Letter of Credit Confirmations

Confirmation of a Letter of Credit constitutes an undertaking on the part of the Confirming Bank, in addition to that of the Issuing Bank, to pay a customer, without recourse, if documents are presented in compliance with the terms and conditions of the credit.

Standard Charted Bank has a large branch and correspondent banking network across the globe and is a leading banking facilities provider in the Middle East, Asia Pacific, Africa, Latin America and other emerging markets. Standard Charted Bank offers Letters of Credit confirmations to exporters to help mitigate sovereign and bank risks subject to its internal approvals.

Benefits

• Confirmation of a Letter of Credit protects the customer and the exporter, against Issuing Bank and country risk. This means that if the customer had successfully performed under the terms and conditions of the Letter of Credit, Standard Charted Bank will guarantee the export proceeds, irrespective of whether the Letter of Credit Issuing Bank honors its obligations or not
• In gaining protection against country risks the customer can access new and emerging markets since the risk of non-payment are borne by the Confirming Bank
• The customer can secure non-recourse financing upon presentation of compliant documents Bank Requirements
• The Letter of Credit should clearly allow for Confirmation, or instruct Standard Charted Bank to confirm the Letter of Credit and indicate whether confirmation charges are for the account of beneficiary or applicant
• The Letter of Credit should not usually have a credit period of more than 180 days
• The Letter of Credit normally has to be restricted to Standard Charted Bank before the confirmation is effected
• Reimbursement should be clearly defined and available by telegraphic transfer
• All confirmations are subject to internal approvals and availability of bank and country limits.
• The Letter of Credit should not permit the original bills of lading to be sent directly to the applicant nor should the bill of lading/Airway bill be consigned to the importer
• The Parties in the Letter of Credit should not be related parties.
• The type of goods and trade should be normal for the customer (the Exporter) and related to the customer‟s core business