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Home  /  Corporates  /  Trade finance

Trade finance

Bank CenterCredit JSC offers a full spectrum of trade finance services and support of foreign trade transactions for companies in the foreign trade business. 

We widely use Trade Finance products such as a documentary letters of credit, documentary collections and guarantees. 

Documentary Letter of Credit is one of the safest ways of settlements between parties of contract minimizing commercial, political and legal risks which can arise in international trade. 

A letter of credit is a conditional financial obligation of the Bank, undertaken on the buyer’s (applicant) request, to execute payments in favour of the seller (beneficiary) upon the submission by the latter of the documents corresponding to the terms of the letter of credit, or to another authorized bank to execute the payment. 
Advantages for the Buyer (the Importer): 
  • Evidence of paying capacity, which is especially important when establishing new trade relations; 
  • Money will be paid to the seller no sooner than the buyer receives the documents corroborating the delivery of the goods; 
  • Minimization of risks to receive goods of improper quality, quantity, packing or with late shipment of goods. 
  • A credit against goods may be obtained when using a letter of credit with deferred payment; 
  • A wide choice of financing forms for any terms of transaction. 
Advantages for the Seller (the Exporter): 
  • Guarantee of payment - the seller can be sure of receiving the money subject to the timely submission of the documents corresponding to the terms of the letter of credit to the Bank since Letter of Credit is payment obligation of a Bank; 
  • Minimization of country, political and legal risks due to application of Uniform Customs and Practіce for Documentary Credіts of ICC Publication 600 (revision 2007) and moreover, a letter of credit can be confirmed by the third bank, preferable for the seller. 
Documentary Collection is a method of payment whereby the exporter initiates, through the banking system, the collection of money due to him from the importer. Payment will be made against commercial or financial documents. 

Advantages for the Buyer (the Importer): 
  • Evidence of shipment of goods – the buyer can pay to the seller only after delivery of goods; The buyer has the possibility to see documents before he buys them. 
  • Inexpensive method of payment 
Advantages for the Seller (the Exporter): 
  • when sending the documents representing the goods, the seller is sure that the bank will not release them to the buyer before acceptance of bill of exchange or payment made. 
  • Inexpensive method of payment 
Bank Guarantee is a written undertaking of a bank (guarantor) to pay the beneficiary the amount of money stated in the guarantee in the event that the principal (a bank customer ordering the bank to issue a guarantee) should default under his obligations secured by the guarantee. 

Types of guarantees: 
  • Bid guarantee (bond) 
  • Performance bond 
  • Guarantee for warranty obligations (warranty bond) 
  • Advance payment guarantee 
  • Payment guarantee 
  • Credit/loan repayment guarantee 
Trade Finance: 
For short-term financing can be used the following instruments: 
  • Letter of Credit with post-financing terms 
  • Discounting of letter of credit with deferred payment terms 
  • Pre-import, pre-export loans 
Basic conditions: 
  • Amount of financing: from 70 000 US Dollars/ or equivalents in Euro 
  • Tenor of financing: 3 – 24 months (depending on type of goods and amount of financing) 
  • Up to 100% of contract value can be financed 
For medium and long-term financing of capital goods can be used a scheme of financing guaranteed by foreign Export Credit Agencies (ECA). At present time Bank CenterCredit has experienced working with the following ECA: Euler Hermes (Germany), SACE (Italy), Atradius (The Netherlands), EDC (Canada) and has conclude a number of Loan Agreements with some foreign banks in Europe, Asia, America. 

Basic conditions: 
  • Amount of financing: from 300 000 US Dollars/ equivalents in Euro (optimal not less 500 000 US Dollars) 
  • Tenor of financing: 36 – 84 months (depending on type of equipment and amount of financing) 
  • Up to 85% of contract value can be financed; at least 15% should be paid by importer in advance 
  • Repayment of principal begins 6 month after starting point (last delivery of goods or mean –weighted delivery or readiness of operation of equipment). 
  • Generally ECAs insure up to 95% of financed amount against all political and commercial risks. 
  • Long repayment period, including a grace period of 6 months 
  • Competitive pricing 
  • Fixed or floating rate options 
  • Minimization of risks for exporter