Banco del Estado de Chile is looking into the possibility of issuing US$500 million in perpetual bonds as it looks to bolster its capitalization in time for Basel III requirements under the country's new banking reform law, Pulso reported, citing CEO Jessica López.
"We are talking with investment banks, they have advised us to look at what is there in the world market, what the interest rates are, what it would mean to approve issuing these bonds before the law of banks is approved, or to do so after it is approved," López said.
BancoEstado has all the necessary documents for an issuance "almost ready," López noted. "We believe that it is a good time to take advantage of issuing perpetual bonds, but naturally we will not make that decision, it will be for the next administration," the executive said.
A bond offering is one of the two capitalization options that the bank is considering, with the other one being the capitalization of profits or extraordinary capitalization. López noted that in the last decade, the bank has received US$1.60 billion in profit and extraordinary capitalization, with US$3.00 billion delivered to the Treasury.
However, López said the state should also contribute to the capitalization of the bank, given the significant role it plays in the Chilean financial system.
