corpbanca and subsidiaries · corpbanca and subsidiaries consolidated statements of financial...

1

CORPBANCA AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

For the years ended December 31, 2011 and 2010

(In millions of Chilean pesos - MCh$)

Notes 12.31.2011 12.31.2010

ASSETS MCh$ MCh$

Cash and deposits in banks 5 265,747 202,339

Items in course of collection 5 96,230 79,680

Trading portfolio financial assets 6 166,039 197,580

Investments under agreements to resell 7 23,251 75,676

Derivative financial instruments 8 248,982 204,067

Loans and receivables from banks, net 9 304,442 63,998

Loans and receivables from customers, net 10 6,709,394 5,362,578

Financial investments available-for-sale 11 843,250 746,248

Financial investments held-to-maturity 11 21,962 -

Investments in other companies 12 3,583 3,583

Intangible assets 13 12,239 13,096

Property, plant and equipment, net 14 57,225 53,430

Current income tax provision 15 6,278 -

Deferred income taxes 15 27,700 25,417

Other assets 16 101,382 98,266

TOTAL ASSETS 8,887,704 7,125,958

LIABILITIES

Current accounts and demand deposits 17 682,720 612,064

Items in course of collection 5 36,948 41,525

Investments under agreements to repurchase 7 130,549 189,350

Time deposits and saving accounts 17 4,824,378 3,700,454


Borrowings from financial institutions 18 663,626 503,692

Debt issued 19 1,522,773 1,215,435

Other financial obligations 19 20,053 23,660

Current income tax provision 15 - 7,168

Deferred income taxes 15 25,352 21,244

Provisions 20 54,240 79,747

Other liabilities 21 30,981 20,998

TOTAL LIABILITIES 8,158,492 6,590,598

SHAREHOLDERS’ EQUITY

Attributable to equity holders of the Bank:

Capital 23 507,108 342,379

Reserves 23 139,140 26,406

Valuation gains (losses) 23 (5,639) (2,758)

Retained earnings: 85,994 166,390

Retained earnings from prior periods 23 - 106,869

Net income for the year 23 122,849 119,043

Less: Accrual for mandatory dividends 23 (36,855) (59,522)

726,603 532,417

Non controlling interest 23 2,609 2,943

TOTAL SHAREHOLDERS’ EQUITY 729,212 535,360

TOTAL LIABILITIES AND SHAREHOLDERS’

EQUITY 8,887,704

7,125,958

Notes 1 to 39 are an integral part of these consolidated financial statements

2


CONSOLIDATED STATEMENTS OF INCOME


(In millions of Chilean pesos - MCh$) Notes 12.31.2011 12.31.2010

MCh$ MCh$

Interest income 24 528,622 387,639

Interest expense 24 (335,622) (163,229)

Net interest income 193,000 224,410

Income from service fees 25 72,404 68,453

Expenses from service fees 25 (12,042) (10,232)

Net Service Fee Income 60,362 58,221

Trading and investment income, net 26 97,745 (9,410)

Foreign exchange gains (losses), net 27 (26,783) 44,611

Other operating income 32 9,507 8,832

Operating Income 333,831 326,664

Provisions for loan losses 28 (40,182) (54,424)

Total Operating Income, Net of Loan Losses, Interest and Fees 293,649 272,240

Personnel salaries expenses 29 (76,461) (71,034)

Administration expenses 30 (55,141) (46,793)

Depreciation and amortization 31 (7,461) (7,117)

Impairment 31 - (427)

Other operating expenses 32 (9,667) (9,464)

Total Operating Expenses (148,730) (134,835)

Total Net Operating Income 144,919 137,405

Income attributable to investments in other companies 12 250 296

Income before income taxes 145,169 137,701 Income taxes 15 (24,144) (19,635)

Net income for the year 121,025 118,066

Attributable to:

Equity holders of the Bank 122,849 119,043

Non controlling interest 23 (1,824) (977)

Earnings per share attributable to equity holders of the Bank

(stated in Ch$)

Basic earnings per share 23 0.514 0.525

Diluted earnings per share 23 0.514 0.525


3


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


(In millions of Chilean pesos - MCh$)

Notes 12.31.2011 12.31.2010

MCh$ MCh$


Other Comprehensive Income

Financial instruments available-for-sale (1,258) 4,836

Exchange differences on translation- New York Branch 1,238 (1,014)

Hedge of net investment in foreign operation (1,264) 963

Effect variation cash flow hedges (2,576) -

Other comprehensive income before income taxes (3,860) 4,785 Income tax relating to other comprehensive income 15 979 (986)

Total other comprehensive income (loss) (2,881) 3,799

Comprehensive income for the year 118,144 121,865

Attributable to:

Equity holders of the Bank 119,968 122,842

Non controlling interest 23 (1,824) (977)


4


STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY


(In millions of Chilean pesos - MCh$, except for number of shares)


Number

of shares

Paid-in

Capital Reserves

Valuation gains (losses) Retained earnings

Accrual for

mandatory

dividends

Financial

investment

available

-for- sale

Hedge of net

investment in

foreign

operation

Derivatives

for Cash

Flow

Coverage

Income tax

other

comprehensive

income

Exchange

differences

Translation

Retained

earnings

from prior

periods

Net

income

for the

year

Total

attributable

to equity

holders of the

Bank

Non-

controlling

interest

Total

Shareholders’

equity

(Millions) MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Balance as of January 1, 2010 221,854 326,038 25,054 (6,353) - - 1,080 (1,284) 201,554 - (42,554) 503,535 3,920 507,455

Increase or decrease in capital and reserves - - - - - - - - - - - - -

Dividends paid - - - - - - - - (85,109) - 42,554 (42,555) - (42,555)

Accrual for mandatory dividends - - - - - - - - - - (59,522) (59,522) - (59,522)

Sale of treasury shares (a) 5,055 16,341 - - - - - - - - - 16,341 - 16,341

Share premium - - 1,352 - - - - - - - - 1,352 - 1,352

Effect first application provision for

contingent claims - - - - - - - - (9,576) - - (9,576) - (9,576)

Comprehensive income for the year - - - 4,836 963 - (986) (1,014) - 119,043 - 122,842 (977) 121,865

Balance as of December 31, 2010 226,909 342,379 26,406 (1,517) 963 - 94 (2,298) 106,869 119,043 (59,522) 532,417 2,943 535,360

Balance as of January 1, 2011 226,909 342,379 26,406 (1,517) 963 - 94 (2,298) 106,869 119,043 (59,522) 532,417 2,943 535,360

Increase or decrease in capital and reserves 23,449 57,860 112,734 - - - - - - - - 170,594 1,490 172,084

capitalization of retained earnings - 106,869 - - - - - - (106,869) - - - - -

Dividends paid - - - - - - - - - (119,043) 59,522 (59,521) - (59,521)

Accrual for mandatory dividends - - - - - - - - - - (36,855) (36,855) - (36,855)

Comprehensive income for the year - - - (1,258) (1,264) (2,576) 979 1,238 - 122,849 - 119,968 (1,824) 118,144

Balance as of December 31, 2011 250,358 507,108 139,140 (2,775) (301) (2,576) 1,073 (1,060) - 122,849 (36,855) 726,603 2,609 729,212

(a) See Note 23 to the consolidated financial statements.

5


CONSOLIDATED STATEMENT OF CASH FLOWS


(In millions of Chilean pesos - MCh$) Notes 31.12.2011 31.12.2010

MM$ MM$

CASH FLOW FROM OPERATING ACTIVITIES:

Income before income taxes 145,169 137,701

Non-controlling interest

(1,824) (977)

Charges (credits) to income not representing cash flow:

Depreciation and amortization 31 7,461 7,117

Provision for loan losses 28 52,160 69,133

Provisions and write-offs for assets received in lieu of payment 32 999 1,373

Contingency provisions 32 2,228 2,166

Adjustment to market value for financial investments available-for-sale and

derivatives

(49,023) 15,795

Net interest income 24 (193,000) (224,410)

Net fees and income from services 25 (60,362) (58,221)

Net foreign exchange gains (losses) 27 26,783 (44,611)

Other charges (credits) to income not representing cash flows 15,342 7,718

Subtotals (54,067) (87,216)

Loans and receivables to customers and banks (1,525,019) (324,987)

Investments under agreements to repurchase 51,512 (28,329)

Trading portfolio financial assets 27,230 (81,329)

Financial investments available-for-sale 72,927 (24,293)

Financial investment held-to-maturity (21,382) -

Other assets and liabilities 7,277 (7,027)

Time deposits and saving accounts 1,089,502 462,280

Current accounts and demand deposits 70,656 115,853

Investments under agreements to resell (58,801) (281,176)

Dividends received from investments in other companies 12 250 296

Foreign borrowings obtained 1,013,562 572,500

Repayment of foreign borrowings (809,997) (542,357)

Net (decrease) increase of other obligations with banks (42,629) 111,146

Repayment of other borrowings (3,834) (3,396)

Net cash (used in) provided by operating activities (182,813) (118,035)

CASH FLOW FROM INVESTING ACTIVITIES:

Purchase of property, plant and equipment (10,911) (5,940)

Proceeds from sales of property, plant and equipment - 286

Sale of assets received in lieu of payment or in foreclosure 482 1,636

Net cash (used in) provided by investment activities (10,429) (4,018)

CASH FLOW FROM FINANCING ACTIVITIES:

Issued debt 344,103 403,073

Redemption of issued debt (61,792) (60,095)

Increase in capital 23 170,594 -

Sales of treasury shares - 16,341

Paid dividends 23 (119,043) (85,109)

Net cash provided (used in) provided by financing activities 333,862 274,210

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 140,620 152,157

Cash and cash equivalents at beginning of year 393,721 241,564

Cash and cash equivalents at end of year 5 534,341 393,721

Net increase (decrease) in cash and cash equivalents 140,620 152,157


INDEX

Page Nº

Note 1 - GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES 8

Note 2 - ACCOUNTING CHANGES 30

Note 3 - SIGNIFICANT EVENTS 31

Note 4 - BUSINESS SEGMENTS 35

Note 5 - CASH AND CASH EQUIVALENTS 40

Note 6 - TRADING PORTFOLIO FINANCIAL ASSETS 41

Note 7 - INVESTMENTS UNDER AGREEMENTS TO RESELL 42

Note 8 - DERIVATIVE FINANCIAL INSTRUMENT AND HEDGE ACCOUNTING 44

Note 9 - LOANS AND RECEIVABLES TO BANKS 46

Note 10 - LOANS AND RECEIVABLES FROM CUSTOMERS 47

Note 11 - INVESTMENT INSTRUMENTS 51

Note 12 - INVESTMENTS IN OTHER COMPANIES 52

Note 13 - INTANGIBLES 53

Note 14 - PROPERTY, PLANT AND EQUIPMENT 54

Note 15 - CURRENT TAXES 56

Note 16 - OTHER ASSETS 60

Note 17 - CURRENT ACCOUNTS, DEPOSITS AND SAVING ACCOUNTS 61

Note 18 - BORROWINGS FROM FINANCIAL INSTITUTIONS 62

Note 19 - DEBT INSTRUMENTS ISSUED AND OTHER OBLIGATIONS 62

Note 20 - PROVISIONS 65

Note 21 - OTHER LIABILITIES 67


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2011 and 2010

Note 22 - CONTINGENCIES, COMMITMENTS AND RESPONSIBILITIES 68

Note 23 - SHAREHOLDERS´ EQUITY 72

Note 24 - INTEREST INCOME AND EXPENSES 74

Note 25 - FEES AND INCOME FROM SERVICES 75

Note 26 - NET TRADING AND INVESTMENT INCOME 76

Note 27 - NET FOREIGN EXCHANGE INCOME (LOSSES) 77

Note 28 - PROVISION FOR LOAN LOSSES 77

Note 29 - PERSONNEL SALARIES EXPENSES 78

Note 30 - ADMINISTRATION EXPENSES 79

Note 31 - DEPRECIATION, AMORTIZATION AND IMPAIRMENT 80

Note 32 - OTHER OPERATING INCOME AND EXPENSES 81

Note 33 - RELATED PARTY TRANSACTIONS 83

Note 34 - FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE 87

Note 35 - RISK MANAGEMENT 91

Note 36 - MATURITY OF ASSETS AND LIABILITIES 116

Note 37 - LEASING 117

Note 38 - FOREIGN CURRENCY POSITION 118

Note 39 - SUBSEQUENT EVENTS 119




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NOTE 1 - GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

General Information – Bank´s and Subsidiaries Background

CorpBanca

CorpBanca, as a banking corporation, is organized under the laws of the Chilean Republic.- The

institution’s purpose is to implement and act upon all those acts, contracts, operations or business

transactions that the General Chilean banking Law will allow without prejudice to extend or narrow

its scope in harmony with the law and any change that the law may have in the future, without

requiring the modification of its statutes. This basis ranges from individual persons up to large

corporations.

i) Our History

CorpBanca is the oldest private bank currently operating in Chile. Originally it was founded as

“Banco de Concepción” in 1871 by a group of residents of the city of Concepción, led by Aníbal

Pinto, who later became President of the Republic of Chile. In 1971, the ownership of “Banco de

Concepción” was transfer to a government agency, the Development Corporation (CORFO). In the

same year the Bank acquired the French and Italian Bank in Chile, which allowed the bank to have a

presence in Santiago. Between 1972 and 1975, the banks of Chillan and Valdivia were acquired. In

November 1975, CORFO sold its shares to private entities/individuals, who took control of the bank

in 1976. In 1980 the bank changed its name to “Banco Concepción”.

In 1983 the Bank was taken over by the Chilean Superintendency of Banks, staying under control until

1986, when it was acquired by the National Mining Society (SONAMI). Under the control of

SONAMI, the Bank focused on financing for small mining companies and medium companies,

increasing its capital and selling part of their high risk portfolio to the Central Bank of Chile.

In 1996 a group of investors led by Mr. Alvaro Saieh Bendeck, acquired a majority stake of “Banco

Concepción”. After the change of ownership in 1996, the controlling group took significant steps

toward managing its risks, improving its operational efficiency and expanding the operations of

CorpBanca. These measures included the strict enforcement of provisions, cost reduction,

technological improvements and productivity increases. As part of the change, they also changed the

name to "CorpBanca" and formed a management team with extensive administrative experience in

the financial services in the Chilean Banking Industry.

Since 1998 CorpBanca has expanded its operations significantly through acquisitions, such as those

of the consumer loan division of “Banco Sud Americano Corfinsa” (now Scotiabank Chile) SA and

“Financiera Condell”, as well as organic growth. In this context, they began expanding

internationally in 2009 with the opening of the New York branch; in 2011 a representative office in

Madrid was opened and an agreement was signed with Banco Santander Spain to acquire its

subsidiary bank of Colombia.




9

ii) CorpBanca Today

The company - controlled by CorpGroup Banking SA with 51.23% - accounts for $ 8,887,704

million (U.S. $ 17,212 million) of total assets and a market share of 7.6% in loans and 7.2% in

deposits up to the 31st of December, 2011. CorpBanca is the fourth largest bank in private banking

in Chile, focused mainly on commercial and retail banking, offering a wide range of universal

banking products. Currently it provides integrated financial products and services through its

distribution network made up of 116 branches, 420 ATMs and 210 self-service machines UniRed.

CorpBanca continues to show excellent performance since its acquisition, with high growth and

profitability. For the period of twelve months ended November 30, 2011, its return on equity (ROE)

reached 21.8% average and a BIS ratio of 14.5%.

CorpBanca has recently reached an agreement with Banco Santander, SA (BS) in order to acquire 95% of Banco Santander Colombia SA (BSC) and also to buy a stock broker, insurance broker and a trustee. This operation is expected to materialize during the first half of 2012. With this acquisition, CorpBanca reinforces its growth strategy and became the first Chilean financial institution that has a foreign bank subsidiary. CorpBanca's total investment in this operation will amount to approximately U.S. $ 1,155 million, and will be financed with equity and a capital increase of approximately $ 450 million. Additionally CorpGroup (cited before) has reached an agreement with the Santo Domingo Group (SDG), one of the largest economic groups in Colombia. SDG will invest in CorpBanca property as a long-term partner and no shareholders' agreement, with an investment of $ 100 million that will begin in the upcoming months. SDG has a strong presence in Colombia, in various economic sectors, including media, services, logistics and industrial, highlighting their participation in SABMiller plc, the second largest beer company in the world. Consequently, two important Latin American business groups join forces as partners of CorpBanca to execute its expansion plans and contribute in building business relationships, creating value for its customers in Colombia.

iii) Corpbanca and Subsidiaries

CorpBanca and its subsidiaries (collectively referred to hereinafter as "Bank" or "Corp Banca") offer consumer and commercial banking products, and other services, including factoring, collections, leasing, insurance and securities brokerage, mutual funds and investment fund management and investment banking.

CorpBanca is the headquarters of a diverse group of subsidiaries which are engaged in different activities. Consequently, CorpBanca is required to develop, in addition to its own complete set of financial statements, consolidated financial statements incorporating their subsidiaries and foreign branches, which also include investment in other entities that render business support to the organization. Below is a description of the foreign subsidiaries and branches:

CorpBanca Corredores de Bolsa SA. It was incorporated by public deed on the 27 January 1993.

Its purpose is to engage in brokerage operations, such as Stock Brokers, in the terms referred in

Article No. 24 of Law No. 18,045, subject to those additional activities that the Superintendency of

Securities and Insurance (SVS) authorizing the brokerage. It is registered in the Register of

Securities Brokers and Agents of the SVS under No. 160 of 11 May 1993.




10

CorpBanca Administradora General de Fondos S.A. It was established by deed dated December

23, 1986, completed by deed dated February 13, 1987, both executed before the Notary of Santiago

Mr. Andres Rubio Flores, and by deed executed before Notary in the same city Don Aliro Veloso

Muñoz dated March 12, 1987. On March 20, 1987, by Resolution No. 034, the SVS approved the

existence of the company, which later changed its name to the present. Its sole purpose is managing

mutual funds governed by the DL No. 1328 of 1976 Mutual Funds Act, investment fund governed

by Law No. 18,815, of capital investment funds abroad governed by Law 18,657 of housing funds

governed by Law 19,281 and any other funds whose control is vested in the SVS, and conducting

any of the complementary activities authorized by all the terms defined in Article 220 of Law

18,045 Securities Market, as well as managing any other type of current funds or future that the

legislation may authorize.

CorpBanca Asesoría Financieras SA It was incorporated by public deed on the 27 January 1992 as

a non-traded corporation. Its purpose is to provide additional financial advisory services in addition

to banking services. It is legislated by Article 70, letter b) of the General Law of Banks and subject

to supervision by the Superintendency of Banks and Financial Institutions (SBIF).

CorpBanca Corredores de Seguros S.A. It was incorporated by deed dated September 8, 1996,

granted before Notary Public Mr. Kamel Saquel Zaror. The purpose of the Company is the

brokerage of life general insurance, with the sole exclusion of pension insurance, with any national

insurer based in the country, and providing advisory and consultancy services in the insurance area

and investment in tangible property and real estate.

CorpLegal S.A. It was incorporated by deed dated March 9, 2007 as a non-traded corporation. Its

purpose is to provide all kind of legal services to CorpBanca, its subsidiaries and / or its customers,

with operations that are granted to them. It is governed by Article 70 letter b) of the General

Banking Act and is subject to oversight by the SBIF.

CorpBanca Agencia de Valores S.A. Entity formed in Santiago on 16 November 2009, according

to public deed executed before Gustavo Montero Marti, Public Notary in replacement of the forty-

eighth of Santiago Mr. José Musalem Saffie, beginning its operations dated the 2nd of December

2009. It is registered in the Register of Brokers and Banks of the SVS under No. 200 on the 23rd of

February 2010. Its purpose is to engage in the securities brokerage operations as stock broker on the

terms contemplated in Article 24 of Law 18,045, and it also can perform additional activities that the

SVS authorized to brokerages.

CorpBanca Sucursal de Nueva York. On 4th of May, 2009 this branch came into operation , with

banking license issued by the State of New York authorities. Its mission is to satisfy the

international financial needs of CorpBanca’s clients, with high standards of service quality,

personalized service and competitive products with high added value from the world's financial

center. It is focused on commercial banking, centralized on providing banking services in New

York and consequently in the US, for Corpbanca´s Headquarter clients as well as granting working

capital and corporate financing to companies throughout Latin America. This entity has complete

dependence on its Headquarters.




11

SMU CORP S.A. Company formed in Santiago on the 2nd of September 2009, recorded in public

deed executed before Gustavo Montero Marti, Notary Public in replacement of the owner of the

Forty Eighth Notary of Santiago Mr. José Musalem Saffie, starting its operations on the 31st of

March 2010, its capital being effective on the 10th of October 2010. Its objective is to issue, operate

and manage credit cards that will be used for granting credit to customers in their own Supermarket

“Unimarc Supermarkets”. It is legislated by Article 70, letter b) of the General Law of Banks and

subject to oversight by the SBIF.

PRINCIPAL ACCOUNTING CRITERIA AND OTHERS

a) Accounting Period

The Consolidated Financial Statements (hereinafter “Financial Statements”) covers the years ended

December 31, 2011 and 2010, respectively.

b) Basis of preparation of the consolidated financial statements

These Consolidated Financial Statements have been prepared in accordance with the Compendium

of Accounting Standards issued by the Superintendency of Banks and Financial Institutions (SBIF), the

regulatory agency that according to Article 15 of the General Banking Law establishes that, pursuant

to the legal provisions, banks must apply the accounting criteria issued by that Superintendency and in

all such matters not specifically covered by it -provided they do not contradict its instructions- they

must abide by the generally accepted accounting criteria that correspond to the technical standards

issued by the Chilean Association of Accountants (Colegio de Contadores de Chile A.G.) coinciding

with the international financial reporting standards (IFRS/NIIF) issued by the International

Accounting Standards Board (IASB). In case of discrepancies between the accounting principles

and the accounting criteria issued by the SBIF (Compendium of Accounting Norms), the latter shall

prevail.

The financial statements notes contain additional information to that submitted in the Consolidated

State of Financial Situation, Consolidated Income Statements, Consolidated Comprehensive Income

Statements, and Statement of Changes in Net Shareholders’ equity, and Cash Flow Statement.

These statements provide a narrative description of such statements in a clear, reliable and

comparable manner.

The main accounting policies adopted in preparing these financial statements are described below.

c) Consolidation Criteria

The Consolidated Financial Statements include the financial statements of the Bank, its subsidiaries

and the New York Branch that participate in the consolidation as of December 31, 2011 and 2010 ,

and include the necessary adjustments and reclassifications to the financial statements of

subsidiaries and the New York Branch to bring their accounting policies and valuation criteria into

line with those applied by the Bank, in accordance with the Compendium of Accounting Standards

issued by the Superintendency of Bank and Financial Institution.




12

All significant balances and transactions between the Bank, its subsidiaries and the New York

Branch have been eliminated in full on consolidation.

For consolidation purposes, the financial statements of the New York Branch have been translated

into Chilean pesos at the closing exchange rate of $519.08 per USD1 as of December 31, 2011 ($

467.78 per USD1 as of December 31, 2010), pursuant to International Accounting Standard (IAS)

21 – The Effects of Changes in Foreign Exchange Rates, related to the valuation of foreign

investments in economically stable countries.

Subsidiaries assets, liabilities, operating income and revenue net of consolidation adjustment,

represent a 2.3%, 2.4%, 13.6%and 18.1% respectively, out of the total consolidated assets,

liabilities, net operating income and the net revenue as of December 31, 2011 (1.7%, 1.7%, 11.5%

and 16.1% in 2010, respectively). Unrealized income from transactions within the company’s

subsidiaries whose investments are recognized under the equity method are eliminated from the

investment, this according to the percentage interest in the assets of the entity (at the close of the

Financial Statements 2011 and 2010, the Bank has no such investments).

Controlled Entities and / or Subsidiaries

"Controlled Entities" are those companies, where CorpBanca is able to exercise control: this

capacity is generally but not exclusively related to the ownership, directly or indirectly, of at least

50% of the social rights of the associated entity, or even when this percentage is lower or zero if,

pursuant to agreements with shareholders of the same, it gives the Bank the control. Control means

the power to exercise significant influence on the financial and operating policies of an entity to

obtain benefits from its activities.

The financial statements of subsidiaries are consolidated with those of the Bank by the global

integration method (line to line). Accordingly, all balances and transactions between consolidated

companies are eliminated through consolidation.

Additionally, the investment on CorpBanca equity involving third parties is presented as non-

controlling interest in the Consolidated Statement of Financial Position. Their participation in the

profits of the year is presented as "Profit attributable to non-controlling interest" in the Consolidated

Statement of Income.




13

The entities where CorpBanca has the ability to exercise control are as follows:

Associates

Associates are entities over which the Bank has the ability to exercise significant influence but not control or joint control. It is presumed that the Bank has significant influence when it holds, directly or indirectly, more than 20% of the voting rights in an entity. Associates are accounted for using the equity method.

The Bank reviewed the valuation method and concluded that for companies that support the business purpose of the organization not to keep the current method, fundamentally due to the degree of significant influence exerted on these companies and not their participation on equity (Note 12.)

Special Purpose Entities (“SPE”)

According to the Compendium of Accounting Standards, the Bank must constantly analyze its scope of consolidation, noting that the fundamental criterion to consider is the degree of control held by the Bank on a specific entity and not their participation in Shareholders´ Equity.

SIC Interpretation 12 - Consolidation - Special purpose entities (SIC 12) addresses when a special purpose entity should be consolidated by a reporting entity under the consolidation principles in IAS 27. Under SIC 12, the Bank must consolidate a special purpose entity when, in substance, it controls the SPE. The control of an SPE by the Bank may be indicated if:

in substance, the activities of the SPE are being conducted on behalf of the Bank according to its specific business needs so that the Bank obtains benefits from the SPE's operations,

in substance, the Bank has the decision-making power to obtain the majority of the benefits of the activities of the SPE and the rights to obtain the majority of the benefits or other advantages of the SPE,

in substance, the Bank retains the majority of the residual or inherent ownership risks related to the SPE or its assets in order to obtain benefits from its activities.

1 Companies regulated by the Superintendency of Banks and Financial Institutions. Other companies are supervised by the

Superintendency of Securities and Insurance (SVS, in its Spanish acronym).

Direct Indirect Total Indirect Total

% % % % % %

CorpBanca Corredores de Bolsa S.A. 99,990 0,010 100,00 99,990 0,010 100,00

CorpBanca Administradora General de Fondos S.A. 99,996 0,004 100,00 99,996 0,004 100,00

CorpBanca Asesorías Financieras S.A. 1

99,990 0,010 100,00 99,990 0,010 100,00

CorpBanca Corredores de Seguros S.A. 99,990 0,010 100,00 99,990 0,010 100,00

CorpLegal S.A. 1

99,990 0,010 100,00 99,990 0,010 100,00

CorpBanca Agencia de Valores S.A. 99,990 0,010 100,00 99,990 0,010 100,00

CorpBanca Sucursal de Nueva York 1

100,000 - 100,00 100,000 - 100,00

SMU CORP S.A. 1

51,000 - 51,00 51,000 - 51,00

As of December 31, 2011 As of December 31, 2010

Participation Percentage

Direct




14

This assessment is based on methods and procedures that take into account the risks and benefits

held by the Bank, which takes into account all relevant factors among which are the guarantees or

losses associated with recovery of the corresponding assets retained by the Bank, among others. As

a result of this assessment, the Bank concluded that there are no SPE’s to be included in the process

of consolidation at December 31, 2011 and 2010.

Investments in other companies

Investments in other entities are those where the Bank does not have control nor exercise significant

influence. The investments in these entities are measured at cost (See Note 12).

Percentage of Participation.

As of December 31,

2011 2010

Operadora de Tarjetas de Crédito Nexus S.A. 12.9 12.9

Transbank S.A. 8.72 8.72

Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A. 4.72 4.72

Redbanc S.A. 2.5 2.5

Sociedad Interbancaria de Depósitos de Valores S.A. 3.91 3.91

Acción Bolsa de Comercio de Santiago 2.0833 2.0833

Acción Bolsa Electrónica de Chile 2.4390 2.4390

d) Non-controlling interest

The non-controlling interest represents the equity and net income in a subsidiary not attributable,

directly or indirectly, to the Bank. The non-controlling interest is disclosed as a separate line item

within equity in the consolidated statement of financial position and as a separate line item within

the consolidated financial statements of income.

e) Operating segments

CorpBanca provides financial information by operating segment with the purpose of identifying and

disclosing in the notes to the financial statements the nature and financial effect of its business

activities and the economic environments in which it operates in accordance with International

Financial Reporting Standards 8 - Operating segments.

The objective of that standard for the Bank is to provide information about the different types of

business activities in which it engages to enable users of its financial statements to:

Better understanding of the Bank’s performance;

Better evaluate of its future cash projections; and

Provide better judgment about the Bank as a whole




15

In order to meet the requirements of IFRS 8, the followings are the operating segments identified by

CorpBanca whose operating results are regularly used by Senior Management and the Board of

Directors in assessing the bank’s performance and making operating, financing and investing

decisions:

Commercial banking:

b.1 Large corporates and Reals Estate Companies Division includes companies that belong to a

major economic group, specific industry, and companies with sales over US$30 million ; this

division also includes real estate companies and financial institutions.

b.2 Companies Division includes a full range of financial products and services provided to

companies with sales under US$30 million. Leasing and factoring services have been included

in this business segment.

Retail banking:

b.3 Traditional and Private banking - offers, among other products, checking accounts, consumer

loans, credit cards and mortgage loans to middle and upper income segments. Retail banking

offers consumer loans, personal loans, automobile financing and credit cards. b.4 Lower income retail banking includes products such as, consumer loans, credit cards and

mortgage loans to the low-to-middle income segments. Treasury and International: b.5 Primarily includes our treasury activities such as financial management, financing and liquidity,

as well as our international businesses. Financial services: b.6 These are services performed by our subsidiaries, which include insurance brokerage, financial

advisory services, asset management and securities brokerage. f) Functional currency and Presentation The Bank and its subsidiaries have defined the Chilean Peso as its functional currency and the

presentation currency for the consolidated financial statements. The functional currency is the

currency of the primary economic environment in which the Bank operates. Consequently, all

balances and transactions denominated in currencies other than Chilean Pesos are considered as

“foreign currencies”. The Bank translates the financial statements of its New York Branch from US dollars into Chilean

Pesos according to the instructions established by the Superintendency of Banks and Financial

Institutions, which are consistent with IAS 21. All the amounts of the Income Statement and of the

Financial Statement are converted into Chilean Pesos according to the exchange rate indicated in

Note 1 g) below.




16

The presentation currency for the consolidated financial statements is the Chilean peso, which is

presented in millions of pesos ($ MM).

g) Foreign currency

The Bank's functional currency is the Chilean Peso, therefore, all balances and transactions

denominated in currencies other than the Chilean peso are considered denominated "foreign

currency".

The Bank provides loans and takes deposits in amounts denominated in foreign currencies,

principally in U.S. dollars.

The balances of the financial statements of the consolidated entities whose functional currencies are

other than the Chilean Peso are translated into the presentation currency as follows:

g.1 Assets and liabilities are translated at the closing exchange rate as of December 31, 2011 y

2010.

g.2 Income, expenses and cash flows are translated at the exchange rate at the date of each

transaction.

g.3 Net equity components are translated at the historical exchange rates.

The resulting exchange differences of translating into Chilean pesos the functional currency

balances of the consolidated entities whose functional currency is other than the Chilean Peso, are

recorded and accumulated as a “Translation reserve” within the line item “Valuation gains (losses)”

within equity, until the disposal of the subsidiary(ies); at which time it is reclassified to net income.

The amount of net foreign exchange gains and losses includes the recognition of the effects of

fluctuations in the exchange rates on assets and liabilities denominated in foreign currencies. It also

includes foreign exchange gains or losses on current and future transactions performed by the Bank.

Assets and liabilities denominated in foreign currencies are expressed in Chilean pesos using the

exchange rate of $ 519.08 per USD1 as of December 31, 2011 ($467.78 per USD1 as of December

31, 2010).

The net foreign exchange loss totaled MCh$26.783 for the year ended December 31, 2011 (net

foreign exchange gain totaled MCh$44.611 in 2010) is presented in the Consolidated Statement of

Income. It includes the recognition of the effects for exchange rate fluctuations over foreign-

currency-denominated, or adjustable for exchange rate, assets and liabilities, and the gains (losses)

obtained from the Bank’s exchange operations.




17

h) Definitions and relevant classifications The assets will include, for presentation purpose, according to its nature in the consolidated financial

statements, the following items: Cash and deposit in banks. In this heading includes cash, bank accounts and deposits with the

Central Bank of Chile and other financial institutions in the country and abroad. The amounts placed

in overnight operations will continue to be reported here and in the lines or items that apply. If not

given a special item for such operations, they are included with the associated accounts . Item in course of collection. This heading includes the values of the documents on exchange and

balance in transactions, in accordance with the agreement, where the payment of the transaction for

the sale of asset or the currency purchased is deferred. Trading portfolio financial asset. Includes portfolio of financial instruments for trading and

investments in mutual funds that must be adjusted to its fair value as well as instruments acquired

for trading. Investment under agreements to resale. This item shows the balances relating to procurement

transactions for contracted instruments and securities lending, depending on whether the

transactions are with domestic banks or other entities. Derivative Financial Instruments. This category includes financial derivative contracts with positive

fair values. Also, it includes both independent contracts and derivatives that can be separated from a

host contract, which are classified under those for trading or hedge, as defined below: Contract negotiation. Applies to derivatives that are not part of a particular hedging relationship

in which is being applied as special accounting for hedges. Contracts for hedge accounting. Corresponds to the derivatives over which is being applied

special hedge accounting. Loans and Receivables from Customers. This item shows the balances of transactions with banks in

the country and abroad, including the Central Bank of Chile, other than those reflected in the items

above. In this category are not included debt instruments acquired for trading or investment from

third parties. Loans and accounts receivable. Applies to loans, leasing and receivable accounts resulting from

operations of the entities, due by different persons to other banks, excluding the operations shown

under the item investment agreement for resale and Derivative Financial Instrument. Also it does not

include debt instruments acquired for trading or investment from third parties. This item will also

include provisions corresponding to loans and receivable accounts. These provisions correspond to

those discussed in Chapter B-1 "credit risk provisions" of the Compendium of Accounting Standards

SBIF. Provisions for country risk referred to in Chapter B-6 "country risk provisions" are included

in the liability (as well as country risk provisions on assets other than loans to customers). In the

same way, the special provision on foreign loans referred to in Chapter B-7 "special provisions for

credits abroad" will be disclosed under liabilities: due to their nature, they cannot be treated as

complementary appraisal asset accounts. It is understood that when it comes to foreign loans, this

refers to loans corresponding to non-resident borrowers in Chile.




18

Financial Investment held-to-maturity. These are classified into 2 categories: a) securities available

for sale b) investments held until maturity. This category will include only instruments that the

entity has the capacity and intention to hold until maturity, the remaining instruments will be

included in the portfolio held for sale.

Investments in other companies. This item is included in equity investments and other investments,

not consolidated, this according to accounting practice set out in letter c) "consolidated criteria".

Intangible Assets. It includes assets such as and any identifiable intangible assets, net of its

accumulated amortization and adjustments.

Fixed assets. This item will include all the real estate and personal property acquired or constructed,

necessary for CorpBanca to run its business, including those acquired through leasing. This category

will also include those renovations made to the leased premises, when it is appropriate to capitalize.

Current income taxes. This Item includes the interim payments that exceed the provision for income

tax or other tax credits on income, such as training expenses or donations to universities.

Additionally, it must include interim payments per month (PPM) to recover profits, absorbed by tax

losses.

Deferred taxes. Groups of receivable accounts arising from the tax effect of temporary differences in

the timing of recognition of the items according to financial and tax accounting criteria.

Other assets. This item included balances from leasing assets, assets received in lieu of payment,

and other assets not included in the items or lines explained above.

The liabilities include, for purposes of presentation, according to its nature in the consolidated

financial statements under the following headings:

Current accounts and demand deposits. It includes all demand deposits except savings accounts with

term conditions, which by their special features are not considered sight. It is understood that

demand deposits are those which payment might be required in the period, i.e., not considered sight

operations that become due on the day after the closing.

