Trade finance
Reduce the costs of your business, if you participate in international trade.
The guarantees are an instrument of collateral and they represent a legal business in which one party – guarantor – the bank – upon request of another party – principal – and following their instructions assumes independent and irrevocable liability to pay the amount of guarantee, should all the conditions specified therein be met – to a third party – a beneficiary of the guarantee.
Guarantee types from the bank´s prospective
- Nostro guarantees (UniCredit Bank Serbia issue guarantees)
- Loro Guarantees (UniCredit Serbia is the advising bank, i.e. User´s bank)
Guarantee types from the participant location perspective
- Domestic guarantees
- Foreign guarantees
Guarantee types from the mode of issuance
- Direct guarantees (UniCredit Bank is the issuer of the guarantee directly in favor of beneficary)
- Indirect guarantees (UniCredit Bank is the issuer of the guarantee in favor of Beneficiarys bank with the request to the bank to issue guarantee directly in favor of beneficiary)
Guarantee types from the bank obligation perspective
1. Performance (issuing Bank takes the risk of non-performance of the certain action on the behalf of the principal)
- Tender guarantees
- Good performance guarantees
- Guarantee period guarantees
- Guarantee deposit release guarantee
2. Payable (Issuing bank takes the risk of a non-payment by the principle)
- Guarantee by which a payment is guaranteed
- Customs guarantees (only domestic guarantees)
Binding intention letters
- A binding intention letter (OLI) is a statement in which the issuing bank according to instructions and order from the client (the principle), assumes the obligation or expresses readiness to issue to the third party (the user) guarantees that are in line with tender conditions or some other documentation. Binding letters about intentions do not produce legal effects towards issuing bank until the moment of complete fulfillment of all the conditions necessary to issue guarantees.
The letters of credit belong to the most significant instruments of payment and collateral, and of recently of crediting of exports. It is a very powerful and widely used instrument of international payment operations, as it equally protects the interests of both buyer and seller, by actively engaging a Bank.
By issuing the letters of credit, the issuing Bank (l/c Bank), irrevocably assumes a liability to, per request of the importer, and following the presentation of the documents which are in accordance with the conditions and provisions stipulated in the letter of credit, pay the beneficiary of the letter of credit (exporter) for the delivery of goods or services rendered; authorize another bank to make such payment; or accept and pay such bill; or negotiate documents (in cases of crediting of exports).
Types of the letter of credit from the bank role prospective
- Import letter of credit (ours, i.e. UniCredit Bank Serbia is the issuing bank)
- Export letter of credit (theirs, i.e. UniCredit Bank Serbia is the ad)
Type of Letters of Credit according to the manner of use
- At sight
- Deferred payment
- By acceptance
- By negotiation
By form
- Transferable
- Non transferable
- Back to back
- Revolving
- Advance payment ( with red or green clause)
- Stand by (in contrast to the above ones, it is a collateral, not a payment instrument)
According to the manner of informing
- Confirmed
- Non confirmed
Documents necessary for opening of the letters of credit
- Application form for opening of letter of credit
- Document serving as a proof of existence of legal business with foreign partner (contract, pro forma invoice, bid).
Letters of credit are subject to uniform rules and customs applicable for documentary letters of credit. (UCP 500 until July01, 2007, and UCP 600 following that date) issued by the International Chamber of Trade in Paris.
What is documentary collection?
If you maintain your business cooperation with a well known partner, we strongly recommend this type of product.
This is an arrangement on documentary collection concluded by parties to international trade, whereby the agreed financial and / or transport documents are submitted by the exported through third party – Bank – in exchange for payment or promise of payment. The documents represent an independent proof that the exporter had adequately settled its liabilities, and that, following the furnishing of the proof, banks collect the funds. The collections are made a vista or within the agreed period following the ‘a vista period’, i.e. with the acceptance of bills.
Documentary collection involves all operations related to the processing of the documents/bills/promissory notes submitted by the client (exporter) with a purpose of their presentation to the bank of the importer for the payment or acceptance of the promissory note from the importer.
Documents involve financial documentation (bills, promissory notes), clear documentary collection or commercial documents (invoices, transport documents etc.) – documentary collection.
Types of the documentary collection from the bank´s prospective:
- Importing ( UniCredit Bank Serbia informs the importer about the reception of the documentation)
- Exporting ( UniCredit Bank Serbia sends exporter´s documents to collection)
Types of documentary collection from the payment prospective
- Delivery of the documents with a payment (D/P – documents against payment)
Presenting bank can deliver documents to the importer only with a previously made payment - Delivery of the documents with acceptance promissory (D/A – documents against acceptance)
Presenting bank can deliver documents to the importer only with the acceptance note which matures on some future date
A check is an instrument of payment that can be defined as an unconditional order, issued in a strictly defined written form, to pay certain amount of money.
A check is an instrument with the right of recourse. The period of the check validity is 6 months from the issuance date, unless otherwise stated on the check itself.
A check is mostly payable to the bearer or by an order.
A check can be regular, open or binary check.
Check types based on the issuer
- Bank (issued by the bank)
- Private checks (issued by the neutral person or a company)
