OREANDA-NEWS. Several retailers in Latin America have created banking subsidiaries (BankSubs) over the last few years, mostly to finance consumer lending related to merchandise sales, according to a new Fitch Ratings report. This trend is affecting retailers' consolidated metrics in several ways.

'As some retailers grew and their consumer lending needs increased, they determined it was economically feasible to set up banking subsidiaries to diversify their funding sources. Changes in regulations across Latin America over the last 10 to 15 years have made it easier for retailers to set up a banking subsidiary,' said Miguel Guzman-Betancourt, Associate Director.

To add more insight to the credit quality and operating characteristics of this subsector of the Latin American retail industry, Fitch is publishing some of investors' most frequently asked questions on Latin American retailers with banking subsidiaries.

Key questions addressed in this report include:

--Why have Latin American retailers historically provided their own financing for customers' purchases?
--Why are installment sales popular with certain Latin American customers?
--Why are installment sales popular with Latin American retailers?
--How do many Latin American retailers provide financing for customers' purchases?
--Why do some Latin American retailers have BankSubs?
--How does owning a BankSub affect leverage and coverage metrics?
--What is the best approach to assess a retailer-BankSub's creditworthiness?
--How does Fitch analyze a retailer with traditional in-house financing?
--Can this be a successful business model?
--What are the credit risks of a retailer switching from traditional financing to a banking subsidiary?

The full report titled 'What Investors Want to Know: LATAM Retailers with Banking Subsidiaries' is available on the Fitch web site at 'www.fitchratings.com'.