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Trade finance

Trade finance instruments
Would you like to eliminate possible risk on the side of your business partners. To secure the risk of business relationships (international or domestic), we offer documentary payment products: documentary letter of credit, documentary collection and bank guarantee.
Documentary letter of creditDocumentary collectionBank guaranteeHow to Apply
A documentary letter of credit is a written obligation of the bank issued upon request of the client (ordering party, buyer) to pay a certain amount according to the conditions defined in the letter of credit.
The bank's condition for paying the letter of credit is the submission of all required documents by the seller.
Participating banks check only documents, not products or services. Letter of credit payments are completely separate from contracts.
Benefits for the beneficiary of the letter of credit (seller)
  • The seller has an outstanding claim towards the bank and not towards the buyer
  • The seller can be certain that the payment will be made after fulfilling the conditions
  • The seller can use the letter of credit as a guarantee for suppliers
  • The claim towards the bank can be sold further, to obtain the funds ahead of time
  • The seller can obtain a loan from its bank, if the letter of credit is of sufficient quality
Benefits for the ordering party of the letter of credit (buyer)
  • The letter of credit represents considerable pressure on the seller to execute the delivery in due time and at the requested quality
  • The seller can be certain that it will only pay as soon as the stipulated conditions are met
  • Allows the buyer to obtain more advantageous price conditions thanks to solid payment security
Types of documentary letters of credit from the viewpoint of legal liability
  • Announced letter of credit
    In this type of letter of credit, the bank of the beneficiary does not assume an obligation towards the beneficiary. The bank only informs the beneficiary of the conditions of the letter of credit and makes its execution possible.
  • Confirmed letter of credit
    The bank of the beneficiary (seller) can confirm the letter of credit and assume the obligation towards the beneficiary.
For the letter of credit to fulfil its function, it must be opened as irrevocable. If the letter of credit text does not mention anything else, it is considered irrevocable pursuant to the Uniform Customs and Practices of the International Chamber of Commerce.
A documentary letter of credit is governed by the uniform customs for documentary letters of credit of the International Chamber of Commerce, UCP600.
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