abumohor Touma	Chairman and Director	87
Alvaro Saieh Bendeck	First Vice Chairman and Director	58
Jorge Andrés Saieh Guzmán	Second Vice Chairman and Director	37
Jorge Selume Zaror	Director	56
Fernando Aguad Dagach	Director	48
Carlos Massad Abud	Director	75
Hernán Somerville Senn	Director	67
Arturo Valenzuela Bowie	Director	64
Ignacio Gonzalez Martinez	Director	44
Francisco Rosende Ramírez	Director	52
Julio Barriga Silva	Director	70
Juan Rafael Gutiérrez Ávila	Alternate Director	67

Carlos Abumohor Touma became a Director and Chairman of our Board of Directors on June 18, 1996. Prior to this he served as a director and as the Chairman of the board of directors for Banco Osorno. He is also an investor in financial institutions and sits on the board of directors of several major Chilean companies.

Alvaro Saieh Bendeck became a Director and First Vice Chairman of our Board of Directors on June 18, 1996. Prior to this he also served as the Chief Executive Officer and later the First Vice Chairman of Banco Osorno. He is currently the Chairman of Corp Group Interhold S.A. and a director of the Santiago Stock Exchange. Mr. Saieh also serves similar positions on a variety of different boards. Mr. Saieh received a B.A. in Business and Administration and graduated from the Universidad de Chile. He holds a Ph.D. in Economics from the University of Chicago.

Jorge Andrés Saieh Guzmán became a Director and Second Vice Chairman of our Board of Directors on August 25, 1998. He also serves as the Chairman of the board of directors for Consorcio Periodístico de Chile S.A., Vice Chairman of both Corp Group Interhold S.A. and the Chilean National Press Association. In addition, Mr. Saieh is a member of the board of Corp Group Inmobiliaria S.A and the Vidadeporte foundation. He has also served as the Vice Chairman of the board of AFP Protección, as a member of the board of AFP Provida and as a member of the board of our former affiliate CorpBanca Venezuela. Mr. Saieh received a B.A. in Business and Administration and graduated from the Universidad Gabriela Mistral. He holds a Masters in Economics and a Masters in Business and Administration from the University of Chicago.

Jorge Selume Zaror became a Director on May 23, 2001. He also serves as director of the board, among others, for Vidacorp S.A., Indisa Clinic, and the Universidad Las Americas. Prior to this he was a director on the board of directors of Banco Osorno, a director of the government budget office of Chile, Chairman of CorpBanca Venezuela and the Chief Executive Officer of CorpBanca between 1996 and 2001. Mr. Selume received a B.A. in Business and Administration and graduated from the Universidad de Chile. He holds a Masters in Economics from the University of Chicago.

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Fernando Aguad Dagach became a Director on June 18, 1996 and is also a director of Vida Corp S.A.. He has previously held similar positions in a variety of institutions including Interbank Perú, Banco Osorno and Canal de Televisión La Red. He is an investor in financial institutions.

Carlos Massad Abud became a Director on February 20, 2004. He also serves as Chairman of AMICAR S.A. He has served as professor at the Faculty of Economics of the Universidad de Chile, and as the Director of the Institute of Economic Research and of the Graduate School of the same university. In 1964 he was appointed Vice President of the Central Bank, and he became President of the Central Bank in 1967. In 1970 he became an Executive Director of the International Monetary Fund. In 1974, Mr. Massad joined the United Nations’ Economic Commission on Latin America and the Caribbean (ECLAC) as an adviser, eventually serving as Deputy Executive Secretary. In early 1994, Mr. Massad was appointed Minister of Health in the first cabinet of President Eduardo Frei Ruiz-Tagle. In September 1996 he became President of the Central Bank and served in that capacity until April 2003. Mr. Massad received a B.A. in Business and Administration and graduated from the Universidad de Chile. He completed his graduate training at the University of Chicago.

Hernán Somerville Senn became a Director on April 29, 1997. Prior to this, from June 1983 through December 1988, he was the Coordinating Director of Foreign Debt of the Central Bank. He is currently a director of Enersis, Inacap and Viña Santa Rita. Mr. Somerville is also the Chairman, among others, of the Association of Banks and Financial Institutions, Transbank. S.A., and the Chilean-Indian Chamber of Commerce. He is a lawyer and received his law degree from the Universidad de Chile. He is currently a member of the Chilean, Interamerican, and the City of New York Bar Associations.

Arturo Valenzuela Bowie became a Director on March 27, 2007. He has served as Professor of Government and Director of the Center for Latin American Studies in Edmund A. Walsh School of Foreign Service at Georgetown University. Previously, he served as Professor of Political Science, Director on the Council of Latin American Studies at Duke University, and has been a member of a variety of Boards. He holds a Ph.D. in Political Science and Comparative Politics from Columbia University.

Ignacio Gonzalez Martinez became a Director on February 27, 2007. He is also a member of the board of for Consorcio Periodístico de Chile S.A. (COPESA). In addition, Mr. Gonzalez is a CEO of Grupo Precision S.A. Mr. Gonzalez received a B.A. in Business and Administration and Graduated from Universidad Gabriela Mistral. He holds a Masters in Business and Administration from University of California-UCLA.

Francisco Rosende Ramírez became an Alternate Director on April��29, 1997 and became a Director on May 23, 2001. He currently serves as the Dean of the University of Economics and Administration of the Pontificia Universidad Católica de Chile. From 1985 through 1990, he was the Chief of the Research Department and Research Management of the Central Bank. He has also been a member of the Antitrust Resolution Committee since 1999. Mr. Rosende received a B.A. in Business and Administration and graduated from the Universidad de Chile. He holds a Masters in Economics from the University of Chicago.

Julio Barriga Silva became a Director on April 29, 1997. Previously, he was the Chairman of Banco Santiago and the Chief Executive Officer of BancoEstado. He is an agricultural engineer and an agricultural economist from the Universidad de Chile.

Juan Rafael Gutiérrez Ávila became an Alternate Director on April 29, 1997. He is a Public Accountant (Contador Público y Auditor), or CPA, and was a director of Banco Osorno and AFP Provida from April 1998 through July 1999. Currently his work relates to real estate and financial activities.

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Our current Executive Officers are as follows:

Executive Officer	Position	Age
Mario Chamorro Carrizo	Chief Executive Officer	50
Cristobal Prado Fernandez	Division Manager – Retail Banking	37
Patricio Leighton Zambelli	Division Manager – Corp Capital	39
Christian Schiessler García	Division Manager – Large Companies and Corporate	53
Oscar Cerda Urrutia	Division Manager – Companies	56
Pedro Silva Yrarrazaval	Division Manager – International and Treasury	47
Cristián Canales Palacios	Division Manager – Legal Services	43
Julio Henríquez Banto	Division Manager – Risk / Interim Chief Financial Officer	42
Fernando Valdivieso Larraín	Division Manager – Companies Credit Risk	55
Luis Morales Fernandez	Division Manager – Commercial Credit Risk	44
Guido Silva Escobar	Division Manager – Operations	56
Armando Ariño Joiro	Division Manager – Information Technology	42
Christian Gilchrist Correa	Division Manager – Human Resources and Administration	37
José Manuel Mena Valencia	Comptroller Manager – Reports to Audit Committee	52

Mario Chamorro Carrizo has served as our Chief Executive Officer since May 30, 2006. From 2003 to 2006, Mr. Chamorro served as Chief Executive Officer of our former affiliate, CorpBanca Venezuela and later served as Chairman of the Board of Directors of CorpBanca Venezuela. From 2001 to 2003 he served as Chief Executive Officer of CorpBanca in Chile and from 1999 to 2001 he served as its Chief Operating Officer. From 1996 to 1999 he served as Chief Financial Officer of Corp Group and previously he held a similar position at Banco Osorno. Mr. Chamorro received a B.A. in Business and Administration from the Universidad de Chile. He also received a Masters in Business and Administration from the University of California in Los Angeles.

Cristobal Prado Fernandez has served as the Division Manager of Retail Banking since June 2008. Mr. Prado was the Manager of Client Services between 2005 and 2008. He previously held similar positions in Banco Santander. Mr. Prado received a B.A. in Business and Administration from the the university Finis Terrae and a Masters in Business and Administration from the university Adolfo Ibañez.

Patricio Leighton Zambelli has served as the Division Manager of Corp Capital since October 2006. He was previously the Money Market Manager of Bice Chileconsult Asesorías Financieras S.A. and between 1999 and 2000 he was an Associate in the Corporate Finance Group of NM Rothschild Sons in Washington D.C., USA. Mr. Leighton received a B.A. in Business and Administration from the Universidad de Chile. He also received a Masters in Business and Administration from the Kellogg School of Management, North Western University.

Christian Schiessler García has served as the Division Manager of Large Companies and Corporate since October 2006. Previously he was the Division Manager of International and Treasury since May 1996. He held similar positions in Banco Osorno from January 1995 to May 1996 and in Banco de A. Edwards from September 1986 to February 1994. Mr. Schiessler received a B.A. in Business and Administration from the Universidad Federico Santa María. He also received a Masters in Business and Administration from the Waterhead School of Management, Case Western Reserve University.

Oscar Cerda Urrutia has served as the Division Manager of Companies since June 2008. He was previously the Chief Executive Officer of Banco Ripley. Mr. Cerda received a B.A. in Business and Administration from the Universidad de Concepcion.

Pedro Silva Yrarrazaval has served as the Division Manager of Treasury and International since October 2006. He was previously the Chief Executive Officer of our subsidiary CorpBanca Administradora General de Fondos S.A. (Asset Management). Mr. Silva received a B.A. in Business and Administration from the Universidad de Chile. He also received a Masters in Business and Administration from the University of Chicago.

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Cristián Canales Palacios has served as the Division Manager of Legal Services since April 2003. Mr. Canales served as our Legal Services Manager from 2002 to February 2003 and as Senior Attorney from 1996 to 2001. From 1989 to 1996 he served as the Attorney of Banco Osorno. Mr. Canales received a law degree from the Universidad de Chile.

Julio Henríquez Banto has served as the Risk Division Manager since 2005 and interim Chief Financial Officer since February 2008; previously he was our Comptroller since 2004. Mr. Henríquez served as the Division Manager of Products from September 2000 to May 2004. Mr. Henríquez served as the Manager of our Personal and Lower Income (Banco Condell) Banking Division from 1996 to August 2000. From 1993 to 1996 he served as the Assistant Manager of Personal and Lower Income Banking Division of Banco Osorno. Mr. Henríquez received a B.A. in Business and Administration from the Universidad de Santiago. He also received a Masters in Business and Administration from the Universidad Adolfo Ibañez.

Fernando Valdivieso Larraín has served as our Companies Credit Risk Division Manager since 2005. From 2002 to 2005 Mr. Valdivieso was the Risk Manager of Vida Corp. From 1999 to 2001 he served as a risk manager in Banco de A. Edwards. From 1990 – 1999 he held similar positions in Banco de Santiago. Mr. Valdivieso received a B.A. in Business and Administration from the Universidad Católica de Chile.

Luis Morales Fernandez has served as our Commercial Credit Risk Division Manager since May 2, 2007. From 1999 to 2007 Mr. Morales was the Retail Credit Risk Manager of Santander Santiago. From 1995 to 1999 he held similar positions in Santander Banefe. Mr. Morales received a B.A. in Business and Administration from the Universidad Católica de Chile.

Guido Silva Escobar has served as the Division Manager of Operations since 2005. From 2003 to 2005 he served in a similar position at Skandia Chile and from 1992 to 2001, in Banco de A. Edwards. From 1981 to 1992 he served as the Operations Deputy Manager at Banchile Administradora de Fondos and at Banco Osorno y la Unión. Mr. Silva received a B.A. in Business and Administration from the Universidad de Chile.

Armando Ariño Joiro has served as the Division Manager of Information Technology since November 2000. From 1995 to 2000 he served as the Information Technology Senior Consultant of Coinfin (Colombia) and from 1993 to 1995 he served as the Information Technology Manager of Finasol (Colombia). Mr. Ariño received an undergraduate degree in Information Technology Civil Engineering with a specialization in Banking from the Universidad INCCA in Colombia.

Christian Gilchrist Correa has served as the Division Manager of Human Resources and Administration since March 21, 2007. From October 2003 to March 2007 he was the Human Resources Director of Tyco Fire & Security - Latin America. Mr. Gilchrist received his undergraduate degree from the Universidad de Santiago de Chile. He also received a Masters degree in Business and Administration specializing in Human Resources from the Universidad de Santiago de Chile.

José Manuel Mena Valencia has served as our Comptroller Manager since March 2008. From 1995 to 2008 he served as the Chief Executive Officer of BancoEstado. Previously, he was the Chief Financial Officer of Banco Osorno. Mr. Mena received an undergraduate degree in Industrial Civil Engineering. He also received a Masters in Economics from the Universidad de Chile.

B. COMPENSATION

Consistent with Chilean law, we do not disclose to our shareholders, or otherwise make public, information regarding the individual compensation of our directors or officers. For the year ended December 31, 2007, we did not pay any fees to our directors and no amounts were set aside or accrued by us to provide pension, retirement or similar benefits for our directors and executive officers. We engaged in transactions with companies controlled by certain of our directors under the applicable requirements of the Chilean Companies Law. In 2007, we paid our senior management an aggregate of Ch$5,652 million. Chilean law does not require us to have a compensation committee.

At the ordinary shareholders’ meetings held on February 26, 2008, we agreed not to pay remuneration to the members of our Board of Directors, although we customarily compensate the members of our Directors Committee and Audit Committee, who earned total fees of Ch$209 million in 2007. Additionally, we paid per diems of Ch$15 million in 2007.

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C. BOARD PRACTICES

The Directors Committee

The Directors Committee is comprised of the following three members of the Board of Directors: Messrs. Carlos Massad Abud (Chairman), Ignacio Gonzalez Martinez and Francisco Rosende Ramirez. The Directors Committee’s responsibilities are, among others:

· reviewing the reports of the internal and external auditors, the balance sheet and any other financial statements presented by the administration to the shareholders, and to pronounce about it previous to its presentation to the shareholders for approval,

· recommending external auditors and rating agencies to the Board of Directors,

· reviewing operations with related parties and reporting to the Board of Directors,

· reviewing the compensation plans of executive officers and principal officers, and

· other duties required by our by-laws, a shareholders meeting and our Board of Directors.

Members of the Director’s Committee receive a monthly remuneration.

The Audit Committee

In May 2003, the Chilean Superintendency of Banks adopted a resolution requiring that, from January 2004, all Chilean banks establish an Audit Committee composed of two or more members, two of whom must be directors appointed by the Board of Directors. Our Audit Committee is comprised of Messrs. Hernan Somerville Senn (Chairman), Arturo Valenzuela Bowie (Vice Chairman), Carlos Massad Abud, Ignacio Gonzalez Martinez and Francisco Rosende Ramirez. The main duties of the Audit Committee are to review the efficiency of internal control systems, to ensure compliance with laws and regulations and to have a clear understanding of the risks involved in our business. The Chilean Superintendency of Banks recommends that at least one of the members of the Audit Committee, who must also be a member of the Board of Directors, be experienced with respect to the accounting procedures and financial aspects of banking operations. The members of the Audit Committee appointed by the Board of Directors must be independent according to the criteria set by the Board of Directors. In furtherance of the independence of the Audit Committee, our Board of Directors has determined that Audit Committee members should not, for the last three years, have held positions as our principal executive officers, have performed professional services for us, have commercial commitments with us or with any of our affiliates or related persons, or have relations with other entities related to us from which they have received material payments. Moreover, they may not accept any payment or other compensatory fee from us, other than in their capacity as members of the Audit Committee or of other committees. The Chairman of the Audit Committee receives a monthly remuneration.

According to its charter, promulgated according to the May 2003 resolution, the duties of the Audit Committee are, among others:

· proposing external auditors to the Board of Directors or the Directors Committee,

· proposing rating agencies to the Board of Directors or the Directors Committee,

· analyzing and supervising the activities, organizational structure and qualifications of our internal auditing staff, whom report directly to the Audit Committee,

· approving the audit plan for us and our affiliates,

· reviewing audits and internal reports,

· coordinating with internal and external auditors,

· reviewing annual and interim financial statements and informing the Board of Directors of the results of such reviews,

· reviewing the reports, procedures and extent of the work of external auditors,

· reviewing the procedures and content of reports from external risk evaluators,

· discussing the effectiveness and reliability of internal control procedures,

· reviewing the performance of information systems, their sufficiency, reliability and use in decision making,

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· discussing the observance of internal regulations related to compliance with laws and regulations,

· reviewing and deliberating on issues related to conflicts of interests,

· investigating suspected fraudulent activities,

· reviewing the inspection reports, instructions and presentations from the Chilean Superintendency of Banks,

· reviewing compliance with the annual program of internal auditing, and

· informing the Board of Directors of any change in accounting principles and its effects.

Other duties of the Audit Committee include, as needed:

· reviewing procedures to detect money-laundering,

· asking internal auditors to perform specific tasks,

· making recommendations on specific tasks to external auditors, and

· intervening in any other situation where intervention is warranted in the committee’s discretion.

According to Chilean Superintendency of Banks requirements, the Audit Committee has a charter that establishes its composition, organization, objectives, duties, responsibilities and extension of its activities. The Chilean Superintendency of Banks requires the Audit Committee to meet at least every four months and to provide an annual written report to the Board of Directors informing it of its activities. The report must also be presented to the annual shareholders’ meeting. According to its charter, the Audit Committee meets twice per month.

Other Committees

We have an Anti-Money Laundering and Anti-Terrorism Finance Prevention Committee. The main purpose of this committee is to monitor our compliance with our anti-money laundering and terrorism finance policies and practices, as well as to review and update our internal controls relating to these matters. This committee holds regular monthly meetings and is directed by its own bylaws.

Comparative Summary of Differences in Corporate Governance Standards

Pursuant to Section 303A.11 of the Listed Company Manual of the New York Stock Exchange, “foreign private issuers” are required to provide a summary of the significant ways in which their corporate governance practices differ from those corporate governance standards required of U.S. companies by the New York Stock Exchange. As a Chilean bank, our corporate governance standards are governed by our by-laws, the General Banking Law, the Chilean Corporations Law, the Ley de Mercado de Valores No. 18,045, or the Securities Market Law, and the regulations issued by the Chilean Superintendency of Banks. The following chart notes these differences:

NYSE Corporate Governance Standards		CorpBanca’s Practices
Listed companies must have a majority of independent directors and independence test.		Under Chilean law there is no requirement that the Board of Directors have a majority of independent directors. Under Chilean law, directors elected by a group or class of shareholders have the same duties to the company and to the shareholders as do the remaining directors, and all transactions with the company in which a director has an interest, either personally (which includes the director’s spouse and certain relatives) or as a representative of a third party, require the prior approval by the Board of Directors and must be entered into on market terms and conditions. Such transactions must be reviewed by the Directors Committee and disclosed at the subsequent shareholders’ meeting.

Non-management directors must meet at regularly scheduled executive sessions without management.		Chilean Law establishes that our executive officers may not serve as directors and therefore, all of our

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		directors are non-management. Our Board of Directors meets regularly on a monthly basis.

Listed companies must have a nominating/corporate governance committee composed entirely of independent directors. The committee must have a written charter addressing the committee’s purpose and responsibilities, which must include: identifying, and selecting or recommending, qualified individuals to serve as board members; developing and recommending corporate governance guidelines; and overseeing the evaluation of the board and management.		Under Chilean law we are not required to have, and do not have, a nominating/corporate governance committee. Under Chilean law, the only committees that are required are the Audit Committee, the Directors Committee, the Anti-Money Laundering Committee and the Anti-Terrorism Finance Committee.

Listed companies must have a compensation committee composed entirely of independent directors. The committee must have a written charter addressing an annual performance evaluation of the committee and addressing the committee’s purpose and responsibilities, which must include: (i) determining and approving the CEO’s compensation level based on an evaluation of the CEO’s performance in light of relevant corporate goals and objectives; (ii) making recommendations with respect to non-CEO executive officer compensation; and (iii) producing a committee report on executive officer compensation.		Under Chilean law we are not required to have a compensating committee. Our Board of Directors establishes the compensation of our Chief Executive Officer and does a performance evaluation. The Directors Committee examines the compensation program of executive officers.

Shareholders must have the opportunity to vote on all equity-compensation plans and material revisions thereto, subject to limited exemptions.		Our compensation policies do not provide for equity compensation plans.

Listed companies must adopt and disclose corporate governance guidelines. The guidelines must address: (i) director qualification standards, (ii) director responsibilities, (iii) director access to management, (iv) director compensation, (v) director orientation and continuing education, (vi) management succession; and (vii) annual performance evaluation of the board.		Under Chilean law we are not required to adopt or disclose our corporate governance guidelines. We follow corporate governance guidelines established by Chilean laws which include, among others: (i) active participation of directors in our main committees, (ii) the requirement that all employees must sign and be knowledgeable of our code of ethics, (iii) a separation of functions – our commercial segment is separated from the back office and risk segments, main credit decisions are taken in committee, (iv) monthly review by the audit committee of internal audit reports and (v) the appointment of an officer who overseas compliance with the code of ethics.

Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose waivers thereof for directors or executive officers.		We have a code of business and ethics conduct which drives business and ethic conduct of our Chief Executive Officer, chief financial officer and each employee. This code must be signed by each of our employees and is published in our intranet; it is included as an exhibit in this Annual Report.

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D. EMPLOYEES

As of December 31, 2007, on a consolidated basis we had 3,032 employees, 2,799 of whom were bank employees and 233 of whom were employees of our subsidiaries. Approximately 24.3% of our employees were unionized as of that date. All management positions are held by non-unionized employees. We believe that we have good relationships with our employees and the unions to which some of our employees belong.

As of December of each of the years ended 2005, 2006 and 2007 we had 1,963, 2,378 and 3,032 employees, respectively, on a consolidated basis.

E. SHARE OWNERSHIP

Mr. Alvaro Saieh Bendeck, our First Vice Chairman and a member of our Board of Directors, together with his family maintains in an indirect ownership of 59.1144% of Corp Group Banking S.A. In addition, Mr. Alvaro Saieh Bendeck with his spouse are indirect holders of 100% of the ownership rights of Compañía Inmobiliaria y de Inversiones Saga S.A. These holding companies, controlled by Mr. Saieh Bendeck, beneficially own approximately 49.59% and 8.23% of our outstanding shares, respectively. Carlos Abumohor Touma is the Chairman of our Board of Directors, and his sons, indirectly beneficially own approximately 1,70% of our shares. Fernando Aguad Dagach and his family indirectly beneficially own approximately 5.19%of our outstanding shares. Ignacio González Martínez and his family indirectly beneficially own approximately 2,46% of our shares. In addition, Jorge Selume Zaror and his family indirectly own approximately 3,43% of our outstanding shares. Other than as stated above, no director or officer owns more than 1.0% of our outstanding common stock.

Our directors and senior managers do not have different or preferential voting rights with respect to those shares they own.

We do not have any arrangements for issuing capital to our employees, including any arrangements that involve the issue or grant of options of our shares or securities.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

Our only outstanding voting securities are our common stock. As of June 6, 2008, we had 221,236,558,313 shares of common stock outstanding and 5,672,732,264 shares in our custody.

On April 15, 2008, at an extraordinary shareholders’ meeting, our shareholders approved the Share Repurchase Program to repurchase our shares in the local Chilean market through one or more tender offers in accordance with article 198-5 of the Securities Market Law. The purpose of the Share Repurchase Program is to invest and trade our own shares in accordance to share price fluctuations experienced throughout the duration of the program. The maximum percentage of shares to be repurchased under this Program is equivalent to 5% of the shares issued and paid, or up to 11,345,464,528 shares. On April 22, 2008, our Board of Directors, acting as authorized by our shareholders at the extraordinary shareholders’ meeting held on April 15, 2008, repurchased 5,672,732,264 shares, which represent 2.5% of our issued and paid shares. This repurchase reduced our total shares outstanding to 221,236,558,313. See Item 4 – “Share Repurchase Program” for a discussion on the main terms and conditions of this program.

The following table sets forth information with respect to the record and beneficial ownership of our capital stock as of June 6, 2008 with respect to each shareholder known to us to own more than 5% of the outstanding common stock and all directors and executive officers as a group, except treasury shares which have been included in the table below:

Stockholder	Number of shares	Percentage of total share capital	Number of Votes	Percentage of Voting and Dividend rights
Corp Group Banking S.A.(1)(4)	112,530,207,591	49.59	112,530,207,591	50.86
Compañía Inmobiliaria y de Inversiones Saga S.A.(2)(4)	18,674,402,741	8.23	18,674,402,741	8.44
Public	80,791,903,233	35.61	80,791,903,233	36.52
Officers and Directors, as a group (3)	114,884,173,819	50.63	114,884,173,819	51.93
CorpBanca (5)	5,672,732,264	2.50	—	—

(1) As of June 1, 2008, Corp Group Financial Chile B.V., or CGFC, indirectly owned 100% of the outstanding capital stock of Corp Group Banking S.A., or CGB. CGFC is controlled by Alvaro Saieh Bendeck who, together with his family, indirectly owns a majority of its voting stock. Accordingly, beneficial ownership of CGB’s shares are attributed to Alvaro Saieh Bendeck and his family, and Mr. Saieh Bendeck and family thereby also indirectly controls CorpBanca. As set forth in footnote (2) below, Alvaro Saieh Bendeck and his spouse also indirectly beneficially owns an additional 8.23% of the shares of CorpBanca through Saga.

(2) Saga is indirectly controlled by Alvaro Saieh Bendeck and his spouse. Accordingly, beneficial ownership of Saga’s shares is attributed to Alvaro Saieh Bendeck and his spouse.

(3) Includes shares (i) indirectly beneficially owned by Alvaro Saieh Bendeck and his family and shares owned by Saga, which is controlled by Alvaro Saieh Bendeck and his spouse, (ii) indirectly owned by Carlos Abumohor Touma and his sons and (iii) owned by the other directors mentioned in “Item 6. Directors, Senior Management and Employees—Share Ownership” above. Does not include all of the shares attributed to Alvaro Saieh Bendeck pursuant to his control of Corp Group Banking S.A., as described in footnote (1) above.

(4) Alvaro Saieh Bendeck and his family are deemed to have beneficial ownership of these shares.

(5) Treasury shares owned by us do not hold voting or dividend redemption rights.

On November 21, 2003, Corp Group Banking S.A completed the offering and sale of 5,287,726 ADSs, representing an aggregate of 26,438,630,000 shares of our common stock, or 5,000 shares per ADS, in a transaction exempt from the registration requirements of the Securities Act pursuant to Rule 144A and Regulation S thereunder.

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Concurrently with the ADSs offering, Corp Group Banking S.A. completed a public offering and sale of 26,438,637,013 shares of our common stock in Chile. In October 2004, we conducted a public offering of ADSs in exchange for ADSs that had been issued pursuant to Rule 144A. Also, on November 1, 2004, our new ADSs were listed on the New York Stock Exchange.

As of June 6, 2008, ADR holders (through the Depositary) held 0.56% of our total shares, represented by one registered shareholder. The remaining 99.44% of our total shares were held locally, in Chile, represented by 6,594 local and foreign shareholders (excluding those share held by us). All of our shareholders have identical voting rights except for treasury shares held by us which do not hold voting or dividend redemption rights.

B. RELATED PARTY TRANSACTIONS

General

In the ordinary course of our business, we engage in a variety of transactions with certain of our affiliates and related parties. The Chilean Corporations Law requires that our transactions with related parties be on a market basis or on similar terms to those customarily prevailing in the market. We are required to compare the terms of any such transaction to those prevailing in the market at the date the transaction is to be entered into. Directors of companies that violate this provision are liable for losses resulting from such violations. Under the General Banking Law, transactions between a bank and its affiliates are subject to certain additional restrictions.

In addition, under the Chilean Corporations Law, a company may not enter into a transaction in which one or more of its directors has a direct or indirect interest unless (i) such transaction has received the prior approval of the company’s board of directors and (ii) the terms of such transaction are consistent with the terms of transactions of a similar type prevailing in the market. If it is not possible to reach such a judgment, the board may appoint two independent evaluators. The evaluators’ final conclusions must be made available to shareholders and directors for a period of 20 business days, during which shareholders representing 5% or more of the issued voting shares may request the board to call a shareholders’ meeting to resolve the matter, with the agreement of two-thirds of the issued voting shares required for approval. For purposes of this regulation, the law considers that the amount of a proposed transaction is material if (1) it exceeds 1% of the company’s net worth (provided that it also exceeds UF 2,000) or (2) it exceeds UF 20,000.

All resolutions approving such transactions must be reported to the company’s shareholders at the next annual shareholders’ meeting. Violations of this provision may result in administrative, criminal or civil liability to the corporation, the shareholders and/or third parties who suffer losses as a result of such violation. We believe that we have complied with the applicable requirements of the Chilean Corporations Law in all transactions with related parties and affirm that we will continue to comply with such requirements.

As of December 31, 2005, 2006 and 2007, loans to related parties totaled Ch$53,731 million, Ch$59,297 million and Ch$41,081 million, respectively. As of December 31, 2005, 2006 and 2007, related party receivables, other than loans, totaled Ch$149.3 million, Ch$15.0 million and Ch$33.1 million, respectively. See note 16 to our financial statements for a more detailed accounting of transactions with related parties.

Loans to related parties

At December 31, 2006 and 2007, loans to related parties were as follows:

	2006				2007
	Loans		Collateral Pledged(1)		Loans		Collateral Pledged(1)
	(in millions of constant Ch$ as of December 31, 2007)

Operating companies	Ch$	51,241	Ch$	8,136	Ch$	37,676	Ch$	2,565
Investment companies(2)	7,021		—		2,131		895
Individuals(3)	1,035		468		1,274		766
Total	Ch$	59,297	Ch$	8,604	Ch$	41,081	Ch$	4,226

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(1) Includes only those guarantees that are admitted by Article 84 of the General Banking Law for purposes of establishing the individual credit limits defined by the Law. The guarantees are valued in accordance with the Superintendency’s instructions.

(2) Includes companies whose purpose is to hold shares in other companies.

(3) Includes debt obligations that are equal to or greater than UF3,000, equivalent to Ch$58.9 million as of December 31, 2007.

All loans were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and did not involve more than the normal risk of collectability or present other unfavorable features. During 2006 and 2007, the largest amounts of related party loans outstanding amounted to Ch$59,298 million and Ch$63,472 million, respectively.

Other Transactions with Related Parties

During 2005, 2006 and 2007, we had the following income (expenses) from services provided to (by) related parties:

	Year ended December 31,
	2005		2006		2007
Company	Income (expenses)		Income (expenses)		Income (expenses)
	(in millions of constant Ch$ as of December 31, 2007)

Corp Group Interhold S.A. (1)	(1,393	)	(1,425	)	(1,410	)
Inmobiliaria Edificio Corp Group S.A.	—		(344	)	(1,034	)
Nexus S.A.	(1,108	)	(1,188	)	(1,825	)
Transbank S.A.	(935	)	(1,110	)	(2,483	)
Empresa Periodística La Tercera S.A.	—		—		(467	)
Recaudaciones y Cobranzas S.A.	(1,439	)	(533	)	(254	)
Redbanc S.A.	(408	)	(308	)	(382	)
Fundación Corpgroup Centro Cultural	(648	)	(269	)	(100	)
Inmobiliaria e Inversiones San Francisco Ltda.	(160	)	(162	)	(155	)
Asesorías Santa Josefina Ltda.	(153	)	(155	)	(148	)
Inmobiliaria e Inversiones Boquiñeni Ltda.	(47	)	(39	)	(36	)
Corp Legal S.A.	(11	)	(20	)	(37	)
Promoservice S.A.	(361	)	(5	)	(110	)
Sociedad Nacional de Minería	(41	)	—		—
Compañía de Seguros Vida Corp S.A.	206		167		—

(1) Relates to our service agreement with our affiliate Corp Group Interhold S.A. which was signed on July 6, 2001 and had an initial five year term which is automatically renewable for one-year periods thereafter. Under this agreement, we pay fees to Corp Group Interhold S.A. of approximately UF6,250 per month.

These transactions were carried out on terms normally prevailing in the market at the date of the transaction.

C. INTERESTS OF EXPERTS AND COUNSEL

Not applicable.

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ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See “Item 18. Financial Statements.”

Legal Proceedings

We are not involved in any litigation or arbitration proceedings that we believe are reasonably likely to have a material adverse effect on us or our operations. We are involved in collections proceedings initiated by us in the normal course of business and certain proceedings against us in the ordinary course of banking business.

Dividend Policy

Under the Chilean Corporations Law, as defined herein, Chilean open stock companies, such as ours, are generally required to distribute at least 30% of their earnings (calculated in accordance with Chilean GAAP) as dividends, but a bank is permitted to distribute less than 30% of its earnings, and may distribute no dividends at all, in any given year if the holders of at least two thirds of a bank’s outstanding common stock so determine. The balance pick up of our distributable net income is generally retained for use in our business (including for the maintenance of any required legal reserves). Although our Board of Directors currently intends to pay regular annual dividends, the amount of dividend payments will depend upon, among other factors, our then current level of earnings, capital and legal reserve requirements, as well as market conditions, and there can be no assurance as to the amount or timing of future dividends. Our actual dividend policy is to distribute at least 50% of our net income.

In the case that dividends are paid, holders of ADSs will be entitled to receive dividends to the same extent as the owners of shares of common stock. Dividends received by holders of ADSs will, absent changes in Chilean exchange controls or other laws, be converted into U.S. dollars and distributed net of currency exchange expenses and fees of the depositary and will be subject to Chilean withholding tax, currently imposed at the rate of 35.0% (which may be subject to credits in certain cases).

B. SIGNIFICANT CHANGES

There have been no significant changes since December 31, 2007 that would materially affect the financial statements included in this Annual Report.

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ITEM 9. OFFER AND LISTING DETAILS

A. OFFER AND LISTING DETAILS

Price History

The table below shows, for the periods indicated, high and low closing prices (in nominal pesos) of the shares of our common stock on the Santiago Stock Exchange and of our ADSs on the New York Stock Exchange.