Items in course of collection. This category includes the balances on the purchase of assets that are

not settled on the same day and where currency selling has not yet been delivered.

Investment under agreement to repurchase. This category presents the balances relating to

operations under an agreement for sale of instruments and securities lending, depending on whether

transactions were made with domestic banks or other entities.

Time deposits and saving accounts. This item shows the balances of deposit transactions in which it

has set a deadline after which they become due. The time deposits that are due and have not been

canceled or renewed will be presented in the item Current accounts and demand deposits. On the

other hand, non-transferable deposits in favor of the banks will be shown in Borrowing from

financial institutions.




19

Derivative Financial Instrument. This category includes financial derivative contracts with negative

fair values. Also includes independent contracts and derivatives that can be separated from a host

contract, both of which can be classified under those for trading or hedge, as defined below:

Contract negotiation. Applies to derivatives that are not part of a particular hedging relationship

in which is being applied special accounting for hedges.

Contracts for hedge accounting. Corresponds to the derivatives where special hedge accounting

is being applied.

Borrowings from Financial Institutions. Includes obligations to other banks in the country, with

foreign banks or the Central Bank of Chile, except for the obligations reported in the above-

explained items,

Debt issued. This item includes obligations such as a) letters of credit, b) subordinated bonds or c)

current bonds.

Other financial obligations. Shows credit obligations to persons other than banks or foreign country

or the Central Bank of Chile, for financing or operations promptly turning over from its business.

Current income taxes. This Item includes the interim payments that exceed the provision for income

tax or other tax credits on income, such as training expenses or donations to universities.

Additionally, should include interim payments per month (PPM) to recover profits, absorbed by tax

losses.

Deferred taxes. Groups of receivable accounts arising from the tax effect of temporary differences in

the timing of recognition of the items according to financial criteria and tax accounting.

Provisions. This item includes the following: a) Provisions for personnel compensation and benefits,

b) Provision for minimum dividends, c) Provisions for contingent credit risk d) Provisions for

contingencies.

Other liabilities. This item will include liabilities of the financial institution not specified above,

including concepts such as: a) Accounts and notes payable, b) Dividends payable , c) Income

received in advance, d) Valuation adjustments for macro hedges d) other liabilities that are not

included in the items or lines explained above.

In Shareholders Equity will be included for presentation purposes, according to its nature in the

consolidated financial statements the following headings:

Capital. Category that includes paid-in capital, detailed as a) paid-in capital and b) shares acquired

by the bank itself.

Reserves. This item will include a) Surcharge paid by shares, b) Other reserves from non -profit c)

Reserves from income.




20

Valuation gain (Losses). Adjustments are presented for valuation of investments available for sale,

derivatives hedging cash flow and the effects of hedges of net investments abroad.

Retained earnings. This item will include earnings from prior years that have not been distributed

and can be subject to future dividends, profit or loss and the amount corresponding to minimum

dividends (recorded as liabilities of the institution).

The statements of income of the period will include, for presentation purposes, according to its

nature in the consolidated financial statements the following headings:

Interest income. This item will include income from interest and indexation adjustment, except,

adjustments for variations in the exchange rate. Interest and adjustments of the instruments for

trading are included under net income from financial operations.

Interest Expenses. Includes the financial expenses from the period corresponding to interest and

adjustments (except for adjustments arising from changes in foreign currency) from operations of

the entity.

Income from services fees. This item includes interest income from the period, generated from

compensation for services generated by the entity.

Expenses from services fees. This item comprises expenses for commissions accrued in the period

from operations.

Trading and Investment income, net. This item shows the results of financial operations, other than

those required in the areas of interest, fees and exchange results.

Foreign exchange gains (losses), net. This item shows the results accrued in the period for the

maintenance of assets and liabilities in foreign currency or indexed to the exchange rate, the results

made by forex trading and the results of derivatives used for hedging of foreign currency.

Other operating income. This item includes other revenue not included in previous items, except

those which make the net balance of the items "Investments in subsidiaries’ net income" and

"income tax".

Provisions for loan losses. This item reports the charge to income for provisions established and

released for loan portfolios (Debt from banks and loans and accounts receivable) and contingent

loans, as well as income from recovery of charged-off loans. All charged-off, even if they do not

comply with the reasons which led to provisions (failure of payment by the debtor), shall be

accounted against the provisions made and therefore will not be reflected in a separate item.

Personnel salaries expenses. This item includes accrued expenses in the period for remuneration and

compensation to employees and other expenses arising from the relationship between the entity as

an employer and its employees.




21

Administration expenses. This item includes concepts such as: a) general administrative expenses,

b) Expenses for outsourced services, c) Expenses of the Board, d) Advertising e) Taxes,

contributions and contributions.

Depreciation and amortization. Include depreciation of fixed assets and amortization of intangible

assets.

Impairment. Includes impairment losses on investments in debt instruments, fixed assets and

intangible assets. Impairments on loans and receivables are reflected in the "provisions for credit

risk", while impairments of investments in companies included in the business results from

investments in companies.

Other operating expenses. This item includes other costs not included in previous items, except

those which make the net balance of the items "Income Attributable to Investments in Other

Companies" and "Income Tax".

Attributable Income Investments in Other Companies. Includes equity investments recognized by

including under "Investments in Other Companies", the results from the sale of shares in them and

any impairment of these assets.

Income tax. Corresponds to the net expense or revenue generated by: income tax determined in

accordance with current tax rules, the recognition of assets and liabilities and deferred tax benefit

arising from the application of tax losses.

i) Transactions Involving Repurchase Agreements and Securities Lending

We enter into repurchase agreement transactions for investment purposes. Pursuant to these

agreements, we purchase financial instruments, which are recorded as assets under the heading

“Repurchase Agreements and Securities Lending”, and are valued according to the interest rate in

the agreement.

We also enter into repurchase agreements as a form of financing. In this regard, investments sold

subject to a repurchase obligation and which serve as security for the loan are recorded under the

heading “Instruments for Negotiation” or “Investments Instruments Available for Sale”,

respectively. An investment repurchase obligation is classified as a liability and recorded as

“Repurchase Agreements and Securities Lending,” recognizing interest and adjustments accrued to

the date of closing.




22

j) Asset and liability valuation criteria

The criteria for measuring the assets and liabilities presented in the statement of financial position

are the following:

• Assets and liabilities measured at amortized cost:

Amortized cost means the cost of acquisition of a financial assets or liabilities adjusted for its

incremental costs (more or less as applicable) for the portion charged systematically to the gains

and losses accounts for the difference between the initial amount and the corresponding value

repayment at maturity.

In the case of financial assets, the amortized cost also includes corrections to the value driven

by the decline they have experienced.

In the case of financial instruments, the portion charged systematically to the profit and loss

accounts is recorded by the effective interest method. The effective interest method is the rate

that equals the value of a financial instrument to all its estimated cash flows from all sources

over its remaining useful life.

• Assets measured at fair value:

Fair value of an asset or liability is the amount for which an asset could be exchanged and

liability could be settled between knowledgeable, willing parties in an arm’s length transaction.

The most objective and habitual reference of the fair value of an asset or liability is the price that

would be paid in an organized and transparent market (“quoted price” or “market price”).

When there is no market price to determine the amount of the fair value for a certain asset or

liability, the price established in recent transactions of similar instruments is considered in order

to estimate its fair value.

In those cases when it is not possible to determine the fair value of a financial asset or a

financial liability, these are measure at amortized cost.

Additionally, according to what is indicated in Chapter A-2 "Limitations or precision on the use

of general criteria" Compendium of Accounting Standards, all banks may not designate values

to their assets and liabilities at fair value in order to replace the general criteria, amortized cost.

The consolidated financial statements have been prepared on the basis of amortized cost, except

for:

• Derivative financial instruments that are measured at fair value.

• Financial investments available-for-sale that are measured at fair value.

• Trading portfolio financial assets that are measured at fair value.

• Financial instrument held for sale measured at fair value.




23

Asset valued at acquisition cost

Acquisition cost is understood as the cost of transaction for the acquisition of the asset, minus

any impairment losses that have been experienced, if any.

k) Trading portfolio financial assets

Trading portfolio financial assets correspond to financial assets acquired with the purpose of

generating earnings from short-term price fluctuations or from brokerage margins, or which is part

of a portfolio of a recent actual pattern of short-term profit-taking.

Trading portfolio financial assets are valued at fair value based on market prices or valuation models

prevailing on the closing date of the statement of financial situation. Gains or losses from changes in

fair value, as well as gains or losses from their trading, and accrued interest income and indexation

adjustments are included in line item “Trading and investment income”.

All purchases and sales of trading instruments to be delivered within the deadline period established

by market regulations and conventions are recognized on the trade date, which is the date on which

the commitment is made to purchase or sale the asset.

l) Investment instruments

Investment instruments are classified into two categories: financial investments held-to-maturity and

financial investments available-for-sale.

Held-to-maturity investments category include only those instruments for which the Bank has the

intention and ability to hold to maturity. All other investment instruments are categorized as

available-for-sale.

Instruments available for sale are initially recognized at cost, including transaction costs.

Subsequent to initial recognition, available for sale investments are measured at fair value based on

market prices or valuations by using models. Gains or losses from changes in fair value are

recognized in other comprehensive income, within Shareholders’ Equity. When these investments

are sold or determined to be impaired, the cumulative gains or losses previously accumulated in the

financial investment available for sale reserve are transferred to income and reported under line item

“trading and investment income”.

Held-to-maturity investments are recorded at cost plus accrued interest and indexation adjustments,

less any provisions for impairment losses recorded when their carrying amount exceed their

estimated recoverable amount.

Interest and indexation adjustments on held-to-maturity and available-for-sale investments are

included under line item “Interest revenue” within the Consolidated Statement of Income.




24

Investment instruments designated as hedging instruments are measured using the requirements

established for hedge accounting, see letter j) of this note to the financial statements.

All purchases and sales of investment instruments to be delivered within the deadline period

established by market regulations and conventions are recognized on the trade date, which is the

date on which the commitment is made to purchase or sell the asset.

Management has evaluated the portfolio classified as “Financial investments available-for-sale and

Financial investment held-to-maturity” in order to assess whether there are any impairment

indicators. This assessment takes into consideration the economic, credit rating of issuers in debt

intention and ability of the Bank to hold these investments to maturity. Based on this evaluation,

management believes that the investment portfolio does not present any evidence of impairment.

m) Financial derivative contracts

Financial derivative contracts including foreign exchange forwards and forwards in unidades de

fomento (inflation index-linked units of account), interest rate futures, currency and interest rate

swaps, interest rate options, and other derivative instruments are initially recognized at cost

(including transaction fees) and are subsequently measured at fair value. The fair value is obtained

from market quotes, discounted cash flow models and option valuation models, as appropriate.

Derivatives contracts are presented on the statement of financial position as an asset when their

change in fair value is positive and as a liability when is negative under line item “Derivative

financial instruments” within the assets and liabilities section.

Certain derivatives embedded in other financial instruments are treated as separate derivatives when

their risk and economic characteristics are not clearly related to those of the host contract such host

contract is not being recorded at fair value through profit or loss.

On the inception of derivatives contract, these should be designated by the Bank as a trading

derivative or as a hedging instrument for hedge accounting purposes.

The changes in the fair value of trading derivatives are recorded in line item “Trading and

investment income” within the Consolidated Statement of Income.

If the derivative is designated as a hedging instrument in a hedge relationship, this may be: (1) a fair

value hedge of assets or liabilities or firm commitments, or (2) a hedge of cash flows related to

recognized assets or liabilities or expected transactions. A hedging relationship qualifies for hedge

accounting if, and only if, all of the following conditions are met: (a) at the inception of the hedge

there is formal designation and documentation of the hedging relationship; (b) the hedge is expected

to be highly effective; (c) the effectiveness of the hedge can be reliably measured and; (d) the hedge

is assessed on an ongoing basis and determined actually to have been highly effective throughout the

financial reporting periods for which the hedge was designated.

Transactions with derivatives that do not qualify for hedge accounting are recognized and presented

as trading derivatives, even if they provide an effective economic hedge for managing risk positions.




25

When a derivative instrument hedges the risk exposure to changes in the fair value of a recognized

asset or liability, the asset or liability is recorded at its fair value with respect to the specific risk

hedged. Gains or losses from measuring the fair value of the item hedged and the hedging derivative

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

firm commitment with respect to the hedged risk are recognized as assets or liabilities with the

corresponding gain or loss recognized in income. The gains or losses from measuring the fair value

of the hedging derivative instrument are also recorded in income. When an asset or liability is

acquired or assumed as a result of the firm commitment, the initial carrying amount of the acquired

asset or assumed liability is adjusted to include the cumulative change in the fair value of the firm

commitment attributable to the hedged risk that was recognized in the statement of financial

position.

When a derivative instrument hedges exposure to variability in cash flows of recognized assets or

liabilities, or highly probable forecasted transactions, the effective portion of the changes in fair

value with regard to the risk hedged is recognized in other comprehensive income. Any ineffective

portion is immediately recognized in income.

The amounts recognized directly into equity are recorded as earnings for the same periods in which

the hedged asset or liability would affect the income.

When making a fair value hedge interest rate for a portfolio, and the hedged item is an amount of

currency instead of assets or liabilities, the earnings or losses from fair value measurement of both

the hedged portfolio and the hedging derivative are recognized effect on earnings, whereas the

associated measurement of the asset/liability at fair value of the hedged portfolio is presented in the

balance sheet under "Other assets " or "Other liabilities", depending on the position of the portfolio

cover at a time.

Financial derivative contracts which have compensatory effects across subsidiaries in a set of

consolidated financial statements are offset in the consolidated balance sheet only when the

subsidiaries have both a legally enforceable right to set off the amounts recognized in those

instruments, the intention to settle on a net basis or to realize the asset and settle the liability

simultaneously.

n) Revenue and expense recognition

The most significant criteria used by the Bank to recognize revenue and expenses are summarized as

follows:

n.1 Interest revenue, interest expense and similar items

Interest revenue and expense are recorded on an accrual basis using the effective interest rate

method.




26

Nevertheless, when a debt instrument is considered to be individually impaired or is part of a group

of those that have suffered impairment because of past due amounts of more than 3 months, the

Bank discontinue the accrual of interest on such impaired debt instruments. Such interest is

recognized as income, when appropriate, as a recovery of the impairment loss.

Dividends received from investments in other companies are recognized in income when the right to

receive them has been entitled, and are presented under item; “Income attributable to investments in

other companies”.

n.2 Commissions, fees, and similar items

Fee and commission income and expenses are recorded in the Consolidated Statement of Income

based on criteria that differ according to their nature. The main criteria are:

- Those arising from transactions or services that are performed over a period of time are recorded

over the life, term, or contractual effectiveness of such transactions or services.

- Those originated by a specific act are recognized when the specific act has occurred.

- Those related to assets or financial liabilities that are recognized when collected.

n.3 Non-finance income and expenses

Non-finance income and expenses are recognized on an accrual basis.

n.4 Loan origination fees

Loan origination fees, mainly loan origination and application fees, are accrued and recognized in

the Consolidated Statement of Income over the term of the loan. For loan origination fees, the

portion relating to the associated direct costs incurred in the loan arrangement is recorded

immediately in the Consolidated Statement of Income.

o) Impairment

The Bank and its subsidiaries use the following criteria to assess damage, if applicable:

Financial assets

A financial asset is assessed at the end of each reporting period to determine whether objective

evidence of impairment exists.

A financial asset or group of financial assets is impaired and impairment losses are incurred if, and

only if, there is objective evidence of impairment as a result of one or more events that occurred

after initial recognition of the asset (a ‘loss event’), and that loss event (or events) has an impact on

the estimated future cash flows of a financial asset or group of financial assets that can be reliably

estimated. It may not be possible to identify a single, discrete event that caused the impairment.




27

An impairment loss relating to financial assets recorded at amortized cost is calculated as the

difference between the carrying amount of the financial asset and the present value of estimated

future cash flows discounted at the financial asset’s original effective interest rate.

An impairment loss relating to a financial asset available for sale is calculated based on its fair

value.

Individually significant financial assets are assessed individually to determine whether objective

evidence of impairment exists. The remaining financial assets are included in groups with similar

credit risk characteristics and are collectively assessed for impairment.

All impairment losses are recorded in income. Any cumulative loss relating to a financial asset

available for sale that has been recognized in other comprehensive income is reclassified from

equity to income.

The reversal of an impairment loss occurs only if it can be objectively related to an event occurring

after the initial impairment loss was recognized. In the case of financial assets carried at amortized

cost and those debt instruments classified as financial assets available for sale, the reversal of

impairment losses is recorded in income.

Non-financial assets:

The Banks carrying amount of non-financial assets, excluding investment properties and deferred

taxes are regularly reviewed to determine whether there is any indication that the asset may be

impaired. If any such indication exists, the Bank estimates the recoverable amount of the asset. In

the case of goodwill and intangible assets with indefinite useful lives or that are not ready for their

intended use their recoverable amounts are estimated at each reporting date.

Impairment losses recognized in prior periods are assessed at each reporting date with the aim to

find any indication that the loss has decreased or disappeared. An impairment loss is reversed only

to the extent that the asset's value which may not exceed the carrying amount that would have been

determined, net of depreciation or amortization, if no impairment loss had been recognized. .

p) Property, plant and equipment

The components of fixed assets are measured at cost less accumulated depreciation and impairment

losses.

The above cost includes expenditure that has been directly attributed to the acquisition of such

assets. The cost of under construction assets include the costs of materials and direct labor, and any

other costs directly attributable to the process for the asset that are ready for use.

In case of an item of fixed asset possesses a different useful life, they will be recorded as separate

items (major components for the category of fixed assets).




28

Depreciation is recognized in the income statement based on the straight-line depreciation method,

over useful lives of each part of an item of fixed assets. The assets related to leased assets are

depreciated over the shorter period between the lease and their useful lives, unless it is certain to

obtain ownership by the end of the period rented.

Property, plant and equipment consist of buildings, land, furniture, vehicles, computer hardware and

other fixtures owned by the Bank or acquired under finance leases. Assets are classified according

to their use as follows:

Property, plant and equipment for own use

Property, plant and equipment for own use (including, among other, assets received in lieu of

payment which are intended to be held for continuing own use and assets acquired under finance

leases) are presented at acquisition cost less accumulated depreciation and accumulated impairment

losses.

For these purposes, the acquisition cost of assets received in lieu of payment is equivalent to the net

amount of the financial assets surrendered in exchange.

Depreciation is calculated using the straight line method over the acquisition cost of assets minus

their residual value, however, the land on which buildings and other structures sit has an indefinite

life and, therefore, is not subject to depreciation.

The Bank applies the following useful lives to the fixed assets that comprise its total assets:

Item Useful life

(Years)

Buildings 75

Facilities 10

Furniture 10

Vehicles 10

Office equipment 10

Security instruments and implements 5

Other minor assets 5

The consolidated entities assess at the end of each reporting date whether there is any indication that

the carrying amount of any of their tangible assets exceeds its recoverable amount; if so, the

carrying amount of the asset is reduced to its recoverable amount and future amortization charges

are adjusted in proportion to the revised carrying amount and to the new /remaining useful life.. Similarly, if there is an indication of a recovery in the value of a tangible asset, the consolidated

entities record the reversal of the impairment loss recorded in prior periods and adjust the future

amortization charges accordingly. In no circumstance may the reversal of an impairment loss on an

asset increase its carrying value above the one it would have had if no impairment losses had been

recorded in prior years.




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The estimated useful lives of the items of property, plant and equipment held for own use are

reviewed at least at the end of each reporting period to determine significant changes therein. If

changes are detected, the useful lives of the assets are adjusted by correcting the amortization

charge to be recorded in the Consolidated Statement of Income in future years on the basis of the

new useful lives.

Maintenance expenses relating to tangible assets (property, plant and equipment) held for own use

are recorded as an expense in the period in which they are incurred.

Assets leased out under an operating lease- Operative Leasing

They consist of contracts where CorpBanca and/or his subsidiaries act as lessee and the contract

classifies under operating leasing - the payments are recorded as expenses. At the end of the

contract any additional payments required by the landlord it will be recorded as expenses of the

period.

Financial leases - leasing contracts

They consist of leases which grant the tenant the option to purchase the leased asset at the end of

the contract. The sum of the present value of the installments that they will receive from lessee in

addition to the purchase option is recorded as a third party financing are shown under loans and

accounts receivable. Assets acquired for leasing operations are presented under "Other assets" at

acquisition cost.

q) Placements loans

They are non-derivative financial assets with fixed or determinable fees that are not quoted in an

active market and which CorpBanca does not intend to sell immediately or in the short term,

measured at amortized cost using the method of the effective interest rate.

When the Bank is the lessor in a lease and transfers substantially all the risks and benefits incidental

to the leased asset, the transaction is provided in loan placements.

r) Allowances for loan losses

Individual and group provision

The allowances required to cover the risk of losses of loans, loans, credit exposures, and contingent

loans, should be determined and recognized on a monthly basis, considering the types of existing

provisions, the evaluation models used and the types of operations.

The evaluation models, criteria and procedures to perform an overall assessment of credit risk and to

determine the amount of provision to be recognized, are approved by the Bank’s Directors

Committee and are defined in the Credit Policy; in accordance with the regulations and instructions

of the Superintendency of Banks and Financial Institutions.




30

Processes and compliance of /with the Policy are evaluated and supervised according to internal

control procedures in order to ensure compliance and to maintain an adequate level of provisions

that would cover losses attributable to expected and incurred impairment.

Allowances are referred to as “individual” when corresponding to debtors that are individually

evaluated, as considering their size, complexity or level of exposure making it necessary to analyze

them in detail and, are referred to as “group” when corresponding to a large number of operations

with similar characteristics whose amounts are not individually significant and relate to individuals

or small-size companies.

Allowances are classified as:

Individuals

Individual allowances over normal portfolio

Individual allowances over substandard portfolio

Individual provisions on default portfolio

Group

Group allowances over normal portfolio

Group allowances over default portfolio.

s) Individual Provisions

Individual assessment means that credit assessment is necessary when dealing with companies

whose size, complexity or level of exposure with the Bank, is necessary to analyze and get to know

them in detail.

The classification methodology is based on provisions and regulations of the Superintendency of

Banks and Financial Institutions for this purpose, assigning risk categories to each debtor, according

to the following details:

Normal Compliance portfolio. Applies to debtors whose ability to pay and fulfill their obligations

and commitments haven´t displayed any signals that may change this condition, according to the

economic and financial situation. The classifications assigned to this portfolio are the categories

ranging from A1 to A6.

Substandard portfolio. Includes debtors with financial difficulties or who have presented

significant deterioration on their ability to pay and for which there is reasonable doubt about the full

repayment of principal and interest on agreed contractual terms, showing a low margin to meet its

short-term financial obligations. Part of this portfolio consists of debtors who in recent times have

presented over 30 days delinquency. The ratings assigned to this portfolio are the categories that

range from B1 to B4.




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Portfolio in Default. Includes debtors and their loans for which recovery is considered remote,

given that they display a deteriorating or no ability to pay. They are part of this portfolio those

debtors where clear indications of a possible bankruptcy exist, those that require a forced

restructuring of debts and any debtor where a delay less than 90 days in the payment of interest or

principal exists. The ratings assigned to this portfolio are the categories ranging from C1 to C6.

As part of the individual analysis of the debtors, the Bank classifies its debtors in the three

categories above, assigning percentages of provisions regulated by the Superintendency of Banks

and Financial Institutions to be applied to each of the individual categories, according the following:

Type of Portfolio Debtor Category Estimated Loss

(%)

Normal

Compliance

Portfolio

A1 0,03600

A2 0,08250

A3 0,21875

A4 1,75000

A5 4,27500

A6 9,00000

Substandard

Portfolio

B1 13,87500

B2 20,35000

B3 32,17500

B4 43,87500

For the portfolio in default, the Bank according to the Superintendency of Banks and Financial

Institutions, must maintain the following levels of reserves:

Type of Portfolio Risk Scale Estimated Loss Range Provision (%)

Portfolio in

Default

C1 More than 0 up to 3 % 2%

C2 More than 3% up to

20% 10%


30% 25%

C4 More than 30 % up to

50% 40%


80% 65%

C6 More than de 80% 90%

ii) Allowances Group

Group evaluations require the formation of groups of loans with similar characteristics, in the type

of debtors and conditions agreed, with the objective of establishing the payment behavior of the

group in question including such factors as the treatment of recoveries.




32

The constitution of provisions methodology is based on experience, underlying the payment

behavior for each homogeneous group of debtors and recovery of collateral and collection actions,

to directly estimate a percentage of expected losses applied to the amount of credits of the respective

group.

Among the credits evaluated in groups, there are two states, normal and non-compliance. The

portfolio includes loans in default for 90 days or more.

Additional Provisions

The Bank constitutes additional provisions in accordance with Section 9 of Chapter B-1 of the

Compendium of Accounting Standards issued by the Superintendency of Banks and Financial

Institutions. These provisions were constituted in order to safe keep against risk and predictable

macroeconomic fluctuations that may affect a sector, industry or group of debtors, in order to

anticipate reversal situations in an expansive economic cycles in the future, that could reflect

deteriorating conditions of the economic environment and, thus, function as an anti-cyclical

mechanism of accumulation of additional provisions when the scenario is favorable and releasing or

assigning specific provisions when environmental conditions deteriorate.

By December 31, 2011 and 2010, the Bank has additional provisions for its portfolio of commercial,

consumer and mortgage debtors required by the Superintendency of Banks and Financial

Institutions.

t) Impaired loan portfolio and write-offs

The impaired loan portfolio includes those loans (heading “Loans and receivables from banks” and

“Loans and receivables from customers”) on which there is concrete evidence that debtors will not

meet some of their contractual payment obligations – regardless of the possibility to collect the

amounts due by referring to the collaterals - by exercising legal collection actions or by agreeing

different contractual conditions.

However, debtors subject to individual assessment should be considered in the impaired portfolio

when classified in any of the categories of "Portfolio in Default", as well as B3 and B4 categories of

"Substandard portfolio. "Equally, as debtors subject to group evaluation, the impaired portfolio

includes all loans in default portfolio.

Based on above, the Bank will incorporate and maintain these loans in the impaired loan portfolio

while debtors’ behavior and/or payment capacity has not changed, , without prejudice to the fact that

writing off credits individually make take place under the write-off conditions indicated below.

Impairment identification is provided on a monthly basis in a centralized manner by the Risk

Classification and Provision System, as defined in the Credit Policy, which is consistent with the

standards issued by the SBIF.




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Write-offs

As a general rule, write-offs must be made when the contractual rights over cash flows expire. For

loans, even when the foregoing has not occurred, write-offs must be made against the respective

asset balances in accordance with Title II, Chapter B-2, “charge-off and written off loans “of the

SBIF’s Compendium of Accounting Standards.

The write-offs remove the asset corresponding to the relevant transaction from the Statement of

Financial Position, including the portion that may not have become due in the case of an installment

loan or a leasing transaction (there are no partial write-offs).

Write-offs must always be recorded through a charge against the loan loss allowances established as

prescribed in Chapter B-1 of the Compendium of Accounting Standards, whatever the cause of the

write-off may be.

Write-offs of loans and accounts receivable are based on due, past-due and current installments, and

the term must run from the commencement of the arrears, i.e., the write-off must be recorded when

the arrears on an installment or portion of a loan in a given transaction reaches the time limit for

write-off stipulated below:

Type of loans Deadline

Consumer loans with or without collaterals 6 months

Consumer leasing 6 months

Other non-real estate leasing operations 12 months

Other operations without collaterals 24 months

Commercial loans with collaterals 36 months

Real estate leasing (commercial and mortgage) 36 months

Mortgage loans for mortgage 48 months

The deadline corresponds to the time elapsed since the date in which all or part of the debt in arrears

became due.

Recovery of charged-off asset

Subsequent payments to be obtained from written-off operations shall be recognized in results as

recoveries from written-off credits.

In the event that there are real recoveries, the profit income will be recognized by the amount by

which they are incorporated into the asset, as described in Chapter B-5 "Assets received in lieu of

payment of obligations" of the Compendium Accounting Standards. The same approach will be

followed if the leased property to recover after the write-off is a leasing operation..




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Renegotiation of Charged-off operations

Renegotiations of written-off credits shall not originate income, for as long as the operation

continues to be classified as impaired; whereas any payments so received must be treated as

recoveries of written-off credits.

A renegotiated credit may only re-enter the assets if it ceases to be classified as impaired, also

recognizing the credit as recovery of written-off credits. The same criteria should be followed in the

event that a loan is granted to pay a write-off.

u) Contingent Asset and liabilities

Contingent loans are those operations or commitments in which the bank assumes a credit risk upon

committing itself before third parties, before the occurrence of a future fact, to make a payment or

disbursement that must be recovered from its clients.

The bank and its subsidiaries keep a record of the following balances -related to commitments or to

liabilities of its own line of business- in memorandum accounts: Collaterals and guarantees,

confirmed foreign letters of credit, documentary letters of credit issued, bank vouchers, inter-bank

vouchers, freely disposable lines of credit, other credit commitments and other Contingent loans.

The balances of such Contingent loans are considered at closing of each financial statement in order

to determine the credit risk provisions required under Chapter B-1 “Credit Risk Provision” of the

Compendium of Accounting Standards of the SBIF, the amounts must be computed according to a

risk exposure factor, according to the following table:

Type of contingent loan Exposure

a) Collaterals and guarantees 100%

b) Confirmed foreign letters of credit 20%

c) Documentary letters of credit issued 20%

d) Bank vouchers 50%

e) Inter-bank vouchers 100%

f) Freely disposable lines of credit 50%

g) Other credit commitments:

- Superior (university) study credits - Law N°20,027 15%

- Other 100%

h) Other Contingent loans 100%

Nevertheless, in case of operations with clients with loans in default as described in section B-1,

such exposure shall be always equivalent to 100% of its Contingent loans.




35

v) Provisions for contingencies loans

The Bank has recorded in memo accounts, balances related to commitments or responsibilities from

business: Endorsements and guarantees, documentary letters of credit, performance bonds, letters of

guarantee interbank credit lines freely available, other loan commitments and other contingent

claim.

The balance of those contingent claims is considered at the end of each financial statement, with the

objective to determine the credit risk provision required under Chapter B-1 of the Compendium of

Accounting Standards according to the methodology detailed in Note No. 1 o).

According as stated in Chapter E of the Compendium of Accounting Standards, effective until

December 31, 2010, provisions referred to contingent loans, regarding the portfolio subject to

individual assessment and group, did not consider claims relating to freely disposable lines of credit,

other credit commitments and other contingent claims. However, the difference between total

provisions for contingent claims calculated with these rules and the total is obtained by considering

all operations with their respective percentages of exposure in accordance with Section B-3 of the

Compendium of Accounting Standards, when the latter is greater, it should be recognized ,as

additional provision for all purposes.

As noted in specific instructions of the Superintendency of Banks and Financial Institutions by

Management Letter No. 10 dated December 21, 2010, additional provisions that were formed for

this item by December 31, 2010, are shown, only for comparative purposes (2011 and 2010) ,as

required provisions over contingent loans in the consolidated financial statements.

w) Deferred taxes

The Bank and its affiliates have recognized an expense for income tax at the end of each period, the

above according to the current tax regulations (Note 15 of these Financial Statements).

The income tax expense for the year is calculated by adding the current tax resulting from the

implementation of the relevant tax rate to the taxable year (after applying the tax deductions that are

allowable) and the change in assets and liabilities by deferred taxes that are recognized in the

accounts of consolidated income.

Assets and liabilities by deferred taxes include temporary differences at the amount expected to be

payable or recoverable on differences between the book value of assets and liabilities and their

corresponding tax values as well as negative tax bases clearing and tax credits not applied for tax

deductions. These amounts are recorded as temporary differences by applying the appropriate tax

rate that is expected to be recovered or settled.

The deferred tax effects of temporary differences between the tax and the balance sheet are recorded

on an accrual basis in accordance with IAS 12 "Income Taxes."




36

The Bank recognizes, as appropriate, deferred tax liabilities for the estimated future tax effects

attributable to differences between the book values of liabilities and their tax values. The

measurement of deferred tax liabilities are made based on the tax rate, according to current tax law,

as applied in the year deferred tax liabilities are realized or settled. The future effects of changes in

tax legislation or in tax rates is recognized in deferred taxes from the date the law approving such

changes is published.

At December 31, 2011 and 2010, the Bank has recognized deferred tax assets, so the bank has said

that it is possible to get future tax benefits that allow the use of temporary differences on tax losses

existing at end of each period.

Law No. 20,455, published in “Diario Oficial” on July 31, 2010, established that the rate of income

tax class of business will increase from the current rate of 17% to 20% for business year 2011,

18.5% for the business year 2012 and by 17% from the business year 2013 and beyond.

x) Provisions and contingent liabilities

Provisions are reserves where there is uncertainty about their amount or maturity These provisions

are recognized in the Statement of Financial Position when the following requirements are met :

It is a real obligation as a result of past events, and

Up to the date of the financial statements it is likely to CorpBanca and / or its subsidiaries an

outflow of resources to settle the obligation and the amount of these resources can be measured

reliably.

A contingent liability is any liability, arised from past events whose existence will be confirmed

only through one or more uncertain future events occurring not under the control of the entity and/or

its subsidiaries

y) Derecognition of financial assets and liabilities

The accounting treatment of financial asset transfers is conditioned by the degree and form in which

risks and benefits associated to the assets are transferred to third parties:

1. If the Bank transfers substantially all the risks and rewards to third parties, as in the case of

unconditional sales of financial assets, sales under repurchase agreements at fair value at the

date of repurchase, sales of financial assets with a purchased call option or written put option

deeply out of the money, utilization of assets in which the assignor does not retain subordinated

debt nor grants any credit enhancement to the new holders, and other similar cases, the

transferred financial asset is removed from the Consolidated Statements of Financial Position

and any rights or obligations retained or created in the transfer are simultaneously recorded.




37

2. If the Bank retains substantially all the risks and rewards associated with the transferred

financial asset, as in the case of sales of financial assets under repurchase agreements to

repurchase at a fixed price or at the sale price plus interest, securities lending agreements under

which the borrower undertakes to return the same or similar assets, and other similar cases, the

transferred financial asset is not removed from the Consolidated Statements of Financial

Position and continues to be measured by the same criteria as those used before the transfer.

However, the following items are recorded:

a) An associated financial liability for an amount equal to the consideration received; this

liability is subsequently measured at amortized cost.

b) Both the income from the transferred (but not removed) financial asset as well as any

expenses incurred on the new financial liability

3. If the Bank neither transfers nor substantially retains all the risks and rewards associated with

the transferred financial asset — as in the case of sales of financial assets with a purchased call

option or written put option that is not deeply in or out of the money, securitization of assets in

which the transferor retains a subordinated debt or other type of credit enhancement for a

portion of the transferred asset, and other similar cases — the following distinction is made:

a) If the assigning entity does not retain control of the conveyed financial assets: it is written-

off the statement of financial position and any right or obligation withheld or created as a

consequence of such transfer is recognized.

b) If the assignor entity retains control of the conveyed financial asset: it continues to

recognize it in the statement of financial position for a value equal to its exposure to value

changes that might be experienced and it recognizes a financial liability associated to the

conveyed financial asset. The net value of the asset conveyed and the liability associated

shall be the amortized cost of the rights & obligations withheld, if the conveyed asset is

measured according to its amortized cost, or according to the fair value of the rights &

obligations thus obtained, if the conveyed assets are measured at their fair value.

In line with the foregoing, financial assets are only written-off the balance sheet when the rights

over the cash flows that they generate are extinguished or when their implicit or ensuing risks and

benefits have been substantially conveyed to third parties. Similarly financial liabilities are only

written off the statement of financial position when the obligations that they generate are

extinguished or when they are acquired with the intention of cancelling or placing them out again.




38

z) Employee Benefits

The annual cost of employee vacations and benefits are recorded on an accrual basis.

aa) Intangible assets

Intangible assets are identified as non-monetary assets (separated from Other assets) without a

physical substance that arise as a result of a legal transaction or that are internally developed by the

consolidated entities. These are assets whose cost may be reliably estimated and for which the

consolidated entities consider it probable to recognize future economic benefits.

