Documentary letters of credit

  • a way to minimise commercial risk

  • payment on satisfaction of conditions

  • exclusion of political and economic risks in international trade

Types of letter of credit

Issued (import, supplier)

ČSOB issues a letter of credit at the request of the buyer (importer, a client of ČSOB) for the benefit of the seller (exporter).

Received (export)

A foreign bank issues a letter of credit in favour of the seller (exporter, a client of ČSOB).

Confirmed

A received letter of credit can be confirmed, meaning that ČSOB guarantees payment based on the letter of credit so that the seller (exporter) can be sure of receiving payment irrespective of the actions of the buyer’s foreign bank.

Stand-by

Equivalent to a bank guarantee.

Transferable

This allows rights resulting from a letter of credit to be transferred to another beneficiary, a feature appreciated particularly by intermediary companies.

Back-to-back

Issued based on another letter of credit, which serves as security.

Revolving

Automatically renewed in its original amount after a sum is drawn or at set intervals.