	Santiago Stock Exchange		New York Stock Exchange
	Common Stock		ADSs
	High	Low	High		Low
	(Ch$ per share (1))		(US$ per ADS(2))
Annual Price History
2003(3)	3.51	2.04	—		—
2004	3.38	2.80	28.75	(4)	26.25	(4)
2005	3.22	2.80	30.40		24.80
2006	3.03	2.28	28.73		21.69
2007	3.82	2.76	39.06		23.74
Quarterly Price History
2006 1st Quarter	3.03	2.80	28.47		26.65
2006 2nd Quarter	2.97	2.40	28.73		22.25
2006 3rd Quarter	2.75	2.28	25.60		21.69
2006 4th Quarter	2.97	2.60	28.21		24.25
2007 1st Quarter	3.28	2.76	30.55		24.00
2007 2nd Quarter	3.33	2.79	31.55		25.70
2007 3rd Quarter	3.82	2.97	37.21		23.74
2007 4th Quarter	3.81	3.25	39.06		32.51
2008 1st Quarter	3.38	2.87	35.15		30.00
2008 2nd Quarter(5)	3.08	2.95	35.12		30.50
Monthly Price History
December 2007	3.55	3.25	36.10		32.51
January 2008	3.38	2.87	35.03		30.00
February 2008	3.25	3.00	35.11		32.25
March 2008	3.05	2.90	35.15		31.91
April 2008	3.08	3.00	35.12		32.70
May 2008	3.05	2.95	32.59		30.50

Sources: Santiago Stock Exchange Official Quotation Bulletin; NYSE.

(1)	Pesos per share reflect nominal price at trade date.
(2)	Price per ADS in US$: one ADS represents 5,000 shares of common stock.
(3)	From November 26, 2003 to December 31, 2003.
(4)	From November 1, 2005 to December 31, 2005.
(5)	Through May 31, 2008.

No trading suspensions relating to our common stock have occurred.

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The table below shows, for the periods indicated, the average daily trading volume for our common stock on the Santiago Stock Exchange and of our ADSs on the New York Stock Exchange.

	Santiago Stock Exchange	New York Stock Exchange
	Common Stock Volume (Ch$)(1)	ADSs Volume (US$)
Annual Average Daily Trading Volume
2003(2)	1,070,206,571	—
2004	958,306,569	264,072	(3)
2005	790,655,535	354,469
2006	622,222,188	323,737
2007	1,197,713,368	287,923
Quarterly Average Daily Trading Volume
2006 1st Quarter	781,630,339	645,405
2006 2nd Quarter	501,742,014	248,000
2006 3rd Quarter	449,239,023	152,963
2006 4th Quarter	748,660,172	170,302
2007 1st Quarter	1,071,374,691	237,293
2007 2nd Quarter	809,002,363	170,971
2007 3rd Quarter	1,404,345,767	452,407
2007 4th Quarter	1,520,204,434	337,591
2008 1st Quarter	969,771,613	249,039
2008 2nd Quarter(4)	869,320,429	52,619
Monthly Average Daily Trading Volume
December 2007	1,666,821,971	135,377
January 2008	1,417,335,910	179,577
February 2008	823,098,926	380,777
March 2008	631,457,208	190,236
April 2008	396,561,828	57,643
May 2008	1,389,354,889	47,356

Sources: Santiago Stock Exchange Official Quotation Bulletin; NYSE.

(1) Pesos per share reflect nominal price at trade date.

(2) From November 26, 2003 to December 31, 2003.

(3) From November 1, 2005 to December 31, 2005.

(4) Through May 31, 2008.

B. PLAN OF DISTRIBUTION

Not applicable.

C. MARKETS

Shares of our common stock are traded on the Santiago Stock Exchange under the symbol “CorpBanca.” Our ADSs have been listed since November 1, 2004 on the New York Stock Exchange under the symbol “BCA.”

D. SELLING SHAREHOLDER

Not applicable.

E. DILUTION

Not applicable.

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F. EXPENSES OF THE ISSUE

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not applicable.

B. MEMORANDUM AND ARTICLES OF INCORPORATION

Set forth below is material information concerning our share capital and a brief summary of the significant provisions of our estatutos, as defined below, and Chilean law. This description contains material information concerning the shares, but does not purport to be complete and is qualified in its entirety by reference to our estatutos, the General Banking Law, the Chilean Corporations Law and the Ley de Mercado de Valores, or the Chilean Securities Market Law, each referred to below.

General

Shareholder rights in a Chilean bank that is also an open-stock (public) corporation are governed by the corporation’s estatutos, which effectively serve the purpose of both the articles or certificate of incorporation and the bylaws of a company incorporated in the United States, by the General Banking Law and secondarily, to the extent not inconsistent with the latter, by the provisions of Chilean Corporations Law applicable to publicly traded corporations except for certain provisions which are expressly excluded. Article 137 of the Chilean Corporations Law provides that all provisions of the Chilean Corporations Law take precedence over any contrary provision in a corporation’s estatutos. Both the Chilean Corporations Law and our estatutos provide that legal actions by shareholders against us (or our officers or directors) to enforce their rights as shareholders or by one shareholder against another in their capacity as such are to be brought in Chile in arbitration proceedings, notwithstanding the plaintiff’s right to submit the action to the ordinary courts of Chile.

The Chilean securities markets are principally regulated by the Chilean Superintendency of Securities and Insurance under the Chilean Securities Market Law and the Chilean Corporations Law. In the case of banks, compliance with these laws is supervised by the Chilean Superintendency of Banks. These two laws provide for disclosure requirements, restrictions on insider trading and price manipulation and protection of minority investors. The Chilean Securities Market Law sets forth requirements relating to public offerings, stock exchanges and brokers, and outlines disclosure requirements for companies that issue publicly offered securities. The Chilean Corporations Law sets forth the rules and requirements for establishing open stock corporations while eliminating government supervision of closed (closely-held) corporations. Open stock (public) corporations are those with 500 or more shareholders, or companies in which 100 or more shareholders own at least 10.0% of the subscribed capital (excluding those whose individual holdings exceed 10.0%), and all other companies that are voluntarily registered in the Securities Registry of the Chilean Superintendency of Securities and Insurance.

Capitalization

Under Chilean law, the shareholders of a company, acting at an extraordinary shareholders’ meeting, have the power to authorize an increase in such company’s capital. When an investor subscribes for issued shares, the shares are registered in such investor’s name, even if not paid for, and the investor is treated as a shareholder for all purposes except with regard to receipt of dividends and the return of capital; provided that the shareholders may, by amending the by-laws, also grant the right to receive dividends or distributions of capital. The investor becomes eligible to receive dividends and returns of capital once it has paid for the shares (if it has paid for only a portion of such shares, it is entitled to receive a corresponding pro-rata portion of the dividends declared and/or returns of capital with respect to such shares unless the company’s bylaws provide otherwise). If an investor does not pay for shares for which it has subscribed on or prior to the date agreed upon for payment, the company is entitled under Chilean law to auction the shares on the stock exchange and collect the difference, if any, between the subscription price and the auction proceeds. However, until such shares are sold at auction, the subscriber continues to exercise all the rights of a shareholder (except the right to receive dividends and return of capital). In the case of banks,

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authorized shares and issued shares which have not been paid for within the period fixed for their payment by the Chilean Superintendency of Banks are cancelled and are no longer available for issuance by the company.

Article 22 of Chilean Corporations Law states that the purchaser of shares of a company implicitly accepts its bylaws and any agreements adopted at shareholders’ meetings.

Ownership Restrictions

Under Article 12 of the Chilean Securities Market Law and the regulations of the Chilean Superintendency of Banks, shareholders of open stock corporations are required to report the following to the Chilean Superintendency of Securities and Insurance and the Chilean stock exchanges:

· any direct or indirect acquisition or sale of shares that results in the holder’s acquiring or ceasing to own, directly or indirectly, 10.0% or more of an open stock corporation’s share capital, and

· any direct or indirect acquisition or sale of shares or options to buy or sell shares, in any amount, if made by a holder of 10.0% or more of an open stock corporation’s capital or if made by a director, liquidator, main officer, general manager or manager of such corporation.

In addition, majority shareholders must state in their report whether their purpose is to acquire control of the company or if they are making a financial investment. A beneficial owner of ADSs representing 10.0% or more of our share capital will be subject to these reporting requirements under Chilean law.

Under Article 54 of the Chilean Securities Market Law and the regulations of the Chilean Superintendency of Securities and Insurance, persons or entities intending to acquire control, directly or indirectly, of a publicly traded company, regardless of the acquisition vehicle or procedure, and including acquisitions made through direct subscriptions or private transactions, are also required to inform the public of such acquisition at least 10 business days before the date on which the transaction is to be completed, but in any case, as soon as negotiations regarding the change of control begin (i.e., when information and documents concerning the target are delivered to the potential acquiror) through a filing with the Chilean Superintendency of Securities and Insurance, the stock exchanges and the companies controlled by and that control the target and through a notice published in two Chilean newspapers, which notice must disclose, among other information, the person or entity purchasing or selling and the price and conditions of any negotiations.

Prior to such publication, a written communication to such effect must be sent to the target corporation, the controlling corporation, the corporations controlled by the target corporation, the Chilean Superintendency of Securities and Insurance, and to the Chilean stock exchanges on which the securities are listed.

In addition to the foregoing, Article 54A of the Chilean Securities Market Law requires that within two business days of the completion of the transactions pursuant to which a person has acquired control of a publicly traded company, a notice shall be published in the same newspapers in which the notice referred to above was published and notices shall be sent to the same persons mentioned in the preceding paragraphs.

A beneficial owner of ADSs intending to acquire control of us will be subject to the foregoing reporting requirements.

The provisions of the aforementioned articles do not apply whenever the acquisition is being made through a tender or exchange offer.

Title XXV of the Chilean Securities Market Law on tender offers and the regulations of the Chilean Superintendency of Securities and Insurance provides that the following transactions shall be carried out through a tender offer:

· an offer which allows a person to take control of a publicly traded company, unless the shares are being sold by a controlling shareholder of such company at a price in cash which is not substantially higher than the market price and the shares of such company are actively traded on a stock exchange,

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· an offer for all the outstanding shares of a publicly traded company upon acquiring two thirds or more of its voting shares (this offer must be made at a price not lower than the price at which appraisal rights may be exercised, that is, book value if the shares of the company are not actively traded or, if the shares of the company are actively traded, the weighted average price at which the stock has been traded during the two months immediately preceding the acquisition), and

· an offer for a controlling percentage of the shares of a listed operating company if such person intends to take control of the company (whether listed or not) controlling such operating company, to the extent that the operating company represents 75.0% or more of the consolidated net worth of the holding company.

Article 200 of the Chilean Securities Market Law prohibits any shareholder that has taken control of a publicly traded company to acquire, for a period of 12 months from the date of the transaction that granted it control of the publicly traded company, a number of shares equal to or higher than 3.0% of the outstanding issued shares of the target without making a tender offer at a price per share not lower than the price paid at the time of taking control. Should the acquisition from the other shareholders of the company be made on the floor of a stock exchange and on a pro rata basis, the controlling shareholder may purchase a higher percentage of shares, if so permitted by the regulations of the stock exchange.

Title XV of the Chilean Securities Market Law sets forth the basis to determine what constitutes a controlling power, a direct holding and a related party. The Chilean Securities Market Law defines control as the power of a person, or group of persons acting pursuant to a joint action agreement, to direct the majority of the votes in the shareholders meetings of the corporation, or to elect the majority of members of its board of directors, or to influence the management of the corporation significantly. Significant influence is deemed to exist in respect of the person or group holding, directly or indirectly, at least 25.0% of the voting share capital, unless:

· another person or group of persons acting pursuant to joint action agreement, directly or indirectly, control a stake equal to or higher than the percentage controlled by such person,

· the person or group does not control, directly or indirectly, more than 40.0% of the voting share capital and the number of shares controlled is lower than the sum of the shares held by other shareholders holding more than 5.0% of the share capital, and

· in cases where the Chilean Superintendency of Securities and Insurance has ruled otherwise, based on the distribution or atomization of the overall shareholding.

According to the Chilean Securities Market Law a joint action agreement is an agreement among two or more parties which, directly or indirectly, own shares in a corporation at the same time and whereby they agree to participate with the same interest in the management of the corporation or in taking control of the same. The law presumes that such an agreement exists between:

· a principal and its agents,

· spouses and relatives up to certain level of kindred,

· entities within the same business group, and

· an entity and its controller or any of its members.

Likewise, the Chilean Superintendency of Securities and Insurance may determine that a joint action agreement exists between two or more entities considering, among others, the number of companies in which they participate, the frequency with which they vote identically in the election of directors, appointment of managers and other resolutions passed at shareholders’ meetings.

According to Article 96 of the Chilean Securities Market Law a business group is a group of entities with such ties in their ownership, management or credit liabilities that it may be assumed that the economic and financial action of such members is directed by, or subordinated to, the joint interests of the group, or that there are common

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credit risks in the credits granted to, or securities issued by, them. According to the Chilean Securities Market Law the following entities are part of the same business group:

· a company and its controller,

· all the companies with a common controller and the latter, and

· all the entities that the Chilean Superintendency of Securities and Insurance declare to be part of the business group due to one or more of the following reasons:

· a substantial part of the assets of the company is involved in the business group, whether as investments in securities, equity rights, loans or guaranties,

· the company has a significant level of indebtedness and that the business group has a material participation as a lender or guarantor,

· when the controller is a group of entities, that the company is a member of a controller of the entities mentioned in the first two bullets above and there are grounds to include it in the business group, and

· when the controller is a group of entities, that the company is controlled by a member of the controlling group and there are grounds to include it in the business group.

Article 36 of the General Banking Law states that as a matter of public policy, no person or company may acquire, directly or indirectly, more than 10.0% of the shares of a bank without the prior authorization of the Chilean Superintendency of Banks, which may not be unreasonably withheld. The prohibition would also apply to beneficial owners of ADSs. In the absence of such authorization, any person or group of persons acting in concert would not be permitted to exercise voting rights with respect to the shares or ADSs acquired. In determining whether or not to issue such an authorization, the Chilean Superintendency of Banks considers a number of factors enumerated in the General Banking Law, including the financial stability of the purchasing party.

Article 35 bis of the General Banking Law requires the prior authorization of the Chilean Superintendency of Banks for:

· the merger of two or more banks,

· the acquisition of all or a substantial portion of a banks’ assets and liabilities by another bank,

· the control by the same person, or controlling group, of two or more banks, or

· a substantial increase in the share ownership by a controlling shareholder of a bank.

Such prior authorization is required solely when the acquiring bank or the resulting group of banks would own a significant market share in loans, defined by the Chilean Superintendency of Banks to be more than 15.0% of all loans in the Chilean banking system. The intended purchase, merger or expansion may be denied by the Chilean Superintendency of Banks. Alternatively, a purchase, merger or expansion, when the acquiring bank or resulting group would have a market share in loans defined by the Chilean Superintendency of Banks to be more than 20% of all loans in the Chilean banking system, may be conditioned on one or more of the following:

· that the bank or banks maintain an effective equity higher than 8.0% and up to 14.0% of their risk weighted assets,

· that the technical reserve established in article 65 of the General Banking Law be applicable when deposits exceed one and a half times the resulting bank’s paid-in capital and reserves, or

· that the margin for interbank loans be diminished to 20.0% of resulting bank’s effective equity.

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If the acquiring bank or resulting group would have a market share in loans defined by the Chilean Superintendency of Banks to be more than 15% but less than 20%, the authorization will be conditioned on the bank or banks maintaining an effective equity not lower than 10% of their risk-weighted assets for the time set forth by the Chilean Superintendency of Banks, which may not be less than one year.

According to the General Banking Law a bank may not grant loans to related parties on more favorable terms than those generally offered to non-related parties. Article 84 No. 2 of the General Banking Law and the regulations issued by the Chilean Superintendency of Banks create the presumption that natural persons who are holders of shares and who beneficially own more than 1.0% of the shares are related to the bank and imposes certain restrictions on the amounts and terms of loans made by banks to related parties. This presumption would also apply to beneficial owners of ADSs representing more than 1.0% of the shares, and accordingly the limitations of Article 84 No. 2 would be applicable to such beneficial owners. Finally, according to the regulations of the Chilean Superintendency of Banks, Chilean banks that issue ADSs are required to inform the Chilean Superintendency of Banks if any person, directly or indirectly, acquires ADSs representing 5.0% or more of the total amount of shares of capital stock issued by such bank.

Article 16 bis of the General Banking Law provides that the individuals or legal entities which, individually or with other people, directly control a bank and who individually own more than 10.0% of its shares shall send to the Chilean Superintendency of Banks reliable information on their financial situation in the form and within the time set forth in Resolution No. 3,156 of the Chilean Superintendency of Banks.

Preemptive Rights and Increases of Share Capital

The Chilean Corporations Law provides that whenever a Chilean company issues new shares for cash, it must offer to its existing shareholders the right to purchase a sufficient number of shares to maintain their existing ownership percentages in the company. Pursuant to this requirement, preemptive rights in connection with any future issue of shares will be offered by us to the depositary as the registered owner of the shares underlying the ADSs. However, the depositary will not be able to make such preemptive rights available to holders of ADSs unless a registration statement under the Securities Act is effective with respect to the underlying shares or an exemption from the registration requirements thereunder is available.

We intend to evaluate, at the time of any preemptive rights offering, the practicality under Chilean law and Central Bank regulations in effect at the time of making such rights available to our ADS holders, as well as the costs and potential liabilities associated with registration of such rights and the related shares of common stock under the Securities Act, and the indirect benefits to us of thereby enabling the exercise by all or certain holders of ADSs of their preemptive rights and any other factors we consider appropriate at the time, and then to make a decision as to whether to file such registration statement. We cannot assure you that any registration statement would be filed. If we do not file a registration statement and no exemption from the registration requirements under the Securities Act is available, the depositary will attempt to sell such holders’ preemptive rights and distribute the proceeds thereof, after deduction of its expenses and fees, if a premium can be recognized over the cost of such sale. In the event that the depositary is not able, or determines that it is not feasible, to sell such rights at a premium over the cost of any such sale, all or certain holders of ADSs may receive no value for such rights. The inability of all or certain holders of ADSs to exercise preemptive rights in respect of shares of common stock underlying such ADSs could result in such holders not maintaining their percentage ownership of the common stock following such preemptive rights offering unless such holder made additional market purchases of ADSs or shares of common stock.

Under Chilean law, preemptive rights are exercisable or freely transferable by shareholders during a period that cannot be less than 30 days following the grant of such rights. During such period, and for an additional 30-day period thereafter, a Chilean company is not permitted to offer any unsubscribed shares for sale to third parties on terms which are more favorable than those offered to its shareholders. At the end of such additional 30-day period, a Chilean open stock corporation is authorized to sell unsubscribed shares to third parties on any terms, provided they are sold on a Chilean stock exchange. Unsubscribed shares that are not sold on a Chilean stock exchange can be sold to third parties only on terms no more favorable for the purchaser than those offered to shareholders.

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Shareholders’ Meetings and Voting Rights

An ordinary annual meeting of shareholders is held within the first four months of each year, generally in February. The ordinary annual meeting of shareholders is the corporate body that approves the annual financial statements, approves all dividends in accordance with the dividend policy determined by our Board of Directors, elects the members of our Board of Directors and approves any other matter which does not require an extraordinary shareholders’ meeting. The last ordinary annual meeting of our shareholders was held on February 26, 2008.

Extraordinary meetings may be called by our Board of Directors when deemed appropriate, and ordinary or extraordinary meetings must be called by our Board of Directors when requested by shareholders representing at least 10.0% of the issued voting shares or by the Chilean Superintendency of Banks. Notice to convene the ordinary annual meeting or an extraordinary meeting is given by means of three notices which must be published in a newspaper of our corporate domicile (currently Santiago) or in the Official Gazette in a prescribed manner, and the first notice must be published not less than 15 days nor more than 20 days in advance of the scheduled meeting. Notice must also be mailed 15 days in advance to each shareholder and given to the Chilean Superintendency of Banks and the Santiago, Valparaiso and Electronic Stock Exchanges. Currently, we publish our official notices in the Diario La Tercera.

The quorum for a shareholders’ meeting is established by the presence, in person or by proxy, of shareholders representing at least an absolute majority of the issued shares; if a quorum is not present at the first meeting, the meeting can be reconvened (in accordance with the procedures described in the previous paragraph) and, upon the meeting being reconvened, shareholders present at the reconvened meeting are deemed to constitute a quorum regardless of the percentage of the shares represented. The shareholders’ meetings pass resolutions by the affirmative vote of an absolute majority of those voting shares present or represented at the meeting. The vote required at any shareholders’ meeting to approve any of the following actions, however, is a two-thirds majority of the issued shares:

· a change in corporate form, merger or spin-off,

· an amendment to our term of existence or early dissolution,

· a change in corporate domicile,

· a decrease of corporate capital,

· the approval of capital contributions in kind and a valuation of the assets contributed,

· a modification of the powers exercisable through the shareholders’ meetings or limitations on the powers of our Board of Directors,

· a reduction in the number of members of our Board of Directors,

· the transfer of 50.0% or more of the corporate assets, regardless of whether it includes liabilities, or the formation or amendment of any business plan that contemplates the transfer of 50.0% or more of the corporate assets,

· any non-cash distribution in respect of the shares,

· the creation of security interests to secure third-party obligations in excess of 50.0% of the corporate assets, unless granted to a subsidiary,

· the repurchase of shares,

· the approval of material related-party transactions when requested by shareholders representing at least 5.0% of the issued and outstanding shares with right to vote, or

· the decision to distribute less than 30.0% of the net profits of any given year as dividends.

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Shareholders may accumulate their votes for the election of directors and cast the same in favor of one person.

In general, Chilean law does not require a Chilean open stock corporation to provide the level and type of information that U.S. securities laws require a reporting company to provide to its shareholders in connection with a solicitation of proxies. However, shareholders are entitled to examine the books of the company within the 15-day period before the ordinary annual meeting. Under Chilean law, a notice of a shareholders’ meeting listing matters to be addressed at the meeting must be mailed not fewer than 15 days prior to the date of such meeting, and, in cases of an ordinary annual meeting, shareholders holding a prescribed minimum investment must be sent an annual report of the company’s activities which includes audited financial statements. Shareholders who do not fall into this category but who request it must also be sent a copy of the company’s annual report. In addition to these requirements, we regularly provide, and management currently intends to continue to provide, together with the notice of shareholders’ meeting, a proposal for the final annual dividend.

The Chilean Corporations Law provides that whenever shareholders representing 10.0% or more of the issued voting shares so request, a Chilean company’s annual report must include, in addition to the materials provided by the board of directors to shareholders, such shareholders’ comments and proposals in relation to the company’s affairs. Similarly, the Chilean Corporations Law provides that whenever the board of directors of an open stock corporation convenes an ordinary meeting of the shareholders and solicits proxies for that meeting, or distributes information supporting its decisions, or other similar material, it is obligated to include as an annex to its annual report any pertinent comments and proposals that may have been made by shareholders owning 10.0% or more of the company’s voting shares who have requested that such comments and proposals be so included.

Only shareholders registered as such with us on the fifth calendar day prior to the date of a meeting are entitled to attend and vote their shares. A shareholder may appoint another individual (who need not be a shareholder) as his proxy to attend and vote on his behalf. Every shareholder entitled to attend and vote at a shareholders’ meeting has one vote for every share subscribed.

Dividend, Liquidation and Appraisal Rights

Under the Chilean Corporations Law, Chilean companies are generally required to distribute at least 30.0% of their earnings as dividends. However, under the General Banking Law, banks are permitted to distribute less than such minimum amount in any given year if holders of at least two-thirds of the bank’s common stock so determine. In the event of any loss of capital or of the legal reserve, no dividends can be distributed so long as such loss is not recovered. Also, no dividends of a bank above the legal minimum can be distributed if doing so would result in the bank exceeding its indebtedness ratio or its lending limits.

Dividends that are declared but not paid by the date set for payment at the time of declaration are adjusted from the date set for payment to the date such dividends are actually paid. The right to receive a dividend lapses if it is not claimed within five years from the date the dividend is payable.

We may declare a dividend in cash or in shares. When a share dividend is declared above the legal minimum (which minimum must be paid in cash), our shareholders must be given the option to elect to receive cash. Our ADS holders may, in the absence of an effective registration statement under the Securities Act or an available exemption from the registration requirement thereunder, effectively be required to receive a dividend in cash.

In the event of our liquidation, the holders of fully paid shares would participate equally and ratably, in proportion to the number of paid-in shares held by them, in the assets available after payment of all creditors.

In accordance with the General Banking Law, our shareholders would have no appraisal rights in the event of a business combination or otherwise.

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Approval of Financial Statements

Our Board of Directors is required to submit our audited financial statements to the shareholders annually for their approval. The approval or rejection of such financial statements is entirely within our shareholders’ discretion. If our shareholders reject our financial statements, our Board of Directors must submit new financial statements not later than 60 days from the date of such rejection. If our shareholders reject our new financial statements, our entire Board of Directors is deemed removed from office and a new Board of Directors is elected at the same meeting. Directors who individually approved such rejected financial statements are disqualified for re-election for the ensuing period.

Registrations and Transfers

Our shares are registered by an administration agent named DCV Registros S.A. This entity is responsible for our shareholders’ registry. In the case of jointly owned shares, an attorney-in-fact must be appointed to represent the joint owners in dealings with us.

C. MATERIAL CONTRACTS

The following is a brief summary of our material contracts currently in force. A copy of each of these contracts has been included as an exhibit hereto. See “Item 19. Exhibits.”

Systems Operations Services Agreement. We have entered into a Systems Operations Services Agreement with IBM, initially dated March 30, 2001, and covering a term from April 1, 2001 through April 15, 2006 which can be renegotiated periodically. The contract now covers a term from April 16, 2008 to April 30, 2018. Under this agreement, IBM provides outsourcing Computer System Operations services to us and we are obligated to pay fees amounting to UF2,821.66 per month.

Service Contract. We have entered into a Service Contract with our affiliate Corp Group Interhold S.A. This agreement is dated July 6, 2001 and covered a five year term which is automatically renewed for one-year periods thereafter. Under this agreement, CorpGroup shall provide us with professional and technical consulting including preparation of financial statements, implementing financial and administrative procedures; preparing, analyzing, and providing legal advisory services; and analyzing economic, financial sectors and feasibility of investment plans. Under this agreement, we pay fees of approximately UF6,250 per month.

Software Consulting and Development Agreement. We have entered into a Software Consulting and Development Agreement, for the Integrated Banking System (IBS), dated as of October 4, 2001, with Datapro, Inc. The contract covers a five-year term for system maintenance and adjustments, which is automatically renewable at the end of the term. The contract includes an initial charge for development and user license of US$380,000 and a schedule of additional fees for services provided as well as a monthly maintenance fee.

Redbanc Agreement. We have entered into an agreement to participate in the automated teller machine network operated by Redbanc S.A., dated as of April 1, 2001. The contract covers a three-year term which is automatically and successively renewed for equal three year periods. The purpose of this agreement is to provide services to facilitate the performance of banking objectives. This includes the installation, operation, maintenance, and development of equipment, devices, systems, and services used for the management and operation of automated and non-automated cash and point-of-sale machines and the related services. RedBanc shall invoice and charge us a different monthly fee for each of the services connected to the automated teller machine network.

D. EXCHANGE CONTROLS

The Central Bank is responsible for, among other things, monetary policies and exchange controls in Chile. Foreign investments can be registered with the Foreign Investment Committee under Decree Law No. 600 of 1974, as amended, or can be registered with the Central Bank under the Central Bank Act and the Compendio de Normas de Cambios Internacionales, or the Central Bank Foreign Exchange Regulations (the “Compendium”). The Central Bank Act is a constitutional law requiring a “special majority” vote of the Chilean Congress to be modified.

The Central Bank Foreign Exchange Regulations were amended on April 19, 2001. The main objective of these amendments was to facilitate capital movements from and into Chile and encourage foreign investment.

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According to the new Central Bank Foreign Exchange Regulations, investors are allowed to freely enter into any kind of foreign exchange transaction, the only restriction being that investors must inform the Central Bank about certain operations which they have conducted and must conduct certain operations through the Formal Exchange Market. The types of information related to equity investment that must be reported to the Central Bank by non-Chilean residents include the occurrence of, among other things, any assignment, substitution, changes in organizational status, change in the form of the investment, or material changes to the terms of the agreement governing the foreign currency transaction. Transactions that are required to be conducted through the Formal Exchange Market include transactions involving foreign commercial bank loans or Chilean company issued bonds, deposits made in Chilean financial institutions by foreign depositors, and equity investments and contributions of capital by foreign investors. The Formal Exchange Market entities through which transactions are conducted will report such transactions to the Central Bank.

Pursuant to the provisions of Chapter XIV of the Compendium, it is not necessary to seek the Central Bank’s prior approval in order to establish an ADR facility. The Central Bank only requires that (i) any foreign investor acquiring shares to be converted into ADSs who has actually brought funds into Chile for that purpose shall bring those funds through the Formal Exchange Market; (ii) any foreign investor acquiring shares to be converted into ADSs informs the Central Bank of the investment in the terms and conditions described below; (iii) all remittances of funds from Chile to the foreign investor upon the sale of the shares underlying the ADSs or from dividends or other distributions made in connection therewith, shall be made through the Formal Exchange Market; and (iv) all remittances of funds to the foreign investor, whether or not from Chile, shall be informed to the Central Bank in the terms and conditions described below.

When the shares to be converted into ADSs have been acquired by the foreign investor with funds brought into Chile through the Formal Exchange Market, a registration form shall be filed with the Department of International Financial Operations of the Central Bank by the foreign investor acting through an entity of the Formal Exchange Market on or before the date on which the foreign currency is brought into Chile. However, if the funds were brought into Chile with a different purpose and subsequently were used to acquire shares to be converted into ADSs, the Department of International Financial Operations of the Central Bank then shall be informed of such investment by the Custodian within ten days following the end of each fifteen-day period on which the Custodian has to deliver periodic reports to the Central Bank. If the funds were not brought into Chile, a registration form shall be filed with the Department of International Financial Operations of the Central Bank by the foreign investor itself or through an entity of the Formal Exchange Market within 10 days following the date on which the proceeds were used. Any foreign investor (other than the Depositary) who has acquired shares and wishes to convert the same into ADSs shall assign to the Depositary, prior to any such conversion, any foreign investment rights it may have pursuant to Chapter XIV of the Compendium. Any such assignment shall be filed with the Central Bank within the ten days following its execution.

All payments in U.S. dollars in connection with the ADS facility made from Chile shall be made through the Formal Exchange Market. Pursuant to Chapter XIV of the Compendium no previous authorization from the Central Bank is required for the remittance of U.S. dollars obtained in the sale of the shares underlying ADSs or from dividends or other distributions made in connection therewith. The entity of the Formal Exchange Market participating in the transfer shall provide certain information to the Central Bank on the next banking business day. In the event there are payments made outside Chile, the foreign investor shall provide the relevant information to the Central Bank directly or through an entity of the Formal Exchange Market within 10 days following the date on which the payment was made.

Under Chapter XIV of the Compendium payments and remittances of funds from Chile are governed by the rules in effect at the time the payment or remittance is made. Therefore, any change made to Chilean laws and regulations after the date hereof will affect foreign investors who have acquired ADSs or shares to be converted into ADSs. There can be no assurance that further Central Bank regulations or legislative changes to the current foreign exchange control regime in Chile will not restrict or prevent foreign investors to purchase and remit abroad U.S. dollars, nor can there be any assessment to the duration or impact of such restrictions, if imposed. For instance, until June 26, 1998, certain foreign investments in Chile were subject to an encaje, or mandatory deposit, with the Central Bank in an amount equal to 30% of the proceeds of the investment or, in the alternative, in lieu of such deposit, an upfront payment to the Central Bank in an amount determined in relation to the amount otherwise required to be deposited. This deposit had to be made in U.S. dollars and had to remain with the Central Bank, without accruing interest, for a period of one year. On June 26, 1998, the encaje was reduced to 10%, on September 17, 1998, it was

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reduced to 0% and, on April 19, 2001, it was eliminated from the Compendium. There is no guarantee that the Central Bank will not reinstate the encaje at such levels or at higher levels.

This situation is different from the one governing ADSs issued by Chilean companies prior to April 19, 2001. Prior to such date, ADSs representing shares of stock of Chilean corporations were subject to Chapter XXVI of the Compendium, which addressed the issuance of ADSs by Chilean companies and foreign investment contracts entered into among the issuer of the shares, the Central Bank and the depository pursuant to Article 47 of the Central Bank Act. Chapter XXVI of the Compendium and the corresponding foreign investment contracts granted foreign investors the vested right to acquire dollars with the proceeds obtained in the sale of the underlying shares of stock, or from dividends or other distributions made in connection therewith and remit them abroad. On April 19, 2001, the Central Bank eliminated Chapter XXVI of the Compendium and made the establishment of new ADR facilities subject to the provisions of Chapter XIV of the Compendium. All foreign investment contracts executed under the provisions of Chapter XXVI of the Compendium remain in full force and effect and are governed by the provisions in effect at the time of their execution.

The foregoing is a summary of the Central Bank’s regulations with respect to the issuance of ADSs representing common stock as in force and effect as of the date hereof. This summary does not purport to be complete and is qualified in its entirety by reference to the provisions of Chapter XIV of the Compendium, a copy of which is available from CorpBanca upon request.

There can be no assurance that further Central Bank regulations or legislative changes to the current foreign exchange control regime in Chile will not restrict or prevent foreign investors from purchasing or remitting U.S. dollars, or that further restrictions applicable to foreign investors which affect their ability to remit the capital, dividends or other benefits in connection with the shares of stock will not be imposed by the Central Bank in the future, nor can there be any assessment to the duration or impact of such restrictions, if imposed.

