Chilean banks Banco de Chile and Banco Santander Chile are analyzing the possibility of issuing perpetual bonds in time for the passing of the country's new general banking law, Diario Financiero reported, citing industry sources.

One of the provisions of the new legislation, which is still being discussed in Congress, would allow for the building up of to 1.5% of banks' capital through hybrid instruments. According to industry experts, there is a market for this investment tool, especially because it would cater to institutional investors with long-term horizons.

In the case of Santander Chile, it could go to international markets with an issuance of about $500 million, and the bank is already working with U.S. investment banks for a possible placement, sources said.

As for Banco de Chile, an internal source said the bank is not ruling out the possibility of issuing a perpetual bond given the attractive prospect offered by the banking reform. However, a senior executive said they are waiting for indications as well as further developments and greater definitions in the area before making a decision.