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TBC Letter Of Credit


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Inter nation Trade made safe and easy and profitable!

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TBC Letter Of Credit

  1. 1. Trade Services: Letters of Credit
  2. 2. Agenda <ul><li>International Trade </li></ul><ul><li>Documentary Credits </li></ul><ul><li>International Regulations </li></ul><ul><li>Documents Under Letters of Credit </li></ul><ul><li>Letters of Credit at TBC BANK </li></ul>
  3. 3. <ul><li>International Trade </li></ul>Back to top
  4. 4. Reasons for and Threats to International Trade <ul><li>Reasons </li></ul><ul><li>Different Resources (nature, climate, commodities) </li></ul><ul><li>Different stage of technical development </li></ul><ul><li>Different density of people </li></ul><ul><li>Threats </li></ul><ul><li>Import – and Export – Licenses Taxes Contingents </li></ul><ul><li>Foreign Currency Applications, Deposits </li></ul><ul><li>Technical requirements </li></ul>
  5. 5. Risks to be considered <ul><li>General Risks </li></ul><ul><li>Different laws, regulations and languages </li></ul><ul><li>Delivery Risk </li></ul><ul><li>Transport Risk </li></ul><ul><li>Acceptance Risk </li></ul><ul><li>Quality Risk </li></ul><ul><li>Economic Risks </li></ul><ul><li>Importer is unable or unwilling to pay </li></ul><ul><li>Political Risks </li></ul><ul><li>Exchange rate Risk </li></ul><ul><li>Convert ion/Transfer/Payment </li></ul><ul><li>War, Riots, Civil Commotions, Terrorism, Strikes </li></ul><ul><li>Embargo </li></ul>
  6. 6. Conditions of payment and security <ul><li>Importer’s </li></ul><ul><li>interest </li></ul>Exporter’s interest TradeFinance Pre- payment Confirmed letter of credit Unconfirmed letter of credit Documentary collection Payment after receipt of goods Increasing security
  7. 7. In every international trade transaction, there must be : <ul><li>an agreed product or service </li></ul><ul><li>a sales contract </li></ul><ul><li>shipping and delivery details </li></ul><ul><li>required documentation </li></ul><ul><li>insurance cover </li></ul><ul><li>terms of payment </li></ul>
  8. 8. Documentary Credits Back to top
  9. 9. A definition of a Letter of Credit: Contractual obligation of a bank for account and instruction of a customer to effect a specified payment upon receipt of specified documents in compliance with specified conditions (as per Letter of Credit).
  10. 10. Documentary Letters of Credit EE Exporter Importer Issuing Bank Advising Bank 8 2 1 5 7 3a 6 4b 4a contract Shipment of goods Letter of credit application Delivery of documents/ debiting of account Remittance of Documents/Payment Letter of Credit opening presentation of documents / Payment Advising Confirmation Abstract undertaking to pay 3b
  11. 11. Types of Letter of Credit <ul><li>Irrevocable </li></ul><ul><li>Confirmed/Unconfirmed </li></ul><ul><li>Back to Back </li></ul><ul><li>Revolving </li></ul><ul><li>Transferable </li></ul><ul><li>Payment Terms </li></ul><ul><li>Sight </li></ul><ul><li>Deferred Payment </li></ul><ul><li>Acceptance </li></ul><ul><li>Others </li></ul>
  12. 12. International Regulations Back to top
  13. 13. International Regulations – UCP600 ICC Uniform Customs and Practice for Documentary Credits Published by the International Chamber of Commerce, Paris Actual Version UCP 600, since 1 st July 2007.
  14. 14. International Regulations - Incoterms <ul><li>Published by ICC Paris, </li></ul><ul><li>published 1936 latest revision in 2000 </li></ul><ul><li>Necessary due to different terms of trade in each country </li></ul><ul><li>To avoid misunderstandings, trouble recommendable to use Incoterms . </li></ul>
  15. 15. INCOTERMS 2000
  16. 16. Documents Under Letters of Credit Back to top
  17. 17. Documentary Requirements <ul><li>Buyer – what document(s) does the </li></ul><ul><li>buyer need? </li></ul><ul><li>Seller – what documents will he be </li></ul><ul><li>able to supply? </li></ul><ul><li>Country of export – </li></ul><ul><li>– what documents are required </li></ul><ul><li>under the regulations of the </li></ul><ul><li>exporting country? </li></ul><ul><li>Country of Import – </li></ul><ul><li>– what documents are required </li></ul><ul><li>under the regulations of the </li></ul><ul><li>importing country? </li></ul>
  18. 18. Documents – which will be used? <ul><li>Invoice </li></ul><ul><li>Bill of Lading (B/L) </li></ul><ul><li>Air Transport Document </li></ul><ul><li>Insurance Document </li></ul><ul><li>Certificate of Origin </li></ul><ul><li>Inspection Certificate </li></ul><ul><li>Others </li></ul>
  19. 19. Documents – which will be used? <ul><li>Embodies the proprietary right to the goods afloat </li></ul><ul><li>Indicates port of loading and port of discharge </li></ul><ul><li>Indicates the name of the carrier </li></ul><ul><li>Normally issued in 3 folds </li></ul>Bill of Lading (B/L) Specimen (Article 20 of UCP 600)