Intangible assets are initially recognized at their acquisition or production cost and are subsequently

measured at cost less accumulated amortization and accumulated impairment losses.

bb) Cash and cash equivalent

For the preparation of the cash flow statement, the Bank applied the indirect method, in which,

starting with the bank’s income before taxes, non-monetary transactions are subsequently

incorporated, as well as income and expenses associated with cash flows classified as investing or

financing activities.

The cash flow statement has been considered as cash and cash equivalent balances "Cash and

deposits in banks" plus/minus the net balance of "Items in course of collections" , shown in the State

of Financial Position, plus trading portfolio financial asset and held for sale with high liquidity and

insignificant risk of changes in value, with a maturity not exceeding three months from the date of

purchase and resell agreements that are in this situation. It also includes investments in fixed income

and mutual funds, which in the Statement of Financial Position are presented along with Trading

portfolio financial instrument. The balances of cash and cash equivalents and its reconciliation with

Cash Flow Statement are detailed in Note 5 of these financial statements.

The preparation of the cash flow statements takes the following items into account:

a) Cash flows: the inflow or outflow of cash and cash equivalent short-term investments of high

liquidity and low risk of changes in value, understanding as such the balances in items such as:

Central Bank of Chile deposits, Domestic bank deposits, and Foreign bank deposits.

b) Operating activities: they correspond to normal activities performed by Banks, as well as other

activates that cannot be classified as either investments or financing.

c) Investment activities: they correspond to the acquisition, sale or disposal by other means, of

long-term assets and other investments not included in cash and cash equivalent.

d) Financing activities: these are activities that produce changes in the size and composition of the

net Shareholders’ equity and liabilities that are not part of operating activities or investments.




39

In the statement of cash flow, cash and cash equivalents are defined as cash balances and bank

deposits plus the net balance of items in course of collection as determined by Chapter C-1 of the

Compendium of Accounting Standards. Cash and cash equivalents balances and their reconciliation

to the cash flow statement are detailed in Note 5 of these financial statements.

cc) Use of estimates and judgment

The preparation of the financial statements requires management to make estimates, judgment and

assumptions that affect the application of accounting policies and the balances reported for assets

and liabilities, the disclosure of asset or liability contingencies as of year-end, as well as income and

expense accounts. Actual results may differ from these estimates.

The relevant estimates and assumptions are reviewed regularly by management in order to quantify

certain assets, liabilities, revenues, expenses and uncertainties. The revisions of accounting estimates

are recognized in the period in which the estimate is revised and in any future period affected.

In certain cases, SBIF rules and generally accepted accounting principles require 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 instead of a forced settlement or sale. Where available, quoted

market prices in active markets have been used as the basis for measurement. Where quoted market

prices in active markets are not available, the Bank has estimated such values based on the best

information available, including the use of modeling and other valuation techniques.

The Bank has established allowances to cover possible losses in accordance with regulations issued

by the Superintendency of Banks and Financial Institutions. These regulations require that, to

estimate the allowances, they must be regularly evaluated taking into consideration factors such as

changes in the nature and volume of the loan portfolio, trends in forecasted portfolio quality, credit

quality and economic conditions that may adversely affect the borrowers’ ability to pay. Increases in

the allowances for loan losses are reflected as “Provisions for loan losses” in the Consolidated

Statement of Income. Loans are written-off when management determines that a loan or a portion

that is uncollectible, in accordance with the legal requirements issued by the SVS, this chapter

through B-2 "Credits damaged and punished". Write-offs are recorded as a reduction of the

provisions for loan losses.

dd) Mandatory dividends

The Bank recognizes as a liability, the portion of net income to be distributed in compliance with the

Corporations Law (30%) or pursuant to its dividend policy, for 2011 the entity will distribute an

amount that won’t exceed 75% of the net income of the period (at least 50% for 2010) During 2011

the bank will provision the minimum stated by the law, 30% of the net income.




40

ee) Assets received in lieu of payment

Assets received in lieu of payment are measured at the lower of initial carrying amount and net

realizable value, i.e., its fair value (independent appraisal) less the necessary maintenance costs and

costs to sell. The net realizable value shall be determined in accordance with current market

regulations, and should correspond to the fair value less the necessary maintenance costs and costs

to sell. Write-offs are required by the regulatory entity SBIF, if the asset is not sold within one year

of receipt.

ff) Factored receivables

The Bank makes factoring transactions with their customers, through which it receives invoices and

other commercial instruments representative of credits, with or without responsibility of the

transferor, the transferor anticipating a percentage of the total amounts receivable from the debtor

(Note 10a). These loans are valued at acquisition value of the credits. Any price difference

generated out of cessions, is accrued over the period of funding. The responsibility for payment of

claims is the transferor.

gg) Leasing

Financial leasing

Corresponds to leases that transfer substantially all the risks and benefits from the owner of the

leased asset to the lessee. When the consolidated entities act as lessors of an asset, the sum of the

present values in the receivable amounts from the lessee plus the guaranteed residual value, usually

the price of exercising the purchase option for the lessee at the end of the contract shall be

recognized as a third party financing, including under "Loans and accounts receivable" of

Consolidated Statement of Financial Position.

When the aforementioned entities act as lessees, they will present the cost of leased assets in the

Consolidated Statement of Financial Position as the nature of the leased asset and, simultaneously, a

liability for the same amount (which is the lower of fair value leased asset and the sum of the present

values of the amounts to the lessor plus, if applicable, the exercise price of the buying option).

These assets are depreciated using similar criteria to those applied to fixed assets for own use (see

letter m practice "fixed asset"). In both cases, financial income and expenses arise from these

contracts is credited or debited, respectively, the Consolidated Statement of Income in the items

"Interest income" and "Interest expense" in order to achieve a constant rate of performance during

the lease term




41

Operating Leasing

In this mode the ownership of the leased asset and substantially all the risks and benefits that fall on

the property, remain with the lessor. When the consolidated entities act as lessors, will present the

acquisition cost of leased assets in the item "Fixed assets". These assets are depreciated according to

the policies adopted for physical assets (see letter m practice "fixed asset") and income from leases

are recognized in the Consolidated Statement of Income in a linear fashion, in item "Other operating

income".

When the aforementioned entities act as lessees, lease expenses, including incentives granted, if any,

by the lessor, are loaded linearly to their accounts consolidated income statement under "Other

General Administrative Expenses" in the Consolidated Statement of Income .

hh) Non-current assets held for sale

Non-current assets (or a group which includes assets and liabilities for disposal) expected to be

recovered mainly through sales rather than through continued use, are classified as held for sale.

Immediately prior to this classification, assets (or elements of a disposable group) are re-measured

in accordance with the Bank’s policies.

The assets (or disposal group) are measured at the lower of book value and fair value minus cost of

sale. Impairment losses on initial classification of assets held for sale and subsequently, gains and

losses on revaluation are recognized in earnings. Gains are not recognized if they exceed any

cumulative loss.

As of December 31, 2011 and 2010, the Bank has not classified any non-current assets as held for

sale.

ii) Earnings per share

Basic earnings per share are determined by dividing the net income attributable to equity holders of

the Bank in a period by the weighted average number of shares outstanding during the period.

Diluted earnings per share are determined in a similar manner as Basic Earnings, but the weighted

average number of outstanding shares is adjusted to take into account the potential diluting effect of

stock options, warrants, and convertible debt.

As of December 31, 2011 and 2010 the Bank did not have instruments that generated diluting effects

on shareholders’ equity.




42

jj) Assets under management and investment funds managed by the Bank

The assets managed by CorpBanca Administradora General de Fondos S.A., which are the property

of third parties are not included in the Consolidated Statements of Financial Position. The relevant

management fees are included in “Fee and commission income” in the Consolidated Statement of

Income.

kk) Consolidated statement of changes in consolidated Shareholders’ equity.

The consolidated statement of changes in shareholders’ equity included in these consolidated

financial statements presents the total changes of the shareholders’ equity during the year.

a) Adjustments due to changes in accounting principles.

b) Net income of the year

c) Other changes in equity, among which include distributions of income, capital increases,

provision of minimum dividends, paid dividends in addition to other increases or decreases in

equity.

This information is presented in two statements: the consolidated statement of comprehensive

income and statement of changes in equity.

Consolidated statement of comprehensive income

This represents the income and expenses generated by the Bank as a result of its business activity in

the period, separately disclosing income and expenses recorded in the Consolidated Statement of

Income for the period and the other income and expenses recorded directly in other comprehensive

income.

Accordingly, this statement presents:

a) Consolidated Statement of Income for the period.

b) The net amount of income and expenses recognized temporarily in equity as adjustments

recorded as "valuation accounts".

c) The deferred income tax arising from the information mentioned before except for adjustments

of exchange differences and derivatives coverage for overseas investment.

d) Total of the consolidated income and expense recognized, calculated as of the sum of the

preceding letters, showing separately the amount attributed to the Bank and for non-controlling

interest.




43

Statement of changes in Shareholders’ equity

The Consolidated Statement of Changes in Shareholders’ Equity presents all the changes occurring

in net equity, including those arising from accounting changes and correction of errors. Accordingly,

this statement provides a reconciliation of the beginning and ending balance of the period for all

items in consolidated net equity, grouping the changes into the following items based on their

nature:

a) Adjustments for changes in accounting criteria and the correction of errors: includes the

changes in consolidated net equity arising as a consequence of the retroactive restatement of the

financial statement balances as a consequence of changes in the accounting criteria or in the

correction of errors.

b) Revenues and expenses recorded in the period: reflects, in aggregate form, all the items

recorded in the Consolidated Statement of Income indicated above.

New and revised accounting standards

i) SBIF Circulars:

As of the preparation of our current consolidated financial statements, new accounting standards

were announced by the Chilean Superintendency of Banks and Financial Institutions (“SBIF”) as

follows:

Circular N°3,503 – On August 12, 2010, the SBIF released this Circular which complements and

modifies instructions to the Compendium of Accounting Standards, chapters B1- “ Credit Risk

Provision”; B2- “Charged-Offs and Written- Off Credits”B3Contingencie Loans and C1, Annual

Financial Statement Such changes, correspond to new texts and re-expression of concepts related to

types of loans and portfolios. These amendments came into effect on January 1, 2011. Additionally,

this Circular introduces provisions relating to additional provisions contained in No. 9 except for

provisions related to additional allowances contained in No. 9 of Chapter B-1, which are still

applicable for 2010. In addition, and as a complement to this Circular, letter to management N° 9

dated December 21, 2010, was issued, specifying that adjustments resulting from the application of

changes in effect as of January 1, 2011, can be made within the first three months of 2011; however,

there is no restriction on entities wishing to anticipate their acknowledgement of guarantees, in

whole or in part, constituting greater allowances, transitory and additional, attributed to the 2010

fiscal year. As of December 31, 2010, we have opted to not anticipate these changes. As of

December 31, 2010, our management estimated an effect of MCh$2,285, which will be recorded

during the first quarter of 2011. Our estimated impact relates to preliminary revisions made as of

November 2010.




44

Circular N°3,510 – On October 8, 2010, the SBIF released this Circular with the purpose of

amending the new instruction forms on allowances, and also to address certain needs with respect to

the simplification of information, by replacing Chapter C-3, “Monthly Financial Statements,” of the

Compendium of Accounting Standards. The changes introduced by this Chapter relate only to the

elimination or creation of rows or items as indicated in the Annex to this Circular, and will be

applied to the information referenced as of January 31, 2011. Our Management believes that

adopting these changes will not significantly affect the presentation of our monthly financial

statements.

Circular N°3,518 – On February 2, 2011, the SBIF issued this circular to complement the

instructions governing starting in January 2011 in relation to sections B-1 and B-3, and clarify

some instructions. The only changes are due to the addition and deletion of words in the text to

clarify the rules set. This circular had no significant effect on these financial statements.

Circular No 1 - May 4, 2011, the SBIF reported the issue of Supreme Decree No. 1512, which

regulates the universal claims of Law No. 20,448, it was requested to take steps to correspond to so

comply to the provisions of the decree on October 24, 2011. The creation of the universal credit

pursues the implementation of single massive loans whose costs are easily understood and

comparable to facilitate consumer choice. The central aspects of this new regulation is the

introduction of a new indicator of the total cost expressed in terms of annual percentage rate (rate),

known as Equivalent Annual Charge, the terms to be delivered in consumer information and content

of contracts universal claims that the entity is required to offer as of the effective date of the Decree.

The Bank's management says that this Circular is implemented by December 31, 2011.

ii) New and revised IFRS effective in the current year

a) The following new and revised IFRS have been adopted in these financial statements:

Amendments to Standards Mandatory application for:

IAS 24, Related Party Disclosures Annual periods beginning on or after

January 1, 2011.

IAS 32, Financial Instruments: Presentation -

Amendments relating to classification of rights issues

Annual periods beginning on or after

February 1, 2010.

Annual Improvements to IFRS 2010 - A collection of

amendments to seven IFRSs

Mostly for annual periods beginning on or

after January 1, 2011.

New Interpretations Mandatory application for:

IFRIC 19, Extinguishing Financial Liabilities with

Equity Instruments

Annual periods beginning on or after July

1, 2010.

Amendments to Interpretations Mandatory application for:

IFRIC 14, The Limit on a Defined Benefit Asset,

Minimum Funding Requirements and their

Interaction.

Annual periods beginning on or after

January 1, 2011.




45

Amendments to IAS 24, Related Party Transactions

On November 4, 2009, the IASB issued Amendments to IAS 24 Related Party Disclosures. The

revised standard simplifies the disclosure requirements for entities that are controlled, jointly

controlled, or significantly influenced by a governmental entity (referred to as related government-

related entities) and clarifies the definition of related entity.

The revised standard is effective for annual periods beginning on or after January 1, 2011 and

requires retrospective application. Therefore, in the year of initial application, disclosures for the

comparative period will need to be restated. Moreover, earlier application is permitted, either of the

whole revised standard or of the partial exemption for government-related entities. If an entity

applies either the whole standard or the partial exemption for a period beginning before January 1,

2011, it is required to disclose that fact.

Management believes that these modifications do not apply, given that the institution is not a part

related to a government entity.

Amendment to IAS 32, Financial Instruments: Presentation

On October 8, 2009, the IASB issued an amendment to IAS 32 Financial Instruments: Presentation

entitled Classification of Rights Issues, on the classification of rights issues (e.g. rights, options, or

warrants).

Under the amendments, rights, options and warrants otherwise meeting the definition of equity

instruments in IAS 32.11 issued to acquire a fixed number of an entity’s own non-derivative equity

instruments for a fixed amount in any currency are classified as equity instruments provided the

offer is made pro-rata to all existing owners of the same class of the entity’s own non-derivative

equity instruments. The amendment is effective for annual periods beginning on or after February 1,

2010 with earlier application permitted.

Management believes that these modifications have not had such an impact on its accounting

policies for the period.

Annual Improvements to IFRS 2010

On May 6, 2010, the IASB issued Improvements to IFRS 2010 - Incorporating amendments to seven

International Financial Reporting Standards. This is the third collection of amendments issued under

the annual improvements process, which is designed to make necessary, but non-urgent,

amendments to IFRS. The amendments are effective for annual periods starting on or after July 1,

2010 and for annual periods starting on or after January 1, 2011.

Management believes that these modifications have not had such an impact on its accounting

policies for the period.




46

IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments

On November 26, 2009, the International Financial reporting Interpretations Committee (IFRIC)

issued IFRIC 19 Extinguishment of Liabilities to Equity Instruments. This interpretation provides

guidance on how to account for the extinction of financial liabilities by issuing equity instruments.

The interpretation indicates that the issuance of equity instruments to extinguish an obligation

constitutes paid consideration. This consideration should be measured at fair value of the equity

instrument issued, unless that fair value is not readily determinable, in which case the equity

instruments should be measured at fair value of the obligation extinguished

Management believes that this new interpretation has not had an impact on its accounting policies

for the period.

Amendment to IFRIC 14, IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding

Requirements and their Interaction

On December 2009 the IASB issued Prepayments of Minimum Funding Requirements, amendments

to IFRIC 14 IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and

their Interaction. The amendment has been made to remedy an unintended consequence of IFRIC 14

where the entities are prohibited in some circumstances to recognize as an asset the advance

payments for minimum funding contributions.

Management believes that this new interpretation has not had an impact on its accounting policies

for the period. b) New and revised IFRS in issue but not yet effective As of the date of issuance of these consolidated financial statements, the following accounting

pronouncements have been issued by the IASB. These pronouncements are new pronouncements or

amendments, revisions, modifications, or interpretations of existing pronouncements. Further, the

application of the below pronouncements is not mandatory until the dates noted below. New Standards, Interpretations and Amendments Effective date

IFRS 9, Financial Instruments – Classification and Measurement Annual periods beginning on or after January 1,

2015.

IFRS 10, Consolidated Financial Statements Annual periods beginning on or after January 1,

2013

IFRS 11, Joint Arrangements Annual periods beginning on or after January 1,

2013

IFRS 12, Disclosure of Involvement with Other Entities Annual periods beginning on or after January 1,

2013

IAS 27 (2011), Separate Financial Statements Annual periods beginning on or after January 1,

2013

IAS 28 (2011), Investments in Associates and Joint Ventures Annual periods beginning on or after January 1,

2013

IFRS 13, Fair Value Measurements Annual periods beginning on or after January 1,

2013




47

Amendments to Standards Effective date:

IAS 1, Presentation of Financial Statements – Presentation of

Items of Other Comprehensive Income

Annual periods beginning on or after July 1, 2012

IAS 12, Income Taxes – Limited scope amendment (recovery of

underlying assets)

Annual periods beginning on or after January 1,

2012.

IAS 19, Employee benefits (2011) Annual periods beginning on or after January 1,

2013

IAS 32, Financial instruments: presentation – Clarified

requirements for offsetting of financial assets and financial

liabilities and amends disclosures


2014

IFRS 1 (Revised), First Time Adoption of IFRS – (i)Replacement

of ‘fixed dates’ for certain exceptions with ‘the date of transition

to IFRSs’ – (ii) Additional exemption for entities ceasing to

suffer from severe hyperinflation

Annual periods beginning on or after July 1, 2011.

IFRS 7, Financial Instruments: Disclosures – Amendments

enhancing disclosures about transfers of financial assets

Annual periods beginning on or after July 1, 2011.

New Interpretations Effective date

IFRIC 20, Stripping costs in the production phase of a surface

mine


2013

IFRS 9, Financial Instruments

On November 12, 2009, the IASB issued IFRS 9 Financial Instruments (IFRS 9) as the first step in

its project to replace IAS 39 Financial Instruments: Recognition and Measurement (IAS 39). Under

this standard, all financial instruments are initially measured at fair value plus or minus, in the case

of a financial asset or financial liability not at fair value through profit or loss, transaction costs.

Moreover, IFRS 9 divides all financial assets that are currently in the scope of IAS 39 into two

classifications – those measured at amortized cost and those measured at fair value. Classification is

made at the time the financial asset is initially recognized, namely when the entity becomes a party

to the contractual provisions of the instrument. As for debt instruments, a debt instrument that

meets business model and cash flow characteristics tests can be measured at amortized cost (net of

any write-down for impairment). All other debt instruments must be measured at fair value through

profit or loss.

Additionally, on 28 October 2010, the IASB published a revised version of IFRS 9. The revised

standard retains the requirements for classification and measurement of financial assets that were

published in November 2009 but adds guidance on the classification and measurement of financial

liabilities. As part of its restructuring of IFRS 9, the IASB also copied the guidance on derecognition

of financial instruments and related implementation guidance from IAS 39 to IFRS 9.




48

The guidance included in IFRS 9 on the classification and measurement of financial liabilities is

unchanged from the classification criteria for financial liabilities currently contained in IAS 39. In

other words, financial liabilities will continue to be measured either wholly, or in part, at amortized

cost or at fair value through profit or loss (FVTPL). The concept of bifurcating embedded

derivatives from a financial liability host contract also remains unchanged. Financial liabilities held

for trading would continue to be measured at FVTPL, and all other financial liabilities would be

measured at amortized cost unless the fair value option is applied, using the existing criteria in IAS

39.

However, there are two differences compared to IAS 39:

The presentation of the effects of changes in fair value attributable to a liability’s credit risk;

and

The elimination of the cost exemption for derivative liabilities to be settled by delivery of

unquoted equity

On December 16, 2011, the IASB issued Mandatory Effective Date of IFRS 9 and Transition

Disclosures, deferring the mandatory effective date of both the 2009 and 2010 versions to annual

periods beginning on or after January 1, 2015. Prior to the amendments, application of IFRS 9 was

mandatory for annual periods beginning on or after January 1, 2013. The amendments modify the

requirements for transition from IAS 39 Financial Instruments: Recognition and Measurement to

IFRS 9. In addition, the amendments also modify IFRS 7 Financial Instruments: Disclosures to add

certain requirements in the reporting period containing the date of initial application of IFRS 9.

Management is evaluating the potential impact on the adoption of these amendments.

IFRS 10, Consolidated Financial Statements

On May 12, 2011, the IASB issued IFRS 10 Consolidated Financial Statements, which is a

replacement of IAS 27 Consolidated and Separate Financial Statements and SIC – 12 Consolidation

– Special Purpose Entities. The objective of IFRS 10 is to have a single basis for consolidation for

all entities, regardless of the nature of the investee, and that basis is control. The definition of

control includes three elements: power over an investee, exposure or rights to variable returns of the

investee and the ability to use power over the investee to affect the investor’s returns. NIIF 10

provides detailed guidance on how to apply the control principle in a number of situations, including

agency relationships and holdings of potential voting rights. An investor would reassess whether it

controls an investee if there is a change in facts and circumstances. IFRS 10 replaces those parts of

IAS 27 that address when and how an investor should prepare consolidated financial statements and

replaces SIC – 12 in its entirety. The effective date of NIIF 10 is January 1, 2013, with earlier

application permitted under certain circumstances.

Management believes that this new standard will be adopted in its financial statements as from

January 1, 2013. The Administration is evaluating the potential impact of the adoption of these

amendments.




49

IFRS 11, Joint Arrangements

On May 12, 2011, the IASB issued IFRS 11 Joint Arrangements which supersedes IAS 31 Interests

in Joint Ventures and SIC – 13 Jointly Controlled Entities – Non-Monetary Contributions by

Venturers. IFRS 11 classifies joint arrangements as either joint operations (combining the existing

concepts of jointly controlled assets and jointly controlled operations) or joint ventures (equivalent

to the existing concept of a jointly controlled entity). A joint operation is a joint arrangement

whereby the parties that have joint control have rights to the assets and obligations for the liabilities.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement

have rights to the net assets of the arrangement. NIIF 11 requires the use of the equity method of

accounting for interests in joint ventures thereby eliminating the proportionate consolidation

method. The effective date of IFRS 11 is January 1, 2013, with earlier application permitted under

certain circumstances.



amendments.

IFRS 12, Disclosure of Interests in Other Entities

On May 12, 2011, the IASB issued IFRS 12 Disclosure of Interests in Other Entities which requires

extensive disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates

and unconsolidated structured entities. IFRS 12 establishes disclosure objectives and specifies

minimum disclosures that an entity must provide to meet those objectives. An entity should disclose

information that helps users of its financial statements evaluate the nature and risks associated with

interests in other entities and the effects of those interests on its financial statements. The disclosure

requirements are extensive and significant effort may be required to accumulate the necessary

information. The effective date of IFRS 12 is January 1, 2013 but entities are permitted to

incorporate any of the new disclosures into their financial statements before that date.



amendments.

IAS 27 (2011), Separate Financial Statements

IAS 27 (2008) Consolidated and Separate Financial Statements has been amended for the issuance

of IFRS 10 but retains the current guidance for separate financial statements.


January 1, 2013. Management estimates that this new standard won’t have any impact on its

consolidated financial statements as of its application.




50

IAS 28 (2011), Investment in Associates and Joint Ventures

IAS 28 Investments in Associates has been amended for conforming changes based on the issuance

of IFRS 10 and IFRS 11.



amendments.

IFRS 13, Fair Value Measurement

On May 12, 2011, the IASB issued IFRS 13 Fair Value Measurement, which establishes a single

source of guidance for fair value measurement under IFRS. The Standard applies to both financial

and non-financial items measured at fair value. Fair value is defined as “the price that would be

received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date” (i.e., an exit price). IFRS 13 is effective for annual periods

beginning on or after January 1, 2013, with early adoption permitted, and applies prospectively from

the beginning of the annual period in which the Standard is adopted.



amendments.

Amendments to IAS 1, Presentation of Financial Statements

On June 16, 2011, the IASB issued Presentation of Items of Other Comprehensive Income

(amendments to IAS 1). The amendments retain the option to present profit or loss and other

comprehensive income in either a single continuous statement or in two separate but consecutive

statements. Items of other comprehensive income are required to be grouped into those that will and

will not subsequently be reclassified to profit or loss. Tax on items of other comprehensive income

is required to be allocated on the same basis. The measurement and recognition of items of profit or

loss and other comprehensive income are not affected by the amendments, which are applicable for

reporting periods beginning on or after July 1, 2012 with earlier application permitted.

Management believes that the adoption of this new standard won´t have a significant impact on the

measurement and recognition of the different components of earnings and loss on its financial

statements as of January 1, 2013, when it´s implemented.

Amendments to IAS 12, Income Taxes

On December 20, 2010, the IASB published Deferred Tax: Recovery of Underlying Assets –

Amendments to IAS 12. The amendments provide an exception to the general principle in IAS 12

Income Taxes (IAS 12) that the measurement of deferred tax assets and deferred tax liabilities

should reflect the tax consequences that would follow from the manner in which the entity expects

to recover the carrying amount of an asset.




51

Specifically, the amendments provide an exception to the general principles of IAS 12 for

investment property measured using the fair value model in IAS 40 Investment Property (IAS 40).

For the purposes of measuring deferred tax, the amendments introduce a rebuttable presumption that

the carrying amount of such an asset will be recovered entirely through sale. The presumption can

be rebutted if the investment property is depreciable and is held within a business model whose

objective is to consume substantially all of the economic benefits over time, rather than through sale.

The exception also applies to investment property acquired in a business combination if the acquirer

applies the fair value model in IAS 40 subsequent to the business combination. The amendments

also incorporate the requirements of SIC 21 Income Taxes - Recovery of Revalued Non-Depreciable

Assets into IAS 12, i.e., deferred tax arising on a non-depreciable asset measured using the

revaluation model in IAS 16 Property, Plant and Equipment should be based on the sale rate. The

effective date of the amendments is for annual periods beginning on or after January 1, 2012. Earlier

application is permitted. Management believes that this new standard will be adopted in its financial statements as from


amendments. Amendment to IAS 19, Employee Benefits On June 16, 2011, the IASB issued amendments to IAS 19 Employee Benefits (2011) that change

the accounting for defined benefit plans and termination benefits. The amendments require the

recognition of changes in the defined benefit obligation and in plan assets when those changes

occur, eliminating the corridor approach and accelerating the recognition of past service costs.

Changes in the defined benefit obligation and plan assets are disaggregated into three components:

service costs, net interest on the net defined benefit liabilities (assets) and remeasurements of the net

defined benefit liabilities (assets). Net interest is calculated using high quality corporate bond yield.

This may be lower than the rate used to calculate the expected return on plan assets, resulting in a

decrease in net income. The amendments are effective for annual periods beginning on or after

January 1, 2013, with earlier application permitted. Retrospective application is required with

certain exceptions. Management believes that this new standard will be adopted in its financial statements as from


amendments. Amendment to IAS 32, Financial Instruments: Presentation On December 2011, the IASB amended the accounting requirements and disclosures related to

offsetting of financial assets and financial liabilities by issuing amendments to IAS 32 Financial

Instruments: Presentation and IFRS 7 Financial Instruments: Disclosures. These amendments are

the result of the IASB and US Financial Accounting Standards Board (‘FASB’ undertaking a joint

project to address the differences in their respective accounting standards regarding offsetting of

financial instruments. The new disclosures are required for annual and interim periods beginning on

or after January 1, 2013 and the clarifying amendments to IAS 32 are effective for annual periods

beginning on or after January 1, 2014. Both require retrospective application for comparative

periods.




52


January 1, 2013 and 2014. The Administration is evaluating the potential impact of the adoption of

these amendments.

Amendments to IFRS 1, First Time Adoption of IFRS

On December 20, 2010, the IAS amended IFRS 1 First Time Adoption of IFRS to:

Provide relief for first-time adopters of IFRSs from having to reconstruct transactions that

occurred before their date of transition to IFRSs. This amendment replaces references to a fixed

transition date of ‘January 1, 2004’ with ‘the date of transition to IFRSs’ so that first-time

adopters of IFRS do not have to apply the derecognition requirements in IAS 39 retrospectively

from an earlier date. It also relieves first-time adopters from recalculating ‘day 1’ gains and

losses on transactions occurring before the date of transition to IFRS.

Provide guidance for entities emerging from severe hyperinflation either to resume presenting

IFRS financial statements or to present IFRS financial statements for the first time. In

accordance with the amendment, when an entity’s date of transition to IFRS is on or after the

functional currency normalization date, the entity may elect to measure all assets and liabilities

held before the functional currency normalization date at fair value on the date of transition to

IFRS and use that fair value as the deemed cost of those assets and liabilities in the opening

IFRS statement of financial position. Entities making use of this exemption should describe the

circumstances of how, and why, their functional currency became subject to severe

hyperinflation and the circumstances that led to those conditions ceasing.

Management estimates that these changes have will have no effect on its financial statements as they

are currently prepared under IFRS.

Amendments to IFRS 7, Financial Instruments: Disclosure

On October 7, 2010, the IASB issued amendments to IFRS 7 Financial Instruments: Disclosure that

increases the disclosure requirements for transactions involving transfers of financial assets. These

amendments are intended to provide greater transparency around risk exposures of transactions

where a financial asset is transferred but the transferor retains some level of continuing exposure

(referred to as ‘continuing involvement’) in the asset. The amendments also require disclosure

where transfers of financial assets are not evenly distributed throughout the period (e.g., where

transfers occur near the end of a reporting period). The amendments are applicable for annual

periods beginning on or after July 1, 2011, with early adoption allowed. Moreover, the disclosures

are not required for any of the periods presented that start before the initial adoption date.


January 1, 2013 and 2014. The Administration is evaluating the potential impact of the adoption of

these amendments.




53

IFRIC 20, Stripping Costs in the Production Phase of a Surface Mine

On October 19, 2011, the IFRS Interpretations Committee published IFRIC 20 Interpretation 20,

Stripping Costs in the Production Phase of a Surface Mine (‘IFRIC 20’). IFRIC 20 applies to all

types of natural resources that are extracted using the surface mining activity process. The costs

from a stripping activity which provide improved access to ore should be recognized as a non-

current asset (“stripping activity asset”) when certain criteria are met, whereas the costs of normal

operational stripping activities should be accounted for in accordance with the principles in IAS 2

Inventories. The stripping activity asset should be initially measured at cost and subsequently

carried at cost or its revalued amount less depreciation and amortization and impairment losses. The

interpretation is effective for annual periods beginning on or after January 1, 2013, with early

application permitted.

Management believes that this new interpretation will not have an impact on its financial statements

as the Company’s business activities do not consider the extraction of natural resources.

NOTE 2 - ACCOUNTING CHANGES

On August 12, 2010, the SBIF released Circular N°3,503, providing for certain modifications over

allowances and distressed portfolios referenced in chapters B-1, B-2, B-3 and C1, Such

modifications apply as of January 1, 2011, except for the relative provisions for additional

allowances included in N°9 of Chapter B-1, which remain in effect during 2010. In addition and as

a supplement to this Circular, letter N°9 addressed to the Bank’s management and dated 21

December, 2010, specifies that adjustments resulting from the application of changes coming into

effect as of January 1, 2011 can be made within the first three months of 2011; however, there is no

restriction on entities able to anticipate their acknowledgement of guarantees, in whole or in part,

constituting greater allowances, transitory and additional, attributed to the 2010 fiscal year. As of

31 December, 2011, the application of the new standards issued by the SBIF had a negative impact

of MCh$2,285 on the income statement, which was recorded during the first quarter of 2011 in the

Consolidated Financial Statements.




54

(1) By 2010 under the heading of allowances for contingencies the balance ascended to MM $

9,740 additional allowances were constituted for MCh $ 7,310, which correspond to provisions

for contingent credit risk, according to the new rule on provisions in accordance with Circular

No. 3503 cited above.

(2) According to the above, for purposes of presentation and comparability of financial statements

by 2011, reclassification took place for amount of MCh $ 7,310 under the heading of Provisions

for contingency credit risk. Note that since the classification took place within the same

category of "Provisions", the balance of presentation does not generate changes in notes to

financial statements relating to the Consolidated Statement of Financial Position.

(3) Regarding the expenses related to the provision explained above, it generates an accounting

reclassification of MCh $ 3,237 from "Other Expenses" under "Provisions for contingencies" to

"Provisions for credit risk" under "additional allowances" , the above for purposes of

presentation and comparability of financial statements by 2011. This filing amends the

Consolidated Income Statement and Consolidated Cash Flow Statement, a situation which will

be explained below.




55

In order to present comparative financial statements, CorpBanca has made necessary

reclassifications in its Consolidated Statement of Income referred to the December 31, 2010, this

according to the provisions of Circular No. SBIF 3503, cited above.




56

In order to present comparative financial statements, CorpBanca has made necessary

reclassifications in its Consolidated Statement of Cash Flows referred to the December 31, 2010,

this according to the provisions of Circular No. SBIF 3503, cited above.




57

NOTE 3 - SIGNIFICANT EVENTS

As of December 31, 2011, the following significant events have occurred, which have had an impact

on the Bank and subsidiaries’ operations, or in its financial statements:

CORPBANCA

a) Board of Directors

On April 27, 2011 the institution received a letter from Don Hernan Somerville Senn, addressed to

the Chairman of the Board of the Bank, through which announced his resignation as Director of this

institution, which sought to come on into effect as on Thursday, April 28 , 2011.

On May 27, 2011 don Segismundo Schulin-Zeuthen Serrano submitted his resignation to the

position of CorpBanca Director.

On the board meeting dated May 31, 2011 the board proceeded to appoint as Director of CorpBanca,

replacing Don Hernan Somerville Senn, Don Francisco Leon Delano.

On August 16, 2011, the institution received a communication from Mr. Brian O'Neill, addressed to

the First Vice Chairman of the Bank, through which announced his resignation as Director of the

institution, which sought to come on into effect as of that date.

In CorpBanca Board Meeting dated August 30, 2011, adopted the following resolutions:

• Appoint Director of CorpBanca, replacing Mr. Brian O'Neill, Dona Ana Beatriz Barros

Holuigue who shall hold office until the next General Meeting of Shareholders.

• To the Board of Directors additionally assume the functions , which, in accordance with current

regulations correspond to the Audit Committee, changing its name to "Board of Directors -

Audit".

• Designate Directors as members of the "Committee of Directors - Audit" to Don Gustavo

Arriagada Morales, who will chair, Fernando Massu Tare and Francisco Leon Delano.

On the Extraordinary Board of Directors celebrated on December 29, 2011 has agreed to accept the

resignation of Mr. Mario Chamorro Carrizo as General Manager of CorpBanca. At the same

meeting it was agreed to appoint, during the time that elapses until the appointment of new General

Manager, Don Christian Canales Palacios as Acting General Manager.

On September 28, 2011 the Board of CorpBanca, has proceeded to appoint as Independent Director

Don Gustavo Arriagada Morales.




58

On December 30, 2010, at special session N°2010/73, the Board of Directors agreed to schedule a

Special Shareholders Meeting on January 27, 2001 in order to propose an increase in shareholder

equity through the issuance of 40,042,815,984 shares comprising 15% of the Bank’s total newly-

issued equity shares and to make the respective amendments to our bylaws, adopting, as necessary,

any other applicable agreement, once such shares were placed, subscribed and paid for, in

accordance with terms and conditions determined at the meeting or, upon delegation, by the Board

of Directors. The shares may be offered in Chile and abroad, as determined by the Board of

Directors, and especially in the securities markets of the United States of America, and/or in the

New York Stock Exchange, through ADR mechanisms.

b) Options

As of the 31st of December 2011 the Bank has Options held for sale and purchase in foreign

exchange (note 8) accordingly as following detail:

Options Type Nominal

Purchase Call US$7.450.000

Put US$8.800.000

Sale Call US$4.050.000

Put US$5.900.000

c) Sanctions

There are no penalties to the date of these financial statements.

d) Shareholder Equity Increases

Extraordinary Shareholders Meeting held on CorpBanca January 27, 2011, agreed to increase the

bank's capital as follows:

• By the capitalization of retained earnings at December 31, 2009 in the amount of $

106,868,578,585.