E. TAXATION

Chilean Tax Considerations

The following discussion is based on material Chilean income tax laws presently in force, including Ruling No. 324 of January 29, 1990 of the Chilean Internal Revenue Service and other applicable regulations and rulings. The discussion summarizes the material Chilean income tax consequences of an investment in the ADSs or shares of common stock by an individual who is not domiciled in or a resident of Chile or a legal entity that is not organized under the laws of Chile and does not have a permanent establishment located in Chile, which we refer to as a foreign holder. For purposes of Chilean law, an individual holder is a resident of Chile if he or she has resided in Chile for more than six consecutive months in one calendar year or for a total of more than six months, whether consecutive or not, in two consecutive tax years. An individual holder is domiciled in Chile if he or she resides in Chile with the purpose of staying in Chile (such purpose to be evidenced by circumstances such as the acceptance of employment within Chile or the relocation of his or her family to Chile). This discussion is not intended as tax advice to any particular investor, which can be rendered only in light of that investor’s particular tax situation.

Under Chilean law, provisions contained in statutes such as tax rates applicable to foreign holders, the computation of taxable income for Chilean purposes and the manner in which Chilean taxes are imposed and collected may be amended only by another statute. In addition, the Chilean tax authorities issue rulings and regulations of either general or specific application interpreting the provisions of Chilean tax law. Absent a retroactive law, Chilean taxes may not be assessed retroactively against taxpayers who act in good faith relying on such rulings and regulations, but Chilean tax authorities may change said rulings and regulations prospectively. There is no general income tax treaty in force between Chile and the United States.

Cash Dividends and Other Distributions

Cash dividends paid by us with respect to the ADSs or shares of common stock held by a Foreign Holder will be subject to a 35.0% Chilean withholding tax, which is withheld and paid over by us. We refer to this as the Chilean withholding tax. A credit against the Chilean withholding tax is available based on the level of corporate income tax, or first category tax, actually paid by us on the taxable income to which the dividend is imputed; however, this credit does not reduce the Chilean withholding tax on a one-for-one basis because it also increases the

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base on which the Chilean withholding tax is imposed. In addition, distribution of book income in excess of retained taxable income is subject to the Chilean withholding tax, but such distribution is not eligible for the credit. Under Chilean income tax law, for purposes of determining the level of the first category tax that has been paid by us, dividends generally are assumed to have been paid out of our oldest retained taxable profits. The first category tax rate is 17.0%. The foregoing tax consequences apply to cash dividends paid by us. Dividend distributions made in property (other than shares of common stock) will be subject to the same Chilean tax rules as cash dividends.

Capital Gains

Gains realized on the sale, exchange or other disposition by a foreign holder of ADSs (or ADRs evidencing ADSs) will not be subject to Chilean taxation, provided that such disposition occurs outside Chile or that it is performed under the rules of Title XXIV of the Chilean Securities Market Law, as amended by Law No. 19,601, dated January 18, 1999. The deposit and withdrawal of shares of common stock in exchange for ADRs will not be subject to any Chilean taxes.

Gains recognized on a sale or exchange of shares of common stock (as distinguished from sales or exchanges of ADSs representing such shares of common stock) by a foreign holder will be subject to both the first category tax and the Chilean withholding tax (the former being creditable against the latter) if (1) the foreign holder has held such shares of common stock for less than one year since exchanging ADSs for the shares of common stock, (2) the foreign holder acquired and disposed of the shares of common stock in the ordinary course of its business or as a regular trader of stock or (3) the sale is made to a company in which the foreign holder holds an interest (10.0% or more of the shares in the case of open stock corporations). In all other cases, gain on the disposition of shares of common stock will be subject only to the first category tax levied as a sole tax. However, if it is impossible to determine the taxable capital gain, a 5.0% withholding will be imposed on the total amount to be remitted abroad without any deductions as a provisional payment of the total tax due.

The tax basis of shares of common stock received in exchange for ADSs will be the acquisition value of such shares. The valuation procedure set forth in the deposit agreement, which values shares of common stock that are being exchanged at the highest price at which they trade on the Santiago Stock Exchange on the date of the exchange, generally will determine the acquisition value for this purpose. Consequently, the conversion of ADSs into shares of common stock and sale of such shares of common stock for the value established under the deposit agreement will not generate a capital gain subject to taxation in Chile.

The distribution and exercise of preemptive rights relating to the shares of common stock will not be subject to Chilean taxation. Amounts received in exchange for the shares or assignment of preemptive rights relating to the shares will be subject to both the first category tax and the Chilean withholding tax (the former being creditable against the latter to the extent described above).

The Chilean Internal Revenue Service has not enacted any rule nor issued any ruling about the applicability of the following norms to the foreign holders of ADRs.

In the case where the sale of the shares is made on a day that is different than the date in which the exchange is recorded, capital gains subject to taxation in Chile may be generated. However, following a ruling of the Chilean Internal Revenue Service the capital gain that may be generated if the exchange date is different than the date in which the shares received in exchange for ADSs are sold, will not be subject to taxation. Such provision states that in the event that the exchanged shares are sold by the ADS holders in a Chilean stock exchange on the same day in which the exchange is recorded in the shareholders’ registry of the issuer or within two business days prior to the date on which the sale is recorded in the shareholders’ registry, the acquisition price of such exchanged shares shall be the price registered in the invoice issued by the stock broker that participated in the sale transaction.

To the extent that our shares are actively traded on the Santiago Stock Exchange, foreign institutional investors who acquire our shares may benefit from a tax exemption included in an amendment introduced to the Chilean Income Tax Law in June 2001. The amendment established an exemption for the payment of income tax by foreign institutional investors, such as mutual funds, pension funds and others, that obtain capital gains in the sales through a Chilean stock exchange, a tender offer or any other system authorized by the Chilean Superintendency of Securities and Insurance, of shares of publicly traded corporations that are actively traded in stock exchanges. Our shares are currently actively traded on the Santiago Stock Exchange.

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A foreign institutional investor is an entity that is either:

· a fund that makes public offers of its shares in a country whose public debt has been rated investment grade by an international risk classification agency qualified by the Chilean Superintendency of Securities and Insurance,

· a fund that is registered with a regulatory entity of a country whose public debt has been rated investment grade by an international risk classification agency qualified by the Chilean Superintendency of Securities and Insurance, provided that the investments in Chile, including securities issued abroad that represent Chilean securities, held by the fund represent less than 30.0% of its share value,

· a fund that holds investments in Chile that represent less than 30.0% of its share value, provided that it proves that no more that 10.0% of its share value is directly or indirectly owned by Chilean residents,

· a pension fund that is exclusively formed by individuals that receive their pensions on account of capital accumulated in the fund,

· a fund regulated by Law No. 18,657 in which case all holders of its shares must reside abroad or be qualified as local institutional investors, or

· another kind of institutional foreign investor that complies with the characteristics defined by a regulation in compliance with the reports prepared by the Chilean Superintendency of Securities and Insurance and the Chilean Internal Revenue Service.

In order to be entitled to the exemption, foreign institutional investors, during the time in which they operate in Chile, must:

· be organized abroad and not be domiciled in Chile,

· not participate, directly or indirectly, in the control of the issuers of the securities in which it invests and not hold, directly or indirectly, 10.0% or more of such companies’ capital or profits,

· execute an agreement in writing with a Chilean bank or securities broker in which the intermediary is responsible for the execution of purchase and sale orders and for the verification, at the time of the respective remittance, that such remittances relate to capital gains that are exempt from income tax in Chile or, if they are subject to income tax, that the applicable withholdings have been made, and

· register in a special registry with the Chilean Internal Revenue Service.

Pursuant to an amendment to the Chilean Income Tax Law published on November 7, 2001 (Law No. 19,768), the sale and disposition of shares of Chilean public corporations which are actively traded on stock exchanges is exempted from Chilean taxes on capital gains if the sale or disposition was made:

· on a local stock exchange or any other stock exchange authorized by the Chilean Superintendency of Securities and Insurance or in a tender offer process according to Title XXV of the Chilean Securities Market Law, so long as the shares (a) were purchased on a public stock exchange or in a tender offer process pursuant to Title XXV of the Chilean Securities Market Law, (b) are newly issued shares issued in a capital increase of the corporation, or (c) were the result of the exchange of convertible bonds (in which case the option price is considered to be the price of the shares). In this case, gains exempted from Chilean taxes shall be calculated using the criteria set forth in the Chilean Income Tax Law, or

· within 90 days after the shares would have ceased to be actively traded on a stock exchange. In such case, the gains exempted from Chilean taxes on capital gains will be up to the average price per share of the last 90 days. Any gains above the average price will be subject to the first category tax.

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Based on rulings and regulations of the Chilean Superintendency of Securities and Insurance, the purchase of ADSs in the form of shares should be deemed to have been made on a public stock exchange for purposes of the foregoing exemption, but there can be no assurance in this regard. Investors who request delivery of ADSs in the form of shares of common stock should consult with their tax adviser to determine whether such shares will be eligible for the foregoing exemption.

If in the future our shares are not significantly traded on stock exchanges, purchasers of our shares may benefit from Article 4 Transitory of Law No. 19,768, given that in November 2002, we registered our shares in the “emerging companies” market according to the rules of the Chilean Superintendency of Securities and Insurance and placed in the Santiago Stock Exchange 18.2% of the issued shares among institutional investors and entities not related to our controlling shareholder. Such article provides that a portion of the capital gain realized upon the sale or disposal of our shares is exempted from taxes if the sale or disposal is made in a Chilean stock exchange or in a tender offer process according to Title XXV of the Chilean Securities Market Law. The calculation of the exempted portion is different depending on whether the sale or disposal is made on or before three years from November 2002 or afterwards.

Other Chilean Taxes

No Chilean inheritance, gift or succession taxes apply to the transfer or disposition of the ADSs by a foreign holder but such taxes generally will apply to the transfer at death or by a gift of shares of common stock by a foreign holder. No Chilean stamp, issue, registration or similar taxes or duties apply to foreign holders of ADSs or shares of common stock.

Withholding Tax Certificates

Upon request, we will provide to foreign holders appropriate documentation evidencing the payment of the Chilean withholding tax.

United States Tax Considerations

The following discussion summarizes the principal U.S. federal income tax considerations relevant to an investment in the ADSs or shares of common stock by a holder that is a citizen or resident of the U.S. or a U.S. domestic corporation or that otherwise will be subject to U.S. federal income tax on a net income basis in respect of the ADSs or shares of common stock, which we refer to as a U.S. holder. However, it does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase ADSs or shares of common stock. In particular, this discussion is directed only to U.S. holders that will hold ADSs or shares of common stock as capital assets and that have the U.S. dollar as their functional currency, and does not address the tax treatment of U.S. holders that are subject to special tax rules, such as banks, dealers or traders in securities or currencies, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, grantor trusts, persons that received shares of common stock or ADSs as compensation for the performance of services, certain U.S. expatriates, tax-exempt entities, holders that own or are deemed to own 10.0% or more of the voting shares of CorpBanca, persons holding ADSs or shares of common stock as a position in a “straddle,” “hedging,” or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction for U.S. federal income tax purposes. Moreover, this description does not address the U.S. federal estate and gift or alternative minimum tax consequences of the acquisition, ownership and disposition of ADSs or shares of common stock. Prospective purchasers who are U.S. holders are advised to consult their own tax advisers as to the overall U.S. federal, state and local tax consequences of their ownership of ADSs and the underlying shares of common stock.

The statements of U.S. tax laws, regulations and interpretations thereof set out below are based on the laws, regulations and interpretations thereof in force and available as of the date of this document and may be subject to any changes in law, regulations and interpretations thereof occurring after such date, including changes that may have retroactive effect.

We are a banking corporation licensed by the Chilean Superintendency of Banks. We believe that we are engaged in the active conduct of a banking business as defined in the Internal Revenue Code of 1986, or the Code. As such, we believe that we are not a passive foreign investment company, or a PFIC. Special, and potentially

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adverse, tax rules apply to holders of stock in a PFIC. Accordingly, potential investors are urged to consult their tax advisers about the possibility of us being a PFIC, and the consequences of holding stock in a PFIC. The remainder of this section will assume we are not a PFIC.

ADRs

In general, U.S. holders of ADRs evidencing our ADSs generally will be treated, for U.S. federal income tax purposes, as the beneficial owners of the underlying shares of common stock that are represented by those ADSs and evidenced by those ADRs.

Cash Dividends and Other Distributions

The gross amount of cash dividends paid out of the current or accumulated earnings and profits of CorpBanca (as determined for U.S. federal income tax purposes) with respect to the shares of common stock or ADSs, including the net amount of the Chilean withholding tax withheld on the distribution (after taking into account the credit for the first category tax), will be includable in the gross income of a U.S. holder as ordinary income on the day the dividends are received by the U.S. holder (if such holder holds the shares of common stock directly) or by the depositary (if such holder holds the ADSs) and will not be eligible for the dividends received deduction allowed to corporations under the Code. Dividends paid in pesos will be includable in the income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day they are received by the U.S. holder or the depositary, as applicable. U.S. holders should consult their own tax advisers regarding the treatment of foreign currency gain or loss, if any, on any pesos received that are converted into U.S. dollars on a date subsequent to receipt. The Chilean withholding tax (after taking into account the credit for the first category tax) will be treated as a foreign income tax that a U.S. holder may elect to deduct in computing its income tax or, subject to generally applicable limitations and conditions under the Code, to credit against its U.S. federal income tax liability. For purposes of calculating the foreign tax credits, dividends paid on the common stock or ADSs will generally constitute foreign source “passive income” or “financial services income” for U.S. tax purposes. U.S. holders should note that recently enacted legislation eliminates the “financial services income” category with respect to taxable years beginning after December 31, 2006. Under the new legislation, the foreign tax credit limitation categories would be limited to “passive category income” and “general category income.” Foreign tax credits generally are not allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities. U.S. holders should consult their own advisers concerning the implications of these rules in light of their particular circumstances.

Distributions of additional shares of common stock (or rights to subscribe for shares of common stock) to U.S. holders with respect to the ADSs or shares of common stock that are made as part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax.

Under recently enacted amendments to the Code, “qualified dividend income” received by non-corporate U.S. holders from domestic corporations or qualified foreign corporations is subject to tax at the lower capital gain rates (generally, 15%). These amendments do not apply to taxable years beginning after December 31, 2010. In general, a “qualified foreign corporation” is a foreign corporation that (i) is incorporated in a possession of the U.S. (which we are not so incorporated), or (ii) is eligible for the benefits of a tax treaty that is a “comprehensive income tax treaty.” The U.S. and Chile do not have a “comprehensive income tax treaty.” A foreign corporation will also be treated as a “qualified foreign corporation” with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the U.S. The term “qualified foreign corporation” does not include a corporation treated as a PFIC. No regulations have been issued regarding the newly enacted provisions as of the date of this annual report. Currently, the ADSs are readily tradable on the New York Stock Exchange. Our common stock would be treated as readily tradable on an established securities market in the U.S. upon any ADS being so treated. Therefore, for taxable years beginning on or before December 31, 2010, distributions taxable as dividends on our common stock or the ADSs generally would be eligible for taxation at the applicable capital gains rates at any time that our ADSs are treated as readily tradable on an established securities market in the U.S.

Capital Gains

Gain or loss realized by a U.S. holder on the sale, exchange or other disposition of ADSs or shares of common stock will be subject to U.S. federal income taxation as a capital gain or loss in an amount equal to the

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difference between such holder’s adjusted basis in the ADSs or the shares of common stock and the amount realized on the disposition. Such gain or loss generally will be a capital gain or loss. Capital gains realized by a non-corporate U.S. holder generally are subject to a reduced rate of tax with respect to property held for more than one year. The deductibility of capital losses is subject to limitations.

Gains realized by a U.S. holder on a sale or other disposition of ADSs or shares of common stock generally will be treated as U.S. source income. Because a U.S. holder generally may not use a foreign tax credit to reduce its U.S. federal income tax liability in respect of its U.S. source income, in the case of a disposition of shares of common stock (which, unlike a disposition of ADSs, would be taxable in Chile), the U.S. holder generally would not be able to utilize foreign tax credits in respect of any Chilean tax imposed on such a disposition unless such holder has other income from foreign sources, in the appropriate category, for purposes of the U.S. foreign tax credit limitation rules. U.S. holders should consult their tax advisers regarding the application of the U.S. foreign tax credit limitation rules to their investment in, and disposition of, the ADSs and shares of common stock.

Deposits and withdrawals of shares of common stock by U.S. holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.

Non-U.S. Holders

A holder of shares of common stock or ADSs that is not a U.S. holder, or a Non-U.S. holder, will not be subject to U.S. federal income or withholding tax on gain realized on the sale of shares of common stock or ADSs, unless (1) such gain is effectively connected with the conduct by such Non-U.S. holder of a trade or business in the U.S. or (2) in the case of gain realized by an individual Non-U.S. holder, such Non-U.S. holder is present in the U.S. for 183 days or more in the taxable year of the sale and certain other conditions are met.

A Non-U.S. holder of shares of common stock or ADSs generally will not be subject to U.S. federal income or withholding tax on dividends received on shares of common stock or ADSs, unless such income is effectively connected with the conduct by such Non-U.S. holder of a trade or business in the U.S.

Backup Withholding and Information Reporting

In general, dividends paid to a U.S. holder and proceeds from a disposition of the ADSs or shares of common stock will be subject to information reporting requirements and such payments may be subject to U.S. backup withholding tax if the U.S. holder does not provide a taxpayer identification number or otherwise establish an exemption from such U.S. backup withholding tax. Under certain circumstances, such payments made to a Non-U.S. holder also may be subject to U.S. information reporting requirements and U.S. backup withholding tax, unless the holder certifies its non-U.S. status or otherwise establishes an exemption from such U.S. backup withholding tax.

The above summary is not intended to constitute a complete analysis of all tax consequences relating to acquisition, ownership and disposition of shares of common stock or the ADSs. Holders of shares of common stock or the ADSs should consult their own tax advisers concerning the tax consequences of their particular situations.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

The documents concerning CorpBanca which are referred to in this Annual Report may be inspected at our offices at Rosario Norte 660, Las Condes, Santiago, Chile.

I. SUBSIDIARY INFORMATION

Not applicable.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

This section describes the financial risks, liquidity risk and market risks to which we are exposed in our business activities. Additionally, an explanation is included of the internal tools and regulatory methods used to control these risks, portfolios over which these market risks approach are applied and quantitative disclosures that demonstrate the level of exposure to financial risk we assumed.

The principal types of inherent risk in our business are market, liquidity, operational and credit risk. The effectiveness with which we are able to manage the balance between risk and reward is a significant factor in our ability to generate long-term stable earnings growth. Our senior management places great emphasis on risk administration.

The composition of our assets, liabilities and shareholders’ equity as of December 31, 2007 by currency and term is as follows:

	As of December 31, 2007
							Ch$ indexed			Foreing
	Ch$			UF			to US$			Currency			Total			Percentage
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)
Assets
Cash and due from banks	Ch$	64,675		Ch$	—		Ch$	—		Ch$	35,408		Ch$	100,083		2.1	%
Other assets:
Less than 1 year	1,422,266			466,639			5,625			460,874			2,355,404			48.7
From 1 to 3 years	343,548			406,180			7,823			67,911			825,462			17.1
More than 3 years	363,204			1,113,429			7,295			88,519			1,572,447			32.5
Bank premises and equipment (2)	34,159			—			—			—			34,159			0.7
Allowances for losses	(55,067		)	—			—			—			(55,067		)	(1.1	)
Total	Ch$	2,172,785		Ch$	1,986,248		Ch$	20,743		Ch$	652,712		Ch$	4,832,488		100.0	%
Percentage of total assets	45.0		%	41.1		%	0.4		%	13.5		%	100.0		%

Liabilities and Shareholders Equity
Non-interest-bearing deposits (1)	Ch$	331,127		Ch$	—		Ch$	—		Ch$	15,115		Ch$	346,242		7.2	%
Other liabilities:
Less than 1 year	1,992,587			245,825			2,358			734,005			2,974,775			61.5
From 1 to 3 years	94,683			361,898			2,898			47,000			506,479			10.5
More than 3 years	66,377			449,284			897			3,760			520,318			10.8
Shareholders’ equity (2)	484,674			—			—			—			484,674			10.0
Total	Ch$	2,969,448		Ch$	1,057,007		Ch$	6,153		Ch$	799,880		Ch$	4,832,488		100.0	%
Percentage of total liabilities and shareholders’ equity	61.4		%	21.9		%	0.1		%	16.6		%	100.0		%

(1)	Includes checking accounts, banker’s drafts and transactions payable.
(2)	Our shareholders’ equity, which includes undistributed net income, and bank premises and equipment are denominated in pesos, but the amounts at which they are carried on the balance sheet are adjusted to reflect the effects of inflation.

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Policies

Our policy with respect to asset and liability management is to maximize our net interest revenue and return on assets and equity while managing interest rate, liquidity and foreign exchange risks while remaining within the limits provided by Chilean banking regulations.

Our asset and liability management policies are developed by our Asset and Liability Committee, or our A&L Committee, following guidelines established by our Board of Directors. The A&L Committee is composed of eleven members, including a director, who shall be the chairman of our Executive Committee, the Chief Executive Officer, the Division Manager—Treasury and International, the Financial Risk Manager and our Chief Financial Officer. The role of the Financial Risk Manager and the A&L Committee is to ensure that our treasury and international division’s operations are consistently in compliance with our internal risk policies and limits, as well as applicable regulations. The A&L Committee typically meets once per week. Senior members of our treasury and international division meet regularly with the A&L Committee and outside consultants to discuss our asset and liability position. The members of our financial risk management department are not employed in our banking operations or treasury and international division.

Our treasury and international division manages trading activities following the guidelines set by the A&L Committee and CorpBanca’s credit risk and market risk and control departments. The market risk and control department’s activities consist of (i) applying VaR techniques (as discussed below), (ii) marking to market our fixed income portfolio, derivatives portfolio and measuring daily profit and loss from trading activities; (iii) comparing VaR and other exposures against the established limits; (iv) establishing control procedures for losses in excess of such limits; and (v) providing information about trading activities to the A&L Committee, other members of senior management and the treasury and international division.

Our market risk analysis focuses on managing risk exposure relating to (i) the interest rate risk relating to fixed income portfolio (comprised of a “trading” portfolio and “an available-for-sale” portfolio), which contains mainly Chilean government bonds, corporate bonds, mortgage finance bonds issued by third parties and interest rate derivatives; and (ii) our net foreign currency position, which includes all of our assets and liabilities in foreign currencies (mainly U.S. dollars), including derivatives that hedge certain foreign currency mismatches that arise between investments and the funding thereof.

Market Risk

Market risk is the risk of losses due to unexpected changes in interest rates, foreign exchange rates, inflation rates and other rates or prices. We are exposed to market risk mainly as a result of the following activities:

· Trading in financial instruments, which exposes us to interest rate and foreign exchange rate risk;

· Engaging in banking activities, which subjects us to interest rate risk, since a change in interest rates affected gross interest income, gross interest expense and customer behavior;

· Engaging in banking activities, which exposes us to inflations rate risk, since a change in expected inflation affects gross interest income, gross interest expense and customer behavior;

· Trading in the local equity market, which subjects us to potential losses caused by fluctuations of the stock market; and

· Investing in assets whose returns or accounts are denominated in currencies other than the peso, which subjects us to foreign exchange risk between the peso and such other currencies.

Interest Rate Sensitivity

A key component of our asset and liability policy is the management of interest rate sensitivity. Interest rate sensitivity is the relationship between market interest rates and net interest revenue due to the maturity or repricing

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characteristics of interest-earning assets and interest bearing liabilities. For any given period, the pricing structure is matched when an equal amount of such assets and liabilities mature or reprice in that period. Any mismatch of interest-earning assets and interest bearing liabilities is known as a gap position. A positive gap denotes asset sensitivity and means that an increase in interest rates would have a positive effect on net interest revenue while a decrease in interest rates would have a negative effect on net interest revenue. Accordingly, a negative gap denotes asset sensitivity and means that a decrease in interest rates would have a negative effect on net interest revenue while an increase in interest rates would have a positive effect on net interest revenue.

Our interest rate sensitivity strategy takes into account not only the rates of return and the underlying degree of risk, but also liquidity requirements, including minimum regulatory cash reserves, mandatory liquidity ratios, withdrawal and maturity of deposits, capital costs and additional demand for funds. Our maturity mismatches and positions are monitored by our A&L Committee and are managed within established limits.

Exchange Rate Sensitivity

In recent years, our operating income has benefited from fluctuations in the exchange rate between the peso and the U.S. dollar due to our policy. However, devaluation or appreciation of the peso against the U.S. dollar could be expected to have the following principal effects:

· If we maintain a net asset position (or positive gap) in U.S. dollars and a devaluation of the peso against the dollar occurs, we would record a related gain, and if an appreciation of the peso occurs, we would record a related loss;

· If we maintain a net liability position (or negative gap) in U.S. dollars and a devaluation of the peso against the dollar occurs, we would record a related loss, and if an appreciation of the peso occurs, we would record a related gain;

· If the inflation rate for a period exceeded the devaluation of the peso against the U.S. dollar during the same period, we would record a related gain if it had a net asset position (or positive gap) in UFs which exceeded a net liability position (or negative gap) in U.S. dollars, and we would record a related loss if we had a net liability position (or negative gap) in U.S. dollars which exceeded a net asset position (or positive gap) in UFs. The same effect would occur if there were an appreciation of the peso against the U.S. dollar; and

· If the inflation rate for a period were lower than the rate of devaluation of the peso against the U.S. dollar during the same period, we would record a related gain if we maintained a net asset position (or positive gap) in U.S. dollars and a net liability position (or negative gap) in UFs and would record a related loss if we had a net liability position (or negative gap) in U.S. dollars and a net asset position (or positive gap) in UFs.

Regulatory method to control market risk

On an unconsolidated basis, we must separate its balance sheet in two separate categories; trading portfolio (Libro de Negociación) and unconsolidated non-trading, or permanent, portfolio (Libro de Banca). The trading portfolio as defined by the Chilean Superintendency of Banks includes all instruments valued at market prices, free of any restrictions for their immediate sale and that are frequently bought and sold by the bank or are maintained with the intention of selling them in the short-term in order to profit from short-term price variations. The non-trading portfolio is defined as all instruments in the balance sheet not considered in the trading portfolio.

We must also report the following absolute risk levels:

Trading Portfolio:

Exposure to interest rate risk: Interest rate risk of the trading portfolio is basically a sensitivity analysis that is calculated potential losses assuming an increase in nominal rate yields curves, real rates and foreign currency rates by 75 to 350 basis point.

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· Exposure to foreign currency risk: The foreign currency risk is calculated using sensitivity factors linked to the credit risk rating of the issuing country.

· Market risk exposure of options: options risk is calculated using sensitivity factors called delta, gamma and vega that basically measure the sensitivity of the value of the options to changes in the price of the underlying security and its volatility.

Non-trading Portfolio:

· Exposure to short-term interest rate risk; sensitivity analysis that is calculated for assets and liabilities with maturities of less than 1 year, assuming a 200 basis point parallel shift of the nominal yield curve, 400 for real rates and 200 for foreign interest rates.

· Exposure to inflation risk; sensitivity analysis that is calculated for assets and liabilities with maturities of less than 1 year, assuming a 200 basis point parallel shift of the nominal yield curve, 400 for real rates and 200 for foreign interest rates.

· Exposure to long-term interest rate risk; sensitivity analysis that is calculated for assets and liabilities with maturities from 1 to over 20 years, assuming a 200 basis point parallel shift of the nominal yield curve, 400 for real rates and 200 for foreign interest rates.

The Chilean Superintendency of Banks has defined various limits for these risks.

1) EMR limit. A bank’s regulatory capital must be greater or equal to the sum of the exposure to market risk multiplied by the minimum capital adequacy ratio defined in the General Banking Law. In other words:

RC – ((k * RWA) + EMR) > 0

Where:

RC:	Regulatory capital as defined by the General Banking Law.

k:	Minimum capital adequacy ratio, in the case CorpBanca is required to have a capital adequacy ratio above 8%.

RWA:	Consolidated risk weighted assets as defined by the General Banking Law.

EMR:	Exposure to market risk, Santander-Chile’s EMR is equal to the total market risk of its unconsolidated trading portfolio. This includes interest rate risk, foreign currency risk and risks derived from options.

2) Limit on exposure to short term interest rate and inflation risk of our non-trading portfolio. CorpBanca’s exposure to short term interest rate and inflation risk of the non-trading portfolio cannot exceed 25% of its unconsolidated net interest income plus fees sensitive to interest rate volatility. Short-term interest rate risk.

3) Limit on exposure to long-term interest rate risk of a banks non-trading portfolio. CorpBanca’s exposure to long-term interest rate risk of the unconsolidated non-trading portfolio cannot exceed 25% of its regulatory capital.

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The following is a description of the models adopted by local regulators for measuring market risks.

Interest Rate Risk of Trading Portfolio: Regulatory Method

The interest rate risk of the trading portfolio as defined by the Central Bank of Chile is equal to the sum of:

1) The sensitivity analysis of the trading portfolio

2) Vertical adjustment factor

3) Horizontal adjustment factor

The sensitivity factor of the trading portfolio is calculated using the following formula:

Where:

Amt	:	Trading Assets (pesos, inflation linked and foreign currency)
Pmt	:	Liabilities funding trading positions (pesos, inflation linked and foreign currency)
amt	:	Sensitivity factor to rise interest rate
m	:	Currency (pesos, inflation linked and foreign currency)
t	:	Time period
å	:	Summation
\| \|	:	Absolute value

The vertical adjustment factor is calculated in the following manner

Where:

b	:	Vertical adjustment factor, equal to 10%
Min( )	:	Compensated net position

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A horizontal adjustment must be made following the vertical adjustment. To determine the horizontal adjustment one must multiply the horizontal adjustment factor by the compensated net position for Zones 1, Zone 2, Zone 3, Zones 1 and 2, Zones 2 and 3 and Zones 1 through 3.

Horizontal adjustment= *Adjusted net position


Compensated net position Zone 1,2 or 3		Min (Adjusted net asset position; absolute value of adjusted net liability position in Zone 1,2 or 3)

Compensated net position Zones 1 and 2		Min (adjusted net asset position in Zones 1 and 2, absolute value of adjusted net liability position in Zones 1 and 2)

Compensated net position Zones 2 and 3		Min (adjusted net asset position in Zone 3 and Zone 2 (deducting adjusted net asset position that have been compensated for with net liability positions in Zone 1), absolute value of adjusted net liability position in Zone 3 and Zone 2 (deducting adjusted net liability positions that have been compensated for with net liability positions in Zone 1)

Compensated net position Zones 1- 3		Min (Adjusted net asset position in Zone 3 and Zone 1 (deducting adjusted net asset position that have been compensated for with net liability positions in Zone 2), absolute value of adjusted net liability position in Zone 3 and Zone 1 (deducting adjusted net liability positions that have been compensated for with net liability positions in Zone 2).

The following table illustrates the value of the different factors used for calculating the interest rate risk of the trading portfolio:

										Horizontal adjustment factor
			Change in interest rate (bp)			Sensitivity factor			Vertical adjustment	Within the	Between adjacent	Between zones 1
Zone	Period		Ch$	UF	FX	a Ch$	a UF	a FX	factor	zones	zones	and 3
Zone 1	1	Up to 30 days	125	350	125	0.0005	0.0014	0.0005
	2	31 days to 3 mths	125	300	125	0.0019	0.0047	0.0020
	3	3 - 6 mths	125	250	125	0.0042	0.0088	0.0044		l1 = 40%
	4	6 - 9 mths	125	200	125	0.0069	0.0116	0.0072
	5	9 mths - 1 year	125	175	125	0.0095	0.0140	0.0100			l12 = 40%
Zone 2	6	1 - 2 years	100	125	100	0.0124	0.0166	0.0133
	7	2 - 3 years	100	100	100	0.0191	0.0211	0.0211	b = 10%	l2 = 30%
	8	3 - years	100	100	100	0.0248	0.0281	0.0281	b = 10%			l13 = 100%
Zone 3	9	4 - 5 years	75	75	75	0.0221	0.0258	0.0258			l23 = 40%
	10	5 - 7 years	75	75	75	0.0263	0.0320	0.0320
	11	7 - 10 years	75	75	75	0.0307	0.0401	0.0401
	12	10 - 15 years	75	75	75	0.0332	0.0486	0.0486		l3 = 30%
	13	15 - 20 years	75	75	75	0.0317	0.0534	0.0534
	14	> 20 years	75	75	75	0.0278	0.0539	0.0539

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Foreign Currency Risk: Regulatory Method

The foreign currency risk as defined by the Central Bank is equal to:

Where:

PNA	:	Net asset position.
PNP	:	Net liabilities position.
PNoro	:	Net gold position.
si	:	Sensitivity factor for each currency.
j	:	Foreign currency
S	:	Summation
\| \|	:	Absolute value
Max	:	Maximum value

Interest Rate and Inflation Risk of Non-trading Portfolio: Regulatory Method

The short-term interest rate risk and inflation risk of non-trading portfolio as defined by Central bank is equal to:

The long-term interest rate risk of the non-trading portfolio is calculated according to the following formula:

Where:

Amt	:	Non-trading Assets (pesos, inflation linked and foreign currency).
Pmt	:	Non-trading Liabilities (pesos, inflation linked and foreign currency).
mt	:	Sensitivity factor associated with interest rate movement.
NPur	:	Net position in inflation linked instruments, including those subject to price level restatement.
t	:	Factor that measures the sensitive to movements in the inflation index. This factor is equal a 2%.
DF	:	Effect on fess from shifts in interest rate and assumes a 200 basis point movement.
r	:	Sensitive factor to increase in interest rates
t	:	Time period
m	:	Currency (pesos, inflation linked and foreign currency).
S	:	Summation
\| \|	:	Absolute value

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		Change in interest rate (bp)			Sensitivity factor short-term	Sensitivity factor long-term (rmt)
Period		Ch$	UF	FX	(mt)	Ch$	UF	FX
1	Up to 30 days	200	400	200	0.0192	0.0008	0.0016	0.0008
2	31 days to 3 mths	200	400	200	0.0167	0.0030	0.0063	0.0031
3	3 - 6 mths	200	400	200	0.0125	0.0067	0.0140	0.0070
4	6 - 9 mths	200	400	200	0.0075	0.0110	0.0231	0.0116
5	9 mths - 1 year	200	400	200	0.0025	0.0152	0.0320	0.0160
6	1 - 2 years	200	300	200	—	0.0248	0.0399	0.0266
7	2 - 3 years	200	200	200	—	0.0382	0.0422	0.0422
8	3 - years	200	200	200	—	0.0496	0.0563	0.0563
9	4 - 5 years	200	200	200	—	0.0591	0.0690	0.0690
10	5 - 7 years	200	200	200	—	0.0702	0.0856	0.0856
11	7 - 10 years	200	200	200	—	0.0823	0.1076	0.1076
12	10 - 15 years	200	200	200	—	0.0894	0.1309	0.1309
13	15 - 20 years	200	200	200	—	0.0860	0.1450	0.1450
14	> 20 years	200	200	200	—	0.0762	0.1480	0.1480

As of December 31, 2007, our interest rate gap, as a percentage was of our net annual interest earnings was 18.4% for the assets and liabilities of less than one year, and as a percentage of our free effective equity 54.3% for assets and liabilities with maturities from one to 30 years.

