Letters of credit, documentary collections and guarantees
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Letters of credit
Letters of Credit (LCs) are the safest and often most convenient means of financing trade related transactions. An LC (Documentary or Standby) is a written undertaking given by a bank (Issuing Bank) to a beneficiary on instruction from an applicant (issuing Bank’s client) to pay the beneficiary at sight, or at a determinable future date, a stated amount of money within a defined time period. This undertaking is conditional upon the beneficiary’s documentary compliance with the terms and conditions in the LC.
A Documentary collection is the collection of a sum of money due from a buyer to a bank against delivery of certain documents. The bank, acting as trustee and intermediary between exporter and importer, presents documents - by order of the exporter - which are proof of the actual delivery of a product or service rendered, and in exchange receives payment of the amount owed or obtains acceptance of a bill of exchange.
Guarantees secure risks from international trade activities along the customer’s supply chain to secure performance obligations arising from commercial, contractual or legal obligations, but also to enable advance payments in favour of the client.
We issue guarantees on the basis of an instruction from of the client (applicant), in favour of a third party (beneficiary).