  20. 20. Documents – which will be used? <ul><li>Commercial Invoice Specimen </li></ul><ul><li>(Article 18 of UCP) </li></ul><ul><li>A commercial invoice usually includes the following information: </li></ul><ul><li>Name and address of the seller and the buyer </li></ul><ul><li>Amount and currency </li></ul><ul><li>Description of goods </li></ul><ul><li>Other information required by the credit </li></ul><ul><li>Need not to be signed </li></ul>
  21. 21. Documents – which will be used? <ul><li>Proving that the shipping contract has been signed and that goods have been received by the carrier </li></ul><ul><li>Indicates airports of departure and destination </li></ul><ul><li>Indicates the name of the carrier </li></ul><ul><li>Issued in 3 originals, original for the shipper must be presented to the bank </li></ul>Air Transport Document Specimen (Article 23 of UCP 600)
  22. 22. Documents – which will be used? <ul><li>Insurance Certificate Specimen </li></ul><ul><li>(Article 28 of UCP600) </li></ul><ul><li>Insurance Policy – Insurance Certificate </li></ul><ul><li>Issued for at least 110 % of the value of the goods </li></ul><ul><li>Indicates amount and risks covered </li></ul>
  23. 23. Documents – which will be used ? <ul><li>Certificate of Origin Specimen </li></ul><ul><li>Gives evidence of the origin of the goods </li></ul><ul><li>Used in the importing county to check possible import restrictions or to calculate the customs duty </li></ul><ul><li>As a rule issued by a competent Chamber of Commerce </li></ul>
  24. 24. Documents – which will be used? <ul><li>Inspection Certificate Specimen </li></ul><ul><li>As a rule issued by a appropriate authority, either a governmental entity or a private inspection company </li></ul><ul><li>Gives evidence, that the goods were inspected and indicates results </li></ul>
  25. 25. Presentation of documents <ul><li>Complying Presentation: presentation of documents in accordance with </li></ul><ul><li>- the terms and conditions of the credit </li></ul><ul><li>- the UCP 600- if applicable -and </li></ul><ul><li>- the international standard banking practice </li></ul><ul><li>Documents with discrepancies: </li></ul><ul><li>- change of documents </li></ul><ul><li>- payment under reserve </li></ul><ul><li>- approval of issuing bank </li></ul>
  26. 26. Presentation of documents <ul><li>Discrepant documents presented to issuing bank </li></ul><ul><li>(UCP 600, Art.16c) </li></ul><ul><li>Notice of refusal within 5 banking-days mentioning all discrepancies + 4 possibilities of handling: </li></ul><ul><li>- hold documents pending further instructions from presenter </li></ul><ul><li>- hold documents until it receives a waiver form the applicant and agrees to accept it, or receives further instructions from presenter prior to agreeing to accept a waiver </li></ul><ul><li>- returning documents to presenter </li></ul><ul><li>- acting in accordance with instructions previously received from the presenter </li></ul>
  27. 27. <ul><li>Letters of Credit at TBC BANK </li></ul>Back to top
  28. 28. Letters of Credit at TBC BANK <ul><li>If you deal with export /import activities, JSC TBC Bank would assist you in financing and reducing the risks concerned with the International Trade Operations. </li></ul><ul><li>We’ll swiftly and efficiently analyze your bargains and process your application. </li></ul><ul><li>Prior to sign of contract with your counterparty, we’ll assist in originating the forms and contents of the LC. </li></ul>
  29. 29. Letters of Credit at TBC BANK <ul><li>In case of requirements, the world leading banks as Commerzbank, Deutche Bank CitiBank, EBRD would provide the confirmation to your documentary operations through our bank. </li></ul><ul><li>We can confirm your LC at either international first class bank . So being our partner, you become the partner of the world leading banks. </li></ul>
  30. 30. Letters of Credit at TBC BANK <ul><li>Financing of International Trade </li></ul><ul><li>If you haven’t enough funds to realize International Trade Operations, we can provide financing with the affordable terms. </li></ul><ul><li>During the period of validity of LC, you’ll be extended with the line of credit at 7-10 % interest per annum. </li></ul>
  31. 31. <ul><li>THANK YOU FOR YOUR ATTENTION! </li></ul><ul><li>  Daniel Epstein </li></ul><ul><li>Private Client Manager </li></ul><ul><li>  Migdal Moshe Aviv - 40th floor </li></ul><ul><li>7 Jabotinsky street, Ramat Gan, 52520 </li></ul><ul><li>  Tel:   +(972 3) 600 60 44 </li></ul><ul><li>Fax:   +(972 3) 600 60 33 </li></ul><ul><li>Cell:  +(972 52) 400 2250 </li></ul><ul><li> </li></ul>