Assumptions and Limitations of Scenario Simulations/sensitivity Analysis (Regulatory Method)

Our scenario simulation methodology should be interpreted in light of the limitations of our models, which include:

· The scenario simulation assumes that the volumes remain on balance sheet and that they are always renewed at maturity, omitting the fact that credit risk considerations and pre-payments may affect the maturity of certain positions.

· This model assumes set shifts in interest rates and sensitivity factors for different time periods and does not take into consideration any other scenario for each time period or other sensitivity factors.

· The model does not take into consideration the sensitivity of volumes to these shifts in interest rates.

· The model does not take into consideration our subsidiaries which are subject to market risks.

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Quantitative Disclosures about Market Risk: Regulatory Method

The following table illustrates our market risk exposure according to the Chilean regulatory method as of December 31, 2006 and 2007.

	As of December 31,
	2006	2007
	(in millions of constant Ch$ as of December 31, 2007)

Market risk of trading portfolio	5,793	6,324
8% x risk weighted assets	247,710	322,417
Subtotal	253,503	328,740
Limit = regulatory capital	433,023	466,883
Available margin	179,520	138,143

Market risk of short-term non-trading portfolio	21,508	31,867
Limit = 25% of (net interest revenue + net fee income sensitive to interest rates)	32,096	43,316
Available margin	10,589	11,449

Market risk of long-term non-trading portfolio	57,645	82,431
Limit = 25% of regulatory capital	108,256	116,721
Available margin	50,610	34,290

Internal Methods to Control Market Risk

Below is a quantitative and qualitative description of our markets risks tools according to our internal guidelines. Our policies establish a set of tools for monitoring market risks both, statistical and sensitive approaches, being main tools Value at Risk methodology.

VaR Methodology

General

We use Value-at-Risk, or VaR, methodology as a statistical tool to measure and control both the interest rate risk trading portfolio and the currency risk relating to our net foreign currency position, which includes all assets and liabilities in foreign currency (principally U.S. dollars) including forward and swap contracts used to hedge positions.

As calculated by CorpBanca, VaR is an estimate of the expected loss in the market value of a given portfolio over a one-day horizon at a one-tailed 99.0% confidence interval. In other words, it is the one-day loss, expressed in Chilean pesos that CorpBanca would expect to suffer on a given portfolio 99.0% of the time, subject to certain assumptions and limitations discussed below. Conversely, it is the loss figure that CorpBanca would expect to exceed only 1.0% of the time. VaR provides a single estimate of market risk that is comparable from one market risk to the other. Volatility is calculated utilizing 260 historical observations. The calculation of the volatility includes a decay factor that gives more importance to the newer values. A one-day holding period is utilized (carry one day loss). We use VaR estimates to alert senior management whenever the statistically expected losses in our fixed income portfolio and net foreign currency position exceed certain pre-set levels which we believe to be prudent.

VaR is complemented with a trading losses measure, “stop loss”. This approach defines the maximum loss permitted with respect to our fixed income or net foreign currency position. Once a stop loss level is reached, our policy is to make adjustments in our foreign currency-denominated assets or liabilities in order to reduce overall foreign currency exposure. The stop loss is activated when the accumulated losses during last 22 days surpass an amount that has been pre-set by the A&L Committee. Calculate suppose that gains obtained do not generate credit for a position, but that amount considered is the minimum of sum last 22 days.

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Limits

This daily VaR limit is relative to expectative revenues and stop loss limit is consistent with daily VaR

Assumptions and Limitations of VaR Model

Our VaR model assumes that changes in market risk factors have a normal distribution and that the parameters, the standard deviation of risk factor changes and the correlation between them have been estimated accurately. The model assumes that the correlation and changes in market rates/prices included in our historical databases are independent and identically distributed random variables, and provide a good estimate of correlation and rate/price changes in the future.

Our VaR methodology should be interpreted in light of the limitations of our models, which include:

· Changes in market rates and prices may not be independent and identically distributed random variables or have a normal distribution. In particular, the normal distribution assumption may underestimate the probability of extreme market moves.

· The historical data we use in our VaR model may not provide the best estimate of risk factor changes in the future, and any modifications in the data may be inadequate. In particular, the use of historical data may fail to capture the risk of possible extreme adverse market movements independent of the time range utilized. For example, the use of extended periods of historical data might erroneously lead to a significant decrease in volatility especially after the Asian crisis. We typically use 260 historical observations of market data depending on circumstances, but also monitor other ranges of market data in order to be more conservative. However, reliable historical risk factor data may not be readily available for certain instruments in our portfolio.

· A one-day time horizon may not fully capture the market risk positions that cannot be liquidated or hedged within one day.

· At present, we compute VaR at the close of business and trading positions may change substantially during the course of the trading day.

Non-statistical Tools for Controlling Market Risk

In addition to VaR methodology, we seek to control market risk in our portfolio through certain non-statistical tools, which are approved by the A&L Committee. The A&L Committee sets certain limits based on guidance from our Board of Directors as to our business strategy, market volatility, liquidity of our assets and overall risk tolerance. Generally, the A&L Committee updates our market risk limits at least once a year.

Sensitivity Simulation

We use a sensitivity simulation above trading and available for sale portfolios, for evaluating the change in portfolio’s market value. This tool is complementary to VaR, like a form to measure portfolio’s sensitivity independent of volatility level. We assumed a change equivalent to 10 basis point. This measure has also associated limits.

Volume Limits

We implement volume limits for a variety of different types of financial investments to encourage diversity in our fixed income portfolio. The A&L Committee has established a series of position limits for each of our investment categories, including Central Bank paper, bonds with Chilean government guarantees, mortgage bonds, corporate bonds, bonds issued by financial institutions, and Chilean sovereign bonds. We also utilize volume limits relating to investments in instruments issued by Chilean and foreign entities. For example, we have developed volume limits that cap the size of our fixed income and foreign currency portfolios, as described below.

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Fixed Income Volume: This system is considered to be an additional limit to the size of our trading and available-for-sale portfolios. This measure seeks to allow a reasonable diversification of our fixed income portfolios and to convert the portfolios into smaller groups of homogenous instruments. We then limit the size of these smaller groups of homogeneous instruments. The volume is controlled by the Control Department and limits are set by the A&L Committee.

Net Foreign Currency Position: Maximum Net Position. We also set an absolute limit on the size of our net foreign currency position. As of December 31, 2007, the limit in effect was US$ 40 million in net U.S. dollar positions, and the equivalent of US$ 40 million in our net foreign currency position in currencies other than the U.S. dollar. This limit is a useful measure in limiting our exposure to foreign exchange and interest rate risks. These limits are determined by the A&L Committee and are calculated and monitored daily by the Market Risk and Control Department.

Interest rate Sensitivity

For a non-trading portfolio we do gap analysis by means of sensitive the mismatches between assets and liabilities, estimating the risk:

Risk = åm Gapj * Drj * Durj

The following table sets forth the repricing of our interest-earning assets and interest bearing liabilities as of December 31, 2007 and may not reflect interest rate gap positions at other times. In addition, variations in interest rate sensitivity may exist within the repricing periods presented due to the differing repricing dates within the period. Variations may also arise among the different currencies in which interest rate positions are held.

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	As of December 31, 2007
	Up to			31-60			61-90			91-180			181-365						Over
	30 days			days			days			days			days			1-3 years			3 years			Total
	(in millions of constant Ch$ as of December 31, 2007, except for percentages)

Interest-earning assets:
Interbank deposits	Ch$	19,525		Ch$	—		Ch$	—		Ch$	—		Ch$	—		Ch$	—		—			Ch$	19,525
Financial investments	82,985			4,400			29,250			10,458			34,021			25,636			53,177			239,927
Loans	631,524			201,721			210,513			355,882			334,298			675,068			1,257,023			3,666,029
Mortgage loans	2,526			2,311			2,323			6,987			14,070			55,201			249,947			333,365
Contingent loans	60,649			26,738			27,631			62,036			75,150			66,155			4,231			322,590
Past due loans	23,452			—			—			—			—			—			—			23,452
Total interest-earning assets	820,661			235,170			269,717			435,363			457,539			822,060			1,564,378			4,604,888

Interest-bearing liabilities:
Deposits	911,982			439,641			203,462			286,824			299,134			162,956			106,669			2,410,668
Central Bank borrowings	45,824			—			—			—			—			—			—			45,824
Repurchase agreements	53,573			47			203			432			—			—			—			54,255
Mortgage finance bonds	10,914			1,521			3,974			7,260			14,625			56,898			258,239			353,431
Other interest-bearing liabilities	93,686			5,901			17,875			48,478			208,309			217,427			145,442			737,118
Total interest-bearing liabilities	Ch$	1,115,979		Ch$	447,110		Ch$	225,514		Ch$	342,994		Ch$	522,068		Ch$	437,281		Ch$	510,350		Ch$	3,601,296

Asset/liability gap	Ch$	(295,318	)	Ch$	(211,940	)	Ch$	44,203		Ch$	92,369		Ch$	(64,529	)	Ch$	384,779		Ch$	1,054,028		Ch$	1,003,592
Cumulative gap	Ch$	(295,318	)	Ch$	(507,258	)	Ch$	(463,055	)	Ch$	(370,686	)	Ch$	(435,215	)	Ch$	(50,436	)	Ch$	1,003,592		—
Ratio of cumulative gap to cumulative total interest earning assets	(36.0		)%	(48.0		)%	(34.9		)%	(21.1		)%	(19.6		)%	(1.7		)%	21.8		%

A sudden increase of 25 basis points in the weighted average interest rate applicable to our interest rate gap would cause a decrease in the market value of these financial investments of Ch$5,462 million as of December 31, 2007.

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Duration Analysis

We perform duration analysis by monitoring the changes in the present value of the assets in our portfolio associated with changes in the reference yield of 100 basis points, we perform duration analysis on a weekly basis.

Stress Test

Scenario Analysis

We use historical simulations to analyze the impact of extreme movements in interest rates and to adopt policies and procedures in an effort to protect our capital and results against such contingencies. We apply this tool to measure interest rate risk relating to our trading and available-for-sale fixed rate portfolios, as well as exchange rate risk relating to our exposure to foreign currencies, and inflation risk relating to our gap in inflation indexed assets versus liabilities.

We simulate a series of scenarios, each based on historical events such as the significant changes in prevailing interest rates that occurred in September 1998, November 2002, June 2003, October 2005, and November 2005 and January 2007.

Sensitivity Analysis

We apply sensitivity analysis above certain financial positions: currency gaps, mismatches between assets and liabilities in both our inflation-indexed (UF) and non inflation-indexed portfolios and banking book interest rate gaps. We perform a hypothetical simulation by calculating the potential loss that would be reflected in our financial results relating to an extreme movement of exchange rate, inflation index and interest rates.

The most important assumption utilized in our portfolio scenario simulations and sensitivity analysis is the usage of a 100 basis point shift in the yield curve. We use a 100 basis point shift since a sudden shift of this magnitude is considered realistic and would result in significant effects on our financial results.

Our scenario simulation methodology should be interpreted in light of the limitations of our models, which include:

· The model does not take into consideration the sensitivity of volumes to these shifts in interest rates.

· The shift is simulated to occur in just one day, and the loss is assumed to happen in the same time period.

As of December 31, 2007 a sudden increase in the value of the peso against the U.S. dollar of 5% would cause an increase in the market value of our financial investments of Ch$21.5 million.

As of December 31, 2007 a sudden rise interest rate of 100% would cause an decrease in the CorpBanca’s market value of Ch$ 68,000 million, 16% regulatory capital.

Disclosures Regarding Derivative Financial Instruments

We enter into transactions involving derivative instruments particularly foreign exchange contracts, as part of our asset and liability management and in acting as a dealer to satisfy our clients’ needs. These transactions arise from forward exchange contracts which are of two types: (i) transactions covering two foreign currencies and (ii) transactions covering pesos against the U.S. dollar.

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Foreign exchange forward contracts involve an agreement to exchange the currency of one country for the currency of another country at an agreed-upon price and settlement date. These contracts are generally standardized contracts, normally for periods between 1 and 180 days and are not traded in a secondary market; however, in the normal course of business and with the agreement of the original counterparty, they may be terminated or assigned to another counterparty.

When we enter into a forward exchange contract, we analyze and approve the credit risk (the risk that the counterparty might default on its obligations). Subsequently, on an ongoing basis, we monitor the possible losses involved in each contract. To manage the level of credit risk, we deal with counterparties of good credit standing, enter into master netting agreements whenever possible and, when appropriate, obtain collateral.

The Central Bank requires that foreign exchange forward contracts be made only in U.S. dollars and other major foreign currencies. Most of our forward contracts are made in U.S. dollars against the peso or the UF. In September 1997, the Central Bank changed its regulations with respect to foreign currency forward contracts. We may now enter into foreign currency forward contracts with companies organized and located outside of Chile, including foreign subsidiaries of Chilean companies.

Unrealized gains, losses, premiums and discounts arising from foreign exchange forward contracts are shown on a net basis under other assets and other liabilities.

The following table summarizes our derivative portfolio as of December 31, 2006:

	Notional amounts			Gross	Gross
Type of future operation	Up to 3 months	From 3 to 12 months	More than 12 months	Unrealized Gains	Unrealized Losses
	MCh$	MCh$	MCh$	MCh$	MCh$

Foreign currency forwards	841,735	162,621	13,743	4,181	(4,119	)
Interest rate swaps	—	—	32,001	328	(435	)
Cross currency and interest rate swaps	—	—	1,147	—	(17	)
Interest rate forward	76,804	57,692	195,521	272	(735	)
				4,781	(5,306	)

The following table summarizes our derivative portfolio as of December 31, 2007:

	Notional amounts			Gross	Gross
Type of future operation	Up to 3 months	From 3 to 12 months	More than 12 months	Unrealized Gains	Unrealized Losses
	MCh$	MCh$	MCh$	MCh$	MCh$

Foreign currency forwards	988,681	988,970	112,085	25,104	(25,964	)
Interest rate swaps	39,215	30,000	6,328,261	8,371	(7,651	)
Cross currency and interest rate swaps	—	784	355,776	556	(576	)
Interest rate forward	26,470	—	—	24	(47	)
				34,055	(34,238	)

Liquidity Risk

Liquidity risk arises in the general funding for our financing, trading and investment activities. It includes the risk of unexpected increases in the cost of funding the portfolio of assets at appropriate maturities and rates, the risk of being unable to liquidate a position in a timely manner at a reasonable price and the risk that we will be required to repay liabilities earlier than anticipated. Our general policy is to maintain sufficient liquidity to ensure our ability to honor withdrawals of deposits, make repayments of other liabilities at maturity, extend loans and meet our working capital needs.

154

Regulatory Observance

The minimum amount of liquidity is determined by the reserve requirements set by the Central Bank. These reserve requirements are currently 9.0% of demand deposits and 3.6% of time deposits. We are currently in compliance with these requirements. The Central Bank has statutory authority to increase these percentages to up to 40% for demand deposits and up to 20% for time deposits, to implement monetary policy. In addition, we are subject to a technical requirement applicable to Chilean banks pursuant to which we must hold a certain amount of assets in cash or in highly liquid instruments, if the aggregate amount of the following liabilities exceeds 2.5 times the amount of our capital and reserves:

· Deposits in checking accounts,

· Other demand deposits or obligations payable on demand and incurred in the ordinary course of business,

· Other deposits unconditionally payable immediately or within a term of less than 30 days, and

· Time deposits payable within ten days.

Chilean regulations also require that gaps between assets and liabilities maturing within 30 days not exceed a bank’s Net Capital Base and that gaps between assets and liabilities maturing within 90 days not exceed twice a bank’s equity.

As of December 31, 2007, the ratio of our gap between 30-day or less liabilities and assets to capital and reserves was 0.16. As of December 31, 2007, the ratio of our gap between 90-day or less liabilities and assets to our capital and reserves was 0.37

Internal Methods

In addition to the tools we use to control regulatory liquidity risk described above, we have also set internal liquidity limits. In particular, our Financial Risk Department measures two liquidity indicators:

Projected Liquidity Requirement: In order to meet regulatory liquidity requirements, we forecast our liquidity needs for subsequent four-week periods. The analysis assumes that the relevant risk factors will remain static during the four-week period. This analysis is designed to reveal potential future gaps between assets and liabilities. Projected liquidity requirements are used to simulate the regulatory limit explained below.

For example, as of December 31, 2007 we had the following four week projection:

		First week of January		Second week of January		Third week of January		Fourth week of January
Excess (deficit)		419,270		344,864		331,460		337,641

Internal Liquidity Indicator (ILIC). We seek to ensure that, even under adverse conditions, we have access to the funds necessary to cover client needs, maturing liabilities and capital requirements. As part of our policy, we have developed an internal liquidity model which we refer to as the indicador de liquidez interna de contingencia (contingency internal liquidity indicator, or ILIC). The purpose of the ILIC model is to evaluate our funding capacity assuming a hypothetical scenario of illiquidity.

Our Financial Risk Department applies the ILIC model on a daily basis. The ILIC is based on a stress scenario which assumes that an unusually large proportion of liabilities will be withdrawn over the next 10 days and at the same time payment default on assets will grow at an unusually high rate. The proportion between income and expenses following such scenario must be over 1 for us to maintain a normal liquidity level. As of December 31, 2007 ILIC was 1.89.

155

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

Not applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

On November 1, 2004, we completed an offer to exchange one newly registered ADS for each of our then outstanding Rule 144A ADSs. We did not receive any proceeds from the exchange.

ITEM 15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of December 31, 2007, CorpBanca, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). There are inherent limitations to the effectiveness of any control system, including the possibility of human error and the circumvention or overriding of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives.

Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information relating to us, including our consolidated subsidiaries, required to be disclosed in the reports that we file under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) accumulated and communicated to the management, including principal financial officers as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in Chile, including the reconciliation to U.S. GAAP.

Our internal control over financial reporting includes those policies and procedures that:

· pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

· provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in Chile, including the reconciliation of U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

156

Because of its inherent limitations, internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2007 based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, (COSO). Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2007.

Our independent registered public accounting firm, Deloitte, has audited the consolidated financial statements included in this Annual Report, and as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting as of December 31, 2007.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

CORPBANCA

We have audited the internal control over financial reporting of CORPBANCA and its subsidiaries (the “Bank”) as of December 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Bank’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Bank’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exist, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

157

In our opinion, the Bank maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2007 of the Company and our report dated June 13, 2008, expressed an unqualified opinion on those consolidated financial statements and included four explanatory paragraphs stating that (1) during 2006 the Bank modified its basis for classification and valuation of derivative instruments and financial investments acquired for trading or investment as described in Note 2, (2) certain reclassifications have been made to the financial statements previously filed with the Superintendencia de Bancos e Instituciones Financieras solely for the convenience of readers outside Chile, (3) the accounting principles generally accepted in Chile vary in certain significant respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”), and that the information relating to the nature and effect of such differences is presented in Notes 26 and 27 to the consolidated financial statements of the Company and (4) that a convenience translation of constant Chilean peso amounts to U.S. dollars was presented.

Santiago, Chile

June 13, 2008

Changes in Internal Control over Financial Reporting

There were no significant changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of 17 CFR 240.a13a-15 or 240.15d that occurred during the period covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

We believe that each of the members of our audit committee qualifies as an “audit committee financial expert” within the meaning of this Item 16A, in that (i) each has an understanding of Chilean GAAP and financial statements, (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves, (iii) significant experience auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the financial statements and experience supervising persons engaged in such activities, (iv) an understanding of internal control over financial accounting and reporting and (v) an understanding of the functions of an audit committee.

All members of our Audit Committee are considered to be independent according to applicable NYSE criteria and Rule 10A-3 promulgated under the Exchange Act.

ITEM 16B. CODE OF ETHICS

We have adopted a code of ethics, as defined in Item 16B of Form 20-F under the Exchange Act. Our code of ethics applies to our Chief Executive Officer, Chief Financial Officer, principal accounting officer and persons performing similar functions, as well as to our directors and other employees without exception. A copy of our code of ethics, as amended, along with our Code of Conduct in the Securities Market, is attached as an exhibit to this Annual Report.

No waivers been granted to the code of ethics since its adoption that applies to the persons indicated above.

158

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the fees billed to us by our independent auditors during the fiscal years ended December 31, 2006 and 2007:

	Year ended December 31,
	2006		2007
	(in millions of constant Ch$ as of December 31, 2007)

Audit fees	Ch$	143	Ch$	354
Audit-related fees		57		89
Other services		128		66
	Ch$	328	Ch$	509

Audit fees in the above table are the aggregate fees billed by Deloitte in connection with the audit of our financial statements and services that are normally provided by Deloitte in connection with statutory and regulatory filings or engagements.

Audit-related fees in the above table are the aggregate fees billed by Deloitte for the audit and review of our filings under the Securities Act.

Other services are fees billed to us by Deloitte in connection with consulting work and advice on accounting matters (which are unrelated to the auditing of the accounts).

Pre-approval Policies and Procedures

Our Audit Committee approves all audit, audit-related services, tax services and other services provided by Deloitte. Any services provided by Deloitte that are not specifically included within the scope of the audit must be pre-approved by the Audit Committee prior to any engagement.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None.

159

PART III

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

See the following items at pages F-1 to F-65.

(a) Report of Independent Registered Public Accounting Firm

(b) Consolidated Balance Sheets as of December 31, 2007 and 2006

(d) Consolidated Statements of Cash Flows for each of the three years ended December 31, 2007

(e) Consolidated Statements of Changes in Shareholders’ Equity for each of the three years ended December 31, 2007

(f) Notes to the Consolidated Financial Statements

ITEM 19. EXHIBITS

The following exhibits are filed as part of this Annual Report:

Exhibit 1.1*		Articles of Incorporation and Bylaws (estatutos sociales) of CorpBanca, including amendment thereto (English language translation).

Exhibit 2.(a).1**		Form of Amended and Restated Deposit Agreement, dated as of September 27, 2004, among CorpBanca, The Bank of New York, as depositary, and the registered holders and beneficial owners from time to time of American Depositary Shares evidenced by American Depositary Receipts issued thereunder, including a form of American Depositary Receipt.

Exhibit 2.(a).2*		Form of CorpBanca Share Certificate (English language translation).

Exhibit 4.(a).1*		Systems Operations Services Agreement, dated as of March 30, 2001, between IBM de Chile S.A.C. and CorpBanca (English language translation).

Exhibit 4.(a).2*		Service Contract, dated as of July 6, 2001, between Corp Group Interhold S.A. and CorpBanca (English language translation).

Exhibit 4.(a).3*		Software Consulting and Development Agreement, “IBS” Integrated Banking System, dated as of October 4, 2001, between Datapro, Inc. and CorpBanca (English language translation).

Exhibit 4.(a).4*		Agreement to Participate in the Automated Teller Machine Network Operated by Redbanc S.A., dated as of April 1, 2001, among Redbanc S.A. and CorpBanca (English language translation).

Exhibit 8.1		List of subsidiaries of CorpBanca.

Exhibit 11.1***		English language translation of CorpBanca’s Code of Ethics, as amended.

Exhibit 11.2***		English language translation of CorpBanca’s Code of Conduct in the Securities Market

Exhibit 12.1		Certification of the chief executive officer of CorpBanca required under Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

Exhibit 12.2		Certification of the chief financial officer of CorpBanca required under Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

160

Exhibit 13.1		Certification of the chief executive officer of CorpBanca required under Rule 13a-14(a) or Rule 15d-14(a), pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 13.2		Certification of the chief financial officer of CorpBanca required under Rule 13a-14(a) or Rule 15d-14(a), pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

*		Incorporated by reference to our Form 20-F (File No. 001-32305) filed on September 24, 2004.
**		Incorporated by reference to our registration statement on Form F-6 (File No. 333-119251) filed on September 24, 2004.
***		Incorporated by reference to our registration statement on Form 20-F (File No. 001-32305) filed on June 29, 2007.

161

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
Financial Statements of CorpBanca and Subsidiaries

	Page

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets as of December 31, 2007 and 2006	F-4

Consolidated Statements of Income for each of the three years ended December 31, 2007	F-6

Consolidated Statements of Cash Flows for each of the three years ended December 31, 2007	F-7

Consolidated Statements of Changes in Shareholders’ Equity for each of the three years ended December 31, 2007	F-8

Notes to the Consolidated Financial Statements	F-9

F-1


		Deloitte
		Auditores y Consultores Limitada
		RUT: 80.276.200-3
		Av. Providencia 1760
		Pisos 6, 7, 8, 9 y 13
		Providencia, Santiago
		Chile
		Fono: (56-2) 729 7000
		Fax: (56-2) 374 9177
		e-mail: deloittechile@deloitte.com
		www.deloitte.cl

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

CORPBANCA

We have audited the accompanying consolidated balance sheets of CORPBANCA and its subsidiaries (the “Bank”) as of December 31, 2006 and 2007 and the related consolidated statements of income, cash flows and changes in shareholders’ equity for each of the three years in the period ended December 31, 2007, all expressed in million of constant Chilean Pesos. These consolidated financial statements (including the related Notes) are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Bank as of December 31, 2006 and 2007 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in Chile and the rules of the Superintendencia de Bancos e Instituciones Financieras.

As further explained in Note 2 to the consolidated financial statements during 2006 the Bank modified its basis for classification and valuation of derivative instruments and financial investments acquired for trading or investment.

Certain reclassifications have been made to the financial statements previously filed with the Superintendencia de Bancos e Instituciones Financieras solely for the convenience of readers outside Chile.

Accounting principles generally accepted in Chile vary in certain significant respects from accounting principles generally accepted in the United States of America (U.S. GAAP). Information relating to the nature and effect of such differences is presented in Notes 26 and 27 to the consolidated financials statements.

Our audits also comprehended the translation of Chilean peso amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 1t. Such U.S. dollar amounts are presented solely for the convenience of readers in the United States of America.

F-2

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Bank’s internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 13, 2008 expressed and unqualified opinion on the Bank’s internal control over financial reporting.

Santiago, Chile

June 13, 2008

F-3

CORPBANCA

CONSOLIDATED BALANCE SHEETS

Adjusted for general price-level changes and expressed in millions of constant

Chilean pesos (MCh$) as of December 31, 2007 and thousands of U.S. dollars (ThUS$)

	As of December 31,
	2006		2007		2007
	MCh$		MCh$		ThUS$
					(Note 1t)
ASSETS
CASH AND DUE FROM BANKS (Note 4)
Non-interest bearing	74,900		80,558		161,805
Interbank deposits-interest bearing	13,358		19,525		39,217
Total cash and due from banks	88,258		100,083		201,022

INVESTMENTS
Trading (Note 5)	133,603		143,122		287,469
Available-for-sale(Note 5)	30,082		41,366		83,086
Investments purchased under agreements to resell	6,591		55,439		111,352
Total investments	170,276		239,927		481,907

LOANS, NET (Note 6)
Commercial loans	1,618,753		2,137,335		4,292,958
Consumer loans	468,232		509,956		1,024,275
Mortgage loans	372,434		333,365		669,582
Foreign trade loans	254,537		270,368		543,049
Interbank loans	21,486		28,014		56,268
Leasing contracts (Note 7)	243,364		257,140		516,480
Factored receivables	76,845		91,143		183,066
Other outstanding loans	200,031		372,073		747,330
Past-due loans	20,530		23,452		47,105
Contingent loans	302,168		322,590		647,940
Allowance for loans losses (Note 8)	(49,967	)	(55,067	)	(110,605	)
Total loans, net	3,528,413		4,290,369		8,617,448

DERIVATIVES (Note 13)	4,781		34,055		68,401

OTHER ASSETS
Bank premises and equipment, net (Note 9)	34,660		34,159		68,610
Assets received in lieu of payment	1,703		3,062		6,150
Assets to be leased	7,970		8,867		17,810
Investments in other companies (Note 10)	1,989		1,985		3,987
Other (Note 11)	131,262		119,981		240,990
Total Other Assets	177,584		168,054		337,547

TOTAL ASSETS	3,969,312		4,832,488		9,706,325

The accompanying Notes are an integral part of these consolidated financial statements.

F-4

	As of December 31,
	2006	2007	2007
	MCh$	MCh$	ThUS$
			(Note 1t)
LIABILITIES AND SHAREHOLDERS’ EQUITY
DEPOSITS
Non-interest bearing
Current accounts	189,124	202,601	406,936
Bankers´ drafts and other deposits	113,219	143,641	288,511
Total non-interest bearing	302,343	346,242	695,447

Interest bearing
Savings accounts and other deposits (Note 12)	1,821,233	2,410,668	4,841,963
Total deposits	2,123,576	2,756,910	5,537,410

OTHER INTEREST-BEARING LIABILITIES (Note 12)
Chilean Central Bank borrowings	34,404	45,824	92,040
Investments under agreements to repurchase	58,937	54,255	108,974
Mortgage finance bonds	359,704	353,431	709,886
Other borrowings
Bonds	195,782	305,113	612,837
Subordinated bonds	47,133	43,882	88,139
Borrowings from domestic financial institutions	3,868	83,220	167,152
Foreign borrowings	257,963	275,362	553,080
Other obligations	30,176	29,541	59,335
Total other borrowings	534,922	737,118	1,480,543
Total other interest-bearing liabilities	987,967	1,190,628	2,391,443

DERIVATIVES (Note 13)	5,306	34,238	68,769

OTHER LIABILITIES
Contingent liabilities (Note 11)	306,312	322,891	648,545
Other (Note 11)	80,841	43,147	86,663
Total other liabilities	387,153	366,038	735,208

CONTINGENCIES AND COMMITMENTS (Note 22)	—	—	—
MINORITY INTEREST	—	—	—

Total liabilities	3,504,002	4,347,814	8,732,830

SHAREHOLDERS’ EQUITY (Note 15)
Capital and reserves	423,312	433,625	870,960
Net Income for the year	41,998	51,049	102,535
Total shareholders’ equity	465,310	484,674	973,495
TOTAL LIABILITIES AND SHAREHOLDERS´ EQUITY	3,969,312	4,832,488	9,706,325

The accompanying Notes are an integral part of these consolidated financial statements.

F-5

CORPBANCA

CONSOLIDATED STATEMENT OF INCOME

Adjusted for general price-level changes and expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 and thousands of U.S. dollars (ThUS$)

	As of December 31,
	2005		2006		2007		2007
	MCh$		MCh$		MCh$		ThUS$
							(Note 1t)
INTEREST REVENUE AND EXPENSE
Interest revenue	272,669		265,858		379,096		761,436
Interest expense	(142,481	)	(148,874	)	(214,328	)	(430,490	)
Net interest revenue	130,188		116,984		164,768		330,946

PROVISION FOR LOAN LOSSES (Note 8)	(15,167	)	(15,751	)	(25,991	)	(52,204	)

FEES AND INCOME FROM SERVICES (Note 17)
Fees and other services income	29,601		35,779		44,090		88,557
Fees and other services expenses	(4,190	)	(5,482	)	(7,225	)	(14,512	)
Total fees and income from services, net	25,411		30,297		36,865		74,045

OTHER OPERATING INCOME
Gains from trading activities	23,569		39,700		97,703		196,242
Losses from trading activities	(10,510	)	(32,178	)	(99,355	)	(199,560	)
Foreign exchange transactions, net	(395	)	324		7,575		15,215
Other operating income	5,767		1,839		3,137		6,301
Other operating expenses	(11,726	)	(13,890	)	(14,204	)	(28,529	)
Total other operating income (loss), net	6,705		(4,205	)	(5,144	)	(10,331	)

OTHER INCOME AND EXPENSES
Non-operating income (Note 18)	2,996		2,799		406		815
Non-operating expenses (Note 18)	(4,412	)	(2,906	)	(2,870	)	(5,764	)
Income attributable to investments in other companies (Note 10)	237		358		361		725
Total other income and (expenses), net	(1,179	)	251		(2,103	)	(4,224	)

OPERATING EXPENSES
Personnel salaries and expenses	(40,830	)	(43,962	)	(51,096	)	(102,629	)
Administrative and other expenses	(18,422	)	(20,246	)	(24,954	)	(50,122	)
Depreciation and amortization	(5,650	)	(5,640	)	(6,019	)	(12,090	)
Total operating expenses	(64,902	)	(69,848	)	(82,069	)	(164,841	)

NET LOSS FROM PRICE-LEVEL RESTATEMENT (Note 24)	(11,576	)	(7,527	)	(25,946	)	(52,114	)
INCOME BEFORE INCOME TAXES	69,480		50,201		60,380		121,277
Income taxes (Note 21)	(11,766	)	(8,203	)	(9,331	)	(18,742	)
Minority interest	—		—		—		—
NET INCOME FOR THE YEAR	57,714		41,998		51,049		102,535

The accompanying Notes are an integral part of these consolidated financial statements.