• By issuing 40,042,815,984 ordinary shares for payment all without nominal value representing

15% of total new capital stock, to be subscribed and paid , under the terms and other conditions

as determined by the Board .

In effect, the Board authorized the Bank Board to proceed to determine the price of the share

placement.

Shares, as determined by the Board, will be offered both in Chile and abroad, especially in the stock

market in the United States of America in the New York Stock Exchange in that country, through

the mechanism ADR 's.




59

On May 19, 2011, reported in respect of the shares issued by the Bank and the supply of them, the

communication received from Corp Group Banking SA, parent company of CorpBanca, which

states:

• Regarding the Bank's capital increase agreed on the Extraordinary Meeting of shareholders

dated January 27, 2011, Corp Group Banking SA in his capacity as shareholder of the Bank,

announced that the number of shares to be placed in accordance with the abovementioned ,

ascend to 25,500,000,000 , additionally the balance of agreed actions are not positioned to

deliver before 12 following months.

• Also notice that Corp Group Banking SA expresses its intention to exercise the right of first

refusal that under the law applicable in the legal period of first refusal.

On the Extraordinary session of Board of Directors celebrated on May 25, 2011, was agreed to

communicate part of the agreements adopted in the exercise of its power was delegated by the

Extraordinary General Meeting of Share Holders held on January 27, 2011, whose minutes were

written dated February 1, 2011 at the Notary of Santiago Mr. José Musalem Saffie, which agreed to

increase the Bank's capital by issuing 40,042,815,984 cash shares, without par value. These

agreements were:

1. Preferably offer to shareholders, the sum of 25,500,000,000 cash shares, ordinary and without

nominal value, under the agreed issue in the Extraordinary General Meeting of Shareholders

referred.

2. Set as start date for the first preferred option period of 30 days of the placement, the 3er of June

2011, and as the date to end, the 2nd of July 2011.

Set then the second period preferential option for a period of 30 days, between July 3rd 2011 until

August 1, 2011, to shareholders who have subscribed shares in the first period of first refusal,

concerning the shares that were not acquired by shareholders or their transferees are entitled to, and

actions that originate in fractions produced in the apportionment among shareholders.

A third term preferential option for a period of 30 days between August 2, 2011 and until August 31,

2011, to shareholders who have subscribed shares in the second period of first refusal concerning

the shares that are not acquired by shareholders or their transferees are entitled to them in that period

and the actions that have their origin in fractions produced in the apportionment among

shareholders.

3. Establish issuance under preferability rights to be offered to shareholders of the Bank, who will

have the right to subscribe new shares 0.1123797088 per share recorded in the Register

Shareholders on 28 May 2011.

In the Special Session of Directory of CorpBanca dated June 2, 2011, it was agreed to communicate,

the agreement of that session, adopted in the exercise of the powers were delegated by the

Extraordinary General Meeting of Shareholders held on 27 January and 2 June 2011.




60

These agreements are as follow:

• Set the price at $ 7.35 (seven point thirty-five Chilean pesos) of each of the 25,500,000,000

cash shares, without par value common to be offered preferentially to shareholders under the

agreed to issue to the Board Extraordinary General Meeting of Shareholders dated January 27,

2011.

• It is noted that, as was reported as an event on May 25 this year, at a board meeting of the same

date, it was agreed that the preferred first option period of 30 days will start June 3 and end on

July 2, the second term preferential option for a period of 30 days, began on July 3 and end on

August 1 and the third term preferential option for a period of 30 days began on August 2 and

ends on August 31, all during 2011.

e) Profit Sharing

At the board meeting of CorpBanca dated January 25, 2011, Ordinary General Meeting of

Shareholders for the day February 24, 2011 agreed, to address the matters within its competence

and, among others, to approve at such meeting the Annual Financial Statements, decide on the

proposal of the Board to distribute 100% of net income in 2010 amounting to $ 119,043,013,408 as

to the amount to be distributed as dividends for the total issued shares of bank up to $

0.524628203218518 per share.

If approved, the distribution of dividends would be paid upon completion of the said Board Meeting.

In case of approval as set out above, the shareholders who are registered in the Register of

Shareholders with 5 working days prior to the date of conclusion the Annual General Meeting of

Shareholders shall be entitled to such dividends.

f) Agreement with Banco Santander Spain for acquisition of companies in Colombia

In Special Session of Directory of CorpBanca of December 6, 2011 it was agreed to authorize

subscription to the agreement with Banco Santander SA, a company established in Spain, under

whichCorpBanca would acquire, under the terms set out below , the participation stock indicated

that Santander Group holds in the following companies, all entities incorporated under the laws of

Colombia , who exercise their business in that country:

• Banco Santander Colombia SA

• Santander Investment Securities Colombia SA

• Colombia Santander Investment Trust Inc.

• Agenda Santander Insurance Limited.

• Santander Investment SA

The transaction is subject to obtaining regulatory approvals of the competent authorities in Chile and

Colombia.




61

As notified in the board meeting, it is expected that the operation will be carried out during the first

half of 2012.

CorpBanca will acquire 95% stake in Banco Santander Colombia SA, the maximum allowed by law

in the country for an individual shareholder. Group Corp SA Interhold will acquire at least 2.85% of

Santander shares in addition to those acquired through the "delisting" in conformity with

Colombian law ..

Additionally, in effect, other agreements necessary for CorpBanca to acquire 100% directly or

indirectly of the equity of the corporate societies Colombia SA Santander Investment Securities,

Santander Insurance Agency Investment Trust Limited and Santander Colombia SA, Corp

GroupInterhold S.A will directly acquire and / or indirectly 100% of Santander Investment SA

Colombia

The entire acquisition, Corpgroup CorpBanca, is to be made for an approximate amount of up to

U.S. $ 1,225,000,000 dollar Libor over 180 days increased by 1% per year, of which the price that

CorpBanca will pay for the bank and financial companies referred to above, is estimated to sum up

to U.S. $ 1,155,000,000 and the amount that Corpgroup will pay will be up to U.S. $ 70,000,000,

plus interest on both noted.

Banco Santander Colombia SA has a market share in that country of 2.7% in loans and 4.7% share

of public deposits. The Bank's assets amounted to approximately U.S. $ 4,000,000,000 and its loan

portfolio is approximately U.S. $ 2,570,000,000.

In response to the limits set by determine the General Banking Act for such investments in

companies abroad, CorpBanca, referring to the acquisition and prior to making the investment, you

should make a capital increase in the equivalent of approximately U.S. $ 450,000,000.

g) Others

On February 23, 2011, The New York Stock Exchange (NYSE) changed the number of materialized

common shares represented by each ADR from 5,000 shares to 1,500 shares per ADR.

CORPBANCA ASESORÍAS FINANCIERAS S.A.


In the twentieth General Meeting of Shareholders held on February 25, 2011 proceeded to renovate

the Board of Directors composed by the following: Fernando Massu Tare, Hector Ruiz and Cristian

Valdes Canales Palacios.




62

CORPBANCA ADMINISTRADORA GENERAL DE FONDOS S.A.


At Board Meeting of January 27, 2011, proceeded to appoint as Acting General Manager of the

company for the period between 7 and 25 February 2011 Daniel Thenoux Don Ruiz.

On the Special session of Board of Directors celebrated on May 5, proceedings appointed as Acting

General Manager of the company for the period between the 9th and 13th May 2011 to Don

Alejandro Sepulveda Magnet, replacing General Manager Mr. Benjamin Epstein Numhauser, who

will be absent from office between 9 , May 13, 2011.

On the Special session of Board of Directors celebrated on July 28, the resignation of his office by

the General Manager Don Benjamin Epstein Numhauser was accepted and Acting General Manager

Don Thenoux Daniel Ruiz was designated.

b) Profit Sharing

In Twenty-Sixth General Meeting of Shareholders held on held February 25, 2011, the amount to be

distributed to shareholders in proportion to its shareholding, will result in the payment of $

17,836.65039 Chilean pesos per share, such meeting thereby enabling the Directory of society to

define the date of payment to the shareholders of such dividends.

c) Presentation of financial statements based on IFRS

As of March 31 the financial statements were presented in pro forma format, in accordance to the

IFRS transition, complying in form satisfactory to the requirements of the Securities and Insurance

in Circular No. 544 above.

d) Adjustments to Mutual Fund Portfolios

On December 20, 2011 procedures were adopted to make adjustments to the portfolios of mutual

funds called Corp Efficiency , Corp Opportunity and Corp Opportunity Dollar, all managed by this

company, because there were deviations greater than 0.1% of the value of the portfolios of these

funds in their valuations considering market rates.




63

This implied a change in the value assessments for the listed series issued by mutual funds, and

profitability thereof, between the dates listed in the table below:

Fund Share Value

19/12/2011

Share Value

20/12/2011

Variation %

CORP EFICIENCIA SERIE A 2,194.0119 2,192.6631 -0.061

CORP EFICIENCIA SERIE B 1,337.8595 1,337.0471 -0.061

CORP EFICIENCIA SERIE C 1,363.1210 1,362.3021 -0.060

CORP EFICIENCIA SERIE ALFA 1,062.9624 1,062.3245 -0.060

CORP OPORTUNIDAD 1,444.7876 1,443.9930 -0.055

CORP OPORTUNIDAD DÓLAR SERIE A 1,023.0826 1,022.1805 -0.088

CORP OPORTUNIDAD DÓLAR SERIE I 1,030.1061 1,029.2034 -0.088

CORPBANCA CORREDORES DE BOLSA S.A.

a) Directorio

At Board Meeting No. 214 on March 23, 2011, the Board approved the resignation of Mr. Cristóbal

Fernández Prado and selected Mr. Alberto Hasbún Selman as his replacement, effective as of that

date. It was further agreed to convene the ordinary shareholders on April 15, 2011.

In the Eighteenth Annual General Meeting of Shareholders held on April 15, 2011, a total

renovation of the board was made, resulting in the membership of the following Board Members:

Hugo Lavado Montes, Jose Manuel Garrido Bouzo, Cristián Canales Palacios, Jose Francisco

Sanchez Figueroa and Alberto Selman Hasbún.

b) Profit Sharing

In Eighteenth Annual General Meeting of Shareholders held on April 15, 2011, it was agreed to

distribute the profit for the year 2010, amount to be distributed to shareholders in proportion to its

shareholding, which will result in the payment of $ 4,149 . 994127 Chilean pesos per share, agreeing

to authorize the Board of the society to set the date payment to shareholders of dividends, a situation

that occurred on December 29, 2011.

c) Presentation of Financial Statements on an IFRS basis.

As of March 31 were presented pro forma financial statements IFRS format, complying in form

satisfactory to the requirements of the Securities and Insurance in Circular No. 549 above.




64

CORPBANCA CORREDORES DE SEGUROS S.A.

a) Directory

At Board Meeting of March 16, 2011, an appointment as Acting General Manager of the Society for

Edwards Don Gerardo Schleyer was made. It was also agreed to convene ordinary shareholders for

March 31, 2011.

In Fourteenth General Meeting of Shareholders held on March 31, 2011, the total renovation of the

board, leaving it formed by the following: Gerardo Schlotfeldt Leighton, Eulogio Guzman Llona,

Francisco Guzman Bauza, Paul de la Cerda Merino , Oscar Cerda Urrutia was made.

On the board meeting of April 14, 2011, the election of the Chairman, unanimously,Don Pablo de la

Cerda Merino, was completed.

At the Special session of Board of Directors celebrated on 22 August 2011, the resignation of his

office by the General Manager Don Roberto Vergara Kyling was accepted. Such resignation became

effective the day August 31, 2011. At the same meeting Acting General Manager Don Edwards

Gerardo Schleyer, who took office the 1st of September 2011, was appointed.

Special Session Board of December 15, 2011, Mr. Cesar Diaz Galdames General Manager of the

Company was appointed.

b) Profit Sharing

In Fourteenth General Meeting of Shareholders, held on 31 March 2011, it was agreed to distribute

the profit for the year 2010. The amount will be distributed to shareholders in proportion to their

participation, which will result in the payment of $ 44.051783 Chilean pesos per share, agreeing to

distribute as the Company has funds available for this purpose and in any case not later than June

30, 2011.

CORPBANCA AGENCIA DE VALORES S.A.

a) Directory

It is reported that on April 21, Don Pablo Solari Gonzalez has resigned as General Manager of the

company, which was accepted by the Board in Special Session on April 25. Also in that meeting it

was agreed to appoint as interim General Manager Don Marcelo Sánchez García, who will exercise

that position until the Board assigns a definitive General Manager.

On July 6, 2011, the special meeting Board No. 5, appointed a new General Manager of the

Company, Mr. Ignacio Ruiz-Tagle Mena.




65

Ordinary Session Board No. 15 held on September 5, 2011, resignation as Director of the Company

Mr. Alvaro Barriga Oliva, was affected as from the date specified thereon. His replacement, Mr.

Paul Ignacio Herrera Avalos, will assume the post.

b) Approval of Financial Statements 2010, appointment of external auditors and other

On April 18, 2011 the Second Annual General Meeting of Shareholders, to deal with all matters for

the Board and in particular the approval of the Annual General Balance and other Annual Financial

Statements ended December 31 2010, the report of the External Auditors. the appointment of

External Auditors and generally deal with all matters within the Board meeting, was held.

c) Presentation of financial statements based on IFRS

As of March 31 the financial statements were presented in pro forma IFRS format, complying

satisfactorily with the requirements of the Securities and Insurance in Circular No. 549 above.

CORPLEGAL S.A

Directory

At Board Meeting held on 3 October 2011, was appointed Chairman Mr. Christian P. Canales,

replacing Mr. Michael A. Poduje S.

SMU CORP SA

a) Directory

At the Special Shareholders Meeting held on June 22, 2011, it was agreed to amend the statute of

SMU society CORP, increasing its Directors from 6 to 7 members, which is written dated 4 July

2011. Furthermore, the same Board it revoked the entire Board of Directors and appointed a new

one, which was composed of the following: Jorge Andres Saieh Guzman, Jorge Id Sanchez, Mario

Chamorro Carrizo, Gerardo Schlotfeldt Leighton, Marcelo Caceres Rojas, Manuel Jose Concha

Saldías Ureta and Marcelo Galvez.

On September 5 this year, communication was received from Don Jorge Sanchez, addressed to the

Chairman of SMU, in which he reported his resignation as Director of this institution, which sought

to come into effect as of that date.

In Fifth Regular Session Directory, dated September 29 this year, a new director, Mr. Javier Luck

Urban was named, replacing the resigned director Mr. Jorge Sanchez.




66

b) Capital increase

By public deed on August 10, 2011, there was an increase in the entities’ equity, which rises to $

8,000,000,000, divided into 10,000 registered shares of the same series without par value, being a

new capital of $ 16,000,000,000, divided into 20,000 shares of the same series without par value.

This capital increase will be subscribed to by its shareholders CORPBANCA (51%) and SMU

(49%), not producing the entry of new shareholders. or changes in shareholding

NOTE 4 - BUSINESS SEGMENTS

The segments information is defined by the Bank based on its different business units, which differ

primarily in the risks and returns that affect them.

The reportable segments and criteria used to report to the highest Bank authority on the operation’s

decision making are in accordance with IFRS 8.

The Bank’s business activities are primarily situated in the domestic market and it has strategically

aligned its operations into four divisions composed of six reporting segments based on its market

segmentation and the needs of its customers 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. The Bank

manages 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:

b.1 Large corporates and Reals Estate Companies Division includes companies that belong to the

major economic group, specific industry, and companies with sales over US$30 million ; this

division also includes real estate companies and financial institutions

b.2 Companies Division includes a full range of financial products and services provided to

companies with sales under US$30 million. Leasing and factoring services have been included

in this business segment.

Retail banking:

b.3 Traditional and Private banking - offers, among other products, checking accounts, consumer

loans, credit cards and mortgage loans to middle and upper income segments.

b.4 Lower income retail banking includes products such as , consumer loans, credit cards and

mortgage loans to the low-to-middle income segments.




67

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 information disclosed below is consistent with the analysis and identification of:

a) Results: As of December 31, 2011

Business Banking Retail Banking

Large

Companies

and

Corporate Companies

Traditional

and Private

Banking

Lower

Income

Retail

Banking

Treasury and

International

Non-

banking

Financial

Services Total

MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Net Interest Income 39,200 48,382 52,815 17,719 18,975 15,909 193,000

Net service fees income 18,862 11,215 22,316 4,182 (408) 4,195 60,362

Trading and investment income, net (4,893) - 3,703 - 89,078 9,857 97,745

Foreign exchange gains (losses),

net

16,668 4,961 272 - (52,302) 3,618 (26,783)

Other operating income - 3,049 - - - 6,458 9,507

Provision for loan losses (12,127) (6,625) (14,660) (6,756) - (14) (40,182)

Gross Operational Margin 57,710 60,982 64,446 15,145 55,343 40,023 293,649

Income attributable to investments in

other companies

3,405 429 24

-

- (3,608) 250

Total operating Expenses (12,573) (26,432) (50,144) (18,194) (11,604) (29,783) (148,730)

Income before income tax 48,542 34,979 14,326 (3,049) 43,739 6,632 145,169

Averages Loans 3,060,485 1,325,799 1,768,365 135,857 90,507 151.00 6,381,164

Average Investments 818,666 - 818,666




68

As of December 31, 2010


Large

Companies

and

Corporate Companies

Traditional

and Private

Banking

Lower

Income

Retail

Banking

Treasury and

International

Non-

banking

Financial

Services Total


Net Interest income 36,363 48,132 54,457 20,667 62,717 2,074 224,410

Net service fees income 13,060 12,523 22,525 3,318 (357) 7,152 58,221

Trading and investment

income,

net

757 (2,564) - - (11,324) 3,721 (9,410)

Foreign exchange gains

(losses),

net

9,024 4,063 72 - 28,646 2,806 44,611

Other operating income - 3,657 - - 185 4,990 8,832

Provision for loan losses (1,873) (24,887) (21,132) (12,429) 1,360 4,537 (54,424)

Gross Operational Margin 57,331 40,924 55,922 11,556 81,227 25,280 272,240

Income attributable to

investments in other

companies

- 10 22 - - 264 296

Total operating Expenses (9,152) (22,104) (54,170) (19,784) (12,173) (17,452) (134,835)

Income before income tax 48,179 18,830 1,774 (8,228) 69,054 8,092 137,701

Averages Loans 2,719,681 1,241,917 1,414,623 161,066 97,215 - 5,634,502

Averages Investments - - - - 770,048 - 770,048




69

b) Assets and Liabilities



Large

Companies

and

Corporate

Companie

s

Traditional

and Private

Banking

Lower

Income

Retail

Banking

Treasury and

International

Non-

banking

Financial

Services Total


Loans:

Mortgage - 13,967 1,157,441 4,520 - - 1,175,928

Consumer 34 2,635 257,690 162,753 - 9 423,121

Commercial 3,687,033 1,266,682 538,981 134 27,188 - 5,520,018

Loans before allowances 3,687,067 1,283,284 1,954,112 167,407 27,188 9 7,119,067

Allowances for loan losses (36,290) (30,407) (29,636) (12,330) - 3,432 (105,231)

Loans net of allowances (*) 3,650,777 1,252,877 1,924,476 155,077 27,188 3,441 7,013,836

Trading portfolio financial

assets

- - - - 166,039 - 166,039

Investments under agreements

to resell

- - - - 23,251 - 23,251

Derivative financial

instruments

- - - - 248,982 - 248,982

Financial investments

available-for-sale

- - - - 843,250 - 843,250

Financial investment held-to-

maturity

- - - - 21,962 - 21,962

Assets not included in

segments

- - - - - - 570,384

Total assets 3,650,777 1,252,877 1,924,476 155,077 1,330,672 3,441 8,887,704

Current Accounts and demand

deposits

133,423 194,503 139,245 - 335 - 467,506

Other sight balances 26,038 25,708 24,881 5,702 58 132,827 215,214

Time Deposits and saving

accounts

1,000,507 405,621 581,298 6,477 2,802,830 27,645 4,824,378

Investments under agreement to

repurchase

- - - - 60,824 69,725 130,549

Derivative financial instruments - - - - 164,233 2,639 166,872

Borrowings from financial

institutions

- - - - 500,612 163,014 663,626

Debt issued - - - - 1,522,773 - 1,522,773

Liabilities not included in

segments

- - - - - - 167,574

Equity - - - - 729,212

Total liabilities and equity 1,159,968 625,832 745,424 12,179 5,051,665 395,850 8,887,704




70



Large

Companies

and

Corporate Companies

Traditional

and Private

Banking

Lower

Income

Retail

Banking

Treasury and

International

Non-

banking

Financial

Services Total


Loans:

Mortgage 162 11,045 1,016,778 4,654 - - 1,032,639

Consumer 13 1,695 263,663 141,916 - 28 407,315

Commercial 2,505,854 1,197,045 358,775 74 31,472 198 4,093,418

Loans before allowances 2,506,029 1,209,785 1,639,216 146,644 31,472 226 5,533,372

Allowances for loan losses (36,018) (27,817) (27,553) (15,408) - - (106,796)

Loans net of allowances (*) 2,470,011 1,181,968 1,611,663 131,236 31,472 226 5,426,576

Trading portfolio financial

assets

- - - - 119,809 77,771 197,580

Investments under agreements

to resell

- - - - 39,556 36,120 75,676

Derivative financial

instruments

- - - - 203,833 234 204,067

Financial investments

available-for-sale

- - - - 728,293 17,955 746,248

Assets not included in

segments

- - - - - 475,811 475,811

Total assets 2,470,011 1,181,968 16,116,663 131,236 1,122,963 608,117 7,125,958

Current Accounts and demand

deposits

94,190 180,004 130,630 - 477 - 405,301

Other sight balances 21,515 27,748 27,514 5,170 - 124,816 206,763

Time Deposits and saving

accounts

774,241 331,487 355,050 6,606 2,213,054 20,016 3,700,454

Investments under agreement to

repurchase

- - - - 155,322 34,028 189,350

Derivative financial instruments - - - - 175,204 57 175,261

Borrowings from financial

institutions

- - - - 409,902 93,790 503,692

Debt issued - - - - 1,215,435 - 1,215,435

Liabilities not included in

segments

- - - - - - 194,342

Equity - - - - - - 535,360

Total liabilities and equity 889,946 539,239 513,194 11,776 4,169,394 272,707 7,125,958

(*) Loans net of allowances include amounts due from Banks as of December 31, 2010 and 2009.




71

NOTE 5 - CASH AND CASH EQUIVALENTS

a) Detail of cash and cash equivalents

The detail of the balances included under cash and cash equivalents is as follows:

As of

December 31 As of

December 31

2011 2010

MCh$ MCh$

Cash and deposits in banks

Cash 77,180 85,062

Deposits in The Central Bank of Chile 3,114 38,932

Deposits in national banks 1,178 3,029

Foreign deposits 184,275 75,316

Subtotal Cash and deposits in banks 265,747 202,339

Items in course of collection, net 59,282 38,155

Highly liquid financial instruments (1) 186,061 77,550

Investments under agreements to resell (2) 23,251 75,677

Total cash and cash equivalents 534,341 393,721

(1) Corresponds to those financial instruments in the trading portfolio and available-for-sale

financial instruments with maturities that do not exceed three months from the date of

acquisition.

(2) Corresponds to those investments purchased under agreements to resell with maturities that do

not exceed three months from the date of acquisition.

The level of cash and deposits at the Central Bank of Chile meets the monthly average reserve

requirements.

b) Items in course of collection

Items in course of collection correspond to those transactions where only the remaining settlement

will increase or decrease the funds at the Central Bank of Chile or in foreign banks, usually within

12 or 24 hours following the close of each fiscal year.




72

Items in course of collection are detailed as follows:

As of

December 31 As of

December 31

2011 2010

MCh$ MCh$

Assets

Outstanding notes from other banks 28,403

36,526

Funds receivable 67,827 43,154

Subtotal assets 96,230

79,680

Liabilities

Funds Payable 36,948 41,525

Subtotal liabilities 36,948 41,525

Net items in course of collection 59,282 38,155

NOTE 6 - TRADING PORTFOLIO FINANCIAL ASSETS

The detail of the instruments deemed as financial trading investments is as follows:

As of December 31,

2011 2010

MCh$ MCh$

Chilean Central Bank and Government securities:

Chilean Central Bank – bonds 9,541 88,077

Chilean - Central Bank notes 5,613 -

Other Chilean Central Bank and government securities - 8

Other national institution securities:

Bonds 2,012 2,998

Notes 125,319 -

Other Securities 11,102 71,379

Foreign Institution Securities:

Bonds 840 1,922

Notes - -

Other foreign Securities 968 550

Mutual funds Investments:

Funds managed by related organizations 3,420 32,646

Funds managed by third parties 7,224 -

Total

166,039

197,580




73

As of December 31, 2011, Chilean Central Bank and Government securities includes investments

purchased under agreements to resell to customers and financial institutions amounting to

MCh$4,759 (MCh$75,173 in 2010). As of December 31, 2011, investments purchased under

agreement to resell have an average maturity of 12 days (At 2010, 18 days a year).

NOTE 7 - INVESTMENTS UNDER AGREEMENTS TO RESELL

a) The Bank purchases financial instruments agreeing to resell them at a future date. As of

December 31, 2011 and 2010 the instruments acquired under agreements to resell are as follows:

Balances As of December 31, 2011

Less than three

months

More than three

months and less

than one year

More

than one

year Total

MCh$ MCh$ MCh$ MCh$

Government and Chilean Central Bank

Securities:

Chilean Central Bank Securities - - - -

Treasury Bonds and Notes 2,450 - - 2,450

Other fiscal securities - - - -

Other securities issued locally:

Other local bank securities 10,965 - - 10,965

Bonds and company business papers 2,708 65 - 2,773

Other securities issued locally 7,063 - - 7,063

Securities issued abroad:

Government and Central Bank securities - - - -

Other Securities issued abroad - - - -

Mutual Funds Investments:

Funds managed by related companies - - - -

Funds managed by third parties - - - -

Total 23,186 65 - 23,251




74


Less than

three

months

More than three

months and less

than one year

More

than one

Year Total

MCh$ MCh$ MCh$ MCh$


Securities:

Chilean Central Bank Securities - - - -

Treasury Bonds and Notes - - - -


Other securities issued locally: -


Bonds and company business papers - - - -

Other securities issued locally 5,433 880 - 6,313







Total 74,796 880 - 75,676

b) The Bank obtains funds by selling financial instruments and committing itself to buy them back

at future dates, plus interest at a fixed rate.

As of December 31, 2011 and 2010, investments under agreements to repurchase are the following:


Less than

three months

More than

three months

and less than

one year

More than

one Year Total

MCh$ MCh$ MCh$ MCh$


Securities:

Chilean Central Bank Securities 60,535 - - 60,535




Other local bank securities 69,841 173 - 70,014

Bonds and company business papers - - - -

Other securities issued locally - - - -







Total 130,376 173 - 130,549




75


Less than

three

months

More than three

months and less

than one year

More than

one Year Total

MCh$ MCh$ MCh$ MCh$


Securities:

Chilean Central Bank Securities 155,322 - - 155,322





Bonds and company business papers 2,222 - - -

Other securities issued locally - - - 2,222



Other Securities issued abroad 6,902 - - 6,902




Total 189,350 - - 189,350




76

NOTE 8 - DERIVATIVE FINANCIAL INSTRUMENT AND HEDGE ACCOUNTING

a) The Bank and its Subsidiaries use Derivative Financial Instruments for hedge accounting

purposes as follows:


Notional amount of contract with final

maturity in Fair value

Up to 3

months

From 3 months

to 1 year

Over one

Year Assets Liabilities

Cash Flow (CF)

or

Fair value

(FV) Hedge

(VR) MCh$ MCh$ MCh$ MCh$ MCh$

Derivatives held-for-hedging

Fair Value

Foreign currency Swaps (VR) - - 62 - 2,936

Interest rate Swaps (VR) - 289,600 48,871 2,877 374

Subtotal

- 289,600 48,933 2,877 3,310

Cash Flow

Foreign currency Swaps (F) - - 58,018 - 409

Interest rate Swaps (F) 105,000 407,600 302,651 2,085 1,870

Subtotal

105,000 407,600 360,669 2,085 2,279

Total derivatives held-for-hedging

105,000 697,200 409,602 4,962 5,589

Derivatives held-for-trading

Foreign currency Forwards

4,774,162 2,090,350 174,618 66,605 60,570

Interest rate Swaps

1,583,067 2,055,175 1,689,879 100,917 67,965

Foreign currency Swaps

12,506 164,186 585,444 76,282 32,612

Foreign currency call options

3,396 2,332 206 140 114

Foreign currency put options

3,004 4,182 96 76 22

Total derivatives held-for-trading

6,376,135 4,316,225 2,450,243 244,020 161,283

Total derivative financial

instruments

6,481,135 5,013,425 2,859,845 248,982 166,872




77


Notional amount of contract with final

maturity in Fair value

Up to 3

months

From 3

months to 1

year

Over one

Year Assets Liabilities

Cash Flow

(CF) or

Fair value

(FV) Hedge

Derivatives held-for-hedging (VR) MCh$ MCh$ MCh$ MCh$ MCh$

Fair Value

Foreign currency Swaps (VR) 11,991 - - 241 -

Interest rate Swaps (VR) 13,056 - 21,443 196 697

Total derivatives held-for-hedging

25,047 - 21,443 437 697

Derivatives held-for-trading

Foreign currency Forwards

3,628,811 2,423,162 443,209 79,048 91,868

Interest rate Swaps

145,220 712,681 4,052,876 51,672 38,368

Foreign currency Swaps

66,983 95,380 1,058,631 72,644 44,325

Foreign currency call options

2,191 1,633 - 12 1

Foreign currency put options

3,513 491 - 254 2

Total derivatives held-for-trading

3,846,718 3,233,347 5,554,716 203,630 174,564

Total derivative financial instruments

3,871,765 3,233,347 5,576,159 204,067 175,261

b) Hedge accounting

Fair value hedges:

The Bank uses interest rate swaps to hedge the risk of fair value fluctuation in its value of debt

(short and long term) as well as long term assets (commercial loans). Through this structure,

economically and for accounting purposes, fixed rates may be “exchanged” for floating, thus

reducing the financial period and consequently the risk of fair value fluctuations resulting from

expected movements of the performance curve.




78

Below is a detail by maturity of hedged items and hedging instruments as of December 31, 2011 and

2010 under fair value hedges.


Hedged Items

Within 1

year

Between 1

and 3 years

Between 3

and 6 years

Over 6

years

MCh$ MCh$ MCh$ MCh$

Corporate Bonds - - 20,000 22,800

Loans - - - 6,071

Investment - - - 62

Time Deposits 289,600 - - -

Total 289,600 - 20,000 28,933

Hedging Instruments

Interest Rate Swaps 289,600 20,000 28,871

Foreign currency Swaps - - - 62

Total

289,600 - 20,000 28,933

Cash flow hedges:

Through interest rate swaps A) the bank is able to reduce the volatility of cash flows in balance

sheet items indexed to inflation through the use of forward contracts and combinations of indexed

inflation swaps in pesos and b) fix the rate for a portion of a pool of term peso liabilities, reducing

the risk on a significant portion of the cost of Bank financing, while minimizing the liquidity risk in

such pool of liabilities. This is achieved by matching the cash flows of hedged items and swaps, thus

hedging uncertain cash flow requirements against known outcomes under contract and represented

by hedging instruments.


Within 1

year

Between 1 and

3 years

Between 3 and

6 years

Over 6

years

MCh$ MCh$ MCh$ MCh$

Hedged item

Corporate Bonds - - - 21,443

Investment - - - -

Credits 13,056 - - -

Total 13,056 - - 21,443

Hedging Instruments

Cross Currency Swap 13,056 - - 21,443

Total 13,056 - - 21,443




79

Below are the ratings of the hedged item for the December 31, 2011 (for the year 2010, these types

of hedges were not maintained):


Within 1

year

Between 1

and 3 years

Between 3

and 6 years

Over 6

years

MCh$ MCh$ MCh$ MCh$

Hedged item

Credits - 360,669 - -

Time Deposits 512,600 - - -

Total 512,600 360,669 - -

Hedging Instruments

Foreign currency Swaps - 58,018 - -

Interest rate Swaps 512,600 302,651 - -

Total 512,600 360,669 - -

The income generated by cash flow hedges of derivatives, which was recorded in the Statement of

Changes in Shareholders' equity at December 31, 2011 (as of December 31, 2010 the Bank had no

cash flow hedges derivatives), are as follows:

As of

December

31, 2011

MCh$

Time Deposits (1,613)

Credits (963)

Net Flows (2,576)

CorpBanca, the parent company with a functional currency in Chilean pesos, has business

investment abroad - branch in New York. This branch generates currency translation allowance at

the parent level in equity. Generates changes in equity of the. A net investment hedge in foreign

operations (with a notional amount MCh$11,991 contract maturing in less than 3 months, with a fair

value of MCh$241) was entered into. During 2011 the hedging instruments were financial assets

and liabilities with notional of Millions of US$ 25.1, with a fair value of MCh1,152.




80

According to IAS 39 “Financial Instruments: Recognition and Measurement”, in paragraph 102, the

Bank recorded the hedge as follows:

Hedges of a net investment in a foreign operation, including coverage of a monetary item that is

accounted for as part of a net investment is recorded in a similar manner to cash flow hedges,

where:

a) The portion of the gain or loss on the hedging instrument that is determined to be an effective

hedge is recognized in equity, and this amount was a credit for MCh$245 in the year 2011, net of

deferred taxes (MCh$799 loss net of deferred taxes at December 31, 2010);

b) The ineffective portion is recognized in profit, (0 in 2011) (loss MCh$85 in December 31, 2010).

