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SE Business: Trade Finance Products

Raiffeisen Bank sha, having a specialized staff and a wide range of branches all over the country, offers advising service to its customers for the proper usage of the Trade Finance transactions in order to reduce the risk of commercial agreements with the respective international partners. We have a considerable number of first class correspondent banks located all over the world acting as our partners and achieving the successful performance of the Trade Finance transactions.

What do we offer to our Corporate and SE customers?

Issurance of Import Letters of Credit
Advising of Export Letters of Credit
Advising service from a specialized staff for Letters of Credit transactions

Documentary Credits or Letters of Credit are a payment transaction issued by a bank upon its customers’ request. The payment under a Letter of Credit is effected against presentation of the proper set of documents, which should be submitted in accordance with the terms and conditions of the Letter of Credit. Letters of Credit are a safer and more effective way of ensuring the payment in international trade transactions. They are not limited in covering only the payment of the trade of goods, but also services and the implementation of specific projects.

Import Letters of Credit are the Letters of Credit issued by Raiffeisen Bank Sha when its customers import goods or services from their respective partners. By this type of Letter of Credit, Raiffeisen Bank Sha offers its Irrevocable Undertaking on behalf of the applicant, to pay the beneficiary against presentation of the proper set of documents in full compliance with the terms and conditions of the Letter of Credit.

Export Letters of Credit

When our customers export goods or services, we suggest that the payment in their favor to be effected by Export Letter of Credit. In this case Raiffeisen Bank receives the Letter of Credit in favor of its customers via SWIFT message or by a Letter from the importer’s bank (issuing bank).Letters of Credit are subject of the Uniform Rules for Customs and Practice for documentary Credits (ICC publications no.600).

Advantages:

The use of Letter of Credit as a means of payment offers advantages for both parties involved in the transaction, the importer and the exporter.T

  • The Buyer (The Importer) is secured that the payment of the goods or services will be effected only after the Seller (The Exporter) will submit at the bank the set of documents as per the Terms and Conditions of the Letter of Credit.
  • The Seller (Exporter) will not investigate on the payment ability of the Buyer (Importer) based on the fact that the risk related to the performance of payment is transferred from the buyer to the Issuing Bank/Confirming
  • BankThe Seller (The Exporter) will ship the goods or perform the service only after receiving and accepting the Letter of Credit as per the terms agreed and stipulated in the Commercial Agreement with the Buyer (The Importer).

What parties should take note?

- A Letter of Credit by its nature is a separate transaction from the sale or other contract on which it may be based. Banks are in no way concerned with or bound by such contract, even if any reference whatsoever to it is included in the credit.

- Banks under a Letter of Credit deal with documents and not with goods, services or performance to which the documents may relate. Consequently, the undertaking of a bank to honor, to negotiate or to fulfill any other obligation under the credit is subject to the documents presented under the Letter of Credit

 

 

Documents Required

In order to initiate the procedures for opening a Letter of Credit the Raiffeisen Bank Client has to deposit in the bank the signed Commercial Agreement between parties or the Proforma Invoice issued by the Seller.

 

 

Financing Alternatives

Letters of Credit are issued against cash collateral by the applicant or by applying for a credit facility at our bank.

What do we offer to our Corporate and SE customers?

The Bank Guarantee is an irrevocable written undertaking of the issuing bank (the guarantor), issued for account of the applicant and in favor of the beneficiary, to pay to the beneficiary any amount up to the maximum amount specified in the guarantee, upon receipt of a complying written demand for payment from the beneficiary, in case of non-fulfillment from the applicant of contractual obligations that are subject to the guarantee.

1. Issuance of different types of direct Bank

  • Payment Guarantee – is issued for account of the applicant to assure payment of goods and services in favor of the beneficiary
  • Advance Payment Guarantee – is issued for account of the applicant to assure usage of the advance payment amount in accordance with the contract
  • Bid Guarantee - is issued for account of the applicant that participates in a BidPerformance Guarantee - is issued for account of the applicant to assure fulfillment of contractual obligations
  • Customs Guarantee

2. Issuance of different types of indirect Bank Guarantees

3. Wording of guarantee texts

4. Advising of guarantees

Advantages:

- The Bank Guarantee comprises a security for the beneficiary to assure him that he will be compensated for any loss/ damage upon presentation by his side of a complying demand.

- The Bank Guarantee creates the possibility that the buyer is awarded more favorable credit terms from the Seller

What parties should take note?

The Bank Guarantee is independent of the underlying relationship between the parties and the bank cannot withdraw from its undertaking as guarantor, irrespective of any disputes arising between the parties.

Documents Required

Depending on the required type of the guarantee, the customers of Raiffeisen Bank sha should deposit a scanned copy of the contract signed by either parties or a different document to justify the agreement between the parties and the object of the required guarantee.   

Financing Alternatives

Bank Guarantees are issued against cash collateral provided by the applicant or by applying for a credit facility at our bank.Stand By Letter Of Credit

Stand By Letter Of Credit is a specific type of Bank Guarantees, but it differs from guarantees because Stand By LCs are subject to Uniform Rules for Customs and Practice for Documentary Credits (ICC publications no.600) unlike Bank Guarantees which are subject to Uniform Rules for Demand Guarantees (URDG, Publication No. 758).

Documentary Collection is a payment instrument in which the Exporter sends to the Importer’s bank, documents related to a specific shipment of goods, along with relative payment instructions.

Methods of payment

D/P – Documents are released against sight payment from the Importer
D/A – Documents are released against Importer’s acceptance to make the payment at a specific date in the future

What do we offer to our Corporate and SE customers?

  • Collecting and forwarding documents to the Importer’s bank at the request of Raiffeisen Bank Sha’ customers (Exporters) and as per their instructions.
  • Advising Import Documentary Collections received by Raiffeisen Bank sha from Exporter’s banks.
  • Assistance/ advising service from a specialized staff for all Documentary Collection transactions

Advantages:

  • These transactions cost less than the Letters of Credit, however they are more risky and therefore inclusion in similar transaction would require the parties to have a considerable level of mutual trust and knowledge.

What parties should take note?

  • The Importer’s bank does not have any obligation regarding the payment
  • The Exporter cannot make sure that the Importer will pay/ accept documents presented by his side to the Importer’s bank 
  • The Importer’s financial situation can change prior that the documents reach the counters of his bank or prior to the maturity date for payment.