F-6

CORPBANCA

CONSOLIDATED STATEMENTS OF CASH FLOWS

Adjusted for general price-level changes and expressed in millions of constant Chilean pesos (Mch$)

as of December 31, 2007 and thousands of US dollars (ThUS$)

	Year ended December 31,
	2005		2006		2007		2007
	MCh$		MCh$		MCh$		ThUS$
							(Note 1t)
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income for the year	57,714		41,998		51,049		102,535

Charge (credit) to income not representing cash flow:
Depreciation and amortization	5,650		5,640		6,019		12,090
Provisions and charge-offs of assets at risk	24,785		25,326		36,071		72,451
Adjustment to market value financial investments of trading portfolio	(172	)	170		(91	)	(183	)
Income taxes	11,766		8,203		9,331		18,742
Amortization of goodwill on investments in companies	1,870		1,105		933		1,874
Charge-off of other assets	212		41		935		1,878
Gain from investments in companies	(237	)	(358	)	(361	)	(725	)
(Gain) loss on sale of assets received in payment	(2,268	)	(1,442	)	122		245
(Gain) loss on sale of fixed assets	(25	)	69		—		—
Net loss from price-level restatement	11,576		7,527		25,946		52,114
Other charges (credits) that do not require (generate) cash	3,122		5,367		(8,244	)	(16,559	)
Net change-interest, indexation adjustment and commissions accrued on assets and liabilities	(6,677	)	(6,552	)	(16,557	)	(33,256	)
Net cash provided by operating activities	107,316		87,094		105,153		211,206
CASH FLOW FROM INVESTING ACTIVITIES:
(Increase) in loans, net	(433,890	)	(488,682	)	(943,074	)	(1,894,216	)
(Increase) decrease in other credit operations, net	8,571		11,325		(59,406	)	(119,320	)
(Increase) decrease in investments, net	116,516		277,624		(63,083	)	(126,705	)
Purchase of fixed assets	(2,457	)	(3,347	)	(3,046	)	(6,118	)
Proceeds from sale of fixed assets	170		122		—		—
Investments in companies	9		16		(106	)	(213	)
Dividends received from investment in companies	206		237		346		695
Sale of fixed assets received in lieu of payment or in foreclosure	5,140		5,846		2,209		4,437
(Increase) decrease in other assets and liabilities, net	(44,373	)	9,277		(27,014	)	(54,259	)
Net cash used in investing activities	(350,108	)	(187,582	)	(1,093,174	)	(2,195,699	)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in current accounts, net	20,636		29,136		27,489		55,213
Increase (decrease) in deposits and borrowings, net	109,072		(14,278	)	717,768		1,441,678
Increase (decrease) in other sight or term obligations, net	(82,701	)	47,669		36,170		72,649
Decrease of other liabilities from brokerage of instruments	(19,369	)	(9,282	)	(643	)	(1,292	)
Increase (decrease) in borrowings from Chilean Central Bank (short term)	(29,139	)	34,766		14,300		28,722
Increase (decrease) of short-term foreign loans, net	(34,504	)	11,726		(26,184	)	(52,592	)
Issue of mortgage notes	156,287		181,247		92,324		185,438
Redemption of mortgage notes	(188,502	)	(136,841	)	(95,213	)	(191,241	)
(Increase) decrease in other short-term liabilities	30,914		(44,002	)	82,970		166,650
Repayment of Chilean Central Bank borrowings (long-term)	(2	)	—		—		—
Proceeds from bond issuance	154,495		38,996		116,541		234,079
Redemption of subordinated bonds	(2,657	)	(4,377	)	(10,957	)	(22,008	)
Loans obtained abroad (long-term)	208,198		171,628		160,522		322,417
Repayment of foreign borrowings (long-term)	(159,575	)	(170,131	)	(87,521	)	(175,791	)
Other borrowings (long-term)	16,201		8,472		4,148		8,331
Repayment of other borrowings (long-term)	(3,675	)	(6,257	)	(3,770	)	(7,572	)
Dividends paid	(28,836	)	(28,857	)	(31,499	)	(63,268	)
Net cash provided by financing activities	146,843		109,615		996,445		2,001,413
NET CASH FLOW	(95,949	)	9,127		8,424		16,920
INFLATION EFFECT ON CASH AND CASH EQUIVALENTS	(3,504	)	(1,593	)	3,401		6,831
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(99,453	)	7,534		11,825		23,751
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	180,177		80,724		88,258		177,271
CASH AND CASH EQUIVALENTS AT END OF YEAR	80,724		88,258		100,083		201,022

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	114,124		86,106		123,863		248,786
Taxes	708		615		572		1,149
Non Cash Movements (Assets received in lieu of payments)	3,610		2,384		3,369		6,767

The accompanying Notes are an integral part of these consolidated financial statements.

F-7

CORPBANCA

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

Adjusted for general price-level changes and expressed in millions of constant Chilean pesos (MCh$) as of December 31, 2007

(except for number of shares)

	Number of shares	Paid-in capital	Reserves		Other reserves		Net income for the year		Total
	Millions	MCh$	MCh$		MCh$		MCh$		MCh$

Balance at January 1, 2005 (historical)	226,909.3	276,752	45,645		3,232		50,767		376,396
Net income from prior year	—	—	50,767		—		(50,767	)	—
Dividends paid	—	—	(25,384	)	—		—		(25,384	)
Price – level restatement	—	9,963	2,380		—		—		12,343
Fluctuation in the value of financial investments	—	—	—		(8,462	)	—		(8,462	)
Net income for the year	—	—	—		—		52,633		52,633
Balance at December 31, 2005	226,909.3	286,715	73,408		(5,230	)	52,633		407,526
Balance at December 31, 2005 restated in constant Chilean pesos of December 31, 2007		314,398	80,496		(5,735	)	57,714		446,873
Balance at December 31, 2005 in ThUS$(Note 1 t)		631,486	161,681		(11,519	)	115,922		897,570

Balance at January 1, 2006 (historical)	226,909.3	286,715	73,408		(5,230	)	52,633		407,526
Net income from prior year	—	—	52,633		—		(52,633	)	—
Dividends paid	—	—	(26,316	)	—		—		(26,316	)
Price – level restatement	—	6,021	2,009		—		—		8,030
Adjustment due to Circular No. 3,345			(605	)					(605	)
Change in fair value of available for sale investments	—	—	—		5,510		—		5,510
Net income for the year	—	—	—		—		39,104		39,104
Balance at December 31, 2006	226,909.3	292,736	101,129		280		39,104		433,249
Balance at December 31, 2006 restated in constant Chilean pesos of December 31, 2007		314,398	108,613		301		41,998		465,310
Balance at December 31, 2006 in ThUS$(Note 1t)		631,486	218,155		605		84,355		934,601

Balance at January 1, 2007 (historical)	226,909.3	292,736	101,129		280		39,104		433,249
Net income from prior year	—	—	39,104		—		(39,104	)	—
Dividends paid	—	—	(29,328	)	—		—		(29,328	)
Price – level restatement	—	21,662	8,324		—		—		29,986
Change in fair value of available for sale investments	—	—	—		(282	)	—		(282	)
Net income for the year	—	—	—		—		51,049		51,049
Balance at December 31, 2007	226,909.3	314,398	119,229		(2	)	51,049		484,674
Balance at December 31, 2007 in ThUS$(Note 1 t)		631,486	239,478		(4	)	102,535		973,495

The accompanying Notes are an integral part of these consolidated financial statements.

F-8

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of presentation

CORPBANCA is a corporation organized under the laws of the Republic of Chile which stock is quoted on the Santiago Stock Exchange and the Chilean Electronic Exchange. It is regulated by the Chilean Superintendencia de Bancos e Instituciones Financieras (hereinafter the Chilean Superintendency of Banks). CorpBanca and its subsidiaries (collectively referred to herein as the “Bank”) offer general commercial and consumer banking services and provide other services, including factoring, collection, leasing, securities and insurance brokerage, mutual and investment funds management and investment banking.

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Chile and regulations of the Chilean Superintendency of Banks, collectively referred to as “Chilean GAAP.”. The consolidated financial statements have been translated into English, certain reclassifications have been made and certain subtotals and clarifying account descriptions have been added in order to present them in accordance with requirements of Securities Act and Securities Exchange Act.

The consolidated financial statements include CorpBanca and its majority owned subsidiaries. All intercompany transactions and balances have been eliminated in the consolidation. The majority interests of CorpBanca as of December 31, 2006 and 2007 were as follows:

	Ownership
	2006	2007
	%	%

Corp Capital Corredores de Bolsa S.A.	100.00	100.00
Corp Capital Administradora General de Fondos S.A.	100.00	100.00
Corp Capital Asesorías Financieras S.A.	100.00	100.00
CorpBanca Corredores de Seguros S.A.	100.00	100.00
CorpLegal (*)	—	100.00

(*) Company incorporated by public deed dated March 9, 2007, in the presence of Santiago notary public Mr. José Musalem Saffie, in which CorpBanca holds 99.99% participation. The exclusive and sole purpose of this company is to provide all types of professional legal services to CorpBanca, its subsidiaries and/or their clients.

b. Use of estimates in the preparation of financial statements

The preparation of financial statements in conformity with generally accepted accounting principles in Chile requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

We have established allowances to cover probable loan losses in accordance with regulations issued by the Chilean Superintendency of Banks. These regulations require us to estimate allowances based on an individual and group classification system as explained in Note 1n.

As described above, the allowance for loan losses requires us to make estimates and, consequently, we regularly evaluate our allowance for loan losses by taking into consideration factors such as changes in the nature and volume of our loan portfolio, trends in forecasted portfolio credit quality and economic conditions that may affect our borrowers’ ability to pay. Increases in our allowance for loan losses are reflected as provisions for loan losses in our income statement. Loans are charged-off when management determines that the loan or a portion thereof is uncollectible. Charge-offs are recorded as a reduction of the allowance for loan losses.

F-9

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

In certain cases Chilean GAAP requires that assets or liabilities be recorded or disclosed at their fair values. The fair value is the amount at which an asset could be bought or sold or in the case of a liability could be incurred or settled in a current transaction between willing parties, other than in a forced or liquidation sale. Where available quoted market prices in active markets have been used as the basis for the measurement. Where quoted market prices in active markets are not available, the Bank has estimated such values based on the best information available.

c. Price-level restatement

The consolidated financial statements are prepared on the basis of general price-level accounting in order to reflect the effect of changes in the purchasing power of the Chilean peso during each year. At the end of each reporting period, the consolidated financial statements are restated in terms of the general purchasing power of the Chilean peso (“constant pesos”) using changes in the Chilean Consumer Price index (“CPI”) as follows:

· Non-monetary assets, non-monetary liabilities and shareholders’ equity accounts are restated in terms of year-end purchasing power.

· Consistent with general banking practices in Chile, no specific purchasing power adjustments of income statement amounts are made.

· Monetary items are not restated as such items are, by their nature, stated in terms of current purchasing power in the financial statements.

· The price-level restatement credit or charge in the income statement represents the monetary gain or loss in purchasing power from holding monetary assets and liabilities exposed to the effects of inflation.

· All prior year amounts contained in the accompanying consolidated financial statements have been restated in constant Chilean pesos as of December 31, 2007. This updating does not change the prior years’ statements or information in any way except to update the amounts to constant pesos of similar purchasing power.

The general price-level restatements are calculated using the official CPI of the Chilean National Institute of Statistics and are based on the “prior month rule”, in which the inflation adjustments at any balance sheet date are based on the consumer price index at the close of the preceding month. The CPI is considered by the business community, the accounting profession and the Chilean government to be the index which most closely complies with the technical requirement to reflect the variation in the general level of prices in the country and, consequently, is widely used for financial reporting purposes in Chile. The values of the CPI used for price-level restatement purposes are as follows:

		Change
Year	Index *	in index
		%
2005	121.53	3.6
2006	124.11	2.1
2007	133.34	7.4

(*) Index as of November 30 of each year, under the prior month rule described above.

The price-level adjusted consolidated financial statements do not purport to represent appraised values, replacement cost, or any other current value of assets at which transactions would take place currently and are only intended to restate all non-monetary financial statement components in terms of local currency of a single purchasing power and to include in the net result for each year the gain or loss in purchasing power arising from the holding of monetary assets and liabilities exposed to the effects of inflation.

F-10

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

For comparison purposes, the financial statements and their respective notes are adjusted by the percentage changes in the CPI to December 31, 2007 as follows:

		Adjustment
Year		Factor

2005		9.7
2006		7.4

d. Index-linked assets and liabilities

Certain interest-earning assets and interest-bearing liabilities are expressed in index-linked units of account. The principal index-linked unit used in Chile is the Unidad de Fomento (UF), a unit of account which changes daily from the tenth day of the current month to the ninth day of the next month, to reflect the changes in the Chilean CPI over the previous month. The carrying amounts of such assets and liabilities change with the changes in the UF and serve to offset the price-level restatement gains or losses from holding such assets and liabilities. In 2005, 2006 and 2007, the Bank’s UF assets have exceeded its UF liabilities, hence any increase in this index results in a net gain on indexation. Values for the UF as of December 31 of each year are as follows in historical Chilean pesos:

Year		Ch$

2005		17,974.81
2006		18,336.38
2007		19,622.66

e. Interest revenue and expense recognition

Interest revenue and expense are recognized on the accrual basis using the effective interest method. The carrying amounts of loans, investments and liabilities include accrued interest and the indexation adjustment applicable to balances that are denominated in UFs or other indices. The effect of changes in the UF index on interest-earning assets and interest-bearing liabilities is reflected in the income statement as an increase or decrease in interest revenue or expense.

The Bank suspends the accrual of interest and indexation adjustment of principal on loan installment payments due beginning on the first day that such loan installment payments are overdue. The Bank continues to accrue interest and indexation on the principal payments not yet overdue for those loans that have installments overdue unless the Bank believes those amounts are uncollectible. Interest accrued prior to the loan becoming overdue remains on the Bank’s books and is considered to be a part of the loan balance when determining the allowance for loan losses. Payments received on overdue loans are first applied to reduce the recorded balance of accrued interest receivable, if any, and thereafter are recognized as income to the extent of interest earned but not recorded. Accrued interest and indexation adjustments are included in the Bank’s recorded investment in the loan for the purpose of determining the required allowance for loan losses.

f. Foreign Currency

The Bank makes loans and accepts deposits which are denominated in foreign currencies, principally in U.S. dollars. Such assets and liabilities are translated at the applicable exchange rates at the balance sheet date.

The net foreign exchange gains and losses which are presented in the consolidated income statement include both the recognition of the effect of exchange rate fluctuations on assets and liabilities stated in foreign currencies as well as the results of foreign exchange transactions.

F-11

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

g. Derivative activities

Prior to January 1, 2006, Chilean GAAP required the Bank to account for forward contracts between foreign currencies and U.S. dollars at fair value with realized and unrealized gains and losses recognized in income. Forward contracts between the U.S. dollar and the Chilean peso or U.F. were valued at the closing spot exchange rate at each balance sheet date with the initial discount or premium being amortized over the life of the contract. The Bank’s interest rate and cross-currency swap agreements were treated as off-balance-sheet financial instruments and the net interest effect, which corresponds to the difference between interest income and interest expense arising from such agreements, was accrued and recorded in net income in the period that such differences originated.

Effective January 1, 2006, through circular No. 3,345 and related amendments, the Chilean Superintendency of Banks established new rules for the accounting treatment of certain derivative instruments and hedges of financial assets. Financial instruments which meet the definition of a “derivative” such as forwards in foreign currency, U.F., interest rate futures currency and interest rate swaps, currency and interest rate options and others, are initially recognized on the balance sheet at their fair value. The fair value is obtained from market quotes, discounted cash flow models and option valuation models, as applicable.

Certain terms may be incorporated into non-derivative financial instruments whose risk and economic characteristics are not clearly and closely related to those of the host contract which may require their bifurcation from the host contract and treatment as a separate derivative as required by Circular No. 3,345.

When a derivative contract is entered into, it must be designated by the Bank as a trading contract or as a hedge. Any changes in the fair value of trading financial derivative contracts are recorded in income under “Gains from trading activities” or “Losses from trading activities”, as applicable. If the derivative is designated as a hedge , the Bank enters into two types of hedge relationships: (1) fair value hedge and (2) a cash flow hedge. To qualify for hedge accounting, the instruments must comply with all the following conditions: (a) hedging must be formally documented at inception; (b) hedging is expected to be highly effective; (c) the effectiveness of the hedge can be reasonably measured; and (d) hedging is highly effective with regard to the risk hedged, continuously throughout the period of the hedge.

Certain derivative transactions that do not qualify for hedge accounting are treated and reported as trading, even though they may provide an effective economic hedge for managing risk positions.

When a derivative hedge covers exposure to changes in the fair value of an existing asset or liability, the latter is recorded at its fair value. Gains and losses from measuring the fair value of both the hedged item and the hedging instrument are recognized in income. If the hedged item in a fair value hedge is a firm commitment, the changes in the fair value of the commitment with regard to the risk hedged are recorded as assets or liabilities with the offsetting effect recorded in income. When an asset or liability is acquired as a result of the commitment, the initial recognition of the acquired asset or liability is adjusted to fair value.

When a derivative hedge covers exposure to changes in the cash flows of existing assets or liabilities, or expected transactions, the effective portion of the changes in fair value with regard to the risk hedged is recorded in shareholders’ equity. Any ineffective portion is recognized directly in income. The amounts recorded directly in shareholders’ equity are recorded in income in the same periods in which the offsetting changes in assets or liabilities hedged affect the income statement.

When fair value hedge accounting is used for portfolio hedge of interest rate risk and the hedged item is designated as an amount of currency, the gains and losses from measuring the fair value of both the portfolio hedged and the hedge are recognized in income.

The Bank does not maintain financial derivative contracts designated as hedge accounting. Therefore changes in the respective fair values of all derivative instruments are reported in income.

F-12

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

h. Financial investments

Prior to January 1, 2006, the Bank recorded investments in financial instruments with a secondary market at market value in accordance with specific instructions of the Chilean Superintendency of Banks. This required the recognition of the market value adjustments to be recorded against income for the year, unless permanent investments are involved, in which case, under certain limitations, the aforementioned adjustments can be made directly against equity, in the account “Fluctuations in value of financial investments”. Investment securities maintained by the Bank’s subsidiaries are carried at the lower of price-level restated cost or market value.

Effective January 1, 2006, through circular No. 3,345 and related amendments, the Chilean Superintendency of Banks established new rules for the classification and accounting treatment of financial instruments, detailed as follows:

Instruments for trading are valued at their fair value according to market prices on the closing date of the balance sheet. Mark-to-market adjustments, as well as realized gains/losses from trading, are included in the Income Statement under “Gains (losses) from trading activities”. Interest income and indexation adjustments are reported as “Interest revenue”.

ii. Investment Instruments - Investment instruments are classified into two categories: Held-to-maturity investments and Instruments available-for-sale. Held-to-maturity investments only include those instruments for which the Bank has the intent and ability to hold-to-maturity. Investment instruments not classified as held-to-maturity or trading are considered to be available-for-sale. Investment instruments are recognized initially at cost, which includes transaction costs.

Investment instruments are recorded initially at cost. Instruments available-for-sale are valued at each subsequent period-end at their fair value according to market prices or valuations obtained by using models. Mark-to-market adjustments are reported in a separate component of Shareholders’ Equity. When these investments are sold or become impaired, the amount of the adjustments to fair value accumulated in Shareholders’ equity is reclassified to the income statement and reported under “Gains (losses) from trading activities”.

Held to maturity investments are recorded at their cost value plus accrued interest and adjustments, less provisions for impairment recorded when the book value is higher than its estimated return.

All purchases and sales of investment instruments, to be delivered within a deadline stipulated by market regulation and conventions are recognized on the commitment date, which is the date on which the commitment is made to purchase or sell the asset. Other purchases or sales are treated as a forwards until they are liquidated.

Management has evaluated the investment portfolio in order to identify if any impairment exists. This evaluation takes into consideration the economic, intention and capacity of the Bank to hold these investments until maturity. Based on this evaluation, management believes that the investment portfolio does not present any evidence of impairment.

The Bank enters into security repurchase agreements as a form of borrowing. In this regard, the Bank’s investments that are sold subject to a repurchase obligation and that serve as collateral for the borrowing are carried at market value. The liability for the repurchase of the investment is classified as “investments under agreements to repurchase” and is carried at cost plus accrued interest.

The Bank also enters into resale agreements as a form of investment. Under these agreements the Bank purchases securities, which are included as assets under the caption “investments purchased under agreements to resell” and are carried at cost plus accrued interest.

F-13

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

i. Leasing contracts

The Bank leases certain property that meets the criteria for direct financing leases. When the Bank enters into a direct financing lease transaction, the Bank records gross financing receivable, unearned income and estimated residual value of leased equipment. Generally, the lessee acquires the leased asset by remitting all lease payments due. There are no significant residual values assumed by the Bank. Unearned income represents the excess of the gross financing receivable plus the estimated residual value over the cost of the property acquired. Unearned income is recognized in such a manner as to produce a constant periodic rate of return on the net investment in the direct financing lease. The net investment in financing leases is included in the account “Leasing Contracts” in the loan section of the consolidated balance sheet.

j. Factored receivables

Factoring receivables are transactions where the Bank receives invoices and other commercial instruments representative of credit and it advances the assignor a percentage of the total amounts to be collected from the original debtor. The price difference between the amounts disbursed and the actual face value of the receivables is earned and recorded as interest income over the financing period.

k. Bank premises and equipment

Bank premises and equipment are stated at acquisition cost net of accumulated depreciation and have been restated for price-level changes. Depreciation is calculated on a straight-line method over the estimated useful lives of the underlying assets.

The costs of maintenance and repairs are charged to income while the costs of significant renovations, betterments, or improvements that add to the permanent value to the asset are capitalized and amortized on a straight-line basis over the lesser of the period of the benefit or the remaining useful lives of the premises and equipment.

l. Investments in other companies

Shares or rights in companies that are integral to the operations of the Bank, where the Bank holds less than a majority interest, but maintains influence over their operations, are accounted for under the equity method. Other minority investments are carried at cost restated for price-level changes.

m. Goodwill from investments in related companies

Goodwill arising from investments in related companies and the premium paid for the acquisition of the Consumer Credit Division of Corfinsa is amortized over a period of ten years.

n. Allowance for loan losses

The Bank has setup allowances for probable loan losses in accordance with the instructions issued by the Chilean Superintendency of Banks and the models for rating and credit risk evaluation approved by the Bank’s Board of Directors.

F-14

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

The following describes the calculation of the allowance for loan losses:

Allowance for individual evaluations on commercial loans

The Bank considers the following risk factors for debtors with commercial loans of Ch$200 million or more to be assigned to a risk category level: (i) industry or sector, (ii) owners or managers, (iii) financial situation, (iv) payment capacity and (v) payment behavior. Based upon the analysis of the risk factors, the loan will be assigned to one of the risk categories. If the borrower has no apparent credit risk, the loan will be classified as either A1, A2 or A3. The loan will be classified as B if the borrower has some credit risk but no apparent deterioration of payment capacity. Finally, if the borrower has diminished capacity to repay its loans, it will be classified as either C1, C2, C3, C4, D1 or D2.

The board of directors of the Bank is authorized to determine the levels of required allowances for loans classified as A1, A2, A3 and B. The loan categories C1, C2, C3, C4, D1 and D2 must use the following levels of allowances as determined by the Chilean Superintendency of Banks:

Classification	Estimated range of loss	Allowance
C1	Up to and including 3%	2%
C2	More than 3% up to 19%	10%
C3	More than 19% up to 29%	25%
C4	More than 29% up to 49%	40%
D1	More than 49% up to 79%	65%
D2	More than 79%	90%

Allowances for group evaluations

Under current regulations, the levels of required allowances for commercial loans less than Ch$200 million and all consumer loans and mortgage loans are to be determined by the bank. This determination is made according to the estimated loss that may result from the loans, by classifying the loan portfolio using one or both of the following models: (i) a model based on the characteristics of the borrowers and their outstanding loans, and/or (ii) a model based on the behavior of a group of loans. For the first model, the borrowers and their loans with similar characteristics will be placed into groups and each group will be assigned a risk level. For the second model, loans with analogous past payment histories and similar characteristics will be placed into groups and each group will be assigned a risk level.

Charge-offs and Recoveries

In accordance with the regulations of the Chilean Superintendency of Banks, the Bank charges off loans or portions thereof when collection efforts have been exhausted. Under the rules and regulations established by the Chilean Superintendency of Banks, charge-offs must be made within the following maximum prescribed limits:

· 24 months after a loan is past-due (3 months for consumer loans) for loans without collateral;

· 36 months after a loan is past-due for loans with collateral.

The Bank will also charge-off commercial loans prior to the meeting of this criteria when the Bank no longer considers such loans or portions thereof to be collectible.

Recoveries on previously charged-off loans are recorded directly to income and presented as a deduction of the provision for loan losses.

F-15

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

o. Fees and expenses related to loans and services

Fees and expenses related to loans are deferred and recognized in income over the term of the loan. Fees for services are deferred and recognized in income in the period that the services are performed. In accordance with the regulations of the Chilean Superintendency of Banks, the Bank does not defer these fees and expenses because the amount is not material.

Fees and income from services are received from various sources as mentioned in Note 17 and recognized as earned based on contractual terms, as the transaction occurs or as the service is provided.

p. Income taxes

Incomes taxes payables are recognized in an amount that approximates the amount due on the respective income tax return pursuant to Chilean tax legislation. Effects of deferred income taxes are recorded in conformity with Technical Bulletin No. 60 and its related amendments, issued by the Chilean Association of Accountants.

The income tax provision is determined based on current Chilean tax legislation.

q. Assets received in lieu of payment

Assets received in lieu of payment are carried at the lower of price-level restated cost or the market value of such assets. Assets that have not been sold within one year of the foreclosure date are written-off as instructed by the Chilean Superintendency of Banks.

r. Vacation expense

The annual cost of employee vacations and benefits is recorded on the accrual basis.

s. Cash and cash equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks within a term not exceeding 90 days from acquisition date and without any risk of material loss of value. For the years ended December 31, 2005, 2006 and 2007 the consolidated statements of cash flows have been prepared in accordance with Technical Bulletin No. 65 of the Chilean Association of Accountants.

t. Convenience translation to U.S. dollars

The Bank maintains its accounting records and prepares its consolidated financial statements in Chilean pesos. The U.S. dollar amounts disclosed in the accompanying financial statements are presented solely for the convenience of the reader at the December 31, 2007 closing exchange rate of Ch$497.87 per US$1.00. This translation should not be construed as representing that the Chilean peso amounts actually represent or have been, or could be, converted into U.S. dollars at such a rate or at any other rate.

NOTE 2 - ACCOUNTING CHANGE

On December 20, 2005, the Chilean Superintendency of Banks, through Circular No. 3,345 (as amended by Circular No. 3,349 of February 7, 2006; Circular No. 3,355 of May 25, 2006; and Circular No. 3,358 of May 31, 2006), required the application of new accounting policies and new policies for valuing financial instruments acquired for trading or investment, derivative instruments, hedge accounting and derecognition of financial assets. These accounting changes were applied retroactively to the portfolio on hand as of December 31, 2005 generating a MCh$649.9 charge against shareholders’ equity.

As of December 31, 2006, the Bank has recorded a MCh$448.9 net credit to income as a result of the application of the accounting changes.

During 2007, there were no significant changes in the accounting policies affecting the comparison of the financial statements.

F-16

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 3 - SIGNIFICANT EVENTS

CorpBanca

At the Ordinary Shareholders’ Meeting held on February 27, 2007, the shareholders elected the following individuals to the Board of Directors: Directors: Messrs. Alvaro Saieh Bendeck, Jorge Andrés Saieh Guzmán, Carlos Abumohor Touma, Jorge Zelume Zaror, Fernando Aguad Dagach, Julio Barriga Silva, Hernán Somerville Senn, René Cortázar Sánz, Francisco Rosende Ramírez, Carlos Massad Abud and Ignacio González Martínez. Alternate Director: Mr. Juan Rafael Gutiérrez Avila.

At the Ordinary General Shareholders’ Meeting held on February 27, 2007, the Shareholders agreed to modify the dividend policy. The new policy consists of distributing at least 50% of the prior year’s net income and retaining the remaining amount in “Other reserves”.

On March 9, 2007 the Company executed the incorporated deed of a new subsidiary, bearing the corporate name of CorpLegal S.A., in which the Company holds 99.99% equity participation, and whose exclusive and sole purpose will be to provide all types of professional legal services to CorpBanca, its subsidiaries and/or its clients.

On March 27, 2007, Mr. René Cortázar Sánz resigned his position as Director of CorpBanca. On the same date, the Board of Directors appointed Mr. Arturo Valenzuela Bowie to replace him.

Corp Capital Asesorías Financieras S.A.

At the Extraordinary General Shareholders’ Meeting held on April 27, 2007, in accordance with the amendments made to the company’s bylaws, the shareholders agreed to decrease the number of directors from five to three members. The shareholders elected as directors Messrs. Patricio Leighton Zambelli, Héctor Valdés Ruiz and Claudio Chamorro Carrizo, who will hold their positions for a period of three years.

At the Extraordinary General Shareholders’ Meeting held on September 10, 2007, it was agreed to change the company’s corporate name from CorpBanca Asesorías Financieras S.A. to Corp Capital Asesorías Financieras S.A.

Corp Capital Administradora General de Fondos S.A.

At the Ordinary General Shareholders’ Meeting No. 22, held on February 27, 2007, the shareholders ratified the Board of Directors for the year 2007, which is composed of the following directors Messrs: Osvaldo Barrientos Valenzuela, Cristian Canales Palacios, Gabriel Falcone D’Aguila, Fernando Serrano Gutiérrez and Guido Silva Escobar.

During the Ordinary Board of Directors’ Meeting No. 204, held on March 16, 2007, the Directors were informed that Mr. Mario Risso A. would cease to perform his duties as Chief Executive Officer. Mrs. Alejandra Saldías A. was appointed to replace him.

On April 9, 2007, in Session No. 205 of the Board of Directors, Messrs. Jorge Franetovic Yob, Claudio Chamorro Carrizo, Pablo de la Cerda Merino and Armando Ariño Joiro were elected as directors to replace Messrs. Fernando Serrano Gutiérrez, Osvaldo Barrientos Valenzuela, Gabriel Falcone D’Aguila and Cristian Canales Palacios.

At the Extraordinary General Shareholders’ Meeting No. 12, held on September 10, 2007, the shareholders agreed to modify the company’s corporate name from CorpBanca Administradora General de Fondos S.A. to Corp Capital Administradora General de Fondos S.A.

F-17

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Corp Capital Corredores de Bolsa S.A.

At the Ordinary Session No. 170 of the Board of Directors, held on March 16, 2007, the directors were informed that as of that date, the Chief Executive Officer, Mr. Carlos Ubeda Paschold, would cease to perform his duties. The directors agreed to appoint Mr. Ramiro Fernández Zanetti as his replacement.

At the Ordinary Session No. 171 of the Board of Directors, held on April 9, 2007, the following Directors resigned their positions: Mr. Alberto Selman Hasbún, Mr. Jorge Franetovic Yob, Mr. Armando Ariño Joiro, Mr. Claudio Chamorro Carrizo and Chairman of the Board, Mr. Pablo de la Cerda Merino.

In the same Session, the new members of the Board of Directors were elected and would be composed of Messrs. Mario Chamorro Carrizo, Héctor Valdés Ruiz, Osvaldo Barrientos Valenzuela, Cristian Canales Palacios and Patricio Leighton Zambelli as Chairman.

At the Extraordinary General Shareholders’ Meeting No. 3, held on September 10, 2007, the shareholders agreed to modify the company’s of corporate name to Corp Capital Corredores de Bolsa S.A.. The first article of the bylaws was also amended.

CorpBanca Corredores de Seguros S.A.

At the Ordinary General Shareholders’ Meeting held on April 27, 2007, the entire Board of Directors was renewed, in accordance with the requirements of Article 32 of the Law of Corporations. The following were elected on to the Board of Directors, Messrs. Osvaldo Barrientos Valenzuela, Alberto Selman Hasbún, Guido Silva Escobar, Pablo de la Cerda Merino and Enrique Pérez Alarcón.

NOTE 4 - CASH AND DUE FROM BANKS

Included in cash and due from banks are amounts maintained by the Bank with various foreign and local banks, including the Chilean Central Bank (“Central Bank”).

In accordance with regulations, the Bank must maintain certain non-interest bearing balances as compulsory reserves in its account with the Central Bank. The requirements are based upon specified criteria, including the level of bank´s deposits, the amounts of its foreign borrowings and its average liabilities. Non Interest-bearing deposits at the Central Bank totaled MCh$30,317 and MCh$25,102 as of December 31, 2006 and 2007, respectively.

F-18

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 5 - FINANCIAL INVESTMENTS

Financial investments are classified at the time of the purchase, based on management’s intentions, as either trading or investment instruments, the latter of which are categorized as available-for-sale or held-to-maturity. As of December 31, 2006 and 2007 the Bank has not classified any securities as held-to-maturity.

Financial investments as of December 31, 2006 and 2007 are as follows:

	As of December 31,
	2006	2007
	MCh$	MCh$
Held-for-Trading:
Central Bank and government securities
Central Bank securities	49,741	114,045
Chilean Treasury bonds	3,007	10,649
Other securities	2	2
Subtotal	52,750	124,696
Other financial securities
Time deposits in Chilean financial institutions	69,350	13,019
Mortgage finance bonds	4,095	3,504
Chilean financial institutions bonds	1,760	1,820
Chilean corporate bonds	—	83
Other Chilean securities	5,648	—
Subtotal	80,853	18,426
Total	133,603	143,122

Available-for-sale:
Central Bank and government securities
Central Bank securities	—	2,984
Chilean Treasury bonds	—	—
Other securities	—	—
Subtotal	—	2,984
Other financial securities
Time deposits in Chilean financial institutions	18,265	38,382
Mortgage finance bonds	1	—
Chilean corporate bonds	6,721	—
Central Bank and government foreign securities	5,095	—
Subtotal	30,082	38,382
Total	30,082	41,366
Total financial investments	163,685	184,488

F-19

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 6 - LOANS

The loans on the accompanying consolidated balance sheets consist of the subcategories described as follows:

Commercial loans are long-term and short-term loans granted to corporations and businesses. These loans are granted in Chilean pesos, UF and foreign currencies on floating or fixed rate basis to finance working capital or investments.

Consumer loans are mainly loans to individuals granted in Chilean pesos, generally on a fixed rate basis, to finance the purchase of consumer goods or to pay for services. Credit card balances subject to interest charges are also included in this category.

