Reforms to Chile's general banking law will provide greater support to the country's banking system stability and bring regulations closer in line with Basel III standards, Fitch Ratings said in a June 14 report.

The proposed reforms will push banks to raise an estimated US$2.8 billion to US$4.0 billion of additional capital between 2019 and 2014 in order to meet new capital requirements, while Chile's central bank has laid out a four-year transition schedule for banks to comply with Basel III-related rules for the liquidity coverage ratio through. Fitch said it considers these changes "credit positive for the Chilean banking system, as they will increase liquidity and the use of stable funding sources, which should improve resilience during cyclical downturns."

However, the rating agency also noted that Chile's bank regulation and supervision framework is already "one of the best in Latin America," and the country's banking system has the lowest systemic risk in Latin America and emerging markets, with a banking system indicator of "a."

"Chilean banks have long been subject to strict requirements for loan classification and reserves, foreign currency positions and interest rate sensitivity, as well as fairly strict limitations on banking activities," the rating agency wrote.