NOTE 9 - LOANS AND RECEIVABLES FROM BANKS

As of December 31, 2011 and 2010, “loans and receivable from banks” are as follows:


Normal

Portfolio

Substandard

Portfolio

Default

Portfolio

Total

MCh$ MCh$ MCh$

MCh$

Local Banks

Loans to local banks 13,047 - - 13,047

Allowances and impairment for local bank loans (29) - - (29)

Subtotal 13,018 - - 13,018

Foreign Banks

Loans to foreign banks 64,258 - - 64,258

Other debts with foreign banks 27,289 - - 27,289

Allowances and impairment for foreign bank

loans

(151) - - (151)

Subtotal 91,396 - - 91,396

Central Bank of Chile

Restricted deposits in the Central Bank of Chile 200,028 - - 200,028

Subtotal 200,028 - - 200,028

Total 304,442 - - 304,442




81


Normal

Portfolio

Substandard

Portfolio

Default

Portfolio

Total

MCh$ MCh$ MCh$ MCh$

Local Banks

Restricted deposits in the Central Bank of Chile - - - -

Subtotal - - - -

Foreign Banks

Loans to foreign banks 50,994 - - 50,994

Other debts with foreign banks 13,193 - - 13,193

Allowances and impairment for foreign bank

loans

(189) - - (189)

Subtotal 63,998 - - 63,998

Total 63,998 - - 63,998

The movement in the provisions for bank loans losses as of December 31, 2011 and 2010 are as

follows: As of 31 December 2011

Local Banks Foreign

Banks Total

MCh$ MCh$ MCh$

Balance as of January 1, 2011 - (189) (189)

Write-offs - - -

Established provisions (31) (110) (141)

Released provisions 2 148 150

Impairment - - -

Impairment reversal - - -

Balances as of December 31, 2011 (29) (151) (180)

As of 31 December 2010

Local Banks Foreign

Banks Total

MCh$ MCh$ MCh$

Balance as of January 1, 2010

Write-offs - (6) (6)

Established provisions - (196) (196)

Released provisions - 13 13

Impairment - - -


Balances as of December 31, 2010 - (189) (189)




82

NOTE 10 - LOANS AND RECEIVABLES FROM CUSTOMERS

a) Loans and receivables to customers

As of December 31, 2011 and 2010, the composition of the loan portfolio is as follows: As of December 31, 2011 Assets Before Allowances Allowances Established

Normal

Portfolio

Substandar

Portfolio

Default

Portfolio Total

Individual Group Total

Net Asset


MCh$

Commercial loans:

Commercial loans 4,185,634 21,970 138,127 4,345,731 37,530 9,732 47,262 4,298,469

Foreign trade loans 344,169 356 44,456 388,981 17,519 191 17,710 371,271

Current account debtors 12,142 56 1,301 13,499 53 125 178 13,321

Factoring operations 92,665 278 2,083 95,026 1,408 383 1,791 93,235

Leasing transactions 243,638 2,438 47,650 293,726 3,850 484 4,334 289,392

Other loans and receivables 78,150 2 281 78,433 19 658 677 77,756

Subtotals 4,956,398 25,100 233,898 5,215,396 60,379 11,573 71,952 5,143,444

Mortgage loans:

Letters of credit loans 95,844 - 6,533 102,377 - 1,323 1,323 101,054

Endorsable mutual mortgage

loans

229,787 - 11,866 241,653 - 4,201 4,201 237,452

Other mutual mortgage loans 772,462 - 13,075 785,537 - 3,803 3,803 781,734

Leasing transactions 71 - 67 138 - 1 1 137

Other loans and receivables 43,232 - 2,991 46,223 - 1,055 1,055 45,168

Subtotals 1,141,396 - 34,532 1,175,928 - 10,383 10,383 1,165,545

Consumer loans:

Consumer loans 246,712 - 20,241 266,953 - 15,279 15,279 251,674

Current account debtors 24,764 - 690 25,454 - 573 573 24,881

Credit card debtors 53,733 - 1,545 55,278 - 1,513 1,513 53,765

Consumer leasing transactions 510 - 219 729 - 8 8 721


Subtotals 398,365 - 24,756 423,121 - 22,716 22,716 400,405

Total 6,496,159 25,100 293,186 6,814,445 60,379 44,672 105,051 6,709,394




83

As of December 31, 2010 Assets Before Allowances

Allowances Established

Normal

Portfolio

Substandard

Portfolio

Default

Portfolio Total

Individual Group Total

Net Asset


MCh$

Commercial loans:

Commercial loans 3,207,452 15,403 144,636 3,367,491 39,746 10,771 50,517 3,316,974

Foreign trade loans 213,418 902 46,656 260,976 13,941 326 14,267 246,709

Current account debtors 45,697 511 6,154 52,362 171 486 657 51,705

Factoring operations 63,299 - 3,317 66,616 1,155 340 1,495 65,121

Leasing transactions 239,940 1,164 39,431 280,535 2,624 524 3,148 277,387

Other loans and receivables 1,068 4 179 1,251 6 8 14 1,237

Subtotals 3,770,874 17,984 240,373 4,029,231 57,643 12,455 70,098 3,959,133

Mortgage loans:

Letters of credit loans 115,206 - 7,727 122,933 - 1,542 1,542 121,391

Endorsable mutual mortgage loans

260,169 - 12,660 272,829 - 3,697 3,697 269,132

Other mutual mortgage loans 575,692 - 9,412 585,104 - 2,726 2,726 582,378

Leasing transactions 77 - 69 146 - - - 146

Other loans and receivables 48,492 - 3,135 51,627 - 972 972 50,655

Subtotals 999,636 - 33,003 1,032,639 - 8,937 8,937 1,023,702

Consumer loans:

Consumer loans 257,018 - 19,278 276,296 - 18,601 18,601 257,695

Current account debtors 23,879 - 1,022 24,901 - 338 338 24,563

Credit card debtors 51,981 - 2,405 54,386 - 3,084 3,084 51,302

Consumer leasing transactions 621 - 87 708 - 6 6 702


Subtotals 381,235 - 26,080 407,315 - 27,572 27,572 379,743

Total 5,151,745 17,984 299,456 5,469,185 57,643 48,964 106,607 5,362,578

Collateral held by the Bank in ensuring recovery of the interests reflected in its loan portfolio relate

to Mortgage type collateral (urban and rural properties, agricultural lands, maritime vessels and

aircraft, mining claims and other assets) and Liens ( Inventories, agricultural goods, industrial

goods, plantations and other property as security). As of December 31, 2011 and 2010, the fair

value of collateral held corresponds to 91.2% and 98.4% of assets covered, respectively.




84

As of December 31, 2011 and 2010, the fair value of collateral held for mortgage loans corresponds

to 64.7 % and 71.7 % of the balance on loans receivable, respectively.

The decline in the ratio presented for 2011, is explained by the increase shown by the commercial

portfolio of 29.91% over the fair value of guarantees, which experienced an increase of 12.90%

(ratio by 2011 - 2010).

The Bank finances its customers’ asset purchases, both movable and real estate, through lease

contracts that are included within loans and receivables from customers. As of December 31, 2011,

MCh$161,876 corresponds to lease of movable assets (MCh$198,024 as of December 31, 2010)

and MCh$132,718 to lease of real estate assets (MCh$83,366 as of December 31, 2010).

During 2011, the Bank has received assets such as homes, apartments, commercial and agricultural

lands, among others, for a total of MCh$2,129 through the execution of guarantees (MCh$1,451 in

2010).

b) Portfolio characteristics

As of December 31, 2011 and 2010, the loan portfolio before allowances for loan losses by

customer economic activity is as follows:


National

Loans

Foreign Loans

Total

MCh$

MCh$

MCh$

%

Commercial loans:

Manufacturing 510,232 10,525 520,757 7.64%

Mining 241,514 32,494 274,008 4.02%

Electricity, gas and water 423,276 10,473 433,749 6.37%

Agriculture and livestock 193,598 20,053 213,651 3.14%

Forestry and wood extraction 39,280 - 39,280 0.58%

Fishing 68,395 - 68,395 1.00%

Transport 163,843 604 164,447 2.41%

Communications 35,867 - 35,867 0.53%

Construction 598,671 848 599,519 8.80%

Commerce 450,957 3,187 454,144 6.66%

Services 2,041,235 137,037 2,178,272 31.97%

Others 233,307 - 233,307 3.42%

Subtotals 5,000,175 215,221 5,215,396 76.53%

Mortgage Loans 1,175,928 - 1,175,928 17.26%

Consumer loans 423,121 - 423,121 6.21%

Total 6,599,224 215,221 6,814,445 -




85


National

Loans

Foreign Loans

Total

MCh$

MCh$

MCh$

%

Commercial loans:

Manufacturing 441,037 2,440 443,477 8.11%

Mining 64,229 32,069 96,298 1.76%

Electricity, gas and water 218,569 28,954 247,523 4.53%

Agriculture and livestock 156,951 - 156,951 2.87%

Forestry and wood extraction 36,344 5,241 41,585 0.76%

Fishing 58,347 - 58,347 1.07%

Transport 162,175 1,062 163,237 2.98%

Communications 43,350 - 43,350 0.79%

Construction 457,376 - 457,376 8.36%

Commerce 346,426 6,422 352,848 6.45%

Services 1,896,212 40,038 1,936,250 35.40%

Others 31,988 - 31,988 0.58%

Subtotals 3,913,004 116,226 4,029,231 73.67%

Mortgage Loans 1,032,639 - 1,032,639 18.88%

Consumer loans 407,315 - 407,315 7.45%

Total 5,352,958 116,226 5,469,185 -




86

c) Provisions

The changes in allowances for loan during the years 2011 and 2010 are summarized as follows:

Individual Group

Provisions Provisions Total

MCh$ MCh$ MCh$

Balances as January 1, 2011 57,643 48,964 106,607

Portfolio write-offs:

Commercial loans (9,677) (11,299) (20,976)

Mortgage loans - (1,782) (1,782)

Consumer loans - (31,676) (31,676)

Total Write-offs (9,677) (44,757) (54,434)

Established provisions 42,126 52,203 94,329

Released provisions (29,713) (11,738) (41,451)

Impairment - - -


Balances as of December 31, 2011 60,379 44,672 105,051

Balances as January 1, 2010 39,484 56,466 95,950

Portfolio write-offs:

Commercial loans (5,941) (9,803) (15,744)

Mortgage loans - (537) (537)

Consumer loans - (45,645) (45,645)

Total Write-offs (5,941) (55,985) (61,926)

Established provisions 28,156 61,827 89,983

Released provisions (4,056) (13,344) (17,400)

Impairment - - -


Balances as of December 31, 2010 57,643 48,964 106,607

In addition to these credit risk provisions, country risk provisions are maintained to cover foreign

transactions and additional provisions approved by the Board of Directors, which are shown in

liabilities under the line item Provisions (See Note 20).




87

d) Portfolio sale

During 2011 CorpBanca sold part of the portfolio of state-guaranteed credits (CAE) in the context of

competitive bidding for award of the Financing Facility and Administration of Loans for Studies in

Higher Education Law No. 20,027. The open bidding model for financial institutions, reflected in

the respective databases, which allow selling a percentage of the portfolio to third parties. On the

portfolio sold, CorpBanca transferred substantially all the risks and rewards associated with this

portfolio, keeping only the administrative service of the same, which considers the generation of

new credit and collection fee waivers thereof. The detail of credits sold is as follows:


No. Operations Par Sale Released Income

Value Value Provisions on Sale

MCh$ MCh$ MCh$ MCh$

(*)

Payroll Tender

36,359 61,727 65,431 (645) 4,349

Others

- - - - -

Total

36,359 61,727 65,431 (645) 4,349

(*) The gain on sale is included in the category “Trading and investment income, net” in the income

statement.




88

NOTE 11 - INVESTMENT INSTRUMENTS

As of December 31, 2011 and 2010, the detail of available for sale investments and held-to-maturity

investments is as follows:

As of December 31,

2011 2010

Available

for sale

Held to

maturity

Total

Available

for sale

Held to

maturity

Total

MCH$ MCH$ MCH$ MCH$ MCH$ MCH$

Unlisted investments in Asset Markets

Chilean Central Bank and Government

Securities

Chilean Central Bank securities 307,122 - 307,122 543,901 - 543,901

Chilean Treasury Bonds 4,336 - 4,336 - - -

Other government securities 57,480 - 57,480 40,140 - 40,140

Other financial instruments

Promissory notes related to deposits in local

banks

380,284 - 380,284 123,226 - 123,226

Chilean mortgage finance bonds 1,056 - 1,056 1,553 - 1,553

Chilean financial institution bonds 41,702 - 41,702 - - -

Other local investments 44,109 11,580 55,689 - - -

Financial instruments Issued abroad

Foreign government and central bank

instruments

- - - - - -

Other foreign investments 7,161 10,382 17,543 17,955 - 17,955

Impairment Provision - - - - - -

Unquoted securities in active markets:

-

Chilean corporate bonds

- - - 19,473 - 19,473

Other investments

- - - - - -

Impairment Provision - - - - - -

Total

843,250 21,962 865,212 746,248 - 746,248

As of December 31, 2011, the portfolio of financial investments available-for-sale includes an

unrealized gain (1oss), net of deferred taxes, recorded in Shareholders' Equity of MCh$1,758

(MCh$1,259 as of December 31, 2010).




89

Impairment of Investment instruments

As of December 31, 2010 and 2011, there are no indicators of impairment in the investment

instrument.

All investments quoted in non-active markets and classified as available-for-sale have been recorded

at their fair value.

NOTE 12 - INVESTMENTS IN OTHER COMPANIES

a) As of December 31, 2011 and 2010 the investments in other companies are detailed as follows:

December 31, 2011 December 31, 2010

Company % %

Share MCh$ Share MCh$

Nexus S.A. 12.9 1,057 12.9 1,057

Transbank S.A. 8.72 939 8.72 939

Combanc S.A. 4.72 135 4.72 135

Redbanc S.A. 2.5 110 2.5 110

Sociedad Interbancaria de Depósitos de Valores S.A. 3.91 75 3.91 75

Santiago Stock Exchange shares - 1,056 - 1,056

Chilean Electronic Stock Exchange shares - 211 - 211

Total 3,583 3,583

During 2011 and 2010 the Bank received dividends from investment in other companies amounting

to MCh$250 and MCh$296 respectively.

b) The movements of investment in other companies as of December 31, 2011 and 2010, were the

following:

2011 2010

MCh$ MCh$

Balance at January 1, 3,583 3,583

Investment acquisitions - -

Investment sales - -

Share on income - -

Dividends received - -

Exchange rate differences - -

Ending balance as of December 31, 3,583 3,583

At December 31, 2011 and 2010, the Bank's investments in subsidiaries, does not show any signs of

deterioration.




90

NOTE 13 - INTANGIBLES

a) Intangibles as of December 31, 2011 and 2010 consists of the following:

December 31, 2011

Concept

Useful

life

years

Remaining

amortizatio

n years

Final

gross

balance

Amortizati

on for the

Period

Final Net

Balance

MCh$ MCh$ MCh$

Separately acquired intangibles

Integrated banking system (a) 15 6 7,706 (1,182) 6,524

Computer equipment system or software 3 2 570 (261) 309

IT Projects 6 4 5,521 (1,126) 4,395

Other projects 5 4 1,097 (86) 1,011

Total 14,894 (2,655) 12,239

December 31, 2010

Concept

Useful

life years

Remaining

amortizatio

n years

Final

gross

balance

Amortizati

on for the

Period

Final

Net

Balance

MCh$ MCh$ MCh$

Separately acquired intangibles

Integrated banking system (a) 15 7 8,813 (1,156) 7,657

Computer equipment system or software 3 2 731 (266) 465

IT Projects 6 5 5,540 (854) 4,686

Other projects 5 4 324 (36) 288

Total 15,408 (2,312) 13,096

(a) Integrated Banking System (IBS) corresponds to the main operating system software of the

Bank 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.




91

b) The changes in the intangible assets during 2011 and 2010 is as follows:

Integrated

banking

system

Computer

equipment

system or

software IT Projects Others Total

MCh$ MCh$ MCh$ MCh$ MCh$

Balance as of January 1, 2011 7,657 465 4,686 288 13,096

Purchases 50 161 962 937 2,110

Retirements - - ( 7) - ( 7)

Amortization (1,182) (261) (1,119) (93) ( 2,655)

Other ( 1) (56) (127) (121) ( 305)

Balances as of December 31, 2011 6,524 309 4,395 1,011 12,239

Integrated

banking

system

Computer

equipment

system or

software IT Projects Others Total


Balance as of January 1, 2010 8,630 777 3,598 625 13,630

Purchases 183 391 1,816 183 2,573

Retirements - (245) - - (245)

Amortization (1,156) (266) (854) (36) (2,312)

Other - (192) 126 (484) (550)

Balances as of December 31, 2010 7,657 465 4,686 288 13,096

c) As of December 31, 2011 and 2010, the Bank has entered into the following contractual

commitments for the acquisition of intangible assets:

Invested Amount

2011

Invested Amount

2010

MCh$ MCh$

License detail:

Bussiness Object Empresa Borja Consultores Ltda.

- -

Ingram Micro Chile S.A. - -

Mac Online Empresas y Tele Ventas Ltda. - 12




92

NOTE 14 - PROPERTY, PLANT AND EQUIPMENT

a) Property, plant and equipment as of December 31, 2011 and 2010 is as follows:

December 31, 2011

Item

Useful

life

year

(*)

Remaining

amortization

years

Final gross

balance

Depreciation

and impairment

for the Period

Final Net

Balance

MCh$ MCh$ MCh$

Land and buildings 21 21 46,457 (2,357) 44,100

Equipment 5 4 6,382 (1,219) 5,163

Other 7 6 9,192 (1,230) 7,962

Total 62,031 (4,806) 57,225

December 31, 2010

Item

Useful

life

year

(*)

Remaining

amortization

years

Final gross

balance

Depreciation

and impairment

for the Period

Final Net

Balance

MCh$ MCh$ MCh$

Land and buildings 21 19 45,914 (2,363) 43,551

Equipment 5 4 6,298 (1,136) 5,162

Other 6 5 6,023 (1,306) 4,717

Total 58,235 (4,805) 53,430

(*) The useful lives presented herein are the remaining useful lives of the Bank’s buildings,

equipment, and other property, plant, and equipment as of the transition date to IFRS (January 01,

2009). The useful lives presented on Note 1, m) correspond to the total useful life of fixed assets of

the Bank. Such useful lives have been determined based on our expected use considering the quality

of the original construction, the environment in which the assets are located, the quality and degree

of maintenance carried out, and appraisals performed by external specialists of the Bank.




93

b) The changes in property, plant and equipment during 2011 and 2010 is as follows:

Land and

buildings Equipment Other Total

MCh$ MCh$ MCh$ MCh$

Balances as of January 1, 2011 43,551 5,162 4,717 53,430

Purchases 2,957 1,509 4,335 8,801

Retirements (51) (306) (1) (358)

Depreciation (2,358) (1,216) (1,232) (4,806)

Other 1 14 143 158

Balances as of December 31, 2011 44,100 5,163 7,962 57,225

Land and

buildings Equipment Other Total

MCh$ MCh$ MCh$ MCh$

Balances as of January 1, 2010 45,495 4,718 4,999 55,212

Purchases 770 1,580 724 3,074

Retirements (287) (3) (56) (346)

Depreciation (2,362) (1,136) (1,307) (4,805)

Other (65) 3 357 295

Balances as of December 31, 2010 43,551 5,162 4,717 53,430

c) As of December 31, 2011 and 2010, the Bank holds operating lease contracts that cannot be

unilaterally terminated. The future payment information is broken down as follows:

Future Operating Lease Payments

Land, Buildings and Equipment

Up to 1 Year

From 1 to 5

Years

Over 5 Years

Total

MCh$

MCh$

MCh$

MCh$

As of December 31, 2011 5,379 20,583 25,013 50,975

As of December 31, 2010 4,391 16,961 22,134 43,486




94

NOTE 15 - CURRENT TAXES

a) Current income tax provision

At the end of each year the bank recognizes an Income Tax Provision, which is determined based on

the currently applicable tax legislation. Income tax provision recognized as of December 31, 2011

was MCh$6,278 (MCh$7,168 asset as of December 31, 2010). The income tax provision (net of

recoverable taxes) is as follows:

As of

December 31,

As of

December 31,

2011 2010

MCh$ MCh$

Income tax. 17% tax rate (20% tax rate for 2011 and 17% tax rate for 2010) 21,099 18,753

Less:

Monthly Provisional Payment (25,413) (9,990)

Tax credit for training costs (310) (401)

Tax credit for donations (1,012) (426)

Tax credit for property taxes on leased real estate assets (395) (768)

Other taxes to be recovered (247) -

Total (6,278) 7,168

b) Effect on income

The net expense for income taxes for the years ended December 31, 2011 and 2010 is comprised of

the following items:

As of December 31,

2011 2010

MCh$ MCh$

Income Tax expense

Current tax expense (21,099) (18,753)

Deferred taxes

Temporary differences (2,804) (24)

Subtotal (23,903) (18,777)

Others (241) (858)

Net expense for income taxes (24,144) (19,635)




95

c) Effective tax rate reconciliation

The table below sets for a summary of the deferred tax effect on other comprehensive income for the

years ended December 31, 2011 and 2010, which consists of the following items:

As of December 31,

2011 2010

Tax Rate Amount Tax Rate Amount

% MCh$ % MCh$

Net income before taxes 20.0 29,034 17.0 23,409

Rate change income tax (1.2) (1,750) (0.9) (1,308)

Permanent Differences and others (2.1) (3,140) (1.8) (2,466)

Income tax effective rate and expenses 16.7 24,144 14.3 19,635

d) Effect of deferred taxes on other comprehensive income

Below is a summary of the separate effect of deferred tax on other comprehensive income, showing

the asset and liability balances, during the years ended December 31, 2011 and 2010, which consists

of the following items: As of December 31,

2011 2010

MCh$ MCh$

Financial assets available-for-sale 283 (822)

Hedge of a net investment in New York Branch 696 (164)

Change of loan provision rule of SBIF - 1,962

Total charge to other comprehensive income 979 976

e) Effect of deferred taxes on income

Below are the effects of deferred taxes on assets, liabilities, and income assigned as a result of

temporary differences: As of December 31,

2011 2010

Assets Liabilities Net Assets Liabilities Net

Concepts: MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Provisions for loans losses 16,160 - 16,160 16,069 - 16,069

Accrued interest and adjustment related

to past-due loan portfolio

4,736

-

4,736

4,471

-

4,471

Unaccrued Price differences 117 - 117 111 - 111

Employees related provisions 798 - 798 812 - 812

Other 5,889 - 5,889 3,954 - 3,954

Depreciation of plant and equipment - (3,266) (3,266) - (3,750) (3,750)

Leases and other - (22,086) (22,086) - (17,494) (17,494)

Total net asset (liability) 27,700 (25,352) 2,348 25,417 (21,244) 4,173




96

f) Effect Joint Circular No. 3,478 SBIF and No. 47 Internal Tax Service (Servicio de Impuestos

Internos, also known as SII).

The information herein does not include the operations of entities that are consolidated in the

financial statements, but only those of the Parent as of December 31, 2011 and 2010.

It reports the total of assets at financial and tax value, regardless of the fact that operations are

unrelated to each other or that do not correspond to what should be included in the columns of

overdue loans. Following is the detail of these operations:

A. Loans and receivables

from customers


Asset value of

the financial

statements

Tax value assets

MCh$ Total

MCh$

Matured

Loan

Portfolio with

Guaranties

MCh$

Matured

Loan

Portfolio

without

Guaranties

MCh$

Commercial Loans 4,915,621 4,942,764 17,567 19,411

Mortgage Loans 1,175,928 1,175,928 5,075 264

Consumer Loans 421,214 421,214 184 1,886

B. Provisions for Matured

Loans

Balance as of

01.01.2011

,

Penalties against

Provisions

Established

Provisions

Released

Provisions

Balance as

of

December

31, 2011


Commercial Loans 19,071 9,814 15,117 4,963 19,411

Mortgage Loans 1,076 41 158 928 265

Consumer Loans 2,351 1,313 1,926 1,079 1,885

C. Penalties and

Recoveries MCh$

D. Application of Art. 31 N° 4 first and third

paragraphs MCh$

Penalties under Art. 31 N° 4

second paragraph 40,425 Penalties pursuant to first paragraph

-

Write-offs originating from

provisions for loan losses - Write-offs pursuant to third paragraph

-

Recoveries or renegotiations

of penalized credits 11,806

-




97

A. Loans and

receivables from

customers

As of

31.12.2010

Asset value of

the financial

statements

Tax value assets

MCh$ Total

MCh$

Matured Loan

Portfolio with

Guaranties

MCh$

Matured Loan

Portfolio

without

Guaranties

MCh$

Commercial Loans 3,697,366 3,720,591 16,886 19,071

Mortgage Loans 1,032,639 1,032,639 4,511 1,076

Consumer Loans 407,119 407,119 156 2,351

-

B. Provisions for

Matured Loans

Balance as of

01.01.2010

Penalties against

Provisions

Established

Provisions

Released

Provisions

Balance as

of

31.12.2010


Commercial Loans 14,021 7,027 14,569 2,492 19,071

Mortgage Loans 1,051 77 502 400 1,076

Consumer Loans 3,072 17,172 17,094 643 2,351

C. Direct Penalties and

Recoveries MCh$

D. Application of Art. 31 N° 4 first and third

paragraphs MCh$

Penalties under Art. 31 N° 4

second paragraph 33,133 Penalties pursuant to first paragraph

-

Write-offs originating from

provisions for loan losses - Write-offs pursuant to third paragraph

-

Recoveries or renegotiations of

penalized credits 14,665

-




98

NOTE 16 - OTHER ASSETS

a) As of December 31, 2011 and 2010, the detail of other assets is as follows:

As of

December 31,

As of

December 31,

2011 2010

MCh$ MCh$

Prepaid rent (1) 22,022 22,739

Accounts and notes receivable(2) 44,400 40,174

Prepaid expenses(3) 9,982 16,681

Projects under development (4) 10,043 10,163

Assets for leasing (5) 7,724 3,132

Assets received in lieu of payment (6) 2,104 2,713

Transactions in process (suspense accounts) 276 34

Other 4,831 2,630

Total 101,382 98,266

(1) Rent paid in advance for SMU ATMs. (See Note 33,b)

(2) Includes accounts and rights to amounts that do not correspond to the business purpose of the

Bank, such as tax credits, guaranteed deposits and other outstanding receivables.

(3) Includes payments for various services to be received (rents, insurance, and others) which have

not yet been earned.

(4) Information system and other projects under development.

(5) Fixed assets available for delivery under the structure of financial leases. Within this item, are

included items recovered from leasing and now held for sale, corresponding to computers,

furniture, and transportation equipment. These assets are available for a sale and have a high

probability of being sold. For most of such assets, it is expect to complete the sale within one

year from the date when the assets are classified as available for sale and/or lease assets

recovered held for sale. Within this item, we include items recovered from leasing and now held

for sale, as well as computers, furniture, and transport equipment. These assets are available for

a sale and have a high probability of being sold. For most of such assets, we expect to complete

sale within one year from the date when the asset is classified as a Fixed Asset Available for

Sale and/or Recovered from Leasing and Held for Sale.

(6) The provisions for assets received in lieu of payment are recorded as described in chapter B-5

No. 3 of the compendium of accounting standards that implies the recognition of a provision for

the difference between initial value and any additions or currency restatement and its realizable

value, where the former is greater.




99

b) The change due to received assets in lieu of payment during 2011 and 2010 is as follows:

Accumulated Amortization and impairment

Provisions on Assets

received in lieu of

payment

MCh$ Balance as of January 1, 2011 -

Released provisions (14)

Established provisions 38

Balance as of December 31, 2011 24

Balance as of January 1, 2010 87

Released provisions (96)

Established provisions 9

Balance as of December 31, 2010 -

NOTE 17 - CURRENT ACCOUNTS, DEMAND DEPOSITS, TIME DEPOSITS AND

SAVING ACCOUNTS

As of December 31, 2011 and 2010, current accounts and demands deposits consist of the following:

As of December 31

2011 2010

MCh$ MCh$

a) Current accounts and demand deposits

Current accounts 467,505 405,301

Other deposits and sight accounts 52,964 46,676

Other sight liabilities 68,791 41,713

Payments in advance from customers 78,533 104,326

Other sight liabilities 14,927 14,048

Total 682,720 612,064

b) Time deposits and saving accounts

Time deposits 4,806,278 3,691,596

Deposits due - -

Term savings accounts 8,707 8,666

Other term creditor Balances 9,393 192

Total 4,824,378 3,700,454




100

NOTE 18 - BORROWINGS FROM FINANCIAL INSTITUTIONS

Borrowings from financial institutions as of December 31, 2011 and 2010 include the following:

As of December 31

2011 2010

MCh$ MCh$

Loans obtained from financial institutions and the Chilean Central Bank:

Loans obtained from national financial institutions 511 43,140

Loans obtained from foreign financial institutions 663,115 460,552

Total

663,626 503,692

NOTE 19 - DEBT ISSUED AND OTHER OBLIGATIONS

As of December 31, 2011 and 2010, the composition of these items is as follows:

As of December 31

2011 2010

MCh$ MCh$

Debt issued

Letters of credit 180,750 226,451

Bonds 933,759 700,570

Subordinated bonds 408,264 288,414

Subtotal 1,522,773 1,215,435

Other financial liabilities

Public Sector liabilities 14,885 19,313

Borrowings from domestic financial institutions 5,168 4,347

Foreign borrowings - -

Subtotal 20,053 23,660

Debt issued and other financial obligations classified as long and short term as are follows:


Long Term Short Term Total

MCh$ MCh$ MCh$

Letters of credit 155,402 25,348 180,750

Bonds 849,297 84,462 933,759

Subordinated bonds 384,951 23,313 408,264

Debt issued 1,389,650 133,123 1,522,773

Other financial obligations 8,952 11,101 20,053




101


Long Term Short Term Total

MCh$ MCh$ MCh$

Letters of credit 219,067 7,384 266,451

Bonds 700,570 - 700,570

Subordinated bonds 288,414 - 288,414

Debt issued 1,208,051 7,384 1,215,435

Other financial obligations 21,847 1,813 23,660

Below is more detail for each debt instrument, according to their balances at December 31, 2011 and

2010.

a) The detail of letter of credits by maturity is as follows: As of December 31

2011 2010

MCh$ MCh$

Due within 1 year 25,348 7,384

Due after 1 year but within 2 years 19,642 4,280

Due after 2 years but within 3 years 19,260 16,874



Due after 5 years 83,289 94,563

Total mortgage finance bonds 180,750 226,451

b) The detail of bonds issued is as follows: As of December 31

2011 2010

MCh$ MCh$

BCOR-D0405 - -

BCOR-J0606 40,572 47,797

BCOR-K0707 45,230 43,411

BCOR-L0707 90,290 86,835

BCOR-M1207 111,152 106,930

Bonos- R0110 117,322 113,271

Bonos- AI0710 105,047 91,161

Bonos - AD0710 44,687 20,811

Bonos- Q0110 224,763 106,906

Bonos-O0110 20,182 -

Bonos-P0110 24,019 -

Bonos-Q0110 110,495 -

Time Deposits - 83,448

Total bonds 933,759 700,570




102

As of December 31

2011 2010

MCh$ MCh$






Due after 5 years 279,578 248,320

Total bonds 933,759 700,570

c) The detail of subordinated bonds is as follows:

As of December 31

2011 2010

MCh$ MCh$

Series UCOR-W1197 29 54

Series UCOR-X1197 3,381 6,264

Series UCOR-Y1197 8,830 8,972

Series UCOR-Z1197 20,526 20,851

Series UCOR-V0808 118,618 114,099

Series UCOR AA-0809 109,090 105,070

Serie UCOR BN0710 28,652 27,560

Serie UCOR BI0710 26,638 5,544

Seria UCOR BL0710 92,500 -

Total subordinated bonds 408,264 288,414

As of December 31

2011 2010

MCh$ MCh$






Due after 5 years 314,598 210,321

Total subordinated bonds 408,264 288,414




103

d) The detail of other financial obligations by maturity is as follows:

As of December 31

2011 2010

MCh$ MCh$


Due after 1 year but within 2 years 1,772 469




Due after 5 years 2,099 371

Total long term obligations 14,885 19,313

The detail of short term financial obligations is as follows:

Amounts due to credit card operators 5,168 4,347

Others - -

Total short-term financial obligations 5,168 4,347

Total other financial obligations 20,053 23,660

NOTE 20 - PROVISIONS

As of December 31, 2011 and 2010 the Bank has recorded the following changes in its provisions:

a. Provisions for contingent loans

The provisions for contingent loans as of December 31, 2011 and 2010 are as follows:

As of December 31

2011 2010

MCh$ MCh$

Sureties and Guarantees 129 13

Letters of credit 109 170

Performance bonds 1,840 735

Open lines of credit 2,501 -

Provisions for contingencies - 1,044

3.503 circular effect - 7,310

Other 255 76

Total 4,834 9,348




104

b. Other Provisions

The provisions as of December 31, 2011 and 2010 are as follows:

As of December 31

2011 2010

MCh$ MCh$

Accrual for benefits and staff salaries 4,801 7,623

Accrual for mandatory dividends 36,855 59,522

Provisions for contingent loans 4,834 9,348

Provisions for contingencies 6,277 2,430

Provisions for country risk 1,473 824

Total 54,240 79,747

c. The provision balance changes during 2011 and 2010, were as follows:

PROVISIONS ON

Short-Term

benefits and

staff salaries

Mandatory

Dividends

Provisions for

contingent

loans

Country Risk

and

Contingencies Total


Balance as of January 1, 2011 7,623 59,522 9,348 3,254 79,747

Application of provisions - - - - -

Established provisions 1,660 36,855 7,559 8,024 54,098

Released provisions (4,482) (59,522) (8,533) (7,068) (79,605)

Other - - (3,540) 3,540 -

Balance as of December 31, 2011 4,801 36,855 4,834 7,750 54,240

PROVISIONS ON

Short-Term

benefits and

staff salaries

Mandatory

Dividends

Provisions for

contingent loans

Country Risk

and

Contingencies Total


Balance as of January 1, 2010 6,473 42,554 896 3,195 53,118

Application of provisions - - - - -

Established provisions (14,210) 59,522 1,998 19,977 67,287

Released provisions 17,089 (42,554) (856) (12,608) (38,929)

Other (1,729) - 7,310 (7,310) (1,729)

Balance as of December 31, 2010 7,623 59,522 9,348 3,254 79,747




105

d. Accrual for employee benefits and staff salaries As of December 31

2011 2010

MCh$ MCh$

Provision for severance indemnities (See Note 20,e) 517 154

Other personnel benefits provision 5 4,370

Provision for vacations 4,279 3,099

Other - -

Total 4,801 7,623

e. Provision for severance indemnities As of December 31

2011 2010

MCh$ MCh$

Present value of the liability at the beginning of fiscal year 154 -

Increase in existing provision 4,977 2,043

Payments (4,460) (2,043)

Released provision (154) -

Other - 154

Total 517 154

NOTE 21 - OTHER LIABILITIES

As of December 31, 2011 and 2010, other liabilities, are as follows: As of December 31

2011 2010

MCh$ MCh$

Accounts and notes payable (1) 18,768 18,564

Dividends payable 49 116

Valuation adjustments for hedges (2) 9,265 -

Various creditors 444 -

Intermediary creditors - 300

Provision for commissions and consulting fees 1,032 558

Other liabilities 1,423 1,460

Total 30,981 20,998

(1) Grouped adjustments for those which are not obligations of normal operations, such as

withholding taxes, pension contributions, accrued purchases of materials, accruals for purchase

of fixed assets or leasing obligations or provisions for unpaid expenses.

(2) Corresponds to adjustments for fair market value of items covered by fair value hedges.




106

NOTE 22 - CONTINGENCIES, COMMITMENTS AND RESPONSIBILITIES

a) Off-balance commitments and responsibilities:

The Bank, its subsidiaries and its New York branch maintain off-balance sheet accounts; the

following most significant balances related to commitments and customary banking responsibilities:

As of

December 31

As of

December 31

2011 2010

MCh$ MCh$

CONTINGENT LOANS 1,791,586 1,052,282

Collaterals and Guarantees 42,252 35,440

Collaterals and Guarantees in Chilean currency - -

Collaterals and Guarantees in foreign currency 42,252 35,440

Confirmed foreign letters of credit 36,641 47,108


Performance bonds 534,148 356,845

Interbank letters of guarantee - -

Cleared lines of credit 675,023 534,873

Other credit commitments 436,529 14,047

Other contingent loans - -

THIRD PARTY OPERATIONS 666,300 580,131

Collections 26,815 23,576

Foreign Collections 17,096 13,736

Domestic Collections 9,719 9,840

Placement or sale of financial securities - -

Placement of public securities issues - -

Sale of bank transaction letters of credit - -

Other security sales - -

Transferred financial assets administered by the bank 56,720 59,726

Assets assigned to Insurance Companies 56,720 59,726

Securitized assets - -

Other assets assigned to third parties - -

Third party funds under management 582,765 496,829

Financial assets under management on behalf of third parties 582,765 496,829

Other assets under management on behalf of third parties - -

Financial assets acquired in own name - -

Other assets acquired in own name - -

SECURITIES CUSTODY 700,989 383,742

Securities in custody held by the bank 87,794 129,201

Securities in custody deposited in another entity 527,561 170,911

Bank-issued Securities 85,634 83,630

Term deposit notes 85,634 83,630

Saleable letters of credit - -

Other documents - -

COMMITMENTS - -

Underwriting transaction guarantees - -

Asset acquisition commitments - -

Total 3,158,875 2,016,155

The information above only includes the most significant balances.




107

b) Pending lawsuits

b.1) CorpBanca

As of December 31, 2011 and 2010, there were lawsuits pending against the Bank relating to loans

and other matters. The opinion of management and the Bank’s Legal Counsel - these lawsuits

should not result in material losses.

b.2) CorpBanca Corredores de Bolsa S.A.

According to the Prosecutor’s Office, as of December 31, 2011 and 2010, there are no pending

lawsuits against CorpBanca Corredores de Bolsa S.A. that may represent a significant risk of loss

for the company.