Mortgage loans are inflation indexed, fixed rate, long-term loans with monthly payments of principal and interest collateralized by a real property mortgage. A certain portion of these loans are specifically funded through the issuance of mortgage finance bonds which are generally acquired by third party investors. At the issuance date, the amount of a mortgage loan cannot exceed 75% of the property value.

Foreign trade loans are fixed rate, short-term loans granted in foreign currencies (principally U.S. dollars) to finance imports and exports.

Interbank loans are fixed rate, short-term loans to financial institutions that operate in Chile.

Lease contracts are agreements for financing leases of capital equipment and other property.

Factored receivables are transactions where the Bank receives invoices and other commercial instruments representative of credit and it advances the assignor a percentage of the total amounts to be collected from the original debtor. The price difference between the amounts disbursed and the actual face value of the receivables is earned and recorded as interest income over the financing period.

Other outstanding loans principally include mortgage loans that are financed by our own funds.

Past due loans include, with respect to any loan, the amount of principal and interest that is 90 days or more overdue, and do not include the installments of such loan that are not overdue or that are less than 90 days overdue, unless legal proceedings have been commenced for the entire outstanding balance according to the terms of the loan.

Contingent loans mainly consist of open and unused letters of credit, performance bonds together with guarantees granted by the Bank in Chilean Pesos (“Ch$”), UF and foreign currencies (principally U.S. dollars).

F-20

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

The following table summarizes the most significant loan concentrations, expressed as a percentage of total loans, excluding contingent loans and gross of allowance for loan losses.

	As of December 31,
	2006		2007
	%		%

Financial services	15.3		19.8
Community, Social and Personal Services	12.4		13.3
Residential Mortgage Loans	11.3		13.0
Consumer credit	14.3		12.7
Commerce	7.7		7.6
Lease contracts	7.4		6.4
Manufacturing	6.5		6.1
Construction	6.8		5.9
Agriculture, Livestock, Agribusiness, Fishing	5.5		5.0
Transport, Storage and Communications	4.1		3.6
Electricity, Gas and Water	2.9		2.9
Factoring	2.4		2.3
Mining and Petroleum	3.4		1.4
Total	100.0	%	100.0	%

NOTE 7 - LEASING CONTRACTS

The amounts shown as leasing contracts are amounts receivable under lease agreements and have the following maturities as of December 31, 2006 and 2007. Unearned income which is presented in the following table corresponds to the interest to be earned in each period.

	As of December 31, 2006				As of December 31, 2007
	Total receivable	Unearned income		Net lease receivable	Total receivable	Unearned income		Net lease receivable
	MCh$	MCh$		MCh$	MCh$	MCh$		MCh$

Due within 1 year	73,662	(13,368	)	60,294	80,862	(12,977	)	67,885
Due after 1 year but within 2 years	59,314	(10,129	)	49,185	62,755	(9,535	)	53,220
Due after 2 years but within 3 years	42,409	(7,537	)	34,872	45,024	(6,831	)	38,193
Due after 3 years but within 4 years	29,691	(5,695	)	23,996	30,731	(4,912	)	25,819
Due after 4 years but within 5 years	20,810	(4,377	)	16,433	21,530	(3,641	)	17,889
Due after 5 years	68,358	(9,774	)	58,584	63,628	(9,494	)	54,134
	294,244	(50,880	)	243,364	304,530	(47,390	)	257,140

Leased assets consist principally of real estate, industrial machinery, vehicles and computer equipment.

F-21

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 8 - ALLOWANCE FOR LOAN LOSSES

The changes in the allowance for loan losses are as follows:

	Year ended December 31,
	2005		2006		2007
	MCh$		MCh$		MCh$

Balance as of January 1,	47,271		48,617		49,967
Price-level restatement (1)	(1,642	)	(1,000	)	(3,443	)
Charge-offs	(17,818	)	(20,889	)	(27,124	)
Allowances established	24,198		28,330		40,724
Allowances released	(3,392	)	(5,091	)	(5,057	)
Balance as of December 31,	48,617		49,967		55,067

(1) Reflects the effect of inflation on the allowance for loan losses at the beginning of each period, adjusted to constant pesos of December 31, 2007.

Allowance for loan losses includes MCh$ 2,495, MCh$ 2,890 and MCh$ 2,507 related to leasing operations as of December 31, 2005, 2006 and 2007, respectively.

The allowance for loan losses and assets received in lieu of payment included in the results of operations are as follows:

	Year ended December 31,
	2005		2006		2007
	MCh$		MCh$		MCh$

Allowance established	(24,198	)	(28,330	)	(40,724	)
Allowance established for assets received in lieu of payment	(2,986	)	(1,335	)	(36	)
Direct charge-offs	(993	)	(752	)	(367	)
Allowance released	3,392		5,091		5,057
Recovery of loans previously charged-off	9,618		9,575		10,079
Net charge to income	(15,167	)	(15,751	)	(25,991	)

NOTE 9 – BANK PREMISES AND EQUIPMENT, NET

Bank premises and equipment, net of accumulated depreciation are as follows:

	As of December 31,
	2006	2007
	MCh$	MCh$

Land and buildings	24,574	23,671
Furniture and fixtures	6,836	6,761
Machinery and equipment	1,515	2,403
Vehicles	52	46
Other	1,683	1,278
Total bank premises and equipment, net	34,660	34,159

F-22

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 10 - INVESTMENTS IN OTHER COMPANIES

Investments in other companies are as follows:

	As of December 31,
	Ownership interest		Participation in net income				Investment Book value
	2006	2007	2005		2006	2007	2006	2007
	%	%	MCh$		MCh$	MCh$	MCh$	MCh$

Transbank S.A.	8.72	8.72	75		76	76	492	493
Nexus S.A.	12.90	12.90	100		127	117	655	604
Combanc S.A	8.78	8.78	(18	)	47	36	279	315
Bolsa de Comercio de Santiago (Stock Exchange)	2.08	2.08	57		79	107	337	341
Bolsa Electrónica de Chile	2.50	2.50	3		4	4	82	86

Total investments in other companies accounted for under the equity method			217		333	340	1,845	1,839
Other investments			20		25	21	144	146
Total investments in other companies			237		358	361	1,989	1,985

NOTE 11 - OTHER ASSETS AND OTHER LIABILITIES

a) Other assets

	As of December 31,
	2006	2007
	MCh$	MCh$

Amounts receivable under foreign exchange transactions	26,707	6,267
Investments in Mutual Funds	—	9,724
Prepaid and deferred expenses	22,939	27,278
Goodwill	3,901	871
Deferred income taxes (Note 21 b)	11,381	12,049
Brokerage	1,307	12,658
Recoverable taxes	12,606	7,461
Credit card charges in process	10,773	14,082
Transactions in process (suspense accounts)	7,652	7,238
Real time gross settlement (RTGS) receivable	26,045	7,164
Commissions receivable	2,107	6,453
Other interest earned not collected	—	213
Other	5,844	8,523
Total other assets	131,262	119,981

F-23

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

b) Other liabilities

	As of December 31,
	2006	2007
	MCh$	MCh$

Brokerage	1,303	12,536
Amounts payable under foreign exchange transactions	20,589	8,209
Income taxes	9,798	98
Deferred income taxes (Note 21 b)	5,089	6,856
Provision for staff benefits	2,543	3,934
Value added tax payable	1,976	2,138
Real time gross settlement (RTGS) payable	37,796	6,054
Transactions in process (suspense accounts)	1,267	1,571
Other	480	1,751
Total other liabilities	80,841	43,147

c) Contingent liabilities

Contingent liabilities consist of open and unused letters of credit, together with guarantees granted by the Bank in Chilean pesos, UF and foreign currencies (principally U.S. dollars). The liability represents the Bank’s obligations under such agreements. The Bank’s rights under these agreements are recognized as assets on the balance sheet under the caption “Contingent loans” (Note 6). Since many of these commitments to extend credit may expire without being drawn upon, the total contingent liabilities do not necessarily represent future cash obligations.

NOTE 12 - INTEREST BEARING LIABILITIES AND OTHER INTEREST BEARING LIABILITIES

Interest Bearing Deposits/Savings Accounts

The following table sets forth the maturity of the interest bearing deposits and saving accounts:

	As of December 31,
	2006	2007
	MCh$	MCh$

Savings accounts and time deposits	1,821,233	2,410,668

The maturities of the outstanding amounts due at December 31, 2006 and 2007 are as follows:

	As of December 31, 2006	As of December 31, 2007
	MCh$	MCh$

Due within 1 year	1,815,929	2,141,043
Due after 1 year but within 2 years	1,554	107,777
Due after 2 years but within 3 years	—	55,179
Due after 3 years but within 4 years	2,156	64,345
Due after 4 years but within 5 years	—	40,742
Due after 5 years	1,594	1,582
Total	1,821,233	2,410,668

F-24

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Other Interest-Bearing Liabilities

The Bank’s long-term and short-term borrowings are summarized below. Borrowings are generally classified as short-term when they have original maturities of less than one year or are due on demand. All other borrowings are classified as long-term, including the amounts due within one year on such borrowings.

	December 31, 2006
	Long-term	Short-term	Total
	MCh$	MCh$	MCh$

Chilean Central Bank borrowings	—	34,404	34,404
Investments under agreements to repurchase	—	58,937	58,937
Mortgage finance bonds	359,704	—	359,704
Bonds	195,782	—	195,782
Subordinated bonds	47,133	—	47,133
Borrowings from domestic financial institutions	—	3,868	3,868
Foreign borrowings	220,342	37,621	257,963
Other obligations	26,996	3,180	30,176
Total other interest-bearing liabilities	849,957	138,010	987,967

	December 31, 2007
	Long-term	Short-term	Total
	MCh$	MCh$	MCh$

Chilean Central Bank borrowings	—	45,824	45,824
Investments under agreements to repurchase	—	54,255	54,255
Mortgage finance bonds	353,431	—	353,431
Bonds	305,113	—	305,113
Subordinated bonds	43,882	—	43,882
Borrowings from domestic financial institutions	—	83,220	83,220
Foreign borrowings	265,620	9,742	275,362
Other obligations	26,048	3,493	29,541
Total other interest-bearing liabilities	994,094	196,534	1,190,628

F-25

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

a) Chilean Central Bank borrowings

Credit lines for renegotiation loans were provided by the Chilean Central Bank to fund renegotiated loans, which arose from the economic recession and the crisis of the banking system in the early 1980s. During 2006, amounts outstanding were fully paid. Other borrowings originated in the normal course of business remain and are presented as Chilean Central Bank borrowings.

b) Mortgage finance bonds

These bonds are used to finance the granting of mortgage loans. The outstanding principal amounts of the bonds are amortized on a quarterly basis. At the date of issue, the maturities of these bonds is up to twenty years. The bonds are denominated in UF and are carried at a real weighted-average annual interest rate of 4.4%.

The maturities of outstanding mortgage bonds are as follows:

	As of December 31, 2006	As of December 31, 2007
	MCh$	MCh$

Due within 1 year	38,535	38,294
Due after 1 year but within 2 years	28,714	28,412
Due after 2 years but within 3 years	28,147	28,486
Due after 3 years but within 4 years	28,082	28,377
Due after 4 years but within 5 years	27,723	27,583
Due after 5 years	208,503	202,279
Total mortgage finance bonds	359,704	353,431

c) Bond

	As of December 31,
	2006	2007
	MCh$	MCh$

BCOR-D0405	158,609	158,054
BCOR-J0606	37,173	67,958
BCOR-K0707	—	39,431
BCOR-L0707	—	39,670
Total	195,782	305,113

In April 2005, the Bank issued the series BCOR-D0405 Bonds. The Bank used the proceeds improve liability structure, liquidity, reduce funding costs and increase the duration of the Bank’s liabilities. The bonds are denominated in U.F. and carry a weighted average annual rate of interest of 3.02%, with interest payments due semi-annually and one repayment of principal after a term of 5 years.

In June 2006 and April 2007, the Bank issued UF 4 million in series BCOR-J0606 Bonds (UF2 million in June 2006 and UF2 million in April 2007) .. The Bank used the proceeds in order to finance the Bank’s normal business activities and to improve its liability structure. The bonds reach maturity in 10 years, are denominated in U.F. and carry a weighted average annual rate of interest of 3.61%, with interest and capital payments due semi-annually.

In July 2007, the Bank issued UF 2 million in series BCOR-K0707. The Bank used the proceeds in order to finance it’s normal business activities and to improve its liability structure. The bonds are denominated in U.F. and reach a maturity in 5 years. The bonds carry a weighted average annual rate of interest of 3.47% and pay interest on a semi-annual basis and the capital at maturity.

F-26

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

In November 2007, the Bank issued series UF 2 million in BCOR-L0707. The Bank used the proceeds in order to finance it’s normal business activities and to improve its liability structure. The bonds denominated in U.F. and reach a maturity in 10 years. The bonds carry a weighted average annual rate of interest of 3.47% and pay interest on a semi-annual basis and the capital at maturity.

The maturities of these bonds are as follows:

	As of December 31, 2006	As of December 31, 2007
	MCh$	MCh$

Due within 1 year	9,852	17,309
Due after 1 year but within 2 years	9,362	16,453
Due after 2 years but within 3 years	8,894	160,279
Due after 3 years but within 4 years	149,374	10,624
Due after 4 years but within 5 years	3,921	43,659
Due after 5 years	14,379	56,789
Total bonds	195,782	305,113

d) Subordinated bonds

	As of December 31,
	2006	2007
	MCh$	MCh$

Series UCOR-W1197	129	111
Series UCOR-X1197	14,858	12,795
Series UCOR-Y1197	9,679	9,324
Series UCOR-Z1197	22,467	21,652
Total	47,133	43,882

The subordinated bonds are denominated in UF and carry a weighted average annual rate of interest of 8.07% , with interest and principal payments due semi-annually and the maturities are as follows:

	As of December 31, 2006	As of December 31, 2007
	MCh$	MCh$

Due within 1 year	6,378	6,352
Due after 1 year but within 2 years	5,899	5,879
Due after 2 years but within 3 years	5,458	5,439
Due after 3 years but within 4 years	5,050	5,032
Due after 4 years but within 5 years	4,672	4,655
Due after 5 years	19,676	16,525
Total subordinated bonds	47,133	43,882

F-27

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

e) Foreign borrowings

These are short-term and long-term borrowings from foreign banks. The maturities of these borrowings are as follows:

	As of December 31, 2006	As of December 31, 2007
	MCh$	MCh$

Due within 1 year	199,208	241,691
Due after 1 year but within 2 years	10,033	14,961
Due after 2 years but within 3 years	—	6,672
Due after 3 years but within 4 years	7,671	2,296
Due after 4 years but within 5 years	3,430	—
Due after 5 years	—	—
Total long-term	220,342	265,620
Short-term obligations	37,621	9,742
Total foreign borrowings	257,963	275,362

These foreign borrowings are denominated principally in U.S. dollars, and are mainly used to fund the Bank’s foreign trade loans and bear interest at an annual average rate of 5.3%.

f) Borrowings from domestic financial institutions

Short-term borrowings from domestic financial institutions are used to fund the Bank’s general activities and bear interest at a weighted annual average rate of 4.1%.

	As of December 31,
	2006	2007
	MCh$	MCh$

Borrowings from domestic financial institutions	3,868	83,220

g) Other obligations

Other obligations are summarized as follows:

	As of December 31, 2006	As of December 31, 2007
	MCh$	MCh$
Long-term obligations:
Due within 1 year	7,616	12,442
Due after 1 year but within 2 years	5,532	4,793
Due after 2 years but within 3 years	4,989	2,951
Due after 3 years but within 4 years	2,982	2,259
Due after 4 years but within 5 years	2,277	1,537
Due after 5 years	3,600	2,066
Total long-term obligations	26,996	26,048

Short-term obligations:
Amounts due to credit card operators	2,893	3,493
Other	287	—
Total short-term obligations	3,180	3,493
Total other obligations	30,176	29,541

F-28

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 13 - DERIVATIVE FINANCIAL INSTRUMENTS

The Bank enters into transactions involving derivative instruments, particularly foreign currency exchange contracts, as part of its asset and liability structure management, and in acting as a dealer in order to satisfy its clients’ needs. The notional amounts of these contracts are recorded off-balance sheet.

When the Bank enters into a forward exchange contract, it analyses and approves the credit risk (the risk that the counterparty might default on its obligations). Subsequently, on an ongoing basis, it monitors the possible losses involved in each contract. To manage the level of credit risk, the Bank deals with counterparties of good credit standing, enters into master netting agreements whenever possible and when appropriate, obtains collateral.

The Chilean Central Bank requires that foreign exchange forward contracts be denominated in U.S. dollars and other major foreign currencies. In the case of the Bank, most forward contracts are denominated in U.S. dollars against the Chilean peso or the UF.

In addition, the Bank enters into interest rate and cross currency swap agreements to manage exposure to fluctuation in currencies and interest rates.

The fair value of derivative contracts including results due to fluctuations of market interest rates and currency exchange rates are recognized in the consolidated income statement.

The derivatives outstanding as of December 31, 2006 and 2007 are summarized as follows:

	As of December 31, 2006
	Notional amounts			Gross	Gross
Type of derivative	Up to 3 months	From 3 to 12 months	More than 12 months	Unrealized Gains	Unrealized Losses
	MCh$	MCh$	MCh$	MCh$	MCh$

Foreign currency forwards	841,736	162,621	13,743	4,181	(4,119	)
Interest rate swaps	—	—	32,001	328	(435	)
Cross currency swaps	—	—	1,147	—	(17	)
Interest rate forwards	76,804	57,692	195,521	272	(735	)
				4,781	(5,306	)

	As of December 31, 2007
	Notional amounts			Gross	Gross
Type of derivative	Up to 3 months	From 3 to 12 months	More than 12 months	Unrealized Gains	Unrealized Losses
	MCh$	MCh$	MCh$	MCh$	MCh$

Foreign currency forwards	988,681	988,970	112,085	25,104	(25,964	)
Interest rate swaps	39,215	30,000	6,328,261	8,371	(7,651	)
Cross currency swaps	—	784	355,776	556	(576	)
Interest rate forward	26,740	—	—	24	(47	)
				34,055	(34,238	)

The notional amount refers to either the U.S. dollar bought or sold, or the equivalent in U.S. dollars of foreign currency bought or sold, as appropriate. The contract terms correspond to the duration of the contracts from the date of the transaction to the date of the settlement.

F-29

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Long-term notional amounts, as of December 31, 2006 and 2007, are as follows:

	Notional amounts
	As of December 31,
	2006	2007
	MCh$	MCh$

Due after 1 year but within 2 years	35,017	337,379
Due after 2 years but within 3 years	23,662	945,521
Due after 3 years but within 4 years	73,710	1,315,357
Due after 4 years but within 5 years	90,590	3,950,077
Due after 5 years	19,433	247,788
	242,412	6,796,122

NOTE 14 - MINIMUM CAPITAL REQUIREMENTS

The Chilean Superintendency of Banks requires Chilean Banks to maintain a minimum capital of 800,000 UF, equivalent to MCh$15,698 as of December 31, 2007. In addition, banks are required to maintain a minimum basic capital of at least 3% of total assets after deductions for mandatory allowances, while effective net equity may not be lower than 8% of its risk weighted assets. Effective net equity is defined as basic capital plus certain loan loss allowances (up to a maximum of 1.25% of risk weighted assets) and qualifying proportion of subordinated bonds less any goodwill balance or paid share premiums and investments in non-consolidated companies.

Chilean banks are permitted to include subordinated bonds in effective net equity. This is limited to 50% of the basic capital and the value which can be included should decrease by 20% per year, beginning six years prior to maturity.

The Bank’s actual qualifying “net capital base” and “effective equity” to support the Bank’s risk-weighted assets as of December 31, 2006 and 2007 are summarized as follows:

	As of December 31,
	2006		2007
	MCh$		MCh$

Basic capital	423,312		433,625
3% total assets net of allowances	(119,518	)	(145,935	)
Excess over minimum capital requirement	303,794		287,690
Total assets	3,983,945		4,864,494
Basic capital as a percentage of the total assets, net of allowances	10.63	%	8.91	%

Effective equity	464,768		470,393
8% of the risk-weighted assets	(273,556	)	(334,250	)
Excess over minimum equity requirement	191,212		136,143
Risk weighted assets	3,419,453		4,178,122
Effective equity as a percentage of the risk-weighted assets	13.59	%	11.26	%

F-30

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 15 - SHAREHOLDERS’ EQUITY

Subscribed and paid shares

As of December 31, 2006 and 2007, the paid in capital of the Bank is represented by 226,909,290,577 subscribed and paid ordinary no-par-value shares.

Dividend distribution

At the Ordinary Shareholders’ Meeting of CorpBanca held on February 28, 2006, the Shareholders’ agreed to maintain the current dividend policy, established on April 27, 2001, of distributing 50% of prior year’s net income, retaining the remaining 50% in the account “Retained earnings to be distributed” included in “Reserves”.

During the Ordinary General Shareholders’ Meeting held on February 27, 2007, the shareholders’ established an amendment to the dividend policy. The new policy consists of distributing at least 50% of the distributable net income, while retaining the remaining in the account “Reserves”. The Shareholders’ agreed to distribute 75% of 2006 retained income, amounting to Ch$29,328.4 million (historic).

The distributions of dividends related to net income for the years 2005 and 2006 as approved by the Annual Shareholders’ Meeting of CorpBanca, are as follows:

	Dividend	Dividend	Percentage
Shareholders’ Meeting	(Historical)	paid (1)	paid
	MCh$	MCh$

February 2005	25,384	29,031	50	%
February 2006	26,316	28,942	50	%
February 2007	29,328	31,381	75	%

(1) Dividend paid has been price-level restated in constant Chilean pesos as of December 31, 2007

NOTE 16 - RELATED PARTY TRANSACTIONS

In accordance with the General Banking Law and the Chilean Superintendency of Bank’s instructions, individuals and companies that are related, directly or indirectly, to the Bank’s owners or management are considered related parties.

a. Loans granted to related parties

Related party loans, all of which are current, are as follows:

	As of December 31,
	2006		2007
	Loans	Collateral Pledged(1)	Loans	Collateral Pledged(1)
	MCh$	MCh$	MCh$	MCh$

Operating companies	51,241	8,136	37,676	2,565
Investment companies(2)	7,021	—	2,131	895
Individuals(3)	1,035	468	1,274	766
Total	59,297	8,604	41,081	4,226

F-31

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

(2) Includes companies whose purpose is to hold shares in other companies.

(3) Includes debt obligations that are equal to or greater than UF 3,000, equivalent to MCh$59 as of December 31, 2007.

The activities in the balances of loans granted to related parties are as follows:

	As of December 31,
	2006		2007
	MCh$		MCh$

Balance as of January 1,	53,731		59,297
New loans	24,334		18,610
Repayments	(17,662	)	(32,741	)
Price-level restatement	(1,106	)	(4,085	)
Balance as of December 31,	59,297		41,081

b. Other transactions with related parties

During the years ended December 31, 2005, 2006 and 2007 the Bank had the following significant income (expenses) from services provided to (by) related parties:

		Year ended December 31,
		2005		2006		2007
Company		Income (expenses)		Income (expenses)		Income (expenses)
		MCh$		MCh$		MCh$

Corp Group Interhold S.A.	Management advisory services	(1,393	)	(1,425	)	(1,410	)
Inmobiliaria Edificio Corp Group S.A.	Rental of offices	—		(344	)	(1,034	)
Nexus S.A.	Credit card processing	(1,108	)	(1,188	)	(1,825	)
Transbank S.A.	Credit card processing	(935	)	(1,110	)	(2,483	)
Empresa Periodística La Tercera S.A.	Newspaper publications	—		—		(467	)
Recaudaciones y Cobranzas S.A.	Rental of offices and credit collections	(1,439	)	(533	)	(254	)
Redbanc S.A.	Automatic teller machine network	(408	)	(308	)	(382	)
Fundación Corpgroup Centro Cultural	Donations	(648	)	(269	)	(100	)
Inmobiliaria e Inversiones San Francisco Ltda.	Financial advisory services	(160	)	(162	)	(155	)
Asesorías Santa Josefina Ltda.	Advisory and management services	(153	)	(155	)	(148	)
Inmobiliaria e Inversiones Boquiñeni Ltda.	Financial advisory services	(47	)	(39	)	(36	)
Corp Legal S.A.	Rental of offices and advisory services	(11	)	(20	)	(37	)
Promoservice S.A.	Advertising services	(361	)	(5	)	(110	)
Sociedad Nacional de Minería	Advertising services	(41	)	—		—
Compañía de Seguros Vida Corp S.A.	Rental of offices	206		167		—

These transactions are basically related to services rendered to the Bank by its related parties. Article 89 of the Chilean Corporations Law requires that transactions with related parties be conducted on a market basis or in similar terms to those customarily prevailing in the market.

F-32

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 17 - FEES AND INCOME FROM SERVICES

Fees and income from services and the related expenses are summarized as follows:

	Year ended December 31,
	Income			Expenses
	2005	2006	2007	2005		2006		2007
	MCh$	MCh$	MCh$	MCh$		MCh$		MCh$
Fees and income from services:
Checking accounts	7,019	8,621	8,350	(27	)	(25	)	(280	)
Remuneration and commissions from Mutual funds	4,286	4,676	6,941	—		—		(194	)
Commissions from collections	4,354	5,851	6,813	—		—		—
Insurance brokerage	3,842	4,439	6,181	—		—		(4	)
Credit cards	2,468	3,436	5,177	(2,834	)	(3,903	)	(5,011	)
Lines of credit	529	851	2,927	—		—		—
Commissions on credit operations	2,384	2,794	2,048	—		—		—
Letters of credit, guarantees, pledges and other contingent loans	1,831	1,585	1,708	(175	)	(192	)	(304	)
Customer services	531	727	1,096	(130	)	(129	)	(104	)
Commissions from stock-exchange operations	378	679	1,004	(148	)	(70	)	—
Automatic teller cards	860	787	555	(734	)	(952	)	(1,151	)
Collection of documents	340	311	347	(56	)	(56	)	(53	)
Bankers’ drafts and wire transfers	27	306	320	—		—		—
Factoring operations	241	216	274	—		(19	)	(11	)
Commissions on sales of mortgages notes	153	125	90	(6	)	(99	)	—
Trust and custody commissions	23	21	22	—		—		—
Stock exchange rights	207	83	—	(52	)	—		—
Other	128	271	237	(28	)	(37	)	(113	)
Total Income (expense)	29,601	35,779	44,090	(4,190	)	(5,482	)	(7,225	)

NOTE 18 - NON OPERATING INCOME AND EXPENSES

Non-operating income and expenses are set forth below:

	Year ended December 31,
	2005	2006	2007
	MCh$	MCh$	MCh$
Non-operating income:
Gains on sales of assets received in lieu of payment previously charged-off	2,399	1,463	171
Recovered income tax related to properties	—	873	—
Release of reserves	175	116	12
Gain on sales of Bank premises and equipment	27	2	—
Other	395	345	223
Total non-operating income	2,996	2,799	406

F-33

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

	Year ended December 31,
	2005		2006		2007
	MCh$		MCh$		MCh$
Non-operating expenses:
Goodwill amortization arising from the excess purchase price paid as a result of the recognition of deterioration in the loan portfolio quality of Financiera Condell S.A.	(657	)	—		—
Goodwill amortization arising from the acquisition of consumer division of Corfinsa	(1,093	)	(1,022	)	(928	)
Goodwill amortization from investments in companies	(146	)	(108	)	(32	)
Payments from collection expenses	(1,675	)	(894	)	(618	)
Write-off of assets received in lieu of payment	—		—		(662	)
Write-off of other-assets	(625	)	(335	)	(221	)
Provision for pending legal proceedings	(120	)	—		(205	)
Other	(96	)	(547	)	(204	)
Total non-operating expenses	(4,412	)	(2,906	)	(2,870	)

NOTE 19 - DIRECTORS’ EXPENSES AND REMUNERATION

At the Ordinary Shareholders’ Meetings, held on February 27, 2007, it was agreed not to pay any remuneration to the Board of Directors, except to members of the Directors Committee and Audit Committee, who received fees of MCh$209 (MCh$187 in 2006 and MCh$191 in 2005). Additionally, during 2007 the Bank paid per diems of MCh$15.

F-34

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 20 - FOREIGN CURRENCY POSITION

The consolidated balance sheets include assets and liabilities denominated in foreign currencies which have been translated into Chilean pesos at the applicable exchange rates as of December 31, 2006 and 2007 and assets and liabilities denominated in Chilean pesos but indexed to changes in foreign currency exchange rates, detailed below:

	As of December 31, 2006					As of December 31, 2007
	Denominated in					Denominated in
	Foreign currency		Chilean Pesos	Total		Foreign currency		Chilean Pesos	Total
	MCh$		MCh$	MCh$		MCh$		MCh$	MCh$
Assets
Cash and due from banks	30,822		—	30,822		35,408		—	35,408
Financial investments	10,720		—	10,720		2		—	2
Loans (including contingent loans)	472,544		25,695	498,239		593,965		20,743	614,708
Other assets	31,278		—	31,278		23,337		—	23,337
Total assets	545,364		25,695	571,059		652,712		20,743	673,455

Liabilities
Deposits	215,643		1	215,644		313,525		1	313,526
Contingent liabilities	117,967		—	117,967		131,351		—	131,351
Due to domestic banks	—		—	—		47,680		—	47,680
Due to foreign banks	240,129		—	240,129		275,227		—	275,227
Other liabilities	35,828		7,673	43,501		32,097		6,152	38,249
Total liabilities	609,567		7,674	617,241		799,880		6,153	806,033
Net assets (liabilities) in foreign currencies	(64,203	)	18,021	(46,182	)	(147,168	)	14,590	(132,578	)

NOTE 21 - INCOME TAXES AND DEFERRED TAXES

a. Income taxes

First Category Income Tax (current expense) recorded by the Bank and its subsidiaries amounted to MCh$8,661 as of December 31, 2007 (MCh$10,238 in 2005 and MCh$9,774 in 2006).

Income taxes for the years ended December 31, 2005, 2006 and 2007 are as follows:

	Year ended December 31,
	2005		2006		2007
	MCh$		MCh$		MCh$

Amortization of deferred tax complementary accounts	—		7		—
Deferred tax for the period	(1,527	)	1,566		(666	)
Price - level restatement	(228	)	(99	)	(434	)
Net benefit from deferred taxes	(1,755	)	1,474		(1,100	)
Income tax provision—current	(10,238	)	(9,774	)	(8,661	)
Other taxes	227		97		430
Net income taxes	(11,766	)	(8,203	)	(9,331	)

b. Deferred taxes

As described in Note 1 p), the Bank applied accounting criteria of the Technical Bulletin No. 60 issued by the Chilean Association of Accountants and its supplements.

F-35

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Deferred taxes arising from temporary differences are as follows:

	As of December 31,
	2006		2007
	MCh$		MCh$

Debit differences:
Allowances for loan losses	7,903		8,366
Unearned price difference	1,371		1,281
Suspended accrual of interest	997		1,239
Other provisions	505		602
Other	605		561
Net difference (Note 11 a)	11,381		12,049

Credit differences:
Fixed asset depreciation	(202	)	(202	)
Deferred expenses	(2,210	)	(2,325	)
Forward contracts	95		36
Leasing contracts	(2,544	)	(3,709	)
Other	(228	)	(656	)
Net difference (Note 11 b)	(5,089	)	(6,856	)

NOTE 22 - CONTINGENCIES AND COMMITMENTS

a. Pending lawsuits:

As of December 31, 2006 and 2007, there were lawsuits pending against the Bank relating to loans and other matters. In the opinion of management and the Bank’s legal counsel, these lawsuits should not result in material losses for the Bank.

The Fifth Criminal Court of Santiago, in the Fraud case No. 149913-7, pursuant to a criminal complaint in initial stages filed by Banco del Estado de Chile, and to which CorpCapital Corredores de Bolsa S.A. is not a party, a time deposit, No. 00243145, of MCh$42.8 (historical), which Concepción S.A. Corredores de Bolsa S.A. (now CorpCapital Corredores de Bolsa S.A.) had acquired from its original beneficiary, was seized, improperly in the Company’s opinion, as it was considered physical evidence. The aforementioned time deposit is fully provisioned in the Company’s financial statements.

b. Guarantees from operations and other liabilities:

· CorpBanca is entitled to transfer obligations arising from deferred customs duties related to the import of assets for leasing to its clients. These transfers require authorization from customs authorities. As of December 31, 2007, CorpBanca had transferred to its clients deferred customs duty obligations amounting to MCh$90.9 (MCh$170.8 in 2006).

· As of December 31, 2007, leasing contracts signed, but for which assets have not yet been delivered, amounted to MCh$18,341.7 (MCh$7,808.6 in 2006).

F-36

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

· In compliance with articles 30 and 31 of Law No. 18,045 (Securities Market Law), Corp Capital Corredores de Bolsa S.A. has furnished a guarantee through Compañía de Seguros de Crédito Continental S.A. for UF4,000, expiring on April 22, 2008. Santiago Stock Exchange has been designated as the depository and custodian of the aforementioned policy.

· On June 30, 2007, an Insurance Policy of US$10,000,000 was taken out with Chubb de Chile Compañía de Seguros Generales, in order to cover any possible situations involving employee wrongdoings. This policy, whose direct beneficiary is Corp Capital Corredores de Bolsa S.A. expires on June 30, 2008.

· Corp Capital Corredores de Bolsa S.A. maintains in Bolsa de Comercio de Santiago, (Santiago Stock Exchange) debt securities worth MCh$623.6 to guarantee operations related to the Clearing and Liquidation Stock Exchange process. In addition, the Company maintains securities to guarantee other operations for MCh$16,397.6.

· In order to comply with the provisions of article 58 d) of Decree Law N°251, of 1931, specifying that “in order to exercise their activity, Insurance Brokers should comply with the requirement of taking out insurance policies as determined by the Superintendency of Securities and Insurances in order to answer for proper, complete fulfillment of all obligations issuing from their activity, and especially for any damages that they may cause to their insured parties”, the Company has taken out the following policies with Chilena Consolidada Seguros Generales S.A. They come into effect on April 15, 2007 and expire on April 15, 2008.

