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L/C Confirmations


 

Other than the issuing bank of an L/C, Bank of China (Canada) may add its confirmation to a L/C, thereby adding an independent payment obligation.

Application

When confirming an L/C, Bank of China (Canada) adds is guarantee for payment to that of the issuing bank of the L/C, thereby enabling an exporter to receive payment when it has complied with the terms of the L/C. Confirmation of L/Cs can take two forms: open confirmation and silent confirmation. The latter means that Bank of China may, at the request of the beneficiary, add its confirmation without informing the issuing bank and in case of the former the issuing bank requests confirmation of the L/C.

Features

·  Confirmation of L/C can help exporters mitigate non-payment risk associated with the issuing bank. In many cases sovereign risk and foreign exchange regulations in the country of the issuing bank may exacerbate this risk.

·  The confirmation of an L/C adds another layer of guarantee for the exporter since the conditional payment undertaking made by the issuing bank is reinforced by that of Bank of China (Canada).

·  The beneficiary of a confirmed L/C can call on payment from a reputable and creditworthy bank as long as the terms of the L/C have been met. All other uncertainty pertaining to possible regulatory risk in the country of the issuing bank is eliminated.

Who can benefit from this product?

·   Exporters who wish to obtain a payment obligation from a bank other than the issuing bank.

·   Exporters who wish to ensure receipt of funds after presentation of documents even if the issuing bank has a good credit standing.

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