Letter of credit

About the product

What is a documentary letter of credit?

A letter of credit is a written commitment of the importer's bank to pay a specific amount of money to an indicated beneficiary (exporter) at an agreed time. The condition for the payment is a delivery by the exporter of appropriate transport documents confirming the performance of a contract. The date of documents submission is at the same time the validity date of the letter of credit. The letter of credit is issued after a relevant instruction is received from the customer and after the customer establishes a liquid payment collateral.

Find out how a letter of credit works!

Is letter of credit perfect for your business?

If you are in the trade or service business and often establish new trade contacts, a letter of credit will be the perfect solution for you. It will secure transactions with partners whose credibility may not be confirmed and also when your relations with the existing partners have deteriorated. The letter of credit is also a good protective instrument for your business when the political or economic situation of the partner's country is far from stable.

Contact your Credit Advisor who will provide you with detailed information about the offer and documents required, and help you prepare a relevant import letter of credit instruction.

What types of letters of credit do we offer?

  • import LC - as an importer, you instruct us to issue a letter of credit and we, in line with your instructions, undertake to pay a specified amount to the beneficiary (foreign exporter) when he has met the conditions stipulated in the LC agreement. The conditions of LC payment, including a list of documents required, are included in the LC agreement.
  • export LC - acting in line with instructions delivered by the foreign exporter's bank, we advise you of the LC and its conditions. Upon a request of the foreign bank, we may confirm the letter of credit, i.e. agree for full financial exposure. We also examine the required documents you have delivered and inform you if anything is missing.


How will you benefit as an importer?

  • the Bank will ensure the security of your transactions both with the existing and new partners,
  • by requiring documents, you will have a confirmation that the goods were sent in line with your instructions,
  • proper selection of the required documents will mitigate quality and transport risks as well as delivery delays,
  • you can always adapt the LC terms and conditions to the specific transaction,
  • you will make payment conditional upon the partner's documenting the proper performance of the contract,
  • you may use deferred payments financing facilities,
  • you can negotiate better terms and conditions of the transaction as the LC secures the transaction to your partner (you eliminate the risk of payment default or delay).

How will you benefit as an exporter?

  • you will get a guarantee of payment immediately after you forward the goods and submit the relevant cargo documents compliant with the letter of credit to the bank,
  • you will be protected against the risk of the importer's withdrawal from the contract or change to the agreed terms and conditions as well as rejection of goods,
  • the payment is guaranteed when you submit the documents required in the LC, it does not depend on the importer's behaviour, thus the risk of payment default or delay is eliminated,
  • if you find that you do not like the terms and conditions in the LC, you may reject it or ask for changes to be made,
  • because the Bank secures the payment and the payment for goods and services is deferred, you may offer attractive payment terms to the importer,
  • you know in advance when the payment will be made.

How to use?

What documents are usually required with a letter of credit?

Documents typically required with a letter of credit are:

  • invoice,
  • transport document,
  • insurance document,
  • other documents, e.g. certificate of origin, weight certificate, standardisation certificate.
  • Examples of transport and freight documents:
  • marine bill of lading,
  • inland shipping bill of lading,
  • copy of rail consignment note,
  • air consignment note,
  • road consignment note,
  • certificate of posting,
  • forwarder's certificate,
  • combined transport consignment note.