Bank guarantee (BG)
Bank Guarantee (MT 760) is an irrevocable commitment, which is issued by a bank on behalf of its client who has concluded a contract to buy goods from a seller and promised to meet all financial obligations to the seller in case of default.
In other words, a Bank Guarantee is a commitment of a bank on behalf of its client.A BG often helps companies to conduct transactions with parties they usually would never have the chance to deal with. Many suppliers often prefer to do business with clients, which have a BG because it removes the risk of non-payment for the goods they sell.BGs can be issued for many purposes, for example, for credit enhancement of institutions that issue industrial development revenue bonds and commercial papers; to provide security for loans granted by third parties; to assure performance under construction or employment contracts; and to ensure the buyer fulfils financial obligations to its supplier.
Standby Letter Of Credit(SBLC)
Standby Letter of Credit (MT 760) is a written commitment of a bank that issues it to pay a certain amount of money on behalf of the bank’s client in favor of a beneficiary in case the client/buyer is not able to fulfil its financial obligation to the beneficiary/seller.
Using an SBLC in business transactions is an indication of good faith and proof of financial credibility and repayment capabilities of a buyer.SBLC is widely used in commodities trading when it is necessary to buy the goods from a local supplier or foreign exporter.SBLC can also be used as a security to obtain credit lines and is ideal for a company that plans to expand its business but does not want to utilize its assets.SBLC should always be issued as an irrevocable financial instrument and cannot be cancelled or revoked since it has been issued and transmitted via authenticated MT 760 SWIFT message by an issuing bank.It is possible to assign an SBLC to another beneficiary in accordance with written instructions from the first beneficiary. The bank, which performs such transfer, must notify the issuing bank the amount to be transferred and the effective date of the transfer.Standby Letter of Credit is provided according to the latest uniform rules ICC Publication No. 600.
Meduim term notes (MTN)
An MTN is a tradable and discountable debt instrument issued by banks, collecting an annual interest before expiring upon maturity with a specified face value.REL IG is involved in the primary and secondary MTN markets and has access to some of the most desirable notes through its relationships with specialized trader/brokers.MTNs can be provided to Clients in need of recourse collateral, non-recourse collateral or for credit-enhancement purposes.
Documentary Letter Of Credit(L/C,DL/C)
Letter of Credit (Documentary Letter Of Credit (L/C, DLC) is the banks obligation to pay the seller of goods or services a certain amount of money in the timely submission of documents, confirming shipment of goods or performance of contractual services.
DLC is one of the most important means of financing in the international trade, since the letter of credit is a tool that removes most of the risks from the buyer (importer) and from the seller (exporter).DLC is a very flexible and convenient tool of calculations, which have the widest recognition and acceptance in the world.There are several forms of Letters of Credit:Revocable Letters of Credit can be changed or cancelled by the issuing bank without prior notice to the recipient of funds. Revoking the letter of credit does not create any obligation from the issuing bank to the payee.
The nominated bank is obligated to make a payment or other operations on a revocable letter of credit if at the time of their commission they have not received notice of the change of conditions or cancelled credit. A letter of credit is revocable if its text does not explicitly state otherwise.The Irrevocable Letter of Creditis a firm obligation of the issuing bank to pay money in the order and terms defined by the conditions of the Letter of Credit, if the documents provided for by it, submitted to the bank are specified in the credit. The Irrevocable Letter of Credit guarantees that the exporter will make payment to the performance of its obligations, even if an importer wants to abandon the deal. Therefore, exporters, performing a special order for which most likely there will not be another buyer, choose this kind of letter of credit.Irrevocable Unconfirmed Letter of Credit. When making an unconfirmed letter of the credit, the issuing bank providing a letter of credit is the only party responsible for the disbursem*nt to the seller. The nominated bank has to pay only after receiving the money from the issuing bank. The nominated bank simply acts on behalf of the bank providing credit, therefore it does not take any risk.Irrevocable Confirmed Letter of Credit The obligation of the issuing bank is confirmed by another bank. Confirmation is an additional guarantee of payment from another bank (bank of the exporter or prime bank).The bank that confirms the letter of credit is committed to paying for documents, according to the conditions of the letter of credit if the issuing bank fails to make the payment.Currently,LCissuance is governed by the latest version of UCP 600.