Policy	Insurance	Insured amount
		UF

379053	Liability	60,000
379050	Guarantee	500

· On June 30, 2007, the Company took out an insurance policy with Chubb de Chile Compañía de Seguros Generales S.A., in order to cover possible employee wrongdoings for US$10,000,000 and it expires on June 30, 2008. Its direct beneficiary is Corp Capital Administradora General de Fondos S.A..

· On January 9, 2007, Corp Capital Administradora General de Fondos S.A., renewed the following Guarantee Insurance Policies for General Fund Administrators in order to guarantee performance of the Administrator’s obligations with regard to the administration of third party funds and indemnity for damages resulting from non-performance thereof, in accordance with article 226 of Law No. 18,045. These policies expired on January 9, 2008.

The aforementioned policies were taken out with Compañía de Seguros Mapfre Garantías y Crédito S.A. CorpBanca is also the representative of the beneficiaries of the guarantee on these Funds.

c. Commitments and responsibilities recorded in memorandum accounts:

As of December 31, 2006 and 2007, the Bank had recorded the following commitments and responsibilities in memorandum accounts:

	2006	2007
	MCh$	MCh$

Loans approved but not disbursed	178,661	213,437

The above only includes significant items. Contingent loans and liabilities are shown in the consolidated balance sheet.

F-37

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

d. Financial guarantees

In the ordinary course of our business we enter into various financial guarantees. The Bank expects most of its financial guarantees to expire unused. The majority of the Bank’s financial guarantees are commercial letters of credit. Under Chilean GAAP, certain guarantees and commercial letters of credit are reported as an asset and a liability as mentioned in Notes 6 and 11c. The Bank’s other financial guarantees in the form of performance bonds are summarized as follows:

Maximum potential amount of future payments

As of December 31,

Less than

1 to 3

3 to 5

After 5

No
stated

2006

2007

one year

years

maturity

MCh$

Guarantees:

Performance bonds to customers included in the balance sheet

236,774

259,527

172,096

51,839

3,740

491

31,361

Guarantees in the form of performance bonds are issued in connection with agreements made by customers to counterparties. If the customer fails to comply with the agreement, the counterparty may enforce the performance bond as a remedy. Credit risk arises from the possibility that the customer may not be able to repay the bank for performance bonds. In order to mitigate credit risk, the bank generally determines the need for specific covenant, guarantee and collateral requirements on a case by case, depending on the nature of the financial instrument and the customer’s creditworthiness.

NOTE 23 - FIDUCIARY ACTIVITIES

The following items are recorded in memorandum accounts and represent fiduciary safekeeping and custody services:

	As of December 31,
	2006	2007
	MCh$	MCh$

Securities held in safe custody	576,824	451,488
Amounts to be collected on behalf of local third parties	9,016	18,131
Amounts to be collected on behalf of foreign third parties	21,801	21,375
Total	607,641	490,994

F-38

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 24 - PRICE-LEVEL RESTATEMENT

The price-level restatement loss is determined by restating the following non-monetary assets, liabilities and Shareholders’ Equity:

	Year ended December 31,
	2005		2006		2007
	MCh$		MCh$		MCh$

Bank premises and equipment	1,293		742		2,485
Investments in other companies	61		35		120
Other non-monetary assets and liabilities	604		320		1,435
Shareholders’ Equity	(13,534	)	(8,624	)	(29,986	)
Net price-level restatement loss	(11,576	)	(7,527	)	(25,946	)

NOTE 25 - SUBSEQUENT EVENTS

On April 15, 2008 at an extraordinary shareholders’ meeting, our shareholders approved a program to purchase shares issued by us (“the Share Repurchase Program”), to be purchased in the local Chilean market through one or more tender offers in accordance with article 198-5 of the Securities Market Law. The purpose of the Share Repurchase Program is to invest and trade our own shares in accordance to share price fluctuations experienced throughout the duration of the program. The main terms and conditions of the Share Repurchase Program are set forth as follows:

· The maximum percentage of shares to be repurchased will be equivalent to 5% of the shares issued and paid, or up to 11,345,464,528 shares. Shares may only be repurchased for up to the amount of retained earnings.

· The minimum repurchase price to be paid for the shares will be Ch$2.90 per share and the maximum repurchase price will be Ch$3.05 per share.

· The Share Repurchase Program will have a tenor of 3 years beginning April 15, 2008.

· Shares repurchased must be sold within 24 months of acquisition. Any shares not resold during this time frame will reduce paid-in capital.

· If shares are resold, Shareholders have a preferential right to acquire the repurchased shares.

· Repurchased shares, although registered in our name, do not have voting or dividend rights.

On April 22, 2008, our Board of Directors, acting as authorized by our Shareholders at the Extraordinary Shareholders’ Meeting held on April 15, 2008, agreed upon the following:

· To set the repurchase price of the shares at Ch$3.03 per share.

· That the number of shares to be offered in the Share Repurchase Program will be 5,672,732,264 shares, which represent 2.5% of our issued and paid shares.

· The share acquisition process will be carried out in accordance with the terms and conditions approved by the Shareholders at the Extraordinary Shareholders’ Meeting; through one or more tender offers (Ofertas Públicas de Adquisicion de Acciones) in accordance with article 198-5 of the Securities Market Law, and Circular No. 1,514 of the Superintendency of Securities and Insurance and applicable law; in the Securities Exchange of the Santiago Stock Exchange, through the System of Firm Offers (Sistema de Ofertas a Firme en Bloque).

· The offer commenced on April 30, 2008, for a period of 30 days.

· The tender offer expired on May 29, 2008, and 6,849,927,252 shares were tendered.

· As Acceptance Orders were received for more shares than the number of shares offered to be purchased, in accordance with the conditions of the offer, a pro rata factor of 0.828144892 was applied.

Between December 31, 2007 and the date of the issue of these financial statements, there have been no other significant subsequent event exists that could materially affect these financial statements.

F-39

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

NOTE 26 - INCOME STATEMENTS, BALANCE SHEETS AND STATEMENTS OF CASH FLOWS (SEC FORMAT)

The presentation of the financial statements prepared in accordance with Chilean GAAP differs significantly from the format required by the SEC under Rules 210.9-01 to 210.9-07 of Regulation S-X (“Article 9”). The Chilean GAAP financial statements set forth below have been restated in constant Chilean pesos as of December 31, 2007 using the adjustment factor arising from the Chilean Consumer Price Index and are shown in accordance with the format required by Article 9.

The principal reclassifications and adjustments which were made to the basic Chilean GAAP financial statements in order to present them in the Article 9 format are as follows:

a. Elimination of contingent assets and liabilities from the balance sheet

In accordance with Chilean GAAP, the Bank recognizes rights and obligations with respect to contingent loans as contingent assets and liabilities. Contingent liabilities consist of open, unused and standby letters of credit, together with guarantees by the Bank in Chilean peso, UF and foreign currencies (principally U.S. dollars). The liabilities represent the Bank’s obligations under such agreements. Under U.S. GAAP, such contingent amounts are not recognized on the consolidated balance sheets but are disclosed in the notes to the financial statements. The elimination of these amounts is included in the consolidated balance sheets below.

b. Presentation of goodwill

Under U.S. GAAP, goodwill should be presented as a separate caption in the balance sheets while under Chilean GAAP the unamortized balance is included in other assets in the consolidated balance sheets and the goodwill amortization is presented as part of non-operating expenses. Goodwill amortization and the unamortized balance has been reclassified in a separate caption in the consolidated income statements and balance sheets below.

Goodwill under U.S. GAAP is not amortized over its estimated useful life. As a result, Goodwill is subject to at least an annual impairment review.

c. Comprehensive income

In accordance with SFAS No. 130, “Reporting Comprehensive Income”, the Bank is required to report and disclose comprehensive income and its components in a full set of general purpose financial statements. “Comprehensive income” is defined in this statement as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes net income and other comprehensive income (revenues, expenses, gains and losses) that under U.S. GAAP are reported in a separate component of shareholders´ equity. The changes in other comprehensive income which are related to movements in fair value of available for sale securities are included in the consolidated income statements below.

d. Reclassification of deferred taxes

Under Chilean GAAP deferred tax assets and liabilities are not netted in the balance sheets. This reclassification is included in the consolidated balance sheets below.

e. Accrued interest and indexation adjustments

Accrued interest and indexation adjustments are presented with the related principal amounts of loans as indicated in Note 1 d) to the financial statements. Under U.S. GAAP, accrued interest and indexation adjustments would be separately presented in the consolidated balance sheets.

F-40

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

f. Reclassification of investments in mutual funds

Investments in mutual funds under Chilean GAAP are presented as other assets on the balance sheet. Under U.S. GAAP, these investments are required to be classified as investments for trading purposes. This reclassification is included in the consolidated balance sheets below.

g. Presentation of cash flows

Under Chilean GAAP, the cash flow has been prepared in accordance with Technical Bulletin No. 65 of the Chilean Association of Accountants, which does not differ significantly from U.S. GAAP, except for changes in other assets and liabilities such as other receivables, prepaid assets and accruals for salaries and vacations which should be presented as cash flows from operating activities. Additionally, the non-cash movements related to assets received in lieu of payments are not reported as supplemental information under Chilean GAAP, as usually required under U.S. GAAP. This reclassification and the disclosure of non-cash activity are included in the consolidated statements of cash flows below.

F-41

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Consolidated Income Statements

The following consolidated income statements have been prepared in accordance with Chilean GAAP and are presented in accordance with requirements of Article 9, except for the inclusion of price-level restatement permitted under Item 18 of Form 20-F. In connection with the preparation of the Article 9 income statements, the price-level restatement includes the effect of inflation primarily resulting from interest-earning assets and interest-bearing liabilities. As the Bank does not compute the price-level adjustment for separate categories of assets and liabilities, such adjustment is presented as a component of interest expense.

	Year ended December 31,
	2005		2006		2007
	MCh$		MCh$		MCh$

Interest income
Interest and fees on loans	222,625		247,664		361,948
Interest on investments	48,580		17,048		7,157
Interest on deposits with banks	1,163		614		1,521
Interest on investments under agreements to resell	301		532		8,470
Total interest income	272,669		265,858		379,096

Interest expense
Interest on deposits	(91,948	)	(100,247	)	(117,769	)
Interest on securities sold under agreements to repurchase	(13,098	)	(12,192	)	(5,398	)
Interest on other borrowed funds	(2,781	)	(4,080	)	(6,958	)
Interest on long-term debt	(34,654	)	(32,355	)	(84,203	)
Price-level restatement (1)	(11,576	)	(7,527	)	(25,946	)
Total interest expense	(154,057	)	(156,401	)	(240,274	)

Net interest income	118,612		109,457		138,822
Allowance for loan losses	(12,181	)	(14,416	)	(25,955	)
Net interest income after provision for loan losses	106,431		95,041		112,867

Other income
Fees and commissions	21,184		25,166		29,684
Brokerage and securities income	4,227		5,131		7,181
Gain (losses) on investment activities	13,059		7,522		(1,652	)
Net gains (losses) on foreign exchange	(395	)	324		7,575
Other revenue	9,000		4,123		3,904
Total other income	47,075		42,266		46,692

Other expenses
Salaries	(40,830	)	(43,962	)	(51,096	)
Net premises and equipment expenses	(6,458	)	(6,417	)	(4,553	)
Goodwill amortization	(4,003	)	(3,175	)	(3,003	)
Administration expenses	(17,615	)	(19,468	)	(24,120	)
Other expenses	(15,120	)	(14,957	)	(16,407	)
Total other expenses	(84,026	)	(87,979	)	(99,179	)
Income before income taxes	69,480		49,328		60,380
Income taxes expenses	(11,766	)	(7,330	)	(9,331	)
Net income	57,714		41,998		51,049
Other Comprehensive income (loss)	(9,283	)	5,918		(282	)
Comprehensive income	48,431		47,916		50,767
Net income per share of common stock	0.25		0.19		0.22
Weighted average number of outstanding common shares (in thousands)	226,909,291		226,909,291		226,909,291

(1) The price-level adjustment includes the effect of inflation primarily resulting from interest-earning assets and interest-bearing liabilities. As the Bank does not record the price-level adjustment for separate categories of assets and liabilities, such adjustment is presented as a component of interest expense.

F-42

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Consolidated Balance Sheets

The following consolidated balance sheets as of December 31, 2006 and 2007 have been prepared in accordance with Chilean GAAP, and are presented in accordance with the requirements of Article 9, except for the inclusion of price-level restatement permitted under item 18 of Form 20-F.

	December 31,
	2006		2007
	MCh$		MCh$
ASSETS
Cash and due from banks	74,900		80,558
Interest bearing deposits in other banks	13,358		19,525
Cash and cash equivalents	88,258		100,083

Investments:
Trading	133,603		152,846
Available-for-sale	30,082		41,366
Investments purchased under agreements to resell	6,591		55,439
Investments	170,276		249,651

Loans	3,335,158		4,077,780
Unearned income	(58,946	)	(54,926	)
Allowance for loan losses	(49,967	)	(55,067	)
Loans, net	3,226,245		3,967,787

Premises and equipment, net	34,660		34,159
Goodwill	3,649		646
Derivatives	4,781		34,055
Other assets	134,187		116,674
Total assets	3,662,056		4,503,055

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing	302,343		346,242
Interest bearing	1,821,233		2,410,668
Total deposits	2,123,576		2,756,910

Short-term borrowings	83,217		142,279
Securities sold under agreements to repurchase	58,937		54,255
Derivatives	5,306		34,238
Other liabilities	75,753		36,605
Long-term debt	849,957		994,094
Total liabilities	1,073,170		1,261,471

Commitments and contingencies	—		—

Shareholders’ equity
Common stock (no par value 226,909 million shares issued and outstanding)
Common stock - paid-in capital	314,398		314,398
Retained earnings	150,611		170,278
Accumulated other comprehensive income (loss)	301		(2	)
Total shareholders’ equity	465,310		484,674
Total liabilities and shareholders’ equity	3,662,056		4,503,055

F-43

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Consolidated Statements of Cash Flows

The following condensed consolidated statements of cash flows have been prepared in accordance with Chilean GAAP, and are presented in accordance with the requirements of Article 9, except for the inclusion of price-level restatement permitted under item 18 of Form 20-F.

	Year ended December 31,
	2005		2006		2007
	MCh$		MCh$		MCh$

Net cash provided by operating activities	62,943		96,371		78,139
Net cash used in investing activities	(305,735	)	(196,859	)	(1,066,160	)
Net cash provided by financing activities	146,843		109,615		996,445
NET CASH FLOW	(95,949	)	9,127		8,424

INFLATION EFFECT ON CASH AND CASH EQUIVALENTS	(3,504	)	(1,593	)	3,401
NET INCREASE IN CASH AND CASH EQUIVALENTS	(99,453	)	7,534		11,825
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	180,177		80,724		88,258
CASH AND CASH EQUIVALENTS AT END OF YEAR	80,724		88,258		100,083

SUPPLEMENTAL CASH FLOW INFORMATION:
Non cash movements (Assets received in lieu of payments)	3,610		2,384		3,369

NOTE 27 - DIFFERENCES BETWEEN CHILEAN AND U.S. GAAP

Accounting principles generally accepted in Chile and accounting principles of the Chilean Superintendency of Banks (collectively, “Chilean GAAP”), differ in certain important respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”). Such differences involve certain methods for measuring the amounts shown in the consolidated financial statements, as well as additional disclosures required by U.S. GAAP.

References below to “SFAS” are to Statements of Financial Accounting Standards in the United States of America.

1. Differences in measurement methods

Set forth below is a description of the significant differences between Chilean GAAP and U.S. GAAP as they relate to the Bank.

The cumulative inflation rate in Chile as measured by the Consumer Price Index (CPI) for the three-year period ended December 31, 2007 was approximately 13.7%. Chilean GAAP requires that financial statements of banks be restated to reflect the total effect of the loss in the purchasing power of the Chilean peso on the financial position and results of operations of reporting entity. The method, described in Note 1 c), is based on a model which enables calculation of net inflation gains or losses caused by monetary assets and liabilities exposed to changes in the purchasing power of local currency, by restating all non-monetary accounts in the financial statements.

The model prescribes that the historical cost of such accounts be restated for general price-level changes between the date of origin of each item and the period-end. The inclusion of price-level adjustments in the accompanying financial statements is considered appropriate under the prolonged inflationary conditions affecting the Chilean economy. As permitted under Item 18 of Form 20-F no adjustments have been made to reflect the elimination of the price-level adjustments.

F-44

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

a. Loan origination fees and costs

The Bank recognizes commissions (origination fees) on credit card loans, lines of credit and letters of credit when collected and expenses related direct cost when incurred. Under SFAS No. 91, “Accounting for Nonrefundable Fees and Costs Associated with Origination or Acquiring Loans and Initial Direct Costs of Leases”, loan origination fees and certain direct loan origination costs should be recognized as an adjustment to interest income over the life of the related loan. In Management’s opinion, the differences that exist between Chilean GAAP and US GAAP are immaterial.

b. Income taxes

Under SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”), income taxes are recognized using the asset and liability method which is similar to Chilean GAAP. The effects of recording deferred income taxes related to certain adjustments to U.S. GAAP and the elimination of the complementary assets and liabilities and their respective amortization are included in the reconciliation of consolidated net income and shareholders’ equity in paragraph (m) below. Also, under FIN 48, Accounting for Uncertainty in Income Taxes, income tax benefits are recognized and measured based upon a two-step model: 1) a tax position must be more-likely than-not to be sustained based solely on its technical merits in order to be recognized, and 2) the benefit is measured as the largest amount of that position that is more-likely-not to be sustained upon settlement. The difference between the benefit recognized for a position in accordance with this FIN 48 model and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit (UTB).

Additional disclosures required under SFAS 109 and FIN 48 are provided in Note 27 2b.

c. Mandatory dividend

As required by Chile’s General Banking Law, unless otherwise decided by a two-thirds vote of the issued and subscribed shares, the Bank must distribute a cash dividend in an amount equal to at least 30% of its net income for each year as determined in accordance with Chilean GAAP, or a higher legally binding commitment (above the aforementioned 30%), should such commitment exist , or unless and except to the extent the Bank has unabsorbed prior year losses. The dividend policy consists of distributing at least 50% of the net income of each year and retaining the remaining in “Other reserves”. Under Chilean GAAP no provision is recorded for the legal minimum dividend.

Under U.S. GAAP, dividends are accrued when declared and in the amount specified by appropriate approval or statutory regulation. Since the payment of the dividend out of each year’s net income is a legal requirement in Chile, an accrual would have been made for U.S. GAAP purposes to recognize the dividend obligation under Chilean law. The effect of recording mandatory dividends in accordance with U.S. GAAP is included in the reconciliation of shareholders’ equity in paragraph (m) below.

d. Investment securities

Prior to January 1, 2006, the Bank recorded investments in financial instruments with a secondary market at market value in accordance with specific instructions of the Chilean Superintendency of Banks. This required the recognition of the market value adjustments to be recorded against income for the year, unless permanent investments are involved, in which case, under certain limitations, the aforementioned adjustments can be made directly against equity in “Fluctuations in value of financial investments”. Investment securities maintained by the Bank’s subsidiaries are carried at the lower of price-level restated cost or market value.

F-45

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

i. Trading Instruments - Instruments for trading are securities acquired for which the Bank has the intent to generate earnings from short-term price fluctuations or through brokerage margins, or that are included in a portfolio created for such purposes. Instruments for trading are valued at their fair value according to market prices on the closing date of the balance sheet.

Held to maturity investments are valued at amortized cost. The Bank does not have investments classified in this category. Available for sale investments are valued at each subsequent period-end at their fair value according to market prices or valuations obtained by using models. These mark-to-market adjustments are recorded directly in a separate component of shareholders’ equity.

Under U.S. GAAP, according to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS 115”), debt and equity securities are required to be classified in accordance with the Bank’s intent and ability to hold the securities, as follows:

•		Debt securities for which the Bank has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and are reported at amortized cost.

•		Debt and marketable equity securities that are bought and held by the Bank, principally for the purpose of selling them in the near term, are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

•		Debt and marketable equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income.

SFAS No.115 established that in the case of foreign-currency-denominated available-for-sale debt securities, the change in fair value expresses in an entity’s functional currency is the total of the changes in market price of the security as expressed in the local currency due to factors such as changes in interest rates and credit risk and the change in the exchange rate between the local currency and the entity’s functional currency. EITF 96-15 established that the entire change in the fair value of foreign-currency-denominated available-for-sale debt securities should be reported in stockholder’s equity. As of December 31, 2007 the Bank does not maintain foreign-currency-denominated available-for-sale debt securities.

Prior to January 1, 2006, the Bank determined that under U.S. GAAP, its investments should be classified as “available-for-sale”. Under Chilean GAAP, the unrealized holding gains (losses) related to investments classified as permanent were included in equity, which does not differ from the treatment “available-for-sale” under U.S. GAAP. The effect of recording the market value adjustment for investments stated at the lower of price-level restated cost or market value, consistent with the valuation criteria of certain subsidiaries of the Bank, and the reclassification of market value adjustment to the Investment portfolio defined as “non-permanent” for Chilean GAAP purposes from net income to shareholders’ equity is included in the reconciliation of consolidated net income and shareholders’ equity in paragraph (m) below.

According to the new rules issued by the Chilean Superintendency of Banks and the Bank’s adoption and implementation of the new classification and accounting treatment, the Bank has determined that there are no material differences between Chilean GAAP and U.S. GAAP commencing on January 1, 2006.

F-46

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

e. Other than temporary impairment of available-for-sale securities

Prior to January 1, 2006, Chilean GAAP did not require an evaluation of marketable securities in order to determine other than temporary impairment. Beginning on January 1, 2006, Chilean GAAP requires an impairment evaluation of marketable securities when they are considered to be other than temporarily impaired, based on whether or not the decline in fair value is judged to be other than temporary. In such circumstances, the cost basis of the security is written down to fair value and the amount written down is charged against income regardless of the category to which it has been assigned. The impairment is not considered as having established a new cost basis for the security and therefore, under certain conditions, recovery up to the extent of the initial cost basis may be recorded. Chilean GAAP does not require reporting foreign exchange differences in the unrealized gains/losses on available-for-sale securities in equity. The portion related to foreign exchange gain (loss) is recorded directly in income.

Under U.S. GAAP, SFAS 115 requires that the Bank determines for individual securities classified as available for sale whether a decline in fair value below the amortized cost basis is other than temporary. If the decline in fair value is judged to be other than temporary, the cost basis of the individual security is written down to fair value as a new cost basis and the amount of the write-down is included in earnings (that is, accounted for as a realized loss). The new cost basis does not change when subsequent recoveries in fair value occur. Subsequent increases in the fair value of available for sale securities are included in other comprehensive income and subsequent decreases in fair value, if not an other than temporary impairment, also are included in the other comprehensive income.

The Bank reviewed securities with unrealized losses as of December 31, 2006 and 2007, and concluded that there was no other than temporary impairment as of any one of these dates. This review consisted of evaluating the economic reasons for the decline, credit rating of the issuers of the securities and the Bank’s intention and ability to hold the securities until the unrealized loss is recovered.

At December 31, 2005, the Bank considered that the continued devaluation of the U.S. Dollar relative to the Chilean peso was an indication of other-than-temporary impairment. As a result, an impairment of MCh$18,102 for U.S. GAAP was recognized for unrealized losses related to U.S. Dollar denominated debt securities, classified as available-for-sale. At December 31, 2006, the Bank recovered under Chilean GAAP MCh$207 gains on available-for-sale securities due to the appreciation of the U.S. dollar relative to the Chilean peso. Under U.S. GAAP these gains are included in “Adjustment to market value” below, under other comprehensive income. This adjustment is included in the reconciliation of consolidated net income in paragraph (m) below.

The carrying value and market value of debt securities available-for-sale as of December 31, 2006 and 2007 are as follows:

	Adjustment to market value
	Cost as of December 31, 2006	Gross Unrealized Gains	Gross Unrealized Losses (1)		Estimated fair value as of December 31, 2006
	MCh$	MCh$	MCh$		MCh$

Chilean Central Bank	—	—	—		—
Local financial institutions	18,268	2	(4	)	18,266
Other local investments	6,316	405	—		6,721
Investments abroad	4,989	106	—		5,095
Total	29,573	513	(4	)	30,082

F-47

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

	Adjustment to market value
	Cost as of December 31, 2007	Gross Unrealized Gains	Gross Unrealized Losses (1)		Estimated fair value as of December 31, 2007
	MCh$	MCh$	MCh$		MCh$

Chilean Central Bank	2,972	12	—		2,984
Local financial institutions	38,396	11	(25	)	38,382
Other local investments	—	—	—		—
Investments abroad	—	—	—		—
Total	41,368	23	(25	)	41,366

(1)

Investments with unrealized losses are disclosed and segregated in accordance with paragraph 21 of EITF 03-01. The unrealized losses were caused by adverse movements in interest rates. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Bank has the ability and intent to hold these investment until a recovery of fair value, which may be maturity, the bank does not consider these investments to be other than temporarily impaired as of December 31, 2006 or 2007.

The following table represents the unrealized losses and fair value of investments on hand at December 31, 2006 not classified as other than temporarily impaired:

	Less than 12 months				12 months or more			Total
	Amortized cost	Fair value	Unrealized losses		Amortized cost	Fair value	Unrealized losses	Amortized cost	Fair value	Unrealized losses
	MCh$	MCh$	MCh$		MCh$	MCh$	MCh$	MCh$	MCh$	MCh$

Local financial institutions	5,375	5,371	(4	)	—	—	—	5,375	5,371	(4	)
	5,375	5,371	(4	)	—	—	—	5,375	5,371	(4	)

There were no securities pledged as collateral under repurchase agreements as of December 31, 2006.

The following table represents the unrealized losses and fair value of investments on hand at December 31, 2007 not classified as other than temporarily impaired:

	Less than 12 months				12 months or more			Total
	Amortized cost	Fair value	Unrealized losses		Amortized cost	Fair value	Unrealized losses	Amortized cost	Fair value	Unrealized losses
	MCh$	MCh$	MCh$		MCh$	MCh$	MCh$	MCh$	MCh$	MCh$

Local financial institutions	12,218	12,193	(25	)	—	—	—	12,218	12,193	(25	)
	12,218	12,193	(25	)	—	—	—	12,218	12,193	(25	)

There were no securities pledged as collateral under repurchase agreements as of December 31, 2007.

F-48

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

f. Investments in other companies

Under Chilean GAAP, certain long-term investments in which the Bank owns less than 20% of the outstanding shares have been recorded using the equity method. Under U.S. GAAP, those investments generally would have been recorded at cost. The effect of accounting for these investments in accordance with U.S. GAAP is included in the reconciliation of consolidated net income and shareholders’ equity in paragraph (m) below.

g. Derivative financial instruments

Effective January 1, 2006, through circular No. 3,345 and related amendments, the Chilean Superintendency of Banks established new rules for the accounting treatment of certain derivative instruments and hedges of financial assets. Financial instruments which meet the definition of a “derivative” such as forwards in foreign currency, U.F., interest rate futures currency and interest rate swaps, currency and interest rate options and others, are initially recognized on the balance sheet at cost (including transaction fees) and, at subsequent period ends, at their fair value. The fair value is obtained from market quotes, discounted cash flow models and option valuation models, as applicable.

When a derivative contract is entered into, it must be designated by the Bank as a trading contract or as a hedge. Any changes in the fair value of trading financial derivative contracts are recorded in income under “Gains from trading activities” or “Losses from trading activities”, as applicable. If the derivative is designated as a hedge, the Bank enters into two types of hedge relationships: (1) fair value hedge, and (2) cash flow hedge. To qualify for hedge accounting, the instruments must comply with all the following conditions: (a) hedging must be formally documented at inception; (b) hedging is expected to be highly effective; (c) the effectiveness of the hedge can be reasonably measured; and (d) hedging is highly effective with regard to the risk hedged, continuously throughout the period of the hedge.

Under U.S. GAAP, SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended (collectively “SFAS 133”), which establishes comprehensive accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities would have been used to record the accounting impact of the above-mentioned financial instruments. The standard requires that all derivative instruments meeting the definition included in SFAS 133 be recorded in the balance sheet at fair value and the changes in income statement. Financial instruments may be designated as “hedges” under SFAS 133 and the accounting for the changes in the fair value of the hedged item and in the hedging instrument may differ depending on the type of hedge designated.

The Bank does not maintain financial derivative contracts that under Chilean and U.S. GAAP qualify for hedge accounting. Therefore changes in the respective fair values of all derivative instruments are reported in earnings.

Prior to January 1, 2006, the Bank has included an adjustment to account for the difference in the accounting treatment of financial derivative contracts between Chilean and U.S. GAAP which is included in the reconciliation of consolidated net income and shareholders’ equity in paragraph (m) below.

F-49

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

h. Business combination

During the year ended December 31, 1998, the Bank acquired the Consumer Credit Division of Corfinsa and Financiera Condell S.A.

Under Chilean GAAP, goodwill represents the difference between the purchase price and the book value of the net assets acquired (book value of the acquired assets minus the book value of the assumed liabilities) and is amortized on a straight-line basis over the period of the estimated return on investment. The estimated return on investment period is determined based on the type and diversity of the business, its location and the markets in which it operates and cannot exceed 10 years. The amortization period was defined in accordance with instructions from the Chilean Superintendency of Banks and is 10 years for all goodwill except for certain loan losses that were recorded as goodwill for Chilean GAAP in accordance with instructions from the Chilean Superintendency of Banks which are amortized over 6 years.

Under U.S. GAAP, these transactions would have been accounted for as business combinations in accordance with Accounting Principles Board Opinion No. 16, “Business Combinations” (“APB 16”). Under APB 16 the assets acquired and the liabilities assumed would have been adjusted to estimated fair value and intangible assets, including goodwill, would have been recorded. These adjustments to fair value and the related intangible assets would have been amortized over the estimated life of the acquired loans and/or deposit relationships in accordance with APB 16 and Accounting Principles Board Opinion No. 17, “Intangible Assets”. The amortization period determined, averaged approximately three years. Accordingly, as of December 31, 2001 the adjustments to fair value of the acquired assets and assumed liabilities and the intangibles assets, including goodwill, for U.S. GAAP purposes were fully amortized.

The effect of the difference in amortization period between Chilean GAAP and U.S. GAAP is included in the reconciliation of consolidated net income and shareholders’ equity in paragraph (m) below.

i. Assets received in lieu of payment

As instructed by the Chilean Superintendency of Banks, assets received in lieu of payment related to lending transactions and assets recovered from leasing contracts, are carried at price-level restated cost which is deemed to be the carrying value of the related loan. If the total fair value of these assets is lower than the carrying amount, a valuation allowance is recorded. This is calculated on the assets as a group, except for leasing which is calculated on an individual basis. Additionally, assets that have not been sold within one year of the foreclosure date are written-off.

Under U.S. GAAP, assets received in lieu of payment are initially recorded at fair value less any estimated sales costs estimated at the date of foreclosure, on an individual asset basis and limited to the carrying amount of the related loan or lease receivable. Subsequent to foreclosure, valuations should be periodically performed to record any impairment.

The Bank recorded in the consolidated statement of income MCh$3,977, MCh$2,087 and MCh$1,065 during 2005, 2006 and 2007 to establish allowances for these assets. The Bank believes that the current allowances are consistent with the decrease in value of the assets received in lieu of payment.

Based on the analysis performed, the Bank believes that there is no significant difference between the amount of the Assets received in lieu of payment recorded for Chilean and U.S. GAAP.

F-50

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

j. Allowance for loan losses

Under Chilean GAAP, the allowance for loan losses is calculated according to specific guidelines issued by the Chilean Superintendency of Banks. The provisions required under the guidelines set by the Chilean Superintendency of Banks are consistent by grade with the Bank’s historical loss experience. Under U.S. GAAP, the allowances for loan losses should be determined for impaired and other loans in amounts adequate to cover inherent probable losses in the loan portfolio at the respective balance sheet dates in accordance with SFAS No. 114, “Accounting by Creditors for Impairment of a Loan” (“SFAS 114”), for loans specifically reviewed for impairment and SFAS No. 5, “Accounting for Contingencies” (“SFAS 5”), for those loans and loan pools evaluated on a collective basis for impairment. The Bank’s methodology for determining its allowance for loan losses uses a variety of internal and external factors, including the results of its loan classification process, historical losses, economic and market data and other relevant factors, applied on a consistent basis, and updated to reflect current trends and information. The Bank has estimated its required allowance in the following manner:

· All loans of the Bank were classified in accordance with the rules of the Chilean Superintendency of Banks.

· Our current classification system includes 11 categories (1, 2, 3, 4, 5, 5D, 6, 7, 8, 9 and 10, which correspond to the ten categories set forth by the Chilean Superintendency of Banks’ for loans A1, A2, A3, B, C1, C2, C3, C4, D1 and D2), as more fully described below.

Category 1: “Excellent”		This category includes commercial borrowers with excellent management, social character, asset quality, payment capability, and low debt levels with excellent debt service coverage capability. This typically includes companies that are leaders in their respective industries with ample access to domestic and international capital markets and stable margins that are in line with those prevalent in their industry. In particular, this category is reserved solely for corporate borrowers with domestic debt ratings equal to or exceeding AA-, provided that if several debt ratings exist with respect to the borrower, the lowest will be considered for purposes of classification. Category 1 corresponds to category A1 of the Chilean Superintendency of Banks.

Category 2: “Strong”		This category includes commercial borrowers with good management and without problems relating to social character. These borrowers have high asset quality and liquidity, a solid capacity to make required payments and service their debt, and stable net margins. These borrowers also have a strong position in the domestic market in their respective industries with good access to domestic capital markets. Category 2 corresponds to Category A2 of the Chilean Superintendency of Banks.

Category 3: “Good”		This category includes borrowers with good liquidity levels and asset quality, good payment capacity and debt service coverage ability. These borrowers also have good management capabilities and margins with a normal degree of stability. These companies have a minimal probability of financial deterioration. Borrowers in this category are normally solid regional companies, leaders in local markets with good access to the financial system, or medium-size companies within their industry or sector. Category 3 corresponds to Category A3 of the Chilean Superintendency of Banks.

