Letters of Credit.
With our comprehensive range of trade and related finance products, we’ll help you reduce risks when you do business abroad. Whatever you need, we can guide and advise you on how to best go about your transaction requirements.
Letters of Credit
The documentary credit is one of the most secure payment methods in international trade, offering the exporter a conditional payment guarantee from the importer's bank. Before the payment can take place, you’ll need to prepare certain documents. But keep in mind that banks examine the documents only with respect to the documentary credit and do not look at contracts, agreements or the condition of the goods.
- Import Letter of Credit - Requires the exporter to comply with the agreed conditions before payment is made.
- Export Letter of Credit - Eliminates the risk that the buyer will not pay if terms and conditions of the letter of credit are complied with.
We can issue an LC on your behalf, including the following types of letters of credit:
- Revolving - A credit available for an amount that can be reinstated by the amount of the drawing in a given period of time. Such amount becomes available again under the credit either automatically or by amending the credit.
- Red Clause - A credit permitting the beneficiary to draw an amount prior to the shipment of goods.
- Confirmation - Adding our guarantee to that of the issuing bank, thus shifting risk from the issuing bank to us.
- Transferable - A credit permitted by the issuing bank to be transferred to one or more beneficiaries by a bank nominated by the issuing bank at the request of the first beneficiary.
- Back to Back Letter of Credit - Facilitates the beneficiary of the export LC to source the identical goods from a seller to supply directly to the buyer, by establishing a back to back LC through us. The proceeds of exports LC will be the source of payment for our import LC.
Bills for Collection
Documentary collections can provide exporters and importers with a secure compromise between open account trading and documentary credits.
We can arrange for an overseas correspondent to release the documents against payment or acceptance of a bill of exchange, with payment at a future date.
- Import Bills for Collection – Permits importers to stipulate documentary requirements and allows them to postpone payment or acceptance generally until the shipment is unloaded at the port of destination.
- Export Bills for Collection – Provides exporters control over goods shipped and reliance for payment through their bankers’ correspondents.
- Avalisation of Bills - For an exporter, it is a payment guarantee from the buyer's bank for the documents released on acceptance to the buyer. Such undertaking can be given on Promissory Notes drawn by the buyer or for Bills of Exchange accepted by buyer to pay on future dates.
Guarantees / Stand By Letter of Credit (SBLC)
A Guarantee is a written undertaking by a guarantor, usually a bank, to ensure that a supplier or contractor receives compensation in the event of a breach of contract. There are different types of guarantees, and more than one type can be included in a contract. Guarantees are subject to various international or local rules and regulations, whereas a Stand By Letter of Credit is governed by either UCP 600 or ISP 98, and published by the International Chamber of Commerce.
FGB can issue the following types of Guarantees on behalf of our clients:
- Advance Payment - Issued by us to the buyer as a security for the advance he has received for an agreed percentage of the contract amount.
- Bid/Tender - Issued to ensure that the bidder submits realistic bids under the tender process. It also protects the principal for any loss, should the bidder fail to fulfill terms of the awarded bid.
- Performance - Safeguards the principal, should the contractor fail to meet contractual obligations.
- Retention - Security for the principal to release the retained money to the contractor on completion of contract.
- Payment - Ensures payment to the seller if the buyer does not fulfill payment obligations.
- Shipping Guarantee - Undertaking given to the shipping agent to release cargo to the buyer in the absence of a specific transport document.
If you need financing, we can offer you products that are competitively priced, and have the advantage of being coupled with high-level trade finance expertise.
Import Financing/Trust Receipt - A type of short-term import loan that provides buyers with financing to settle goods imported under a Letter of Credit whereby the title of goods is held by FGB. Under a TR arrangement, FGB retains the title to the goods but allows the buyer to take possession of the goods, in trust that the goods will be re-sold.
Import Loan/Open Account TR - The advance is made on presentation of supplier invoices and evidence of shipment.
Discounting of Bills drawn under LC issued by our bank - Discounting bills presented under our LCs without recourse to beneficiaries.
Pre Shipment Finance/Packing Credit - A financing mechanism to manage your cash flow when it comes to procuring raw materials, processing, packing, warehousing, shipping of goods, etc. against Export LCs or Confirmed Purchase order.
Invoice Discounting/Receivable Financing - A borrowing mechanism against invoices raised on buyers of your goods, often supported by evidence of transport documents.
- Discounting of Export Bills for Collection - A borrowing mechanism available to raise finance against the documents drawn on buyers for an agreed specific tenor.
- Discounting of Avalised Bills - A form of financing to an exporter to avail funding prior to its maturity dates without recourse to him
- Discounting of Bills under Export LC – A form of loan advanced to you to bridge the working capital needs that may arise after shipping of goods. It can beset up with or without recourse to you.