At December 31, 2011 the company has taken steps to pre-judicial collections which have not risen

to the expected level of results, therefore judicial proceedings were initiated; according to the

prosecution, this could mean a loss to the Company in the event recovery of the amounts due from

customers cannot be achieved. The Company has proceeded to make full provision in its financial

statements ascending to MCh$ 99

Before the Fifth Crime Tribunal of Santiago is the fraud case Rol Nº149913-7, this criminal lawsuit

filed by Banco del Estado de Chile, and which CorpBanca Corredores de Bolsa S.A. is not party to,

claims the time deposit N°00243045 totaling MCh$43 (historical), was unduly confiscated,

Concepción S.A. Corredores de Bolsa, currently named CorpBanca Capital Corredores de Bolsa

S.A. acquired the time deposit from its first beneficiary claiming “corpus delicti”. The above

mentioned time deposit is entirely provisioned in the financial statements, and is presented net of

allowances in Receivable Notes in the financial statements of the subsidiary Company.

b.3) Other companies included in the consolidation of Financial Statements.

At December 31, 2011 and 2010, these companies have no lawsuits pending against them which

represent significant risk of loss. Those companies are:

CorpBanca Administradora General de Fondos S.A

CorpBanca Asesorías Financieras S.A

CorpBanca Corredores de Seguros S.A

CorpLegal S.A

CorpBanca Agencia de Valores S.A

CorpBanca Sucursal de Nueva York.

SMU CORP S.A




108

c) Contingent loans

The fol1owing table details the contractual amounts of transactions that under which the Bank is

obligated and their associated provisions:

As of December 31

2011 2010

MCh$ MCh$

Sureties and guarantees 42,252 35,440


Confirmed foreign letters of credit 36,641 47,108

Performance bonds 534,148 356,845

Amounts available on lines of credit and credit cards 675,023 534,873

Other 436,529 14,047

Subtotal (See Note 22) 1,791,586 1,052,282

Provision for contingent loans (See Note 20) (4,834) (9,348)

Total 1,786,752

(1,042,934)

d) Responsibilities

The bank and its subsidiaries hold the following responsibilities under the normal course of

business:

As of December 31

2011 2010

Al 31 de diciembre de

2011

2010

MCh$

MCh$

Notes under collection 26,815

23,576

Financial assets transferred to and managed by the bank 56,720

59,726

Third party resources managed by the bank 582,765

496,829

Securities held in Custody 700,989

383,742

Total 1,367,289

963,873

MCh$ MCh$




109

In particular a subsidiary CorpBanca Corredores de Bolsa S.A., has the following information regarding custody of

securities:

As of December 31,2011

Unrelated third party custody

Local Foreing

Total IRV

IRF E

IIF Otros IRV

IRF E

IIF Otros


Custody is not subject to administration 350,691 55,282 3,844 - - - 409,817

Portfolio Management - - - - - - -

Voluntary pension savings management - - - - - - -

Total 350,691 55,282 3,844 - - - 409,817

Percentage of custody D.C.V. (%) 97.29% 99.96% 100.00% - - -

As of December 31,2010

Unrelated third party custody

Local Foreing

Total IRV

IRF E

IIF Otros IRV

IRF E

IIF Otros


Custody is not subject to administration 228,818 80,976 2,365 - - - 312,159

Portfolio Management - - - - - - -

Voluntary pension savings management - - - - - - -

Total 228,818 80,976 2,365 - - - 312,159

Percentage of custody D.C.V. (%) 98.00% 100.00% 100.00% - - -

1,367,289 963,873

The brokerage conducts its custody proceedings in accordance with the provisions of the SVS

Circular No. 1962 of January 19, 2010, segmenting the escrow unrelated and related to that: a) not

subject to administrative custody, b) Administration portfolio c) Administration of voluntary

pension savings by segmenting their amounts between nationals and foreigners, also by type of

instruments Equity instruments (IRV), Fixed Income instruments (IRF), Financial Intermediation

instruments (IIF) and others, also including the percentage of those held in the Central Securities

Depository (DCV).




110

e) Guarantees

e.1) CorpBanca

Assets given as collateral As of December 31,

2011 2010

MCh$ MCh$

Assets given as collateral 81,648 7,099

Total 81,648 7,099

e.2) CorpBanca Corredores de Bolsa S.A.

Direct commitments. At December 31, 2011 and 2010, the company has no direct commitments.

Security interests in corporate assets constituted in favor of third party obligations. As of

December 31, 2011 and 2010, the Company has no real guarantees in constituted assets to third

parties.

Personal guarantees. As of December 31, 2011 and 2010, the Company has not given personal

guarantees

Guarantees for transactions.

2011

• Pursuant to Article 30 of Law No. 18,045 (Securities Act), the Company has established a

guarantee through Credit Insurance Company Continental SA, in the amount of UF 4000 due on

April 22, 2012, designating the Santiago Stock Exchange creditor representative beneficiaries,

and this is the depository and custody of the policy.

• On July 30, 2011, was extended Insurance Policy with Chubb OF CHILE insurer whose

maturity was the July 30, 2011, in order to anticipate possible situations of officer impropriety,

with coverage up to USD$ 10,000. 000. The maturity of this policy was August 29, 2011 and

CorpBanca Corredores de Bolsa S.A. is a direct beneficiary.

• On August 29, 2011, a process to renew the Policy with Chubb Insurance Company of Chile

General, in order to anticipate possible situations of officer impropriety, with coverage up to

USD$ 10,000,000 was instituted. The maturity of this policy is August 29, 2012 and CorpBanca

Corredores de Bolsa S.A. is a direct beneficiary.




111

• The Company has in the Santiago Stock Exchange, Stock Exchange fixed income securities to

ensure operations in the Clearing House Settlement Service in December 2011 of MCh$3,436.

Also in this category are actions to ensure simultaneous operations delivered of MCh$7,073.

Finally in December 2011 there are collaterals USD$ 30,137.62 or MCh$14, to ensure

operations with foreign traders and USD$100,000 equivalent to MCh$52.

2010

Pursuant to Article 30 of Law No. 18,045 (Securities Act), the Company has established a guarantee

through Credit Insurance Company Continental SA, in the amount of UF 4000 due on April 22,

2012, designating the Santiago Stock Exchange creditor representative beneficiaries, and this is the

depository and custody of the policy.

On July 30, 2010, was extended Insurance Policy with Chubb OF CHILE insurer whose maturity

was the July 30, 2011, in order to anticipate possible situations of officer impropriety, with coverage

up to USD$ 10,000. 000 and is a direct beneficiary.

The company keeps at the Stock Exchange Santiago Stock Exchange fixed income securities to

ensure operations in the Clearing House Settlement Service in December 2010 of MCh$3,417 in

December 2009; these values were to provide the service of System clearing and Settlement of

Securities Transactions (SCL) for MCh$4,704 in 2009. Also found in this category were shares

delivered to ensure simultaneous operations for MCh$6,287 in 2010 (MCh$17,617 in 2009). In

addition there is the guarantee provided for $ 140,000, to ensure operations traders overseas in

December 2010 for MCh$66 and USD $ 100,000 equivalent to MCh$52 in December 2009. During

December 2010 and 2009, the Company established guarantees for CorpBanca of MCh$49,516 in

December 2010 and MCh$50,744 respectively to ensure credit for MCh$49,500 in 2010 and

MCh$100,000 in 2009.

Other guarantees. At December 31, 2011 and 2010, the Company guarantees to support lending by

Corpbanca, amounts guaranteed to 31 December 2011 are MCh$52,467 (due on January 17, 2012)

MCh$49,516 in December 2010.

e.3) Other companies included in the consolidation of Financial Statements.

December 31, 2011 and 2010, these companies have no other obligations to be disclosed in the

financial statements. These companies are:

CorpBanca Administradora General de Fondos S.A.


CorpBanca Corredores de Seguros S.A

CorpLegal S.A

CorpBanca Agencia de Valores S.A

CorpBanca Sucursal Nueva York

SMU CORP S.A




112

Other Liabilities

f.1) CorpBanca

CorpBanca is authorized to pass on to its customers any obligations related to deferred customs

duties originating from imports of assets for leasing, which are transfers that materialize prior to

National Customs Service authorization. As of December 31, 2011, the Bank has not

transferred any obligations related to deferred customs duties.

As of December 31, 2011 , leasing contracts signed, but for which assets have not yet been

delivered, amounts to MCh$60,959 (MCh$44,754 in December 2010 ).

f.2) CorpBanca Corredores de Seguros S.A.

2011

• To comply with Article 58° letter d) of DFL 251 of 1930 which states that "Insurance brokers,

in their business activities, must comply with the requirement to contract insurance policies as

determined by the SVS, to correctly respond and fully comply with the obligations of their

business and especially for damages that could result for insured parties that contract their

policy through a broker", the Company has contracted the following policies with Consorcio

Nacional de Seguros S.A. that took effect on April 15, 2011 and expire on April 14, 2012:

Policy Insured item Insured Amount (UF)

10019727 Civil Liability 60,000

10019725 Guarantee 500

2010

To comply with Article 58° letter d) of DFL 251 of 1930 which states that "Insurance brokers, in

their business activities, must comply with the requirement to contract insurance policies as

determined by the SVS, to correctly respond and fully comply with the obligations of their business

and especially for damages that could result for insured parties that contract their policy through a

broker", the Company has contracted the following policies with Consorcio Nacional de Seguros

S.A. that took effect on April 15, 2010 and expire on April 14, 2011:

Policy Insured item Insured Amount (UF)

4323295 Civil Liability 60,000

4323304 Guarantee 500




113

f.3) CorpBanca Administradora General de Fondos S.A.

2011

At December 31, 2011 and 2010, there are no direct or indirect commitments or contingencies

for lawsuits or other legal action. The Company has no restrictions or limits management of

financial indicators arising from contracts or agreements signed.

On July 30, 2010 the Chubb Insurance Policy of Chile General Insurance Company SA was

renewed, in order to cover possible situations of officer impropriety , which policy expires on

July 30, 2011. The insured amount of the policy amounts to USD $ 10,000,000.

On July 30, 2011, Corpbanca Administradora General de Fondos S.A extended the maturity of

the policy with Chubb Insurance of Chile General Insurance Company SA mentioned above to

August 29, 2011.

On August 29, 2011, Corpbanca Administradora General de Fondos S.A extended the maturity

of the policy with Chubb Insurance of Chile General Insurance Company SA mentioned above

to August 29, 2011.

2010

As of March 9, 2010, Administradora General de Fondos S.A. has taken a new Guarantee

Assurance Policy in order to assure the obligations due to the administration of the new mutual

fund Corp Asia Pacifico, which will have a validity until January 10, 2011

As of May 4, 2010, Administradora General de Fondos S.A. took a new Guarantee Assurance

Policy, in order to assure the obligations to the new mutual fund Corp Emea, which will have

validity until January 10, 2011.

As of July 30, 2010, Corpbanca Administradora General de Fondos S.A. renewed the Assurance

Policy with Chubb from Chile Compañía de Seguros Generales S.A., in order to cover possible

officer impropriety. The policy covers up to US$ 10,000,000. The expiration date is July 30,

2011.

As of January, 2011, Corpbanca Administradora General de Fondos S.A. has renewed the

Guarantee Assurance Policy for the “Administradoras Generales de Fondos” in order to assure

the faithful accomplishment of the “Administradora” obligations, by the third parties mutual

fund administration and the indemnity of the damage that arises from any nonobservance under

the Article 226 from the Law N°18.045. The expiration date of the obligations is January 10,

2012.




114

f.4) CorpBanca Agencia de Valores

Pursuant to Article 30 of Law No. 18.045 (Securities Act), the Company has entered into a

guarantee through Mapfre SA and Credit Guarantee Insurance Company in the amount of U.F.

4.000 due on December 1, 2012, appointing CorpBanca as custodian of the policy.

On September 1, 2011, the Company extended coverage of the policy to ensure proper and

complete fulfillment of all obligations as securities agent for the benefit of the creditors present

or future that are or will be under the umbrella of their brokerage operations, as noted in the

article No. 30 of law 18.045; this policy amounts to UF24, 000 maturing on December 31,

2011.

f.5) Other companies included in the consolidation of Financial Statements.

At December 31, 2011 and 2010, these companies have no other obligations to be disclosed in

the financial statements. These companies are:

CorpBanca Corredores de Bolsa S.A


CorpLegal S.A

CorpBanca Sucursal Nueva York

SMU CORP S.A

NOTE 23 - SHAREHOLDERS’ EQUITY

a. Movement in Shareholders’ equity accounts (attributable to equity holders of the Bank)

As of December 31, 2011, the Bank’s issued capital is represented by the following detail, ordinary

shares authorized, subscribed and paid, with no par value, detailed below:

Ordinary Ordinary

Shares Shares

2011 2010

(amount) (amount)

Issued as of January 1 226,909,290,577 226,909,290,577

Issuance of paid shares 23,448,903,657 -

Issuance of shares due - -

Repurchase of bank-issued shares - (5,672,732,264)

Sale of bank owned issued shares - 5,672,732,264

Total 250,358,194,234 226,909,290,577




115

Purchase and sale of shares (Treasury shares)

2008

As of December 31, 2008, the Bank was authorized to make the acquisition of shares of its own

issuance for 5,672,732,264 equivalents to 2.5% of the shares subscribed and paid.

2009

As of December 31, 2009, the Bank has sold bank issued shares that were acquired through a Public

Offer during 2008. The offer for 5,672,732,264 shares took place between December 6, 2009 and

February 18, 2010.

2010

As of December 31, 2010 the repurchase of treasury shares process initiated in December 2009 is

closed and there are no treasury shares available.

2011

There were no transactions of purchase and sale of own shares in this year..

Authorized, subscribed and paid shares

2011

At the Special Shareholders CorpBanca dated January 27, 2011,it was agreed to increase the

bank's capital through capitalization of retained earnings for 2009 and issuance of ordinary

shares for payment 40,042,815,984 (without par value, which represent 15% of new equity).

In Special Session of Board of Directors dated May 25 agreements were made which aim to:

Provide shareholders under preference rights 25,500,000,000 cash shares, without par value.

The following periods are set to offer preferred options (all within the year 2011): a) First

period: Between June 3 and July 2, b) second period: between July 3 and Aug. 1 and c) third

quarter: from August 2 to August 31.

The issue will be offered preferentially to the Bank's shareholders, who have the right to

subscribe to new shares at 0.1123797088 per share recorded in the Register of Shareholders

on May 28, 2010.




116

At the Special Session of Board of Directors dated June 2, 2011, it was agreed:

To set at $ 7.35 the price of each of the above shares in the quantity of 25,500,000,000.

Periods are ratified (agreed on May 25, 2011) to offer preferred stock to shareholders.

In short, to June 30, 2010, the Bank's paid-up capital is represented by 228,306,683,253

shares, which are composed of 226,909,290,577 subscribed and paid common shares,

without par value (figures at December 31, 2010) and 1,397,392,676 shares placed in 2011,

the latter from the situations described in previous sections.

During the period June-August 2011, placed a total subscribed shares paid up for the quantity

of 23,448,903,657, such payment amounting to MCh$172,594.

2010

As of December 31, 2010, the Bank’s issued capital consists of 226,909,290,577 ordinary shares

authorized, subscribed and paid, with no par value (same situation at December 31, 2009).

Capitalization of earnings

2011

At the Special Shareholder´s meeting held on January 27, 2011 it was agreed to capitalize retained

earnings at December 31, 2009 in the amount of MCh$106,869.

Distribution of dividends

2010

At the Bank’s Ordinary General Shareholder’s meeting held on February 24, 2011 it was agreed to a

dividend distribution of MCh$119,043 equivalent to 100% of the net income for the year 2010.

2009



2008






117

b. List of major shareholders

The movement of shares during 2011 is as follows:

Common Stock

2011

N° of Shares Share %

Corp Group Banking S.A. 128,253,046,085 51.22782%

Compañía Inmobiliaria y de Inversiones Saga Limitada 23,084,435,510 9.22056%

SG Inversiones Bancarias Limitada 7,547,376,000 3.01463%

SN Holding S.A 5,907,402,949 2.35958%

Banco de Chile por cuenta de Terceros 5,413,342,266 2.16224%

Cía. de Seguros Corpvida S.A 5,247,617,878 2.09604%

Moneda Sa Afi Para Pionero Fondo de Inversión 4,717,743,703 1.88440%

CRN Inmobiliaria Limitada 3,790,725,224 1.51412%

Banco Itau por cuenta de Inversionistas 3,494,174,016 1.39567%

CorpBanca Corredores de Bolsa S.A 3,414,088,765 1.36368%

Inversiones FMAD S.A 3,287,837,485 1.31325%

Merrill Lynch Corredores de Bolsa S.A 3,139,064,347 1.25383%

Inversiones JCSZ S.A 2,869,580,000 1.14619%

Banchile C de B S.A 2,717,839,791 1.08558%

Inmob e Inversiones Boquiñeni Ltda. 2,528,466,986 1.00994%

The Bank of New York según Circular 1375 de la SVS 2,502,376,082 0.99952%

Banco Santander por cuenta de Inv. Extranjeros 2,463,218,506 0.98388%

AFP Provida S.A para Fdo. Pensión C 2,353,758,526 0.94016%

Omega Fondo de Inversión Privado 2,255,046,125 0.90073%

Inversiones y Valores Limitada 2,216,950,089 0.88551%

Other Shareholders 33,154,103,901 13.24267%

Total 250,358,194,234 100.00000%




118

Common Stock

2010

N° of Shares

Shares %

Corp Group Banking S.A. 112,530,207,591

49.59260%

Compañía Inmobiliaria y de Inversiones SAGA Limitada 19,764,285,412

8.71021%

SG Inversiones Bancarias Limitada 8,282,189,106

3.65000%

SN Holding S.A. 5,413,342,266

2.38569%

Banco de Chile por cuenta de Terceros 5,189,038,023

2.28683%

Cía. de Seguros Corpvida S.A. 4,686,703,589

2.06545%

Moneda S.A. AFI para Pionero Fondo de Inversión 4,028,519,000

1.77539%

CRN Inmobiliaria Limitada 3,790,725,224

1.67059%

Banco Itau por cuenta de Inversionistas 3,689,619,584

1.62603%

CorpBanca Corredores de Bolsa S.A. 3,508,800,080

1.54634%

Inversiones FMAD S.A. 3,336,750,199

1.47052%

Merrill Lynch Corredores de Bolsa S.A. 2,827,817,924

1.24623%

Inversiones JCSZ S.A. 2,593,579,929

1.14300%

Banchile C de B S.A. 2,581,004,959

1.13746%

Inmob e Inversiones Boquiñeni Ltda. 2,353,758,526

1.03731%

The Bank of New York según Circular 1375 de la SVS 2,334,190,000

1.02869%

Banco Santander por cuenta de Inv. Extranjeros 2,329,465,743

1.02661%

AFP Provida S.A. para Fdo. Pensión C 2,303,428,231

1.01513%

Omega Fondo de Inversión Privado 2,216,950,089

0.97702%

Inversiones y Valores Limitada 2,196,612,332

0.96806%

Otros Accionistas 30,952,302,770

13.64083%

Total 226,909,290,577 100.00000%

c. Dividends

The distribution of dividends of the company is as follows:

Year

Income

attributable to

equity holders

To reserves or

retained

earnings

Intended

Dividends

Percentage

Distributed N° of Shares

Dividend per

share (in

MCh$)

MCh$

MCh$ MCh$ %

2010 (Shareholders

Meeting February,

2011)

119,043 -

119,043 100.00%

226,909,290,577

0.525

2009 (Shareholders

Meeting February,

2010)

85,109 -

85,109 100.00%

226,909,290,577

0.375




119

d. As of December 31, the diluted and basic earnings per share are the following:

2011 2010

N° Shares Total N° Shares Total

MCh$ MCh$ MCh$ MCh$

Basic and diluted earnings per share

Basic earnings per share


Weighted average number of shares outstanding 238,829 226,852

Assumed conversion of convertible debt

Adjusted number of shares 238,829 226,852

Basic earnings per share (Chilean pesos) 0.514 0.525

Diluted earnings per share


Weighted average number of shares outstanding 238,829 226,852

Diluted effect from:

Assumed conversion of convertible debt

Ordinary share conversion

Option Rights

Adjusted number of shares 238,829 226,852

Diluted earnings per share (Chilean pesos) 0.514 0.525

a. Valuation Accounts

Fair value reserve. This includes the cumulative net change in fair value of investments available

for sale, the above until the investment is recognized or there is a need for provisions for

impairment.

Translation Reserves. Includes the effects of translating the financial statements of the New York

branch, whose functional currency is U.S. dollar reporting currency of CorpBanca, being the

Chilean Peso.

Accounting Reserves Cash Flow Coverage. Coverage includes the effects of exposure to changing

cash flows attributed to a particular risk associated with assets and / or liability recognized, which

can affect the profit or loss.

Reserves Investment Accounting coverage abroad. Corresponds to adjustments for net

investment hedge of the foreign, cited above.




120

Below are the equity effects and income taxes between 2011 and 2010:

Comprehensive income for the year

2011

2010

MCh$

MCh$

Financial instruments available-for-sale

Balances as of January 1 (1,517)

(6,353)

Losses and gains by appreciation of portfolios and other adjustment (1,258)

4,836

Total (2,775) (1,517)

Coverage abroad

Balances as of January 1 963

-

Losses and gains by appreciation of portfolios and other adjustment (1,264)

963

Total (301) 963

Cash flow coverage

Balances as of January 1 -

-

Losses and gains by appreciation of portfolios and other adjustment (2,576) -

Total (2,576) -

Exchange differences translation

Balances as of January 1 (2,298)

(1,284)

Charge for net exchange translation 1,238

(1,014)

Total (1,060) (2,298)

Other comprehensive income before income taxes (6,712)

(2,852)




121

Income taxes on components of other comprehensive income

Income tax referred to financial instruments available-for-sale

1,017

258

Income tax referred to Coverage abroad

56

(164)

Income tax referred to Cash flow coverage

-

-

Total 1,073 94

Other comprehensive income before income taxes

(5,639)

(2,758)

b. Non-Controlling interest:

Corresponds to the net assets of subsidiaries attributable to equity instruments that do not belong

directly or indirectly, to the Bank, including the part they have been attributed the profit or loss. The

participation of non-controlling interest in the equity and results of the subsidiary is shown below:

2011


Subsidiaries

Participation

of third

parties Equity Income

Financial

instruments

available-

for-sale

Exchange

difference

s on

translatio

n- New

York

Branch

Hedge of

net

investment

in foreign

operation.

Hedge of

net

investmen

t cash

flow

Deferred

taxes

Total other

comprehens

ive income

comprehe

nsive

income

% MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

SMU CORP S.A. 49.00% 2,609 (1,824) - - - - - - (1,824)

2010


Subsidiaries

Participation

of third

parties Equity Income

Financial

instrument

s available-

for-sale

Exchange

difference

s on

translatio

n- New

York

Branch

Hedge of

net

investme

nt in

foreign

operatio

n.

Hedge of

net

investme

nt cash

flow

Deferred

taxes

Total other

comprehensiv

e income

comprehensive

income

% MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

SMU CORP S.A. 49.00%

2,943 (977) -

-

-

- - - (977)




122

NOTE 24 - INTEREST INCOME AND EXPENSE

a) The composition of interest income from interest and adjustments for the years ended December

31, 2011 and 2010 is as follows:

As of December 31,

2011

2010

Interests

Adjustments

Total

Interests

Adjustments

Total

MCh$

MCh$

MCh$

MCh$

MCh$

MCh$

Normal Portfolio

Investments under agreements to resell 3,016 18 3,034 2,876 746 3,622

Loans and receivables from banks 2,983 - 2,983 729 - 729

Commercial loans 238,510 50,507 289,017 158,281 21,177 179,458

Mortgage Loans 48,043 39,930 87,973 44,677 22,512 67,189

Consumer Loans 67,839 1,702 69,541 73,937 275 74,212

Financial investments 24,347 20,750 45,097 24,425 11,931 36,356

Other interest income 5,747 904 6,651 1 2,382 2,383

Hedge accounting gains(losses) - - - - - -

Subtotals 390,485 113,811 504,296 304,926 59,023 363,949

Impaired loan portfolio

Interest Recovery

Commercial loans 14,276 3,351 17,627 15,406 2,152 17,558

Mortgage Loans 1,326 842 2,168 1,679 626 2,305

Consumer Loans 4,510 21 4,531 2,634 1,193 3,827

Subtotals 20,112 4,214 24,326 19,719 3,971 23,690

Total interest income and expense 410,597 118,025 528,622 324,645 62,994 387,639

b) The detail of suspended interest income recognition on the impaired loan portfolio for the years

ended December 31, 2011 and 2010 is the following:

As of December 31,

2011 2010

Interest

Indexation

Adjustments Total Interests

Indexation

Adjustments Total

MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Commercial loans 5,667 962 6,629 5,807 473 6,280 Mortgage Loans 1,568 1,292 2,860 1,110 662 1,772

Consumer Loans 4 7 11 9 3 12

Financial investments - - - - - -

Total 7,239 2,261 9,500 6,926 1,138 8,064

As of December 31,

2011 2010

Interests

Indexation

Adjustments Total Interests

Indexation

Adjustments Total

MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Demand Deposits (15) (82) (97) (19) (40) (59)




123

c) The detail of interest expenses for the years ended December 31, 2011 and 2010 is the

NOTE 25 - FEES AND INCOME FROM SERVICES

As of December 31

2011

2010

a) Income from fees and services MCh$

MCh$

Lines of credit and overdrafts 7,740

9,098

Letters of credit and guarantees 4,460

4,789

Card services 10,602

9,068

Account administration 6,353

6,698

Collections, billings and payments 9,586

8,587

Management and brokerage commissions for securities 4,321

3,931

Investments in mutual funds and others 6,406

8,188

Insurance brokerage 8,161

7,930

Financial Advisory services 10,756

5,690

Other payments for services rendered 3,334

3,780

Other fees earned 685

694

Total Income from fees and services 72,404

68,453

Investments under agreements to repurchase (8,148) (315) (8,463) (4,959) (54) (5,013) Deposits and Time Deposits (193,555) (11,062) (204,617) (77,103) (8,873) (85,976)

Borrowings from financial institutions (8,466) - (8,466) (7,324) - (7,324)

Debt issued (56,435) (52,147) (108,582) (39,861) (22,901) (62,762) Other financial obligations (604) (525) (1,129) (795) (413) (1,208)

Other interest expenses - (1,404) (1,404) - (892) (892)

Hedge accounting gains(losses) (2,864) - (2,864) 48 (43) 5

Total Interest Expenses (270,087) (65,535) (335,622) (130,013) (33,216) (163,229)




124

As of December 31,

2011 2010

MCh$ MCh$

b) Expenses from services

Credit card transactions (6,963) (6,557)

Brokerage (259) (467)

Commissions on interbank transactions (702) (571)

Other paid commissions (2,184) (1,495)

Transaction processing (129) (68)

Foreign trade (237) (131)

Expenses on return commissions (916) (267)

Commissions spent on Happy Ending benefits (652) (676)

Total expenses from services ( 12,042) 10,232

The fees earned through transactions with letters of credit are recorded under “Interest income”

within the consolidated statement of income.

NOTE 26 - NET TRADING AND INVESTMENT INCOME Net trading and investment income recognized on the statement of income for the years ended

December 31, 2011 and 2010 is as follows: As of December 31,

2011 2010

MCh$ MCh$

Trading instruments 13,109 6,856

Derivative financial instruments 79,994 (14,327)

Other financial investments at fair value with effect on gain (losses) (1,364) 942

Financial investments available-for-sale 6,403 (3,288)

Profit on bank-issued time deposit repurchase 82 450

Loss on bank-issued time deposit repurchase (7) (44)

Other (472) 1

Total 97,745 (9,410)




125

NOTE 27 - NET FOREIGN EXCHANGE INCOME (LOSSES) The detail of net foreign exchange gains (losses) for the years ended December 31, 2011 and 2010 is

as follows:

As of December 31,

2011 2010

MCh$ MCh$

Gains (losses) of foreign currency exchanges differences

Net gains (losses) of foreign currency exchange positions (7,219) 45,700

Other foreign currency exchange gains(losses) 3,257 (26)

Subtotals (3,962) 45,674

Net earnings on exchange rate adjustments

Adjustments to loan to customers 835 (775)

Adjustments to investment instruments 3,048 -

Adjustments in other liabilities (331) 318

Fair value gains (losses) on hedging derivatives (26,373) (606)

Subtotals (22,821) (1,063)

Total ( 26,783) 44,611

NOTE 28 - PROVISION FOR LOAN LOSSES

The changes in provision for loan losses recorded on the income statement for the years ended December 31, 2011 and 2010 is as

follows:


Credits and asset (receivable) accounts from clients

Loans and

receivable

from banks Commercial loans

Mortgage

Loans

Consumer

Loans

Contingent

loans

Additional

provisions

Minimum

provision

normal

portfolio Total


MCh$

MCh$ MCh$

Established provisions:

Individual Analysis (141) (42,125) - (1) (4,035) - (6,265) (52,567)

Group Analysis - (13,513) (3,669) (35,021) (3,524) - - (55,727)

Charge to income for provisions established (141) (55,638) (3,669) (35,022) (7,559) - (6,265) (108,294)(*)

Released provisions:

Individual Analysis 150 29,712 - 1 3,351 1,637 4,363 39,214

Group Analysis - 2,890 441 8,407 5,182 - - 16,920

Credit to income for provisions released 150 32,602 441 8,408 8,533 1,637 4,363 56,134(*)

Recovered assets previously written-off 19 1,787 574 9,598 - - - 11,978

Net charge to income 28 (21,249) (2,654) (17,016) 974 1,637 (1,902) (40,182)




127


Credits and asset (receivable) accounts from

clients

Loans and

receivable

from banks

Commercial

loans

Mortgage

Loans

Consumer

Loans

Contingent

loans

Additional

provisions

Minimum

provision

normal

portfolio Total

MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Established provisions:

Individual Analysis (196) (28,252) - (2) (1,747) - - (30,197)

Group Analysis - (10,883) (3,341) (47,505) (251) - - (61,980)

Charge to income for provisions

established

(196) (39,135) (3,341) (47,507) (1,998) - - (92,177) (*)

Provisions used:

Individual Analysis 13 3,939 - 1 386 - - 4,339

Group Analysis - 5,355 119 7,974 470 - - 13,918

Credit to income for provisions

released

13 9,294 119 7,975 856 - - 18,257(*)

Income by release of additional

contingent provisions

- - - - 4,787 - - 4,787(*)

Recovered assets previously written-off - 2,726 90 11,893 - - - 14,709

Net charge to income (183) (27,115) (3,132) (27,639) 3,645 - - (54,424)

(*) Consolidated Statement of Cash Flows, 2011 for MCh$52,160 and 2010 for MCh$69,133.

NOTE 29 - PERSONNEL SALARIES EXPENSES

Personnel salaries expenses for the years ended December 31, 2011 and 2010 consisted of the

following:

As of December 31

2011 2010

MCh$ MCh$

Personnel compensation (46,382) (40,462)

Bonuses and gratifications/awards (19,508) (21,132)

- -

Severance indemnities (3,600) (5,215)

Training expenses (832) (718)

- -

Other personnel expenses (6,139) (3,507)

Total (76,461) (71,034)




128

NOTE 30 - ADMINISTRATION EXPENSES

Administration expenses for the years ended December 31, 2011 and 2010 as follows:

As of December 31,

2011 2010

MCh$ MCh$

Maintenance and repair of fixed assets (2,095) (1,693)

Office rentals (6,831) (5,853)

Equipment rentals (2,279) (2,216)

Insurance premiums (988) (256)

Office supplies (879) (906)

IT and communications expense (3,867) (3,067)

Lighting, heating and other services (2,628) (2,565)

Security Service and transportation of securities (1,379) (1,433)

Public relations expense and staff travel expenses (1,672) (977)

Legal and notary costs (169) (161)

Technical report fees (7,956) (7,279)

Professional services fees (592) (643)

Securities classification fees (181) (96)

Fines imposed by the SBIF - (6)

Fines imposed by other entities (16) (11)

Other administration expenses (10,865) (7,915)

Subtotal (42,397) (35,077)

Subcontracted services (4,399) (3,288)

Data processing (3,212) (2,534)

Sales (66) (56)

Loan valuation (274) (104)

Others (847) (594)

Board of Directors Expenditure (784) (564)

Remunerations (784) (564)

Other Board of Directors expenses - -

Marketing and advertising (4,411) (5,021)

Real states taxes, contributions and levies (3,150) (2,843)

Real estate taxes (282) (293)

Patents (686) (549)

Other taxes (25) (53)

Contribution to SBIF (2,157) (1,948)

Total (55,141) (46,793)




129

NOTE 31 - DEPRECIATION, AMORTIZATION AND IMPAIRMENT

a) Depreciation and amortization expense for the years ended December 31, 2011 and 2010 are as

follows:

As of December 31,

2011 2010

MCh$ MCh$

Depreciation and amortization

Depreciation of property, plant and equipment (See Note 14) (4,806) (4,805)

Amortization of intangible assets (See Note 13) (2,655) (2,312)

Balances as of December 31, (7,461) (7,117)

b) Impairment losses for the years ended December 31, 2011 and 2010 are as detailed below:

As December 31,

2011 2010

MCh$ MCh$

Impairment of financial investments available-for-sale - -

Impairment of financial investments held-to-maturity - -

Impairment of property, plant and equipment - (427)

Total - (427)




130

NOTE 32 - OTHER OPERATING REVENUE AND EXPENSES

a) Other operating revenue

The detail of other operating income is as follows: As of December 31,

2011 2010

MCh$ MCh$

Revenues for assets received in lieu of payment

Gain on sales of assets received in lieu of payment 872 859

Other revenues 416 -

Subtotal 1,288 859

Contingency provisions released

Provision for country risk - -

Special Provisions for credit abroad. - -

Other contingency provisions 156 77

Subtotals 156 77

Other Revenues

Gain on sales of property, plant and equipment 17 557

Utilidad por venta de participación al exterior. 3,192 -

Gain on sale of investment in other companies - -

Subtotal 3,209 557

Other income 952 558

Leasing contributions revenue 1,016 1,594

Other operating income -subsidiaries 854 3,123

Gain on sales of leased assets 1,048 645

Other operating income –leasing 820 754

Revenues from leasing loans expense recovered 164 665

Subtotal 4,854 7,339

Total 9,507 8,832




131

b) Other operating expenses

Other operating expenses for the years ended December 31, 2011 and 2010 are the following:

As of December 31,

2011

2010

MCh$

MCh$

Provisions and expenses for assets received in lieu of payment

- Provisions for assets received in lieu of payment (26)

(27)

- Write-offs of assets received in lieu of payment (973)

(1,346)

- Maintenance expenses of assets received in lieu of payment (115)

(357)

Subtotals (1,114)

(1,730)

Contingency provisions

- Country risk provisions (571)

(806)

- Special Provisions for credit abroad -

-

- Other contingency provisions (1,657)

(1,360)

Subtotals (2,228)

(2,166)

Other expenses

- Expenses for consumer loans levying (2,019)

(1,089)

- Expenses for bond issue (586)

(44)

- Expenses for business reports (576)

(561)

- Expenses for operational losses (1,476)

(2,110)

- Other expenses (1,668)

(1,764)

Subtotals (6,325)

(5,568)

Total (9,667)

(9,464)




132

NOTE 33 - RELATED PARTY TRANSACTIONS

In accordance with the General Banking Law and the Chilean Superintendency of Banks and

Financial Institutions, individuals and companies that are related, directly or indirect1y, to the Bank

or management are considered related parties.

a) Loans granted to related parties

Loan granted to related parties as of December 31, 2011 and 2010 are as fol1ows:

2011 Operating

Companies

Investment

Companies Individuals

MCh$ MCh$ MCh$

Loans and receivables to customers:

Commercial loans 83,374 2,509 1,012

Mortgage Loans - - 6,105

Consumer Loans 4 - 819

Loans and receivables to customers - gross 83,378 2,509 7,936

Allowances for loan losses (5,866) - (7)

Loans and receivables to customers, net 77,512 2,509 7,929

Contingent loans 8,930 - -

Contingent loans provisions - - -

Contingent loans, net 8,930 - -

2010 Operating

Companies

Investment

Companies Individuals

MCh$ MCh$ MCh$


Commercial loans 117,043 2,466 306

Mortgage Loans - - 4,184

Consumer Loans 1 - 1,931

Loans and receivables to customers - gross 117,044 2,466 6,421

Allowances for loan losses (291) (4) (16)

Loans and receivables to customers, net 116,753 2,462 6,405

Contingent loans 1,240 - -

Contingent loans provisions - - -

Contingent loans, net 1,240 - -




133

b) Other transactions with related parties

During the years ended December 31, 2011 and 2010, the Bank entered into the fol1owing

transactions with related parties for amounts exceeding UF 1,000.