F-51

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Category 4: “Acceptable”		This category includes borrowers with an acceptable credit capacity and an average risk level and acceptable asset portfolios and liquidity. Their capacity to pay is subject to business and financial cycles, and debt levels may be higher than average for their industry or sector. These borrowers maintain good access to the financial system, but in some cases may need to provide third party guarantees in order to obtain financing. Loans to these borrowers require some level of monitoring because they are not financially solid enough to handle strong economic downturns or market activity. Guarantees or other contractual protections are recommended with respect to loans made to borrowers in this category. Category 4 also corresponds to Category A3 of the Chilean Superintendency of Banks.

Category 5: “Marginal”		This category includes borrowers with a higher than average risk level. These borrowers have low levels of liquidity and limited debt capacity. They are typically smaller companies than average for their sector or industry and have limited access to financing. Loans to these borrowers require a higher level of monitoring as they are probably unable to survive strong financial or economic crises. Adequate protections, such as of guarantees on real property, are required. Typical borrowers in this category include companies with high debt loads, start-ups, and all others that do not merit a higher classification. Category 5 corresponds to Category B of the Chilean Superintendency of Banks.

Category 5D: “Weak”		This category includes debtors with poor payment history and weak financial condition, but that provide guarantees that result in an estimated loan recovery percentage of at least 97% of amounts due. Category 5D corresponds to Category C1 of the Chilean Superintendency of Banks.

Category 6: “Vigilance”		This category includes debtors under special vigilance. These borrowers have displayed serious deterioration and require constant monitoring. Loans to borrowers in this category require special strategies to either guarantee the amounts due, reduce the bank’s exposure, or terminate the credit relationship. This category includes borrowers with poor payment behavior but that provide guarantees that result in an estimated loan recovery of 81% to 96% of amounts due. Category 6 corresponds to Category C2 of the Chilean Superintendency of Banks.

Category 7: “Vulnerable”		This category includes debtors with serious weaknesses in their business but that provide guarantees that result in an estimated loan recovery of 71% to 80% of amounts due. Category 7 corresponds to Category C3 of the Chilean Superintendency of Banks.

Category 8: “Sub-Standard”		This category includes debtors with serious difficulty in paying the amounts due and for whom the debt is inadequately protected by the capital of the borrower, and the guarantees provided result in an estimated loan recovery of 51% to 70% of amounts due. Category 8 corresponds to Category C4 of the Chilean Superintendency of Banks.

Category 9: “Doubtful”		This category includes debtors for whom serious doubts exist with respect to repayment in the normal course and for which guarantees provided result in an estimated loan recovery of 21% to 50% of amounts due. Category 9 corresponds to Category D1 of the Chilean Superintendency of Banks.

Category 10: “Loss”		This category includes loans to debtors where total loan loss is expected and any guarantees result in an estimated loan recovery of up to 20% of amounts due. Category 10 corresponds to Category D2 of the Chilean Superintendency of Banks.

F-52

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

· Commercial loans greater than MCh$200, which were considered impaired, were specifically reviewed for impairment in accordance with SFAS 114. The Bank considers all past due loans and loans classified as either 6, 7, 8, 9 and 10 (B-, C or D in 2003 with balances greater than MCh$100) to be impaired loans for the purposes of applying SFAS 114. The allowances for loans losses for these loans were determined based on the present value of the expected future cash flows discounted at the loan’s effective contractual interest rate, or at the fair value of the collateral if the loan was collateral dependent.

· Commercial loans classified as either 1, 2, 3, 4, 5 and 5D (A or B in 2003) were evaluated collectively for impairment based on management’s best estimate of the probable losses inherent in these loans. The allowance for loan losses for these loans was determined based on an analysis of the results of the Bank’s classification process overtime and the resulting losses experienced on these types of loans updated to reflect current market trends and conditions.

· Commercial loans with balances under MCh$200 were evaluated collectively for impairment based on management’s best estimate of the probable losses inherent in these loans. The allowance for loan losses for these loans was determined based on historical losses for these types of loans updated to reflect current market trends and conditions and management’s estimate of the probable losses inherent in these loans.

· Consumer and mortgage loans were evaluated collectively for impairment based on management’s best estimate of the probable losses inherent in these loans. The allowance for loan losses for these loans was determined for (l) delinquent loans based on the amount of past due payments and the related probable loss and (ii) for current loans based on the results of the Bank’s risk matrix model which is used to identify loans with risk factors and estimate the related probable losses.

Management believes that there is no difference between the methodology it uses for Chilean GAAP to determine its allowance for loan losses and the process required by SFAS 114 and SFAS 5. Accordingly, there is no significant difference between the allowance for loan losses for Chilean GAAP and the amount that would be determined in accordance with U.S. GAAP as of December 31, 2006 and 2007. The following table sets forth the additional disclosure required by U.S. GAAP.

	December 31,
	2006	2007
	MCh$	MCh$

Impaired loans with an allowance	64,770	69,540
Impaired loans without an allowance	—	—
Allowance for impaired loans	2,532	2,208
Average balance for impaired loans for the year	65,375	70,035

k. Interest recognition on non-accrual loans

The Bank suspends the accrual of interest on loans on the first day that such loans are overdue. Previously accrued but uncollected interest on overdue loans is not reversed at the time the loan ceases to accrue interest. Under U.S. GAAP, recognition of interest on loans is generally discontinued when, in the opinion of management, there is an indication that the borrower may be unable to meet payments as they become due. As a general practice, this occurs when loans are 90 days or more overdue. Any accrued but uncollected interest is reversed against interest income at that time.

In addition, under Chilean GAAP any payment received on overdue loans is applied to reduce the recorded balance of accrued interest receivable, if any, and thereafter is recognized as income to the extent of interest earned but not recorded. Any remaining amount is then applied to reduce the outstanding principal balance. Under U.S. GAAP, any payment received on loans when the collectibility of the principal is in doubt is treated as a reduction of the outstanding principal balance of the loan until such doubt is removed. The effect of the difference in interest recognition on non accrual loans is not material to the Bank’s financial position or results of its operations.

F-53

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

l. Charge-offs and recoveries of loans previously charged-off

As discussed in Note 1 n. of these financial statements, under Chilean GAAP the Bank charges off loans when collection efforts have been exhausted. Under the rules and regulations established by the Chilean Superintendency of Banks, charge-offs must be made within the following maximum prescribed limits:

· 24 months after a loan is past due (3 months for consumer loans) for loans without collateral;

· 36 months after a loan is past due for loans with collateral.

Under U.S. GAAP loans or portions thereof should be written-off in the period that they are deemed uncollectible. The Bank believes that the charge-off policies it applies in accordance with Chilean GAAP are substantially the same as those required under U.S. GAAP, and therefore that differences are not significant to the presentation of its financial statements.

m. Effects of conforming to U.S. GAAP

The following is a reconciliation of consolidated net income under Chilean GAAP to consolidated net income determined in accordance with U.S. GAAP. It also includes the adjustments to the movement in Other Comprehensive Income:

	*For the years ended ()**
	2005		2006		2007
	MCh$		MCh$		MCh$

Net income in accordance with Chilean GAAP	57,714		41,998		51,049
Loan origination fees and costs (par. 27.1. a)	(66	)	12		337
Deferred income taxes (par. 27.1. b)	(195	)	12		(111	)
Investment securities (par. 27.1. d)	4,197		(397	)	229
Other than temporary impairment (par.27.1.e)	(18,102	)	—		—
Investments in other companies (par. 27.1. f)	(8	)	(99	)	4
Derivative financial instruments (par. 27.1. g)	1,262		113		—
Business combinations (par.27.1.h)	4,003		3,175		3,003
Net income in accordance with U.S. GAAP	48,805		44,814		54,511
Other comprehensive income (loss) for available for sale securities net of deferred taxes for an amount of MCh$ (191), MCh$(1,042) and MCh$87 in 2005, 2006 and 2007, respectively.	932		5,076		(424	)
Comprehensive income in accordance with U.S. GAAP	49,737		49,890		54,087

Accumulated other comprehensive income (loss) net of deferred taxes amounted to MCh$(4,567), MCh$422 and MCh$(2) as of December 31, 2005, 2006 and 2007, respectively.

F-54

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

The following is a reconciliation of consolidated shareholders’ equity under Chilean GAAP and under U.S. GAAP:

	*For the years ended ()**
	2006		2007
	MCh$		MCh$

Shareholders’ equity in accordance with Chilean GAAP	465,310		484,674
Loan origination fees and costs (par. 27.1. a)	(337	)	—
Deferred income taxes (par. 27.1. b)	111		—
Deferred income taxes on investments under FAS 115	(1,042	)	87
Accrual for mandatory dividends (par. 27.1. c)	(31,498	)	(25,525	)
Investments in other companies (par. 27.1. f)	1,710		1,714
Business combinations (par.27.1.h)	(3,649	)	(646	)
Shareholders’ equity in accordance with U.S. GAAP	430,605		460,304

The following summarizes the changes in shareholders’ equity under U.S. GAAP during the years ended December 31, 2006 and 2007:

	*MCh$ ()**

Balance as of December 31, 2005	412,214
Price-level restatement	(595	)
Dividends paid 2006	(28,263	)
Accrual for mandatory dividend prior year	28,857
Accrual for mandatory dividend closing year	(31,498	)
Other comprehensive income for the year	5,076
Net income for the year	44,814

Balance as of December 31, 2006	430,605
Price-level restatement	(1,033	)
Dividends paid 2007	(29,328	)
Accrual for mandatory dividend prior year	31,498
Accrual for mandatory dividend closing year	(25,525	)
Other comprehensive loss for the year	(424	)
Net income for the year	54,511

Balance as of December 31, 2007	460,304

(*) For comparative purposes the amounts for periods ended December 31, 2005 and December 31, 2006, have been restated in Chilean pesos of general purchasing power as of December 31, 2007 (“constant Chilean pesos”).

F-55

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

2. Additional disclosure requirements

a. Earnings per share

The disclosure of basic earnings per share and weighted average number of shares outstanding is not required for presentation in the financial statements under Chilean GAAP but is required under U.S. GAAP.

	2005	2006	2007
Basic and diluted earnings per share-U.S. GAAP (1)	0.215	0.197	0.240
Basic and diluted earnings per share-Chile GAAP (1)	0.254	0.185	0.225
Weighted average number of shares outstanding (in thousands)	226,909,291	226,909,291	226,909,291

(1) Basic earnings per share have been calculated by dividing net income by the weighted average number of common shares outstanding during the year. There are no potentially dilutive effects on the earnings of the Bank as it had not issued convertible debt or equity securities.

b. Income taxes

The provision for income taxes charged to income is as follows:

	For the years ended
	2005		2006		2007
	MCh$		MCh$		MCh$

Income tax provision-current under Chilean GAAP	(10,238	)	(9,774	)	(8,661	)
Other taxes (expense) benefits under Chilean GAAP	227		97		430
Effect of deferred income taxes under Chilean GAAP	(1,755	)	1,474		(1,100	)
U.S. GAAP Adjustments:
Reclassification of recovered income tax for U.S. GAAP(1)	—		873		—
Deferred tax for effect of U.S. GAAP adjustments	(195	)	12		(111	)
Income tax expense under U.S. GAAP	(11,961	)	(7,318	)	(9,442	)

(1) Reclassification from “Other Income” in Chile GAAP to “Income tax expense” (as a credit) in U.S. GAAP given that it represents the recovery of a benefit for Chilean income tax return deductions.

Accumulated other comprehensive income is net of deferred tax asset of MCh$954, MCh$(88), MCh$(29) as of December 31, 2005, 2006, and 2007, respectively.

F-56

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Deferred tax assets (liabilities) under U.S. GAAP are summarized as follows:

	For the years ended
	2006		2007
	MCh$		MCh$

Temporary differences
Allowance for loan losses	7,903		8,366
Unearned price difference	1,371		1,281
Forward exchange contracts - fair value adjustment	205		—
Suspended accrual of interest	997		1,239
Other provisions	505		602
Other	605		561
Total deferred tax assets	11,586		12,049

Credit differences:
Fixed asset depreciation	(202	)	(202	)
Deferred expenses	(2,210	)	(2,325	)
Forward contracts	—		36
Leasing contracts	(2,544	)	(3,709	)
Other	(228	)	(656	)
Total deferred tax liabilities	(5,184	)	(6,856	)
Net deferred tax assets	6,402		5,193

The provision (benefit) for income taxes under U.S. GAAP differs from the amount of income tax determined by applying the applicable Chilean statutory income tax rate to pre-tax income as a result of the following differences:

	For the years ended
	2005				2006				2007
	MCh$		%		MCh$		%		MCh$		%

At statutory Chilean income tax rate	(10,330	)	17.0	%	(8,862	)	17.0	%	(10,872	)	17.0	%
Decrease (increase) in rates resulting from:
Non-taxable income	—				—				—
Reclassification of recovered income tax for U.S. GAAP(1)	—				873		(1.7	)	—
Permanent differences and others (2)	(1,631	)	2.7		671		(1.3	)	1,430		(2.2	)
At effective tax rate	(11,961	)	19.7	%	(7,318	)	14.0	%	(9,442	)	14.8	%

(2) The “Others” category includes adjustments to income tax expense to reconcile to the filed tax return.

The implementation of FIN 48 did not have any material impact on the Bank’s financial statements. Please refer to Nota 27. h.

c. Investment securities

SFAS 115 requires additional disclosures for investments classified as available-for-sale. Realized gains and losses are determined using the proceeds from sales less the cost (specific identification method) of the specific investment sold. Additionally, any unrealized gain/loss previously recorded in equity for these investments is reversed through the income statements. SFAS 115 also requires disclosure of the carrying value and market value of securities available-for-sale a maturity schedule for debt securities and the proceeds on sale and related gross gains and losses realized on the sale of available-for-sale securities.

F-57

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

In 2005, proceeds from sales of securities available for sale were MCh$12,135,166 with gross realized gains of MCh$23,569 and gross realized losses of MCh$10,510. In 2006, proceeds from sales of securities available for sale were MCh$206,778 with gross realized gains of MCh$1,465 and gross realized losses of MCh$3,210. In 2007, proceeds from sales of securities available for sale were MCh$105,377 with gross realized gains of MCh$866 and gross realized losses of MCh$1.

The amortized cost and fair value of securities, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.

	As of December 2006		As of December 2007
	Amortized cost	Fair value	Amortized cost	Fair value
	MCh$	MCh$	MCh$	MCh$

Due in 1 year or less	759	793	38,396	38,382
Due after 1 year through 5 years	20,865	20,980	1,864	1,872
Due after 5 years through 10 years	6,138	6,416	1,108	1,112
Due after 10 years	1,811	1,893	—	—
Total	29,573	30,082	41,368	41,366

Under U.S. GAAP, the Bank is required to disclose the amounts of unrealized holding gains and losses included in income as securities classified as trading. For the years ended December 31, 2005, 2006 and 2007, the Bank recognized in income net unrealized holding gains (losses) of MCh$0, MCh$163 and MCh$(79) respectively, on these securities.

d. Troubled debt restructurings

Under Chilean GAAP, troubled debt restructurings are accounted in a manner similar to U.S. GAAP. The Bank, however, is not required under Chilean GAAP to identify all loans, which may qualify as troubled debt restructurings.

e. Future minimum operating lease payments

SFAS 13 requires additional disclosures for the future minimum lease payments, which are as follows:

	As of December 31,	As of December 31,
	2006	2007
	MCh$	MCh$

Due within 1 year	3,076	3,681
Due after 1 year but within 3 years	5,542	6,914
Due after 3 years but within 5 years	4,487	5,748
Due after 5 years	21,428	12,100
Total future minimum operating lease payments	34,533	28,443

A majority of the leases provide for the payment of taxes, maintenance, insurance, and certain other expenses applicable to the leased premises. Many of the leases contain renewal provisions.

Rent expense for 2005, 2006, and 2007 was MCh$1,580, MCh$2,243, and MCh$3,092 respectively.

F-58

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

f. Estimated Fair Value of Financial Instruments

The estimated fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. For those financial instruments with no quoted market prices available, fair values have been estimated using discounted expected future cash flows or other valuation techniques. These techniques are inherently subjective and are significantly affected by the assumptions used, including the discount rates, estimates of future cash flows and prepayment assumptions. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments.

In addition, the estimated fair values presented below do not attempt to estimate the value of the Bank’s revenue generating businesses and anticipated future business activities, and therefore do not represent the Bank’s value as a going concern.

The following notes summarize the major methods and assumptions used in estimating the fair values of financial instruments:

Cash and due from banks The book value of cash and due from banks approximates its estimated fair value due to the short-term nature of these instruments.

Financial investments and investments under agreements to repurchase The estimated fair value of these financial instruments was determined by using quoted market prices, market prices of financial instruments with similar characteristics or valuation models. Investments under agreements to repurchase which mature in less than one year are considered to have a fair value which is not materially different from their book value.

Loans For floating-rate loans that reprice frequently and have no significant change in credit risk, estimated fair values are based on book values. The estimated fair-values for certain mortgage loans, credit card loans, and other consumer loans are based on quoted market prices of similar loans, adjusted for differences in loan characteristics. Fair values of commercial loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

Deposits The fair value disclosed for non-interest bearing deposits and savings accounts is the amount payable at the reporting date and, as a result, is equal to the carrying amount. Fair value for time deposits is estimated using a discounted cash flow calculation that applies interest rates currently offered to a schedule of aggregated expected monthly maturities on time deposits. The value of long-term relationships with depositors is not taken into account in estimating the fair values disclosed.

Chilean Central Bank borrowings, Mortgage finance bonds and Other borrowings The fair value of these financial instruments is estimated using discounted cash flow analyses based on the Bank’s current borrowing rates for similar types of borrowing arrangements with similar remaining maturities.

Derivative instruments The estimated fair value of derivative contracts was determined by using quoted market prices of financial instruments with similar characteristics and valuation models.

F-59

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

The estimated fair values of financial instruments are as follows:

	As of December 31
	2006		2007
		Estimated		Estimated
	Book value	fair value	Book value	fair value
	MCh$	MCh$	MCh$	MCh$
Assets
Cash and due from banks	88,258	88,258	100,083	100,083
Financial Investments	170,276	170,276	239,927	239,927
Loans	3,528,413	3,530,172	4,290,369	4,310,085
Derivative financial instruments	4,781	4,781	34,055	34,055

Liabilities
Deposits	2,123,576	2,120,906	2,756,910	2,753,124
Chilean Central Bank borrowings	34,404	34,404	45,824	45,824
Investments under agreements to repurchase	58,937	58,937	54,255	54,255
Mortgage finance bonds	359,704	355,551	353,431	351,431
Other borrowings	534,922	539,559	737,118	733,969
Derivative financial instruments	5,306	5,306	34,238	34,238

g. Segment information

SFAS No. 131 “Disclosure about Segments of an Enterprise and Related Information” establishes standards for reporting information about operating segments and related enterprise-wide disclosures. Operating segments are defined as components of an enterprise about which discrete financial information is available that is regularly used by the chief operating decision making group in deciding how to allocate resources and assess performance, and which components engage in business activities from which they may earn revenues or incur expenses.

Our business is primarily situated in the domestic market and has strategically aligned its operations into four divisions composed of six reporting segments based on its market segmentation and the needs of its clients and trading partners. The six reporting business segments are Large Companies and Corporate, Companies, Traditional and Private Banking, Lower Income Retail Banking, Treasury and International, and Non-banking Financial Services. We manage these reporting segments using an internal profitability reporting system. Management reviews their segments on the basis of gross operational margin and only uses average balances to evaluate performance and allocate resources.

Descriptions of each business segment are as follows:

Commercial Banking:

· Large Companies and Corporate, includes a full range of financial products and services for companies with annual sales in excess of US$10 million. Financial products include commercial loans, working capital lines of credit, trade financing, payment services and short-term and other deposits.

· Companies, includes a full range of financial products and services to companies with annual sales of less than US$10 million. Leasing and factoring have been included in this business segment.

F-60

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

Retail Banking:

· Traditional and Private Banking offers, among others, checking accounts, consumer loans, credit cards and mortgage loans to middle and upper income segments.

· Lower Income Retail Banking offers, among others, consumer loans, credit cards and mortgage loans to the traditionally underserved low-to-middle income segments..

Treasury and International:

· Primarily includes our treasury activities such as financial management, funding and liquidity as well as our international business.

Non-Banking Financial Services:

· These are services performed by our subsidiaries which include insurance brokerage, financial advisory services, asset management and securities brokerage.

The following table presents summary information in millions of Chilean pesos related to the Bank’s reporting segments for the years ending December 31, 2005, 2006 and 2007.

	Year ended December 31, 2005
	Commercial Banking				Retail Banking
	Large Companies and Corporate		Companies		Traditional and Private Banking		Lower Income Retail Banking		Treasury and International (1)		Non- Banking Financial Services		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Net interest revenue	23,203		27,472		23,371		28,212		21,561		6,369		130,188
Fees and income from services, net	2,635		4,747		6,318		2,667		477		8,567		25,411
Gain from trading activities	2		3,532		—		—		7,224		2,301		13,059
Foreign exchange transactions, net	386		(2,222	)	4		—		4,146		(2,709	)	(395	)
Other operating income (expenses), net	(43	)	1,896		(2,545	)	(7,938	)	2,006		665		(5,959	)
Provision for loan losses	(369	)	(7,805	)	(5,978	)	(8,450	)	(2,183	)	—		(24,785	)
Gross Operational margin	25,814		27,620		21,170		14,491		33,231		15,193		137,519
Other income and expenses													8,439
Operating expenses													(64,902	)
Net loss from price-level restatement													(11,576	)
Income before income taxes													69,480
Average Loans	1,362,407		793,584		482,733		218,280		47,063		—		2,904,067
Average Investments	—		—		—		—		475,357		120,934		596,291

F-61

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

	Year ended December 31, 2006
	Commercial Banking				Retail Banking
	Large Companies and Corporate		Companies		Traditional and Private Banking		Lower Income Retail Banking		Treasury and International (1)		Non- Banking Financial Services		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Net interest revenue	26,980		24,882		32,151		28,397		4,041		533		116,984
Fees and income from services, net	2,942		5,840		7,652		4,324		(249	)	9,788		30,297
Gain from trading activities	—		4,022		—		—		258		3,242		7,522
Foreign exchange transactions, net	609		1,427		107		—		(1,815	)	(4	)	324
Other operating income (expenses), net	(51	)	1,195		(2,851	)	(10,215	)	(554	)	425		(12,051	)
Provision for loan losses	455		(4,770	)	(7,998	)	(11,642	)	(1,371	)	—		(25,326	)
Gross Operational margin	30,935		32,596		29,061		10,864		310		13,984		117,750
Other income and expenses													9,826
Operating expenses													(69,848	)
Net loss from price-level restatement													(7,527	)
Income before income taxes													50,201
Average Loans	1,429,484		859,098		625,668		255,316		19,732		—		3,189,298
Average Investments	—		—		—		—		99,640		110,669		210,309

	Year ended December 31, 2007
	Commercial Banking				Retail Banking
	Large Companies and Corporate		Companies		Traditional and Private Banking		Lower Income Retail Banking		Treasury and International (1)		Non- Banking Financial Services		Total
	MCh$		MCh$		MCh$		MCh$		MCh$		MCh$		MCh$

Net interest revenue	24,775		29,787		45,221		30,571		30,421		3,993		164,768
Fees and income from services, net	2,467		5,997		9,182		5,959		(666	)	13,926		36,865
Gain from trading activities	—		4,390		—		—		(5,473	)	(569	)	(1,652	)
Foreign exchange transactions, net	1,229		(188	)	210		—		4,869		1,455		7,575
Other operating income (expenses), net	(49	)	1,497		(3,923	)	(9,191	)	(318	)	917		(11,067	)
Provision for loan losses	333		(4,330	)	(12,575	)	(19,086	)	(412	)	—		(36,070	)
Gross Operational margin	28,755		37,153		38,115		8,253		28,421		19,722		160,419
Other income and expenses													7,976
Operating expenses													(82,069	)
Net loss from price-level restatement													(25,946	)
Income before income taxes													60,380
Average Loans	1,554,770		939,612		820,128		278,605		39,096		—		3,632,211
Average Investments	—		—		—		—		99,897		116,432		216,329

(1) Includes other non-segment items

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CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

h. Recent accounting pronouncements

Adoption of FIN 48 “Accounting for Uncertainty in Income Taxes”

In June 2006, the Financial Accounting Standards Board (“FASB”) issued interpretation No. 48, “Accounting for Uncertainty in Income Taxes, and interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in a measurement attribute criteria for the financial statement recognized in a company’s financial statements. FIN 48 establishes “a more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted the provisions of FIN 48 on January 1, 2007. The implementation of FIN 48 did not have a material impact on the Bank��s financial statements. There were no unrecognized tax benefits as of the date of adoption and of December 31, 2007. Under Chilean tax regime, as of December 31, 2007, fiscal years 2003 through 2007 remain subject to examination by the Internal Revenue Service (“Servicio de Impuestos Internos”).

SFAS No. 157, “Fair Value Measurements”

On September 15, 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,” which enhances existing guidance for measuring assets and liabilities using fair value. Prior to the issuance of SFAS No. 157, guidance for applying fair value was incorporated in several accounting pronouncements. SFAS No. 157 provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. SFAS No. 157 also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy with the highest priority being quoted prices in active markets. Under SFAS No. 157, fair value measurements are disclosed by level within that hierarchy. SFAS No. 157 is effective for our fiscal year beginning January 1, 2008, and requires that the cumulative effect of the adoption of SFAS No. 157 be reflected as an adjustment to the beginning balance of retained earnings in the year of adoption. Our management is currently evaluating the impact of the adoption of SFAS No.157 on our consolidated financial condition, operating results and cash flows.

SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”

The FASB has issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” which permits an entity to measure certain financial assets and financial liabilities at fair value. The objective of SFAS No. 159 is to improve financial reporting by allowing companies to mitigate volatility in reported earnings caused by the measurement of related assets and liabilities using different attributes, without having to apply complex hedge accounting provisions. Under SFAS No. 159, companies that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value option election is irrevocable, unless a new election date occurs. SFAS No. 159 also establishes presentation and disclosure requirements to help financial statement users understand the effect of the company’s election on its earnings, but does not eliminate disclosure requirements of other accounting standards. SFAS No. 159 is effective for our fiscal year beginning January 1, 2008, and requires that the cumulative effect of the adoption of SFAS No. 159 be reflected as an adjustment to the beginning balance of retained earnings in the year of adoption. Our management is currently evaluating the impact of the adoption of SFAS No. 159 on our consolidated financial condition, operating results and cash flows.

F-63

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

FASB Staff Position FIN 39-1, “Amendment of FASB Interpretation No. 39, ‘Offsetting of Amounts Related to Certain Contracts’

In April 2007, the FASB issued FASB Staff Position (“FSP”) No. FIN 39-1, “Amendment of FASB Interpretation No. 39” (“FSP FIN 39-1”). FSP FIN 39-1 amends certain provisions of FIN 39, “Offsetting of Amounts Related to Certain Contracts,” and permits companies to offset fair value amounts recognized for cash collateral receivables or payables against fair value amounts recognized for net derivative positions executed with the same counterparty under the same master netting arrangement. FSP FIN 39-1 is effective for fiscal years beginning after November 15, 2007, with early application permitted. Our management is currently evaluating the impact and timing of adoption of FSP FIN 39-1, but does not expect that it will have a significant impact on our consolidated financial condition and results of operations.

Staff Accounting Bulletin No. 109, “Written Loan Commitments Recorded at Fair Value Through Earnings”

On November 5, 2007, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 109, “Written Loan Commitments Recorded at Fair Value Through Earnings” (“SAB 109”). SAB 109 requires that the expected net future cash flows related to servicing of a loan be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. The adoption of SAB 109 is on a prospective basis and effective for our loan commitments measured at fair value through earnings which are issued or modified after January 1, 2008. Our management is currently evaluating the impact and timing of the adoption of SAB 109, but does not expect that it will have a significant impact on our financial condition, results of operations and cash flows.

SFAS No. 141R, “Business Combinations”

On December 4, 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”). SFAS No. 141R modifies the accounting for business combinations and requires, with limited exceptions, the acquirer in a business combination to recognize 100% of the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition-date fair value. In addition, SFAS No. 141R requires the expensing of acquisition-related transaction and restructuring costs, and certain contingent assets and liabilities acquired, as well as contingent consideration, to be recognized at fair value. SFAS No. 141R also modifies the accounting for certain acquired income tax assets and liabilities. SFAS No. 141R is effective for new acquisitions consummated on or after January 1, 2009 and early adoption is not permitted. As SFAS No. 141R is only applicable prospectively for new business combinations, it will only have an impact to the extent the Bank acquires another business.

FSP FAS 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions”

On February 20, 2008, the FASB issued FSP FAS 140-3, “Accounting for Transfers of Financial Assets and Repurchase Financing Transactions.” The objective of FSP FAS 140-3 is to provide implementation guidance on whether the security transfer and contemporaneous repurchase financing involving the transferred financial asset must be evaluated as one linked transaction or two separate de-linked transactions. Current practice records the transfer as a sale and the repurchase agreement as a financing. FSP FAS 140-3 requires the recognition of the transfer and the repurchase agreement as one linked transaction, unless all of the following criteria are met: (1) the initial transfer and the repurchase financing are not contractually contingent on one another; (2) the initial transferor has full recourse upon default, and the repurchase agreement’s price is fixed and not at fair value; (3) the financial asset is readily obtainable in the marketplace and the transfer and repurchase financing are executed at market rates; and (4) the maturity of the repurchase financing is before the maturity of the financial asset. The scope of this FSP is limited to transfers and subsequent repurchase financings that are entered into contemporaneously or in contemplation of one another. FSP FAS 140-3 will become effective as of January 1, 2009. Early adoption is prohibited. Our management is currently evaluating the impact of adopting FSP FAS 140-3 on our consolidated financial condition, operating results and cash flows.

F-64

CORPBANCA

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Expressed in millions of constant Chilean pesos (MCh$)

as of December 31, 2007 (except as indicated)

SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”

During March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” which modified the existing disclosure requirements in FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 161 enhances disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. SFAS No. 161 requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No.161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. SFAS No.161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. Our management is currently evaluating the impact of adopting SFAS No.161 on our consolidated financial condition, operating results and cash flows.

FSP FAS 142-3-”Determination of the Useful Life of Intangible Assets”

On April 25, 2008, the FASB issued FSP FAS 142-3, “Determination of the Useful Life of Intangible Assets.” FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets.” The objective of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS No.142 and the period of expected cash flows to measure the fair value of an asset under SFAS No. 141R, “Business Combinations,” and other U.S. generally accepted accounting principles. FSP FAS 142-3 is effective on January 1, 2009 and early adoption is prohibited. Our management is currently evaluating the impact of adopting FSP FAS 142-3 on our consolidated financial condition, operating results and cash flows.

SFAS No.162, “The Hierarchy of Generally Accepted Accounting Principles”

In May 2008, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.162, “The Hierarchy of Generally Accepted Accounting Principles”. The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles for nongovernmental entities. Statement 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principle”. Management does not expect that the adoption of SFAS 162 will have a material impact on the consolidated statements of income and consolidated balance sheets.

Transition to International Financial Reporting Standards (IFRS)

The Chilean Superintendency of Banks along with other agencies in Chile agreed to implement IFRS to internationalize the reporting standards of public companies. The strategic plan for the Chilean Superintendency of Banks entails applying the new accounting standards for the banking industry beginning January 1, 2009.

In the first IFRS financial statements, the Banks are required to prepare an opening IFRS balance sheet at the beginning of the earliest period for which they are presenting comparative information under IFRS, in this case, January 1, 2008.

New Standardized Format for the Presentation of Financial Statements

Circular No. 3,410 issued by the Superintendency of Banks, which became effective on January 1, 2008, dictated new accounting formats for financial statements. The new accounting formats are congruent with International Accounting Standards, but do not imply a change in accounting standards. Banks are required to adopt the new accounting formats in 2008. These changes do not involve a change to accounting principles and will not impact net income compared to figures that have been presented in the twelve month period ended December 31, 2006 and 2007. Beginning January 1, 2009, Chilean banks will adopt accounting standards more congruent with International Accounting Standards.

F-65

SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: June 30, 2008

	CorpBanca

	By:	/s/ Julio Henriquez
	Name: Julio Henriquez
	Title: Interim Chief Financial Officer

F-66

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. freshman Avg

Banco Itau Chile (ITCLY) 20-F2007 FY Annual report (foreign)

Content analysis

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

B. CAPITALIZATION AND INDEBTEDNESS

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

D. RISK FACTORS

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

Transition to International Financial Reporting Standards (IFRS)

B. BUSINESS OVERVIEW

C. ORGANIZATIONAL STRUCTURE

D. PROPERTY

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. OPERATING RESULTS

B. LIQUIDITY AND CAPITAL RESOURCES

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

D. TREND INFORMATION

E. OFF-BALANCE SHEET ARRANGEMENTS

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

B. COMPENSATION

C. BOARD PRACTICES

D. EMPLOYEES

E. SHARE OWNERSHIP

A. MAJOR SHAREHOLDERS

B. RELATED PARTY TRANSACTIONS

C. INTERESTS OF EXPERTS AND COUNSEL

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

B. SIGNIFICANT CHANGES

ITEM 9. OFFER AND LISTING DETAILS

A. OFFER AND LISTING DETAILS

B. PLAN OF DISTRIBUTION

C. MARKETS

D. SELLING SHAREHOLDER

E. DILUTION

F. EXPENSES OF THE ISSUE

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

B. MEMORANDUM AND ARTICLES OF INCORPORATION

C. MATERIAL CONTRACTS

D. EXCHANGE CONTROLS

E. TAXATION

F. DIVIDENDS AND PAYING AGENTS

G. STATEMENT BY EXPERTS

H. DOCUMENTS ON DISPLAY

I. SUBSIDIARY INFORMATION

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

ITEM 15. CONTROLS AND PROCEDURES

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

ITEM 16B. CODE OF ETHICS

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

PART III

ITEM 17. FINANCIAL STATEMENTS

ITEM 18. FINANCIAL STATEMENTS

ITEM 19. EXHIBITS