Letters of Credit enable international trade. They protect both the buyer and the seller (the beneficiary), the importer and the exporter. An L/C provides payment protection and reliable delivery of goods and services.
An L/C is an essential means of payment in international trade.
An L/C is also sometimes known as a ‘documentary credit’, ‘commercial letter of credit’, ‘L/C’, or ‘bank guarantee’. They provide a payment commitment to the seller for an amount against presentation of documents which appear to comply with the terms and conditions of the credit and applicable rules.
The Applicant: This will normally be the buyer.
The Beneficiary: This will normally be the seller. This is the party who will be paid under the Letter of Credit [L/C].
The Issuing Bank: The bank that issues the credit, usually under instruction from the Applicant (the Buyer).
The Nominated Bank: this is the other bank in the transaction. This is the bank nominated in the letter of credit where the credit is available.
The Advising Bank: this bank will inform the Beneficiary or their Nominated Bank of the credit. They will send the original credit to the Beneficiary (or their Nominated Bank) & provide them with any amendments to the Letter of Credit [L/C].
Confirmation: This can help to further reduce risk. It is an undertaking from another bank (not the issuing bank) to pay the Beneficiary for a Complying Presentation. It is usually provided at an extra cost.
Confirming Bank: Upon the Issuing Bank’s instruction, this bank also confirms to credit. This provides the Beneficiary with an extra level of protection.
A Complying Presentation: The L/C requires a set of conforming documents which comply with the rules of the L/C. This is the Complying Presentation.
Funding Levels
We provide fund Letters of Credit from Less than USD 250k to USD 100m +
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