As of December 31, 2011:

Company Description

Balance

Asset

(Liability)

Effect on Statement of

Income

Note Income (Expense)

MCh$ MCh$ MCh$

Inmobiliaria Edificio Corpgroup S.A. Corporate office rent and building costs - - 2,357

Transbank S.A. Credit Card processing - - 2,367

Corp Group Interhold S.A. Management advisory services - - 1,993

Operadora de Tarjeta de Crédito Nexus S.A. Credit card processing - - 900

Redbanc S.A. Automatic teIler machine administration - - 1,442

Recaudaciones y Cobranzas S.A. Office rent and credit coIlection - - 985

Proservicen S.A. Promotion service - - 1,032

Compañía de Seguros Vida Corp S.A. Brokerage of insurance premiums and office rent

- - 281

Inmobiliaria e Inversiones San Francisco Ltda. Financial advisory services - - 177

Asesorías Santa Josefina Ltda. Financial advisory and management services - - 151

Inmobiliaria e Inversiones Boquiñeni Ltda. Financial advisory services - - 58

Empresa Periodística La Tercera S.A. Advertising services - - 244

Inmobiliaria e Inversiones B y F Limitada Financial advisory services - - 1,441

SMU S.A., Rendic Hnos S.A. Prepaid rent for space for ATMs 16 22,022 - 1,447

These transactions were carried out at normal market prices prevailing at the day of transactions.


Company Description

Balance

Asset

(Liability)

Effect on Statement of

Income


MCh$ MCh$ MCh$

Inmobiliaria Edificio Corpgroup S.A. Corporate office rent and building costs - - 2,445

Transbank S.A. Credit Card processing - - 2,110 Corp Group Interhold S.A. Management advisory services - - 1,931 Operadora de Tarjeta de Crédito Nexus S.A. Credit card processing - - 922

Redbanc S.A. Automatic teIler machine administration - - 800

Recaudaciones y Cobranzas S.A. Office rent and credit coIlection - - 792 Proservicen S.A. Promotion service - - 372 Compañía de Seguros Vida Corp S.A. Brokerage of insurance premiums and office rent - - 226

Inmobiliaria e Inversiones San Francisco Ltda. Financial advisory services - - 174

Asesorías Santa Josefina Ltda. Financial advisory and management services - - 146 Inmobiliaria e Inversiones Boquiñeni Ltda. Financial advisory services - - 66 Empresa Periodística La Tercera S.A. Advertising services - - 36

Inmobiliaria e Inversiones B y F Limitada Financial advisory services

- - 712

SMU S.A., Rendic Hnos S.A. Prepaid rent for space for ATMs 16 22,739 - 15




134

c) Other assets and liabilities with related parties


Company Description

Balance

Asset

(Liability)

Effect on Statement of Income


MCh$ MCh$ MCh$

Fundación Corpgroup Centro Cultural Donations - - 2,203


Company Description

Balance

Asset

(Liability)

Efecto en resultados


MCh$ MCh$ MCh$

Fundación Corpgroup Centro Cultural Donations

- - 133

d) Other assets and liabilities with related parties

As of December 31,

2011 2010

MCh$ MCh$

ASSETS

Derivative financial instruments 19,780 16,744

Other assets - -

LIABILITIES

Derivative financial instruments 97 288

Demand deposits 14,713 2,189

Deposits and other time deposits 14,060 20,482

Other assets - -




135

e) Operating income from related party transactions

As of December 31,

2011 2010

Type of recognized income or expense Income Expense Income Expense

MCh$ MCh$ MCh$ MCh$

Interest revenue 7,466 3,194 5,743 412

Income and expenses on fees and services 769 (2) 160 6

Gain and loss on trading - - - -

Gain and Loss on other financial transactions - - - -

Foreign currency exchanges - - - -

Operating support expense - 13,434 - 10,035

Other income and expense 1 - - -

Total 8,236 16,626 5,903 10,453

f. Contracts with related parties

2011

Company

Description

Inmobiliaria Edificio Corpgroup S.A. Corporate office rent and building costs

Transbank S.A. Credit card processing

Corp Group Interhold S.A. Management advisory services

Operadora de Tarjeta de Crédito Nexus S.A. Credit card processing

Redbanc S.A. Automatic teIler machine administration

Recaudaciones y Cobranzas S.A. Office rent and credit coIlection

Proservicen S.A. Promotional services

Compañía de Seguros Vida Corp S.A. Brokerage of ínsurance premiums and office rent

Inmobiliaria e Inversiones San Francisco Ltda. Financial advisory services

Asesorías Santa Josefina Ltda. Financial advisory and management service


Inmobiliaria e Inversiones Boquiñeni Ltda. Financíal advisory services

Empresa Periodística La Tercera S.A. Advertising services

Inmobiliaria e Inversiones B y F Limitada

Financíal advisory services

SMU S.A., Rendic Hnos S.A. Prepaid rent for space for ATMs




136

2010:

Company Description

Proservicen S.A. Promotion Services

Transbank S.A Credit card processing

Inmobiliaria Edificio Corpgroup SA Corporate office rent and building costs

Corp Group Interhold S.A Management advisory services

Operadora de Tarjeta de Crédito Nexus S.A. Credit card processing

Redbanc S.A Automatic teIler machine administration

Recaudaciones y Cobranzas S.A. Office rent and credit coIlection

Empresa Periodística La Tercera SA Advertising services

Inmobiliaria e Inversiones San Francisco Ltda. Financial advisory services

Asesorías Santa Josefina Ltda Financial advisory and management service

Compañía de Seguros de Vida Corp S.A. Brokerage of ínsurance premiums and office rent


Inmobiliaria e Inversiones Boquiñeni Ltda Financíal advisory services

SMU S.A Rendic Hermanos S.A Prepaid rent for space for ATMs

g. Remunerations to members of the board and key Management Personnel

Remunerations paid to key management personnel are sets forth in table below:

2011 2010

MCh$ MCh$

Short term employee remuneration 15,588 14,231

Severance indemnities 1,098 1,534

Total 16,686 15,765

2011

For the year ended December 31, 2011, the members of the Board of Directors received

remuneration for MCh$713.

For the year ended December 31, 2011, the members of the Directors Committee and Audit

Committee received remunerations for MCh$92.

The total remuneration paid to key management personnel of the Bank for the year December 31,

2011 was MCh$13,608.

In addition, and as established in our Bonus Policy as established jointly by the Division

Management - Human Resources and Development and the General Manager, certain bank

executives were paid bonuses based on the completion of goals.




137

2010

For the year ended December 31, 2010, the members of the Board of Directors received

remuneration for MCh$328.

For the years ended December 31, 2009 and 2008 the members of the Board did not receive any

remuneration.

For the year ended December 31, 2010, the members of the Directors Committee and Audit

Committee received remunerations for MCh$148.

The Directors of subsidiary companies did not receive any remuneration during the years ended

December 31, 2010.

The total remuneration paid to key management personnel of the Bank for the year December 31,

2010 was MCh$13,755.

In addition, and as established in our Bonus Policy as established jointly by the Division

Management - Human Resources and Development and the General Manager, certain bank

executives were paid bonuses based on the completion of goals.

h. Key management personnel

As of December 31, 2011 and 2010, the composition of the Bank´s key management personnel is as

follows:

Number of Executives

Position 2011 2010

Directors 44 44

Chief Executive Officers 7 8

Division Managers 12 13

Department Managers 76 77

Deputy Managers 120 125




138

i. Transactions with key management personnel

During 2011 and 2010 transactions with key personnel were carried out as follows:

Income

MCh$

2011 2010

Credit Cards 28 31

Consumer loans 62 26

Commercial loans 45 13

Mortgages loans 445 244

NOTE 34 - FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE

Fair value of an asset or liability is the amount for which an asset could be exchanged and liability

could be settled between knowledgeable, willing parties in an arm’s length transaction. The most

objective and habitual reference of the fair value of an asset or liability is the price that would be

paid in an organized and transparent market (“quoted price” or “market price”).

For financial assets and financial liabilities for which there is no market price available, fair value is

estimated by using recent similar transactions and, in the absence thereof, current values or other

valuation techniques based on mathematical valuation models that have been sufficiently verified by

the international financial community and the pertinent regulatory bodies. These models take into

account the specific features of the asset or liability to be valued and the different types of risks

associated to the asset or liability.

These fair value assessments are subjective by nature since their price estimation is based on a

number of assumptions of an original axiomatic nature. For that reason, the fair value estimation

process is affected by the variables that the assumptions are targeted to, such as interest rates,

prepayment options, covenants, etc. Thus, it is possible that this fair value estimate might not

entirely relate to that resulting from independent prices. However, they represent the best estimates

available in many cases.




139

Determination of the fair value of financial instruments

A summary of the fair value of the main financial assets and liabilities as of December 31, 2011 and

2010 is detailed below, including those that have not been presented at fair value in these Financial

Statements.

As of December 31

2011

2010

Note

Carrying

Amount

Estimated

Fair Value

Difference

(loss)/gain

Carrying

Amount

Estimated

Fair Value

Difference

(loss)/gain

MCh$ MCh$ MCh$

MCh$ MCh$ MCh$

ASSETS

Cash and due from banks 5 265,747 265,747 -

202,339 202,339 -

Items in course of collection 5 96,230 96,230 -

79,680 79,680 - Trading portfolio financial assets 6 166,039 166,039 -

197,580 197,580 -

Investments under agreements to resell 7 23,251 23,251 -

75,676 75,676 - Derivative financial instruments 8 248,982 248,982 -

204,067 204,067 -

Loans and receivables from banks 9 304,442 304,442 -

63,998 63,998 - Loans and receivables from customers 10 6,709,394 6,753,036 43,642

5,362,578 5,469,983 107,405

Financial investments available-for-sale 11 843,250 843,250 -

746,248 746,248 - Financial investments held-to-maturity 11 21,962 21,835 (127)

-

-

LIABILITIES

Current accounts and demand deposits 17 682,720 682,720 -

612,064 612,064 -

Items in course of collection 5 36,948 36,948 -

41,525 41,525 -

Items under agreements to repurchase 7 130,549 130,549 -

189,350 189,350 -

Time deposits and saving accounts 17 4,824,378 4,826,737 2,359

3,700,454 3,639,847 (60,607)

Derivative financial instruments 8 166,872 166,872 -

175,261 175,261 -

Borrowings from financial institutions 18 663,626 687,883 24,257

503,692 522,103 18,411

Debt issued 19 1,522,773 1,480,306 (42,467)

1,215,435 1,323,193 107,758

Other financial obligations 19 20,053 20,053 -

23,660 24,525 865

In addition, the fair value estimates presented above, do not attempt to estimate the value of earnings

generated by the Bank’s current or future business activities and, as such, do not represent the value

of the Bank as an operational company. Below is a summary of the methods used to estimate the

fair value of financial instruments:

a) Cash and Bank Deposits

Cash, bank deposits, and financial instruments included in other liabilities are recorded at face value

given their short-term and liquid nature.




140

b) Items in course of collection, trading instruments, available for sale investment instruments,

resale agreements, and securities loans

The estimated fair value of these financial instruments was determined by using quoted market

prices, available dealer quotes, or 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. For fair

value estimates of debt investment or values representing debt, included within these items, we take

into account variables and additional inputs, to the extent they are applicable, including estimated

pre-payment rates and issuers’ credit risk.

(c) Loans and accounts receivables to customers

For floating-rate loans that re-price frequently and have no significant change in credit risk, the

estimated fair values are based on their carrying 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. Fair values of non-accruing loans are

estimated using discounted cash flow analyses, derived from the liquidation of underlying

guarantees, as applicable (or from other sources of payment), at an estimated discount rate.

(d) Deposits, other foreseeable obligations and term obligations

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 disclosed fair

values.

(e) Issued debt instruments, Bank obligations, and other financial obligations

Fair values for these financial instruments are estimated using discounted cash flow analyses, using

interest rates currently being offered for loans with similar types of loan agreements, with similar

maturities.

(f) Financial instruments included in other assets

Fair values for these financial instruments are estimated using discounted cash flow analyses, based

on discount rates implicit in transactions that generated these balances, which are similar to

comparable instruments with similar risk assessments.




141

(g) Financial derivative contracts

The estimated fair value of forward currency contracts was determined by using quoted market

prices of financial instruments with similar characteristics and valuation models.

The fair value of interest rate swaps represents the estimated amount that the Bank expects to

receive or pay out in order to rescind the contracts or agreements, taking into account the payment

term structure of the interest rate yield, underlying volatility, and credit risk for counterparties.

In the absence of market price quotes (direct or indirect) for a particular derivative instrument,

current values or other valuation techniques based on mathematical valuation models such as Black-

Scholes, Hull and Montecarlo simulations are used, taking into account the relevant variables, such

as option volatility, underlying appreciable correlations, credit risk of the counterparty, volatility of

the implicit price volatility, speed at which volatility returns to median value, and correlation

between a market variable and its volatility, among others.

Fair value measurement and hierarchy

Based on hierarchy levels established by IAS 39 classified according to three levels of valuation

techniques. A Level 1 for those elements that have been valued through observable inflows or

inputs; a Level 2 for elements valued through observable inputs and a Level 3 for unobservable

inputs.

The financial assets and liabilities recognized at fair value in the financial statements are classified

according to the following order of hierarchy:

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that

the Company has the ability to access at the measurement date: Central bank, bank deposits in pesos

and adjustment within 1 year.

Level 2: Inputs are inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly or indirectly: currency derivative contracts and rates (FX

forwards, swaps CPI, Swaps on libor, etc.), Security Bonds, Letters Banking, Corporate Bonds.




142

Level 3: Inputs are unobservable inputs for the asset or liability: TAB (Tasa Activa Bancaria in

Spanish, or prime rate) Swaps

The level in the hierarchy in which a measurement is classified based on the lowest level of the

input / output that is significant for the measurement at fair value as a whole. The following table

presents the assets and liabilities are measured at fair value on a recurring basis, at December 31,

2011 and 2010:

Fair Value Measurement at reporting date using

December 31, 2011 Note

Fair Value

Amount

Quoted prices in

Active Markets

for identical

assets (Level 1)

Significant

Other

observable

inputs

(Level 2)

Significant

unobservable

inputs (Level 3)

ASSETS

Trading securities 6 166,039

166,039

-

-

Available-for-sale securities 11 843,250

692,005

151,245

-

Derivatives 8 248,982

-

216,008

32,974

Total

1,258,271

858,044

367,253

32,974

LIABILITIES


-

159,964

6,908

Total

166,872

-

159,964

6,908

Fair Value Measurement at reporting date using

December 31, 2010 Note

Fair Value

Amount

Quoted prices in

Active Markets

for identical

assets (Level 1)

Significant

Other

observable

inputs

(Level 2)

Significant

unobservable

inputs (Level 3)

ASSETS

Trading securities 6 197,580

88,085

109,495

-

Available-for-sale securities 11 746,248

584,041

162,207

-


-

204,067

-

Total

1,147,895

672,126

475,769

-

LIABILITIES


-

175,261

-

Total

175,261

-

175,261

-




143

NOTE 35 - RISK MANAGEMENT

Introduction:

As part of its business activities, the Bank is exposed to various types of risks primarily in terms of

financial instruments. A description of the Banks main business activities and policies with regard

to risk management is as follows:

Risk Management Structure:

Board of Directors

At CorpBanca, the Board plays a leading role in the field of Corporate Governance, and is

responsible for establishing and monitoring the Bank’s risk management structure, for which

purpose it has a system of corporate governance aligned with international trends and Chilean

regulations, mainly stemming from the Superintendence for Banks and Financial Institutions. One of

the main functions of the Board is to monitor, assess, and lead senior management to ensure that

actions conform to best practices. In order to do this, various committees, support areas, codes and

manuals have been implemented, which provide staff behavior guidelines and allow them to assist in

the development of the Bank’s risk management control related functions.

Board of Directors’ Committee

The purpose of the Board of Directors’ Committee is to strengthen self-regulation within the Bank,

enabling a more efficient Board performance by developing control work of all its activities. To this

effect, among other functions, it is responsible for reviewing the accounting and financial reports of

transactions with related parties and the remuneration and compensation plan systems for Managers

and Senior Executives. At Board Meeting dated August 30, 2011, it was agreed that this Committee

take in in addition to its own functions those which, in accordance with current regulations are the

responsibility of the Audit Committee, calling themselves then the "Board of Directors – Audit

Committee.”

Credit Committees

These committees are comprised of executives belonging to the Management Offices of Business,

Risk, and/or Directors, having as their main purpose the resolution of different operations and their

respective conditions, which represent credit risks for the Bank. In addition, the Executive

Committee, our highest recourse authority, assesses eventual amendments, modifications, and/or

updates to our Credit Policies.




144

Auditing Committee

The purpose of the Auditing Committee is to encourage the effectiveness of the internal control

systems at the Bank and their compliance with regulations. Furthermore, it should strengthen and

support both the Bank’s Comptroller Management function as well as its autonomy from

Management and in turn be the link with and coordinate all tasks between internal auditing and the

External Auditors as well as being a nexus between these and the Board of Directors of the Bank.

Committee on the Prevention of Money Laundering and Terrorist Financing

This is an internal body assigned to the prevention of money laundering and terrorism financing,

whose primary purpose is to plan and coordinate all policy procedures and compliance activities on

the subject. It also monitors work conducted by the Compliance Officer, and its decisions relating to

the improvement of any proposed control measures.

Compliance Committee

Its main purpose is to ensure the compliance with the rules set forth in the Codes of Conduct and

other complimentary norms, creating and developing the necessary compliance procedures, as well

as interpreting, managing and supervising the norms of action therein contained, and resolving any

potential conflicts that may arise from the application of such rules and norms. The Compliance

Committee is formed by one Officer, the Chief Executive Officer, the Legal Services Division

Manager, the Organizational Development Division Manager and the Compliance Officer.

Comptroller

The Comptroller’s Division’s main purpose is to support the Board of Directors and Senior

Management in safeguarding the maintenance, application, and performance of our internal control

system, as well as to monitor general compliance with our rules and procedures.

Code of General Conduct and Market Information Management Handbook

CorpBanca’s goal is to continue advancing towards being the best bank and having first-class

human resources. All employees and Directors of CorpBanca and its Subsidiaries are subject to

ethical norms that are based on guiding principles and values designed to uphold the highest

standards.

In response to our client’s trust and recognition, which are determining factors in the success of our

institution, all employees and Officers must carefully ensure that trust, through the strict compliance

with the Code of General Conduct adopted in 2008 by the Management and Auditors’ Committee.




145

Main risks affecting the Bank:

Credit Risk:

Proper risk management, in all areas, and in particular with respect to Credit Risk, constitutes one of

the fundamental pillars with respect to the performance of our portfolio, by ensuring that we

maintain an adequate risk/return ratio.

Credit Risk management at CorpBanca is based on the following core elements:

- Credit Policies.

- Credit Processes.

- Solid risk culture consistent with our strategy.

- Regulated, preventive, and forward-looking risk assessment.

- Human Resources with high level of expertise in credit determinations.

- Active involvement of the Credit Risk Manager during the approval process, using a segmented

market structure.

- Defined Tracking and Collections Processes, with the participation of Business, Risk, and Asset

Rating and Control areas.

- Risk culture transmission within the Bank, by offering internal and external Training programs

for the Business and Risk sectors.

- The Division Manager for Companies Credit Risk performs the “checks and balances” task with

respect to the Business Areas.

In addition, we have a Credit Committee structure relating to Debtor Risk Ratings, with powers that

are principally vested in the committees involving the Risk Managers. The concurrence of Bank

Directors is required with respect to certain amounts.

These committees define the levels of individual and collective exposure levels with clients, as well

as any applicable mitigating conditions, including guarantees and credit agreements, among others.

Pursuant to our risk management tools, our portfolio is divided into:

Normal Risk Portfolio

Watch List Portfolio

Distressed Portfolio

Normal Risk Portfolio

The risk involved is reviewed in the following events:

- New credit proposals, including renewals of credit lines and special transactions.

- As determined by the Asset Rating and Control Management Office.

- Every time an account executive determines the occurrence of relevant changes to the debtor’s

risk factors that merit higher risk treatment.




146

- Through a monthly sample reflected by the warning signals system.

- Through the regular review of our various centers of responsibility.

Watch List Portfolio

To safeguard the quality of the loan portfolio, the Bank has established that the debtor Watch List

must include the following types of portfolios, depending on the type of problems that affect them :

- Special Watch Portfolio

- Default Portfolio

Watch List Portfolio (“WL”)

It is important to note that credits included within these categories do not necessarily represent

expected losses for us.

An asset in WL presents weaknesses that can be corrected. As such, it must receive special attention

from the Business Areas and is subject to active control and monitoring measures by the Asset

Rating and Control Management Office.

An asset in WL is managed by the Business Areas, which must comply with action plans established

by the Watch List Committee.

Portfolios in WL, in addition, are reviewed by the Watch List Committee, which is comprised by the

Division Manager for Companies Credit Risk and/or the Credit Risk Managers, the Asset Rating and

Control Manager, and the Business Area Managers, according to the following schedule:

Every 4 months Debtor review under the following strategies:

V1 Exit

V2 Guaranty

V3 Reduce

Every 6 months V4 Follow-up

Every 2 months V5 Structured Exit

In the event the loan remains unpaid,

The WL Committee conducts special surveillance reviews of all debtors with debts in excess of

MCh$50 million.

The Manager of Risk of each business segment and the Asset Rating and Control Manager are

responsible to oversee the follow-up and compliance by the account executive of the action and

agreement plans of the Watch List Committee.




147

Plans of action

Everyone must have a defined action plan. The action plan is agreed to by account executives and

the Asset Rating and Control Management Office (“GCCA”), and is reviewed by the Watch List

Committee.

The action plans consist of:

Debtors with an exit plan

The Bank takes a full risk exit decision. These debtors must have a defined payment plan. .................................................... V1

Debtors with a plan to increase their guarantee hedging ........................................................................................................... V2

Debtors with a plan to reduce exposure.

Reduce debt to an amount at which the Bank feels comfortable............................................................................................... V3

Debtors with a monitoring plan.

Lower degree of concern, for example: monitoring a company’s committed and not specified capitalization,

specific payments arrears, payment of claims disputed by the insurance company. ................................................................. V4

Debtors with a structured payment plan.

A defined payment plan for the full debt, needing only control of timely paid installments. ................................................... V5

Satisfactory Asset Debtors.

Debtors who have exited the system due to satisfactorily complying with the action plans agreed.. ....................................... V6

Variables that determine the classification of a Watch List asset

1. Through an analysis of warning signs, that could include:

Debtor Warning Signs

Change of ownership, partners or guarantors

Issues among partners

Change in the marital status of guarantors

Changes in the ownership of fixed assets

Labor issues

Quality of financial information

Other Warning Signs

Reduction in sales

Reduction in the gross and operational margins

Increase in cash flow cycles (inventory and accounts receivable turnover ratios)

High retirement rates among partners

Increase in investments and account receivables corresponding to related entities

Structural changes in pertinent markets




148

Payment Behavior

Continued renewal requests

Continued internal overdrafts

Payment defaults for 30 days in the SF and/or Defaulted Portfolio

Challenged documents

2. Debtor Risk Rating.

Client merits rating A6 classification or worse,

3. Debtor Analysis

Review of business circumstances and changes in the financial situation due to credit line renewals

or requests for one-time credits.

Who obtains access to The Watch List

Account Executives

Risk Managers

Approval Committees, as required,

Defaulted and Expired Portfolio Committees

Asset Rating and Control Manager

Business Managers

Who grants access to the Watch List

The Asset Rating and Control Manager

The Asset Rating and Control Management, who grants the access, change the plans under Watch

List and/or exclude the clients from this segment.

The Asset Rating and Control Management Office is the only body that can amend, modify or

exclude a client from the Watch List.

How is a client excluded from the Watch List.

Upon request to the committee, which reviews the background and either approves or rejects.

How is the Business Area notified of Committee resolutions.

Through a minute issued by the Asset Rating and Control Management Office.




149

Portfolio in default

Includes any portfolio managed by the Regularization Management Office. Notwithstanding its

rating, any client who has a rating that is equal to or less than seven, as well as any client who has

defaulted on a payment, must be transferred to the Regularization Management Office.

On a monthly basis, the Asset Rating and Control Management Office evaluate and ensure

compliance with the aforementioned provision.

This portfolio is reviewed on a monthly basis by a Committee comprised of the Chief Executive

Officer, the Division Manager for Companies Credit Risk, the Regularization Manager, the

Regularization Sub-manager, and the Asset Rating and Control Manager.

The Asset Rating and Control Management Office’s analysts review the portfolios by analyzing the

information provided through the Debtors Classification Sheet.

Financial Derivatives Agreements

We maintain strict controls over our open positions in derivative agreements negotiated directly with

counterparties. In all cases, credit risk is limited to the fair value of those agreements that are

favorable to us (active position), which represent a small fraction of the notional values of those

instruments. This exposure to credit risk is managed as part of client loan limits, in addition to

potential exposures due to market fluctuations. In order to mitigate risk, we usually operate with

deposit margins of the counterparties.

Contingent Commitments

We use several instruments that, notwithstanding their exposure to credit risk, are not reflected in

the Balance Sheet: personal guaranties, documented letters of credit, guaranty ballots and

commitments to grant loans.

Backings and personal guaranties represent an irrevocable payment obligation. In the event that a

guaranteed client defaults on obligations to third parties secured by us, it must make the

corresponding payments, such that these transactions represent the same exposure to credit risk as a

common loan.

Letters of credit are documented bank commitments on behalf of a client, which are guaranteed by

assets in transit to which such letter is related, such that letter of credit are less risk than direct

indebtedness. Guaranty ballots are contingent commitments that become effective only if a client

defaults on its obligation to execute certain actions, as agreed with third parties.




150

With respect to our commitments to grant loans, we are potentially exposed to losses in an amount

equal to the total unused amount of the commitment. However, the probable amount of losses is less

than the total unused amount of the commitment. We monitor the maturity of credit lines because,

generally, long term commitments have a higher credit risk than short term commitments.

Financial Instruments

For these types of assets, we measure the probability of an unrecoverable issuer default by using

internal and external ratings, such as independent risk rating agencies.

Maximum credit risk exposure The table below presents the distribution, by financial assets, of the Bank’s maximum credit risk

exposure as of December 31, 2011 and 2010 for the different statement of position line items,

including derivatives, before deducting collateral or other credit improvements received:

Maximum exposure

Note 2011 2010

MCh$ MCh$

Loans and receivables to banks 9 304,442 63,998

Loans and receivables to customers 10 6,709,394 5,362,578


Investments under agreements to resell 7 23,251 75,676

Financial investments available-for-sale 11 843,250 746,248

Financial investments held-to-maturity 11 21,962 -

Other assets 16 101,382 98,266

Contingent loans 22 1,791,586 1,052,282

Total 10,044,249 7,603,115

For further detail on maximum credit risk exposure and concentration by financial security type,

please refer to the specific Notes.




151

An analysis of credit risk concentration by industry of financial securities follows:

2011

2010

Note

Maximum

gross

exposure

Maximum

net

exposure %

Maximum

gross

exposure

Maximum

net exposure %

MCh$ MCh$

MCh$ MCh$

Manufacturing

520,757 513,573 9.98%

443,477 435,762 11.01%

Mining

274,008 270,228 5.25%

96,298 94,623 2.39%

Electricity, gas and water

433,749 427,765 8.32%

247,523 243,217 6.14%

Agriculture and Livestock

213,651 210,703 4.10%

156,951 154,220 3.90%

Forestry and wood extraction

39,280 38,738 0.75%

41,585 40,862 1.03%

Fishing

68,395 67,451 1.31%

58,347 57,332 1.45%

Transport

164,447 162,178 3.15%

163,237 160,397 4.05%

Communications

35,867 35,372 0.69%

43,350 42,596 1.08%

Construction

599,519 591,248 11.50%

457,376 449,419 11.35%

Commerce

454,144 447,879 8.71%

352,848 346,709 8.76%

Services

2,178,272 2,148,220 41.77%

1,936,250 1,902,564 48.06%

Others

233,307 230,089 4.47%

31,989 31,432 0.79%

Subtotal 10 5,215,396 5,143,444 100%

4,029,231 3,959,133 100%

Consumer Loans 10 423,121 400,405

407,315 379,743

Mortgage Loans 10 1,175,928 1,165,545

1,032,639 1,023,702

Total

6,814,445 6,709,394

5,469,185 5,362,578

Guarantees

To mitigate credit risk effects, guarantees are held in favor of the Bank. The main collateral offered

by customers is as follows:

In corporate loans, collateral mainly includes: Machinery and/or equipment, Construction Projects,

specifically targeted Buildings and Urban Sites and Lands.

For loans to natural persons the main guarantees are: Houses, Apartments and Automobiles.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2010 and 2009

152

Credit quality by financial asset class

With regard to the quality of credits, these are described consistent with the Compendium of Accounting Standards of the

Superintendence for Banks and Financial Institutions. A detail by credit quality is summarized as follows:

December 31, 2011

Individual Portfolio

Group Portfolio

Normal Porfolio

Portfolio Substandard

Default Portfolio Normal

Porfolio

Default

Portfolio

A1 A2 A3 A4 A5 A6

B1 B2 B3 B4

C1 C2 C3 C4 C5 C6 Total

Total

General

Total

MCh$ MCh$$ MCh$ MCh$ MCh$$ MCh$

MCh$ MCh$ MCh$ MCh$

MCh$

MCh$

MCh$

MCh$

MCh$

MCh$

MCh$

MCh$ MCh$ MCh$

MCh$

Loans and receivables to

banks

200,028 36,851 67,701 42 - - - - - - - - - - - - 304,622 - - - 304,622

Loans and receivable to

customers

Commercial loans::

Comercial loans 236,229 1,002,989 1,227,123 1,039,390 439,597 9,011 14,203 4,594 2,554 619 27,711 7,153 7,467 9,679 11,747 6,244 4,046,310 231,295 68,126 299,421 4,345,731

Foreign Trade loans - 53,245 93,925 144,847 36,568 7,432 357 - - - 2,857 990 18,618 15,907 3,749 69 378,564 8,151 2,266 10,417 388,981

Lines of credit and

overdrafts

- 1,299 5,526 245 1,066 1 49 4 - - 72 43 - - 9 11 8,325 4,008 1,166 5,174 13,499

Factored receivables - 8,755 28,677 36,988 15,308 290 54 - 95 129 105 - - - 27 - 90,428 2,647 1,951 4,598 95,026

Leasing contracts - 11,495 16,698 106,405 89,018 592 2,439 - - - 27,010 6,142 979 1,099 2,015 410 264,302 19,428 9,996 29,424 293,726

Other outstanding loans - 171 42 519 125 12 - 2 1 - 1 7 - 5 4 4 893 77,281 259 77,540 78,433

Subtotal Commercial

loans

236,229 1,077,954 1,371,991 1,328,394 581,682 17,338 17,102 4,600 2,650 748 57,756 14,335 27,064 26,690 17,551 6,738 4,788,822 342,810 83,764 426,574 5,215,396

Consumer loans - - - - - - - - - - - - - - - - - 398,365 24,757 423,122 423,122

Mortgage loans - - - - - - - - - - - - - - - - - 1,141,396 34,532 1,175,928 1,175,928

Total loans and

receivable to customers

236,229 1,077,954 1,371,991 1,328,394 581,682 17,338 17,102 4,600 2,650 748 57,756 14,335 27,064 26,690 17,551 6,738 4,788,822 1,882,571 143,053 2,025,624 6,814,446

Financial investments - - - - - - - - - - - - - - - - - - - -

-



153

December 31, 2010

Individual Portfolio

Group Portfolio

Normal Porfolio

Portfolio Substandard

Default Portfolio Normal

Porfolio

Default

Portfoli

o

A1 A2 A3 A4 A5 A6

B1 B2 B3 B4

C1 C2 C3 C4 C5 C6 Total

Total

General

Total

MCh$ MCh$$ MCh$ MCh$ MCh$$ MCh$

MCh$ MCh$ MCh$ MCh$

MCh$

MCh$

MCh$

MCh$

MCh$

MCh$

MCh$

MCh$ MCh$ MCh$

MCh$

Loans and receivables to

banks

- 8,415 50,520 5,223 29 - - - - - - - - - - - 64,187 - - - 64,187

Loans and receivable to

customers

Commercial loans::

Comercial loans 161,851 836,435 848,042 791,581 343,999 10,564 14,205 1,074 - 123 16,559 11,532 13,678 9,781 4,288 21,860 3,085,572 214,966 66,937 281,903 3,367,475

Foreign Trade loans - 43,268 58,976 80,606 19,012 3,713 902 - - - 3,189 1,177 23,080 17,258 558 64 251,803 7,842 1,330 9,172 260,975

Lines of credit and

overdrafts

- 921 2,626 14,064 6,821 146 497 9 - 5 223 72 35 6 13 44 25,482 21,135 5,762 26,897 52,379

Factored receivables 462 12,062 11,179 30,422 4,820 - - - - - 226 - 64 162 220 846 60,463 4,353 1,799 6,152 66,615

Leasing contracts - 34,652 17,025 109,274 58,077 738 867 298 - - 15,679 8,609 3,580 - 874 - 249,673 20,175 10,688 30,863 280,536

Other outstanding loans - 71 53 336 44 2 4 - - - 7 9 2 2 3 1 534 561 156 717 1,251

Subtotal Commercial

loans

162,313 927,409 937,901 1,026,283 432,773 15,163 16,475 1,381 - 128 35,883 21,399 40,439 27,209 5,956 22,815 3,673,527 269,032 86,672 355,704 4,029,231

Consumer loans - - - - - - - - - - - - - - - - - 381,235 26,080 407,315 407,315

Mortgage loans - - - - - - - - - - - - - - - - - 999,636 33,003 1,032,639 1,032,639

Total loans and

receivable to customers

162,313 927,409 937,901 1,026,283 432,773 15,163 16,475 1,381 - 128 35,883 21,399 40,439 27,209 5,956 22,815 3,673,527 1,649,903 145,755 1,795,658 5,469,185

Financial investments - - - - - - - - - - - - - - - - - - - -

-



154

The past due analysis by financial asset class is as follows:

December 31, 2011

1-30 days 30-90 days 90 days or

more

Total

MCh$ MCh$ MCh$ MCh$

Loans and receivables to banks - - - -


Commercial loans 6,233 8,823 38,326 53,382

Mortgage loans 806 736 5,974 7,516

Consumer loans 2,007 1,648 2,079 5,734

Financial investments - - - -

Total 9,046 11,207 46,379 66,632

December 31, 2010

1-30 days 30-90 days 90 days or

more

Total

MCh$ MCh$ MCh$ MCh$

Loans and receivables to banks - - - -


Commercial loans 5,846 5,277 37,633 48,756

Mortgage loans 622 590 6,711 7,923

Consumer loans 1,364 2,323 2,507 6,194

Financial investments - - - -

Total 7,832 8,190 46,851 62,873

The fair value of the guarantees over defaulted but not damaged assets was MCh$163,604 as of

December 31, 2011 and MCh$143,855 as of December 31, 2010.

Liquidity Risk is the risk that an entity has difficulties in obtaining the necessary funds to meet its

obligations with respect financial liabilities.

On a daily basis, we are exposed to cash capital requirements related, among others, to transfers

from checking accounts, long-term deposit payments, guarantee payments, disbursements of

transactions involving derivatives. In accordance with regularly accepted banking practices, we do

not maintain enough cash to cover the balance of such positions because, according to prior

experience, only a minimum amount of funds will be withdrawn, something that can be foreseen

with a high degree of certainty.

The Board of Directors sets limits on a minimum portion of funds set to expire and available [funds]

to cover such payments, as well as over a minimum level of interbank transactions and other credit

facilities that must be available in order to cover transfers at unexpected demand levels, [all of]

which are reviewed periodically. In addition, we must comply with regulatory limits for any

mismatch in tenor.



155

These limits affect mismatches between future flows of income and expenses considered

individually, and are the following:

(i) mismatches of up to 30 days for all currencies up to one times basic capital;

(ii) mismatches of up to 30 days for foreign currencies representing up to one times the [basic

capital]; and

(iii) mismatches of up to 90 days for all currencies two times the basic capital.

