HAB eBanking

Export Letter of Credit

When HAB receives an Export Letter of Credit to be Confirmed, Advised, or Discounted, our team ensures that we handle your transaction as expeditious as possible so you can grow your business.

HAB Bank handles hundreds of Export Letters of Credit a year.

Our services include:

  • Same-day notification
  • Competitive advisement and negotiated rates
  • Confirmations at competitive rates
  • Assistance with technical features of the Letter of Credit.

What is Export Letter of Credit? It is a method of payment commonly used in international trade transactions, whereby the advising bank (HAB Bank) facilitates payment to the exporter-provided the exporter complies with the terms and conditions of the letter of credit. Export letters of credit carry the credit risk of the issuing bank and the political risk of the issuing bank’s country. A letter of credit may also be referred to as a documentary credit.

Features

  • Irrevocable letters of credit cannot be cancelled or changed without the consent of all parties involved (Importer, exporter and the issuing bank)
  • Foreign issuing bank and country risk can be mitigated via confirmation of the letter of credit
  • May be payable upon presentation of certain documents (sight) or at a future date after documents have been accepted under the letter of credit (term or usance)
  • May be transferred to a third party if stipulated in the letter of credit
  • The letter of credit should be consistent with the terms and conditions stipulated in the commercial contract.
  • Letters of credit can be advised electronically via HAB Bank Trade Services.

Benefits

  • Exporter is assured of receiving payment if it complies with all terms and conditions of the letter of credit
  • Under a letter of credit, the exporter relies upon the creditworthiness of the issuing bank and not that of the importer
  • Term/usance letters of credit can be discounted upon acceptance of drafts, thereby expediting cash flow
  • Exporters may offer extended payment terms if payment is through a letter of credit
  • Electronic notification of letters of credit through HAB Bank Trade eliminates illegible copies of letters of credit and provides a central database