BancoEstado appraises the Treasury project for the new capitalization of the Bank that allows it to comply with Basel III requirements
The bill will allow, among other means, to issue "perpetual bonds" under the same conditions as the rest of the industry.
Santiago, April 22, 2021. - The Ministry of Finance announced sending a bill that would authorize up to US$1,500 million as a new capitalization for BancoEstado.
The capital increase may be carried out no later than December 31, 2025, and seeks for the state financial entity to comply with capital requirements according to Basel III standards.
The Chairman of the Board of BancoEstado, Mr. Ricardo de Tezanos Pinto, stated: "it is a well-grounded bill that responds to the work of many people, so BancoEstado may adequately meet the requirements of Basel III in the long term."
Mr. De Tezanos Pinto added: “also, this project will reinforce BancoEstado’s important social role mirrored during the pandemic, which is to support all the country's inhabitants."
The initiative includes legal rework to let BancoEstado issuing “perpetual bonds” under the same conditions as other banks in the industry. The above sets up an additional source of financing to meet the capital established by the regulator, as established by Basel III.
In addition, the project seeks to reduce capital deductions the regulator must make to BancoEstado due to deferred taxes on assets.
Finally, the bank must report each year the evolution of its capital to the Finance Committee of the House of Representatives and Senate.