Financial Instrument Solutions

Documentary Letter of Credit (DLC) MT 700
Many primaries use of our documentary letter of credit is to facilitate the movement of goods from one country to another. In some cases, we are able to provide instruments for credit enhancement, allowing the beneficiary to take better advantage of existing credit facilities.
Our clients fall into two broad categories:
a) Clients buying goods on a regular basis to hold stock or fill regular orders:
The client is opening a letter to his supplier before he has the goods. When he opens the LC through us, he doesn’t need to use his money until the goods arrive. This can be 30,60, 90, 120 or 366+1 days after the LC was opened. The longer the manufacture and shipment period, the more advantageous it is for the client to use our bank instrument. Instead of locking his money up with his supplier, he can use his money to hold stock, finance credit terms to regular buyers, market, etc.
b) Trading Companies, middlemen and Brokers
This type of client has a buyer already lined up for the goods that he is trading. The buyer wants to pay cash against original Documents of the goods, but does not want to make deposit or open LC until the goods are already on their way or have arrived at the destination port. The middlemen need to arrange for the goods to ship so that he can finish the deal.
The supplier wants a deposit or an LC before he will ship the goods. The middlemen open the Letter of credit through our company. When the goods are shipped, he arranges for his buyer to pay for the goods on a Cash Against Documents basis. The client is less limited in the number of deals that he can do, since he doesn’t need to invest his own capital to the same degree in each deal.
In either case, we open letter of credit to cover the shipment time of the shipment of the goods. When goods arrive at their destination, our bank must receive the full value of documents submitted under the LC before they will release those documents.