Subordinated Bonds in the Chilean Financial System

Abstract

For a long time, the banking system reaching stability has been sought by means of the adequate combination of the banks´ own resources, expanding this concept to debt instruments that are functionally similar to capital. Chilean law has attempted this assimilation only by means of subordinate bond issuance, following the model originally proposed by the Basel Committee of 1988. However, important progress regarding this matter has been made since then by means of a series of guidelines of the aforementioned Committee and the European Union that, so far, have not been accepted in our country. This article aims at accounting for the functional concept of these banks´ own resources and for the different models to legally articulate the subordinated financing. Finally, its legal regime in Chile will be explained.