Letters of credit are conditional payment undertakings of the buyer's bank to the supplier, with or without (In-House) the intermediation of the supplier's bank. Usually, the supplier receives the letter of credit prior to production or shipment of the merchandise. The supplier is paid upon submitting credit conform documentation in accordance with the terms of the letter of credit.
Letters of credit, (“LCs”), have several types such as revocable- and irrevocable LCs, payable at sight or usance LCs, with or without advance payment clauses and with or without the confirmation of the advising bank, revolving and/or transferable.
Trade & Commodity Finance Teams together with Documentary Credits experts of GarantiBank International NV are not only providing straight-forward LC services but also mobilizing fast, accurate and tailor-made banking solutions built in and around such LCs.
Import Letters of Credit
On the basis of a credit relationship between the client and GarantiBank International NV, the client may instruct GarantiBank International NV to issue a letter of credit in favour of the supplier. Such letters of credit are referred to by GarantiBank International NV as “Import LCs”. With its wide correspondent bank network, GarantiBank International NV is able to issue a variety of import LCs at attractive terms. Or instead, such import LC may also be issued directly to the supplier (“In-House LCs”) without the intermediation of a correspondent bank. In this case, payments under the LC and resolution of the discrepancies are faster.
By issuing an irrevocable LC, GarantiBank International NV's client (i.e. buyer) secures a pre-agreed price for the merchandise, to be paid if and when credit conform documentation as per the LC terms and conditions is presented by the supplier.
Trade & Commodity Finance Teams together with Documentary Credits experts of GarantiBank International NV are not only providing straight-forward Import LC services but also mobilizing fast, accurate and tailor-made banking solutions built in and around such Import LCs.
Export Letters of Credit
The suppliers are in need of securing their sales proceeds. If such sales are on cross-border basis, the supplier may find himself in dealing with complex and unusual risks and regulations. Furthermore, competition may prevent suppliers to force the buyer for an advance (pre-shipment) payment.
In such cases, secure collection of export proceeds may be facilitated by export letter of credit (“LC”). This payment instrument is probably the most old-fashioned, but also the most convenient. By mobilizing its resources and expertise, GarantiBank International NV is on the side of the supplier in formulating and executing such export LCs.
By teaming up with GarantiBank International Trade & Commodity experts, suppliers may mitigate risks such as country risk and commercial risk. Export LCs can even be structured with a view to provide funding to suppliers. Such funding may be on a recourse, non-recourse, pre-shipment or post-shipment bases, allowing suppliers to shorten their cash cycles, while revolving their risk levels.
Stand by Letters of Credit
Stand-by letters of credit (“LC”) provide a secondary or back-up payment for a particular trade transaction under a bank's full coverage. In case the supplier is unable to collect funds from the buyer, such funds may be claimed under the stand-by LC from the issuing bank as per Uniform Customs and Practice for Documentary Credits. Therefore, a stand-by LC can usually be activated in case of the buyer's payment default.
Suppliers or buyers may also obtain financing based on stand-by LCs.
Trade & Commodity Finance Teams together with Documentary Credits experts of GarantiBank International NV are not only providing straight-forward stand-by LC services but also mobilizing fast, accurate and tailor-made banking solutions built in and around such stand-by LCs.