Considering the nature of transactions, we adopt an adjusted methodology in order to measure

mismatches and compliance with its regulatory limits. This methodology allows us to consider, in

the measurement of the mismatches, a part of on-demand deposits, deposits with fixed maturities,

and saving accounts. Although contractually funds can be disbursed at any time, they tend to remain

in the Bank for relatively long periods of time, a tendency that we can foresee with reasonable

confidence.

We are exposed to the effects of exchange rate volatility, which are stated or indexed in its financial

and cash flow statements. The Board of Directors establishes limits on net exposure levels by

currency and on hedging positions during the day and at closing, which are reviewed on a daily

basis.



156

The following tables details assets and liabilities by currency as of December 31, 2011 and 2010:


Notes US$ Euros Yen Libras

Other

currencies UF Pesos TC Total


Cash and due from bank 5 186,339 3,429 38 44 270 - 75,627 - 265,747

Items in course of collection 5 45,217 853 - 1,936 24 - 48,200 - 96,230

Trading portfolio financial assets 6 1,810 - - - - 13,806 150,423 - 166,039

Investments under agreements to resell 7 172 - - - - 984 22,095 - 23,251

Derivative financial instruments 8 118,094 - - - - - 130,888 - 248,982

Loans and receivables to banks 9 104,445 - - - - - 199,997 - 304,442

Loans and receivables to customers 10 1,148,263 6,184 - 146 - 2,959,001 2,588,261 7,539 6,709,394

Financial investments available-for-sale 11 7,162 - - - - 471,511 330,625 33,952 843,250

Financial investments held-to-maturity 11 10,382 - - - - 11,580 - - 21,962

Investments in other companies 12 - - - - - - 3,583 - 3,583

Intangibles 13 161 - - - - - 12,078 - 12,239

Premises and equipment 14 115 - - - - - 57,110 - 57,225

Current income tax provision 15 - - - - - - 6,278 - 6,278

Deferred income taxes 15 651 - - - - - 27,049 - 27,700

Other Assets 16 8,195 334 38 38 210 45 92,522 - 101,382

Total Assets 1,631,006 10,800 76 2,164 504 3,456,927 3,744,736 41,491 8,887,704



157

Current accounts and demand deposits 17 98,593 2,404 - 1,942 80 2,822 576,879 - 682,720

Items in course of collection 5 14,718 414 - - 4 - 21,812 - 36,948

Investments under agreements to repurchase 7 672 - - - - 1,699 128,178 - 130,549

Time deposits and saving accounts 17 763,984 333 - - - 336,693 3,723,367 1 4,824,377

Derivative financial instruments 8 66,581 - - - - 442 99,849 - 166,872

Borrowings from financial institutions 18 656,497 7,019 - 146 - - (36) - 663,626

Debt issued 19 - - - - - 1,478,388 44,385 - 1,522,773

Other financial obligations 19 - - - - - 11,443 5,781 2,829 20,053

Current income tax provision 15 - - - - - - - - -

Deferred income taxes 15 - - - - - - 25,352 - 25,352

Provisions 20 1,842 - - - - - 52,398 - 54,240

Other Liabilities 21 1,369 - - - - 2,060 27,552 - 30,981

Total Liabilities 1,604,256 10,170 - 2,088 84 1,833,547 4,705,517 2,830 8,158,492

Net Assets (liabilities) 26,750 630 76 76 420 1,623,381 (960,782) 38,661 729,212

Contingent loans 22 387,909 5,213 3,741 73 1,394,650 - 1,791,586

Net asset (liability) position 414,659 5,843 3,817 149 420 1,623,381 433,686 38,661 2,520,616


Total Assets 1,631,006 10,800 76 2,164 504 3,456,927 3,744,736 41,491 8,887,704

Total Liabilities 1,604,256 10,170 - 2,088 84 1,833,547 4,705,517 2,830 8,158,492

Net Assets (liabilities) 26,750 630 76 76 420 1,623,381 433,686 38,661 729,212

Contingent loans 22 387,909 5,213 3,741 73 - - 1,394,650 - 1,791,586

Net asset (liability) position 414,659 5,843 3,817 149 420 1,623,381 433,686 38,661 2,520,616

The analysis, by contractual maturity, of assets and liabilities can be found in Note 36.



158


Notes US$ Euros Yen Libras

Other

currencies UF Pesos TC Total


Cash and due from bank 5 73,966 7,433 89 - 413 - 120,438 - 202,339

Items in course of collection 5 16,765 812 1,648 532 1 - 59,923 - 79,681

Trading portfolio financial assets 6 1,922 - - - - 45,666 149,992 - 197,580

Investments under agreements to resell 7 1,792 - - - - 11,869 62,015 - 75,676

Derivative financial instruments 8 24,213 - - - - - 179,854 - 204,067

Loans and receivables to banks 9 64,023 - - - - - (25) - 63,998

Loans and receivables to customers 10 613,904 896 - 71 - 2,220,718 2,517,112 9,877 5,362,578

Financial investments available-for-sale 11 17,955 - - - - 515,450 212,843 - 746,248

Financial investments held-to-maturity 11 - - - - - - - - -

Investments in other companies 12 - - - - - - 3,583 - 3,583

Intangibles 13 174 - - - - - 12,922 - 13,096

Premises and equipment 14 98 - - - - - 53,332 - 53,430

Current income tax provision 15 - - - - - - - - -

Deferred income taxes 15 1,137 - - - - - 24,280 - 25,417

Other Assets 16 5,748 - - - - 11 92,507 - 98,266

Total Assets 821,697 9,141 1,737 603 414 2,793,714 3,488,776 9,877 7,125,958

Current accounts and demand deposits 17 (70,243) (6,688) - (508) (39) (2,108) (532,478) - (612,064)

Items in course of collection 5 (12,512) (701) (86) (10) (214) - (28,002) - (41,525)

Investments under agreements to repurchase 7 (10,213) - - - - (4,946) (174,191) - (189,350)

Time deposits and saving accounts 17 (590,730) (608) - - - (371,817) (2,737,298) (1) (3,700,454)

Derivative financial instruments 8 (19,504) - - - - - (155,757) - (175,261)

Borrowings from financial institutions 18 (462,896) (13,388) - (71) - - (27,286) (51) (503,692)

Debt issued 19 (83,328) - - - - (1,131,912) (195) - (1,215,435)

Other financial obligations 19 - - - - - (14,412) (4,960) (4,288) (23,660)

Current income tax provision 15 - - - - - - (7,168) - (7,168)

Deferred income taxes 15 - - - - - - (21,244) - (21,244)

Provisions 20 (862) - - - - - (78,885) - (79,747)

Other Liabilities 21 (458) - - - - - (20,540) - (20,998)

Total Liabilities (1,250,746) (21,385) (86) (589) (253) (1,525,195) (3,788,004) (4,340) (6,590,598)



159

Net Assets (liabilities) (429,049) (12,244) 1,649 14 161 1,268,519 (299,228) 5,537 535,360

Contingent loans 22 193,731 3,684 4,469 254 201,628 648,517 - 1,052,282

Net asset (liability) position (235,318) (8,560) 6,118 268 161 1,470,147 349,289 5,537 535,360


Total Assets 821,697 9,141 1,737 603 414 2,793,714 3,488,776 9,877 7,125,958

Total Liabilities (1,250,746) (21,385) (88) (589) (253) (1,525,195) (3,788,004) (4,340) (6,590,598)

Net Assets (liabilities) (429,049) (12,244) 1,649 14 161 1,268,519 (299,228) 5,537 535,360

Contingent loans 22 193,731 3,684 4,469 254 - 201,628 648,517 - -

Net asset (liability) position (235,318) (8,560) 6,118 268 161 1,470,147 349,289 5,537 535,360

The analysis, by contractual maturity, of assets and liabilities can be found in Note 36.



160

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Represents the risk of losses related to adverse changes in market prices corresponding to assets and

financial liabilities. This risk is closely related to the volatility of the market (interest market rates,

exchange rates, and prices) and to its negative impact in the value of the assets and liabilities.

It is classified by:

Interest Rate

Risk of losses caused by adverse shifts in interest rates over time. This is generated by increases in

the yield curve or decreases in the yield curve with respect to the risk free performance. These shifts

have an impact on long and short term results.

Spread

Risk of losses related to adverse shifts in existing spreads on the yields of the different financial

assets and liabilities, which can reflect particular liquidity conditions of those assets, deterioration of

credit conditions, or specific pre-payment clauses the exercise of which can result in a deterioration

of our capability to create future margin.

Exchange Rate

Risk of losses caused by adverse shifts in exchange rates. This risk is caused by financial

mismatches between the assets and liabilities (in and off the balance sheet).

Optionality

Risk of financial losses related to positions in explicit or implicit options in the balance sheet,

purchased or delivered, including, for example, those related to mortgage credits and education

credits.

LIQUIDITY RISK

The liquidity risk is related to the impossibility of:

a) Complying with contractual obligations in a timely manner;

b) Liquidating positions without significant losses caused by abnormal volumes of operation;

c) Avoiding regulatory penalties caused by the default of regulatory indexes; and

d) Financing business and treasury activities in a competitive fashion.



161

Two sources of risk are identified:

Endogenous: risk situations caused by controllable corporate decisions:

High liquidity reached by reduced liquid assets or mismatches of material assets and liabilities.

Low diversification or high concentration of financial and commercial assets according to

issuer, maturity, and risk factors.

Deficient management of security hedges flows or credit in terms of hedging efficiency,

correlation between changes in value, sensitivity ratios of hedged items, and derivatives, among

others.

Adverse corporate reputational effects that result in lack of or non-competitive access to

financing.

Exogenous: risk situations caused by shifts in financial markets and which are not within our

control:

Extreme unexpected shifts or corrections/events in local and international markets.

Regulatory changes, intervention by currency authorities, among others.



162

PRINCIPLES OF MANAGEMENT

Corpbanca and its subsidiaries have established a set of business principles that ensure the proper

functioning of the management of financial risks:

• CorpBanca and its subsidiaries manage their own portfolios in line with corporate levels of

tolerance to the level of market risk, their standards of liquidity, profitability and annual plans.

• Business is conducted in accordance with established policies, appropriate boundaries, standards of

conduct, procedures and controls clearly delegated authority and in compliance with laws and

regulations.

• The non-proprietary and proprietary portfolios should be managed in a manner consistent with the

definitions made by management, avoiding concentrations of risk that could have an adverse effect

on their income or financial position.

• The organizational structure of CorpBanca and its subsidiaries ensures effective separation of

duties, so investing activities, monitoring, accounting, risk management and measurement are

performed and reported independently.

• The aim of the process of managing market risk is to identify, measure and manage risk / return

ratio, within established risk tolerance, ensuring that these activities are conducted with appropriate

safeguards.

• CorpBanca and its affiliates regularly monitor its exposure to market extreme movements and

consider these results to the establishment and review of policies and limits for taking risk on in

their portfolios.

• The business areas are responsible for managing proprietary positions within approved limits and

provide the General Manager and Board explanations of any breach of limits as to amount, terms

and / or conditions.

• Products and their limits are subject to Board approval. The limits should be reviewed at least

annually.

• CorpBanca and its affiliates may invest in new products and participate in their markets only after

it has made a full assessment of the activity to determine if it is within the tolerated risk level and

the objectives and business plans and have established appropriate controls and limits the activity.

• Limits, terms and conditions set should be monitored daily and independently of the areas that

originate and administer, and any excess must be reported no later than tomorrow.

• The models used for financial reporting and risk measurement are verified and approved

independently.



163

ORGANIZATIONAL STRUCTURE AND CORPORATE GOVERNANCE

Board and CAPA

The group has a modern financial institutions in defining the role of the Board with the various

investment committees specialized in making financial decisions.

The Board of Directors is ultimately responsible for financial management with the responsibility to

ensure a comprehensive manner for internal and regulatory compliance to shareholders.

The Bank Board has delegated to the Asset and Liability Committee (CAPA) making financial

decisions, the latter being the highest authority in financial matters for the Bank.

The CAPA is composed of the two Vice Presidents of the Bank Board, a Director, General Manager

of the Bank, and International Finance Division Manager, Planning Division Manager, Control and

Risk Management, Finance Manager and Risk Manager (financial).

The CAPA is to make the financial decisions that the organization embodies. This Committee is

responsible for generating the policy framework governing the management of financial risks in

accordance with the guidelines established by the Board and the existing rules as to review of the

macroeconomic and financial risks assumed and the results obtained.

As part of the Bank's financial institutions, there are specialized committees in the implementation

of financial strategies in which lies the responsibility of daily and weekly monitoring of the baseline

scenario (TPM awards for liquidity, inflation, etc.), balance of risks and performance strategies:

Journal Committee, Committee of Balance Sheet, Liquidity Committee, Committee for Proprietary

Positions and Customer Committee.

International and Treasury Division

The International and Treasury Division is responsible for providing the necessary resources to the

business areas in order to ensure a healthy structure of financing and liquidity. Likewise, it must

generate income through the development of financial solutions in treasury and foreign commerce

products for clients in our different segments.

We have established different interrelated specialized units, through which investment and financing

decisions are reached. These units not only support our business pillars, but also constitute units of

business that determine the profitability of invested capital, complementing our traditional banking

business.



164

Balance Management

The Bank has a unit responsible for liquidity management, in Finance and International Division,

whose mandate is to efficiently manage mismatches between assets and liabilities, securing

permanent financing and competitive assets as well as to secure the timely payment of obligations

and compliance with regulatory margins at all times.

Additionally, the Bank has a unit responsible for managing the balance mandated to efficiently

manage the bank's balance sheet, ensuring the sustainable generation of net interest income by way

of managing the risk of inflation and interest rates.

The Bank's assets consist of mortgage loans (mainly denominated fixed rate), commercial loans,

consumer loans (including overdrafts and cards) and education credits.

The Bank's liability structure comprises mainly demand deposits, time deposits from retail and

wholesale customers, which mostly have a maturity of less than one year. The liability structure also

includes a portion of long-term debt and senior subordinated.

The Bank manages its balance sheet in order to maximize net income from fees and maintaining a

ratio of deposits for which no interest is paid on time deposits to short-term deposits, providing

loans for longer periods to take advantage thus of the slope of the yield curve within the context of

financial risk management to be arranged by senior management.

Portfolio Management

Additionally, we have a unit that is responsible for managing a portfolio of non-derivative financial

instruments with the purpose of capturing differentials in the yield curve and/or shifts in rate

structures to generate capital gains. Derivative instruments in this portfolio are only and exclusively

utilized for hedging purposes (economic and accounting) or in order to capture premiums between

the fixed income and the derivatives market.

Trading Activities

We have a trading area that is responsible for the active trading of instruments of high liquidity,

including central bank bonds, bank notes and/or corporate bonds, derived from interest rate or

currency.

This area is responsible for (a) identifying short-term income opportunities by capturing transitory

arbitrage opportunities in prices and yield curve differentials (base and spreads), (b) managing

financial risks arising from transactions with clients, and (c) creating high added-value financial

solutions by obtaining returns consistent with the financial risks of existing credits.



165

Financial Risk Management

The Bank has a Financial Risk Management Office(under the Management Division for Planning

and Control), the main purpose of which is to identify, measure, and control financial risks, by

permanently informing upper management of risk profiles and by anticipating scenarios that may

compromise our short, medium or long term financial situation.

The Financial Risk Management Office is responsible for ensuring regulatory and internal

compliance related to financial risks, ensuring compliance with the standards and recommendations

of regulators and with good business practices provided by the Basel Committee.

On a daily basis, he Financial Risk Management Office reports on exposures and is responsible of

reporting any excess above the limit structure approved by upper management.

Policies, limits and methodologies are approved annually by the A&L Committee and/or the Board

of Directors.

MEASUREMENT TOOLS: MARKET RISK

The market risk measurement is based on tools to use and measurements universally accepted:

Value at Risk, Sensitivity of Net Interest Income and Financial Margin among others, supplemented

with stress testing market risk scenarios that analyze hypothetical and historical scenarios.

Value at Risk

The Bank uses models of "Value at Risk" to quantify the market risk of portfolios of Trading:

Owner and Market Making. Through these measures the currency risk, interest rate and inflation

inherent in trading activities is monitored.

Annually, we review and establish the limits of VaR in both portfolios and Financial Risk

Management is responsible for calculating and reporting on its use. Trading Owner: 250 million

CLP Trading Market Making: 450 million CLP.

The VaR is calculated using a historical simulation confidence level of 95% and a moving

timeframe of 300 days.

At the end of December 31, 2011, VaR reached a value of 48 million CLP and 258 million CLP for

the areas of Trading Owner and Trading Market Making respectively, with average of 80 million

CLP and 267 million CLP.

Additionally, the Bank contrasts the predictive quality of the VaR model using a) Test of the

frequency of excess b) Test of the first overage. At the end of December both tests realized a good

level of fit.



166

Net Interest margin and Market value sensitivity

We use net interest margin sensitivity and market value sensitivity to quantify the interest rate risk

of the balance sheet.

Both measures include total assets and liabilities in the balance sheet with exception of the Trading

Portfolios.

Interest rate sensitive items are represented:

On a contractual basis in the case of fixed income products

Next date of reprising in the case of floating rate products

Non-paid assets and cost-free liabilities are registered as non-interest-rate-sensitive:

Cash flow

Other assets and liabilities

Deteriorated loans

Provisions

Capital and reserves

Changes in equity are determined by assuming a parallel shift of 100 pbs under interest rate

structures. The calculation is made separately for national currency and foreign currency (USD and

the rest of the currencies). The total risk is the sum of the absolute value of both items.

Stress Testing

The Financial Risk Management Office develops, and regularly informs the A&L Committee, stress

test results that include parallel and non-parallel shifts in the yield curve, volatility shocks and

historical scenarios among others.

Liquidity Management

We have a unit that is responsible for balance sheet management (in the International and Treasury

Division), the purpose of which is to efficiently manage our balance sheet, ensuring a permanent and

competitive financing of assets, the prompt payment of liabilities, and compliance with regulatory

margins at all times.

Balance Sheet Management

We have a unit that is responsible for balance sheet management, the purpose of which is to

efficiently manage the balance sheet, ensuring the generation of a sustainable financial margin by

managing inflation and interest rate risk.



167

Our assets are comprised of mortgage (mainly fixed income), commercial and consumer loans.

Our liabilities include fixed rate deposits payable on demand and upon maturity to clients that, in

most cases, have maturities of less than a year. The structure of long-term debt includes

senior/subordinated loans.

We manage our balance sheet with the goal of maximizing net interest margin by maintaining a

proportion of deposits payable on demand under which no interest is paid, as well as short term

deposits, and by granting loans for longer periods which allow us to benefit from the slope of the

yield curve within the context of the financial risk management previously agreed-to by senior

management.

EXHIBITION DETAILS

Currency risk

The Bank is exposed to exchange rate movements that are expressed or indexed to their financial

positions and cash flows. Annually, the board sets limits for levels of net exposure by currency at

the end of the day, which is monitored daily by Financial Risk Management.

The foreign currency balance sheet (excluding derivatives) at the end of December 2011 can be seen

in the following table:

Table 1: Balance of Money, in millions of pesos.

Interest rate risk

The Bank is exposed to volatility in the structure of market interest rates.. As a result of changes in

interest rates, margins may increase, but can also be reduced and even cause losses in the event that

adverse movements are in force.

The Board sets limits to the effects of mismatches in the banking book (which includes all positions

that are not for trading) on the margin and on the economic value of its assets, compliance with



168

which must be reported monthly to the Superintendency of banks and Financial Institutions.

At December 31, 2011, those limits were MCh$79.835 and MCh$298,208, respectively, and

exposure was MCh$5.666 and MCh$172.747 respectively.

The following table shows the structural exposure of interest rate assets and liabilities at their

periods of change or renewal. Otherwise the expiration dates of the transactions (consolidated

figures) are used.

Table 2: Exposure of the Book of Business (Banking). Figures in Millions of Pesos.

Table 3: Term structure, Book of Business Assuming that assets and financial liabilities at 31

December 2011 remain to maturity without any action by the Bank to alter the exposure to interest

rate risk, an immediate and sustained increase in market interest rates of 1 % during expiration

would reduce net income by approximately MCh$68.208.



169

Market risk (Trading Book)

Market risks arise from exposures to interest rate risk positions and prices in trading and currency

risk on global positions.

The Central Bank of Chile establishes a regulatory limit for the sum of the interest rate risk on

positions for trading (including derivatives) and the currency risk. The Bank, individually, should

keep under those limits and report weekly to the Superintendency of Banks and Financial

Institutions on their positions in risk and compliance with these limits. You must also report

monthly to the SVS risk on positions in consolidated subsidiaries and branches abroad.

The regulatory limit established that the regulatory capital must be sufficient to cover the sum of 8%

of risk weighted assets for credit and market risk. At December 31, 2011, exposure to interest rate

risk trading book MCh$22,182 was for the currency risk MCh$742 and MCh$991 for optionality

risk.

Table 4: Figures for the bank, in Pesos.

MEASUREMENT TOOLS: LIQUIDITY RISK

The tools used to measure and control liquidity risk are:

-Mismatches accumulated at different times

-Coverage Ratios: Current assets / liabilities

-Concentration of depositors

-Liquidity Stress Testing

Finally, on the basis of continuous monitoring, the Bank reviews all aspects of the liquidity

management process in light of potential risks to which it is exposed in this area. The liquidity

contingency planning is an integral component of this review, and aims to provide a framework for

establishing appropriate actions in event of a liquidity crisis. For this purpose the bank has a

"Liquidity Contingency Plan" which is reviewed and approved annually by the Board and CAPA.



170

Accumulated mismatches reported to December 31, 2011 are as follows:

Table 5: Accumulated mismatches. Figures in Millions of Pesos.

COUNTERPARTY RISK

As a result of our client activity, we have counterparty exposures generated by the probability that

our debtors default on their payments with respect to financial derivative agreements, as originally

agreed. We set levels of credit risk by setting limits to the concentration of such risk in individual

debtors, groups of debtors, and country and industry segments. Such risks are under permanent

review by the Risk Division, and the limits per debtor, groups of debtors, products, and industry and

country, are reviewed and approved at least once a year by our Board of Directors and our Senior

Risk Committees.

Our exposure to credit risks is managed through a regular analysis of the debtor’s capacity and

potential debtors to comply with their payment obligations in accordance with contractual terms of

such loans, and is mitigated by obtaining guarantees.

We have strict controls over open positions in derivative agreements directly negotiated with

counterparties, Our exposure to credit risk is managed as part of our limits for loans to clients,

jointly with potential exposures caused by market fluctuations.



171

Operational Risk

CorpBanca adopts the Basel Committee’s definition of operational risk, which is presented below:

“The risk of loss resulting from inadequate or failed internal processes, people and systems, or from

external events”.

These risks, it not handled appropriately, can result in service unavailability, information

deficiencies, financial losses, increased costs, loss of professional reputation or failure to maintain or

increase market share.

For its operational risk management, CorpBanca has established and imposed an appropriate

structure of responsibilities, which is detailed below:

OPERATIONAL RISK MANAGEMENT ROLES AND RESPONSIBILITIES

Board of Directors

The Board of Directors must ensure that the management mechanisms used to manage operational

risk, such as the definition of roles and responsibilities (set out in this policy), are consistent with the

guidelines laid out by our shareholders on this subject.

Operational Risk and Information Safety Committee

It is responsible for maintaining a visible commitment with respect to the management of

operational risks, at the most senior executive level.

Area in charge of Operational Risk Management

Its mission is to identify, promote, implement and follow up on the execution of a policy framework

for managing operational risk, which must be consistent with our approach, objectives and strategic

goals.



172

Division Management

The Division Management areas are in charge of managing operational risk within their respective

divisions. Their responsibilities, among others, include:

Implementing operational risk policy in their respective business units.

The more significant operational risk management responsibilities within their respective

divisions include the following activities:

Risk awareness.

Risk assessment (both qualitative and quantitative).

Risk improvement.

Providing direct support in the monitoring of their business unit’s operational risk.

I. Operational Risk Management Process

The CorpBanca Operational Risk Management model takes into accounts the following activities or

roles:

III.1 Creation of Risk Awareness

Training and communication

Communicating and providing ongoing training with respect to the threats faced by our business,

along with business-oriented training, are crucial to meeting objectives. Operational risks

assessment is based on identifying potential threats to the business process, assessing their impact,

and conducting a subsequent evaluation of the controls needed to mitigate operational risk.

III.2 Assessment

Operational risks assessment is based on identifying potential threats to the business process,

assessing their impact, and conducting a subsequent evaluation of the controls needed to mitigate

operational risk.



173

III.3 Improvement

Every Division Manager must ensure that operational risks are reviewed regularly and that any

appropriate measures are taken.

Shareholders’ equity requirement

Consistent with Chile’s General Banking Law, we must maintain a ratio of at least 8%, net of

required provisions between Effective Shareholders’ Equity and Consolidated Assets Weighted by

risk, and a ratio of at least 3%, net of required provisions, between our Equity Base and Total

Consolidated Assets. For such purposes, effective Equity is determined according to our Equity and

Reserves or Equity Base with the following adjustments:

a. subordinated bonds with a 50% limit of the Equity Base are added, and

b. the balance of Goodwill assets or surcharges paid, and investments in companies not involved

in the consolidation are subtracted.

Assets are weighted based on their risk categories, to which we assign a risk percentage based on the

amount of capital needed to back each one of those assets. Five risk categories are applied (0%,

10%, 20%, 60% and 100%). For example, cash, deposits in other banks, and financial securities

issued by the Central Bank of Chile have a 0% risk factor, which means that, consistent with current

regulations, no capital is needed to back these assets. Fixed assets carry a 100% risk, which means

that a mandatory capital equivalent of 8% of the value of these assets must be available.

In determining risk assets with conversion factors on [notional values], we take into account all

derivative securities negotiated off-exchange, thereby obtaining a credit risk exposure amount (or

“credit equivalent”). The off-balance contingent loans are also considered to be “credit equivalent”

in terms of weighting.



174

At year end the ratio of assets and risk weighted assets is the following:

Note Consolidated Assets

Risk-Weighted

Assets

2011 2010 2011 2010

MCh$ MCh$ MCh$ MCh$

In-Balance Assets (net of provisions):

Cash and due from banks 5 265,747 202,339 - -

Items in course of collection 5 96,230 79,680 29,338 26,619

Trading portfolio financial assets 6 166,039 197,580 46,149 48,456

Investments under agreements to resell 7 23,251 75,676 23,251 52,931

Derivative financial instruments (1) 559,847 405,526 396,927 278,157

Loans and receivables from banks 9 304,442 63,998 107,018 63,998

Loans and receivables from customers 10 6,709,394 5,362,578 6,248,575 4,973,749

Financial investments available-for-sale 11 843,250 746,248 142,059 50,819

Financial investments held-to-maturity 11 21,962 - 21,962 -

Investments in other companies 12 3,583 3,583 3,583 3,583

Intangibles 13 12,239 13,096 12,240 13,096

Premises and equipment 14 57,225 53,430 57,223 53,429

Current income tax provision 15 6,278 - 628 -

Deferred income taxes 15 27,700 25,417 2,770 2,542

Other assets 16 101,382 98,266 101,382 98,267

Off-Balance sheet assets:

Contingent loans 744,672 499,912 446,803 299,960

Total risk-weighted assets 9,943,241 7,827,329 7,639,909

5,965,606

Amount Ratio

2011 2010 2011 2010

MCh$ MCh$

Basic capital 726,603 532,417 7.31% 6.80 %

Effective Equity 1,105,718 801,412 14.47% 13.43%

(1) Value items presented as Credit Risk Equivalent, according to the provisions of Chapter 12-1

"Equity for statutory and regulatory impact purposes" of the Superintendency of Banks and

Financial Institutions.

b) As of December 31, 2011, the bank includes among its objectives, policies and management

processes, the following information:

- In consolidated terms, the bank holds a total equity of MCh$726,603 (MCh$532,417).

- During the year 2010, no increases in equity or extraordinary investments were realized,

with the exception of the sale of bank issued shares described in Note 23.

- In 2011 capital gains were made and capitalization of retained earnings as described in Note

23.

- At the regulatory level, the Bank closed the year 2011 with a solvency indicator of 7.31%

(6.80% in 2010), while the Basel Index was 14.47% (13.41% in 2010).



175

NOTE 36 - MATURITY OF ASSETS AND LIABILITIES

a) Maturity of financial assets

Below are the main financial assets grouped according to their remaining terms, including interest

accrued as of December 31, 2011 and 2010. As these are trading or available-for-sale securities,

they are included at fair value and under the term at which they may be sold.


Note

Up to 1

month

From 1

month to

3 months

From 3

months

to 1 year

From 1

year to 3

years

From 3

years to

6 years

Over 6

years

TOTAL


Trading portfolio financial assets 6 24,551 15,915 100,032 13,472 6,299 5,770 166,039

Investments under agreements to resell 7 19,360 1,344 864 1,683 - - 23,251

Derivative financial instruments 8 16,526 31,953 39,665 30,473 66,273 64,092 248,982

Loans and receivables from banks 9 217,468 22,836 10,241 17,379 36,518 - 304,442

Loans and receivables from customers(*) 10 593,947 495,860 1,107,958 1,274,972 1,542,713 1,627,312 6,642,762

Commercial loans 553,239 462,281 970,099 998,917 1,320,132 785,394 5,090,062

Mortgage loans 2,012 7,557 32,330 106,697 168,890 840,543 1,158,029

Consumer Loans 38,696 26,022 105,529 169,358 53,691 1,375 394,671

Financial investments available-for-sale 11 66,861 76,586 191,473 224,834 247,624 35,872 843,250

Financial investments help-to-maturity 11 11,122 - 1,777 2,960 5,190 913 21,962

(*) Excluding the amounts for which the maturity date has expired, totaling MCh$66,632 as of December 31, 2011.

(*) Excluding the amounts for which the maturity date has expired, totaling MCh$61,832 as of December 31, 2010.


Note

Up to 1

month

From 1

month to

3 months

From 3

months

to 1 year

From 1

year to 3

years

From 3

years to

6 years

Over 6

years

TOTAL


Trading portfolio financial assets 6 58,602 19,170 34,495 85,313 - - 197,580

Investments under agreements to resell 7 75,676 - - - - - 75,676

Derivative financial instruments 8 15,492 10,323 60,280 - 62,942 55,030 204,067

Loans and receivables from banks 9 5,033 9,582 8,411 40,972 - - 63,998

Loans and receivables from customers(*) 10 644,114 437,825 889,695 1,133,393 969,719 1,226,000 5,300,746

Commercial loans 599,140 414,327 754,970 887,936 766,156 487,763 3,910,292

Mortgage loans 7,735 1,608 32,986 91,995 146,503 736,077 1,016,904

Consumer Loans 37,239 21,890 101,739 153,462 57,060 2,160 373,550

Financial investments available-for-sale 11 20,297 1,901 64,082 433,304 166,201 60,463 746,248

Financial investments help-to-maturity 11 - - - - - - -



176

b) Maturity of financial liabilities

Below are the main financial liabilities grouped according to their remaining terms, including

interest accrued to December 31, 2011 and 2010.

From 1 From 3

Up to 1 Month to 3 months to 1 From 1 year From 3 years Over 6

Note month months year to 3 years to 6 years years TOTAL


Investment under agreements to repurchase 7 189,350 - - - - - 189,350Time deposits and saving accounts (*) 17 1,739,972 1,132,833 655,365 148,996 710 13,912 3,691,788Derivate financial instruments 8 21,191 33,105 116,668 50,597 (50,380) 4,080 175,261Borrowings from financial institutions 18 173,494 29,469 221,820 78,909 - - 503,692Debt issued 19 7,383 4,281 122,701 218,861 211,349 650,860 1,215,435


(*) Excludes term savings accounts totaling MCh$8,666 during 2010.

(*) Excludes term savings accounts totaling MCh$8,707 during 2011.

From 1 From 3 Up to 1 Month to 3 months to 1 From 1 year From 3 years Over 6

Note month months year to 3 years to 6 years years TOTAL MCh$ MCh$ MCh$ MCh$ MCh$ MCh$ MCh$

Investment under agreements to repurchase 7 61,271 15,151 53,057 1,070 - - 130,549 Time deposits and saving accounts (*) 17 1,955,951 1,482,915 1,281,733 79,164 821 15,087 4,815,671 Derivate financial instruments 8 12,689 25,121 33,841 29,975 37,697 27,549 166,872 Borrowings from financial institutions 18 79,992 132,937 430,649 20,078 - - 663,656 Debt issued 19 6,615 3,762 88,905 172,023 553,156 698,312 1,522,773




177

NOTE 37 - LEASING

The following table reflects the maturity of leasing contracts as of December 31, 2011 and 2010.

As of December 31

2011 2010

Note

Net Leasing

MCh$

Net Leasing

MCh$

Up to 1 month 12,392 11,054

From 1 month to 3 months 14,957 13,168

From 3 months to 1 year 60,557 55,897

From 1 year to 3 years 95,458 89,603

From 3 years to 6 years 42,630 42,292

Over 6 years 64,256 66,221

Total 10 290,250 278,235



178

NOTE 38 - FOREIGN CURRENCY POSITION

Assets and liabilities denominated in foreign currencies or indexed to changes in exchange rates are summarized below: Payable in Payable in

Foreign currency Chilean Peso (*) Total

12.31.11 12.31.10 12.31.11 12.31.10 12.31.11 12.31.10

ThUS$ ThUS$ ThUS$ ThUS$ ThUS$ ThUS$

ASSETS

Cash and due from banks 366,264 175,087 - - 366,264 175,087

Items in course of collection 92,528 42,233 - - 92,528 42,233

Trading portfolio financial assets 3,486 4,109 - - 3,486 4,109

Financial investments available-for-sale 13,795 38,383 65,409 - 79,204 38,383

Investments under agreements to resell 330 3,831 - - 330 3,831

Derivative financial instruments 227,505 51,761 - - 227,505 51,761

Loans and receivables to customers and banks 2,224,309 1,314,445 14,524 21,115 2,238,833 1,335,560

Other assets 16,984 12,286 - - 16,984 12,286

Intangibles 312 372 - - 312 372

Premises and equipment 217 208 - - 217 208

Deferred income taxes 1,254 2,434 - - 1,254 2,434

TOTAL ASSETS 2,946,984 1,645,149 79,933 21,115 3,026,917 1,666,264

LIABILITIES

Current accounts and demand deposits 198,466 165,628 - - 198,466 165,628

Items in course of collection 29,158 28,911 - - 29,158 28,911

Investments under agreements to repurchase 1,293 21,833 - - 1,293 21,833

Time deposits and saving accounts 1,472,443 1,264,139 1 1 1,472,444 1,264,140

Derivative financial instruments 128,268 41,695 - - 128,268 41,695

Borrowings from financial institutions 1,278,536 1,018,330 - 109 1,278,536 1,018,439

Debt issued - 178,134 - - - 178,134

Other financial obligations - - 5,449 9,169 5,449 9,169

Deferred income taxes - - - - - -

Provisions 3,550 1,843 - - 3,550 1,843

Other Liabilities 2,639 970 - - 2,639 970

TOTAL LIABILITIES 3,114,353 2,721,483 5,450 9,279 3,119,803 2,730,762

(*) Includes transactions expressed in foreign currencies payable in pesos or adjustable transactions due to foreign currency exchange

rate.



179

NOTE 39 - SUBSEQUENT EVENTS

At the board meeting on January 24, 2012, Mr. Fernando Massú Tare was agreed upon to be

designated as the CEO of CorpBanca, a position he began to exercise the February 6, 2012.

Additionally Mr Massú has resigned as Director to assume this new role, such resignation has been

accepted by the Board as of this date.

SMU CORP S.A.

With date January 18, 2012, SMU CORP S.A. received communication of Mr. Mario Chamorro

Carrizo, Director, addressed to President of Directory of SMU Corp SA, by which communicated

his resignation from the position of Director of the Society, effective from that date.. This situation

was communicated to the SBIF, dated January 20, 2012, as essential fact.

In the period between January 1 and 27, 2012, the issue date of these financial statements, there

have been no other subsequent events that could materially affect the financial statements.

Juan Antonio Vargas Cristian Canales Palacios

Accounting Manager Chief Executive Officer (I)

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