...Alternative Sources of Funding Available: Unlike other markets in Latin America, Brazilian banks have seen changes to their regular funding sources. Since the creation of three innovative funding products -- Letras Financeiras (LFs), Letras de CrTdito Imobiliarias (LCIs) and Letras de CrTdito do Agroneg=cio (LCAs) -- the approach of Brazilian banks toward their funding has changed. These instruments provide different benefits to the issuing banks and depositors, such as no daily liquidity clauses, longer terms and tax incentives to investors. Because the ultimate buyer of those securities tends to be the same depositor base, Fitch Ratings is expanding its traditional loan to deposits metrics in Brazil to include these instruments and provide a greater understanding of a bank's liquidity. Deposit-Like Funding Instruments Boost: The products are deposit-like instruments. LFs are very similar to time deposits but do not include liquidity clauses and have longer tenors, usually two or three...
