Credins Bank supports its clients with Trade Finance operations. Thanks to the experience and expertise of our staff in these transactions, as well as our network of well-established correspondent banks across Europe, we are able to stay close to our clients, minimize the risks associated with international trade, and reach their business partners wherever they are.

Our specialized staff provides consulting services and drafts Letters of Credit and Bank Guarantees in accordance with the international uniform rules governing these instruments. Their wording is tailored to your business and to the terms agreed in the contract with your business partners.

Special attention is also given to the handling of documents related to Letters of Credit and Bank Guarantees, in compliance with the applicable rules and the conditions specified in these instruments.

Credins Bank offers the issuance of Letters of Credit and Bank Guarantees, as well as Documentary Collection / Inkaso services. These services may also be supported through financing from the Bank’s own funds, subject to the relevant analysis and approvals, if the client is unable to provide the required funds.

Letter of Credit

What is an L/C:
A Letter of Credit (L/C), also known as a Documentary Credit, is a payment instrument. It is one of the most widely used and secure forms of payment in international trade.

As a payment instrument, a Letter of Credit represents the commitment of the Applicant’s Bank to pay the Beneficiary, through the Beneficiary’s Bank, against the presentation of documents related to the sale of goods or services, provided that these documents comply with the terms and conditions of the L/C.

Depending on the position of our Bank’s client in the underlying business relationship, Letters of Credit may be:

• Import L/C – our client is the Buyer of the goods/services. In this case, the L/C is issued by our Bank and the Client is the Applicant of the L/C.
• Export L/C – our client is the Seller of the goods/services. In this case, the L/C is issued by the Buyer’s Bank and advised by our Bank in favor of our Client, who is the Beneficiary of the L/C.

Advantages of an L/C

Letters of Credit are widely used in international trade because they provide security and advantages to the parties involved by minimizing the risks associated with trading goods and services across different countries and geographical distances.

• The Seller (L/C Beneficiary) may begin production or delivery of the goods/services upon receipt and acceptance of the L/C issued in their favor, with the assurance that payment will be made by the Buyer’s Bank, provided that all required documents are presented and comply with the terms and conditions of the L/C.
• The Buyer (L/C Applicant) is assured that payment will only be made by the Bank if the Seller (L/C Beneficiary) presents the required set of documents and those documents comply with the terms and conditions of the L/C.

Bank Guarantee

What is a Bank Guarantee:
A Bank Guarantee is an irrevocable written commitment issued by the issuing Bank (the Guarantor), on behalf of the Applicant and in favor of the Beneficiary, to make payment up to the amount specified in the guarantee upon receipt of a compliant demand for payment from the Beneficiary, in the event that the Applicant fails to fulfill the obligation covered by the guarantee.

The main types of Bank Guarantees that may be issued include:

• Bid Guarantee – issued for participation in a tender.
• Contract / Performance Guarantee – issued to guarantee the fulfillment of contractual or performance obligations.
• Advance Payment Guarantee – issued to guarantee that an advance payment is used in accordance with the contract.
• Payment Guarantee – issued to guarantee payment for goods and services in favor of the Beneficiary.
• Credit Line Guarantee – issued to guarantee repayment obligations under a credit line granted to a client.
• Other types of guarantees.
• Standby Letter of Credit (SBLC) – a special type of Bank Guarantee that serves the same general purpose as a guarantee. Unlike standard guarantees, Standby Letters of Credit are generally governed by the International Standby Practices (ISP98).

Key Principles of Bank Guarantee Operations

• Bank Guarantees operate under and are subject to the Uniform Rules for Demand Guarantees (URDG), ICC Publication No. 758, 2010.
• A Bank Guarantee is independent of the underlying contractual relationship between the parties and becomes payable upon presentation of a demand for payment that complies with the terms and conditions set out in the guarantee.

Advantages of a Bank Guarantee

A Bank Guarantee provides assurance regarding the fulfillment of the contractual obligations for which the guarantee is issued.

• A Bank Guarantee covers the risk of delayed or non-performance of the Applicant’s contractual obligations toward the Beneficiary.
• Once issued, the Bank Guarantee becomes legally binding.

Documentary Collection / Inkaso

What is Documentary Collection:
Documentary Collection, also known as Inkaso, is a payment instrument under which a Bank collects payment on behalf of the Seller/Exporter in exchange for delivering the goods-related documents to the Buyer/Importer, in accordance with the instructions received from the Seller’s Bank.

This instrument is suitable when the Exporter and Importer have an established and reliable business relationship, when the Exporter has no concerns regarding the Importer’s ability to pay, and when the Importer has confidence in the Exporter.

Key Principles of Documentary Collection

• Documentary Collection / Inkaso is governed by the Uniform Rules for Collections (URC 522), published by the International Chamber of Commerce (ICC), Paris, France.
• Banks act only as intermediaries in carrying out payment instructions against the delivery of the presented documents.
• D/P (Documents against Payment) – documents are released against immediate payment by the Importer.
• D/A (Documents against Acceptance) – documents are released against the Importer’s acceptance of an obligation to make payment at a later date.

Advantages

This form of payment is particularly suitable in the following cases:

• When there is a stable and established business relationship between the Exporter and the Importer, and the Exporter has no concerns regarding the Importer’s ability to pay.
• When the political and economic situation in the Importer’s country is considered stable and there are no import restrictions.
• It involves simpler procedures and lower costs, as banks do not have a prior obligation to make payment.