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Home > Trade Finance

Trade Finance

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Trade Finance products can be employed to back up all kinds of transactions. These transactions can be nonfinancial, such as contracts of sale, leases and construction contracts. Trade Finance is also used to back up financial transactions such as loans and overdraft facilities, participations in joint ventures, bond issued, reinsurance and other financial commitments.

Girobank offers the following Trade Finance Products:

  1. Letters of credit
  2. Collections
  3. Bank guarantees

 1. Letters of Credit

A documentary credit or letter of credit is issued by a bank for account of the buyer (the applicant) or for its own account, to pay the beneficiary the value of the draft and/or documents, provided that the terms and conditions of the Documentary Credit are complied with.

Types of Letters of Credit

  • Unconfirmed Documentary Credit
  • Confirmed Documentary Credits
  • Standby Letter Credits
  • Revolving Credits
  • Red/Green Clause Credits
  • Back to Back Letter of Credit
  • Transferable Letter of Credit

Benefits Letter of Credit

Benefits for the Exporter

  • Protection against non-payment or non-accep-
  • Protection against country risk, if confirmed.
  • Immediate availability of funds through sight
    payment or bankers acceptances.
  • Pre-export financing.

Benefits for the Importer:

  • Documentary compliance with the sales contract.
  • Buyer is only required to pay
    if conditions of credit are met
  • Improved cash flow management
  • Minimized financial risks to your business
  • Elimination of extensive credit investi-

2. Collections

A payment technique where the exporter submits the draft and the shipping documents to the bank for presentation to the importer. The documents will not be released to the importer until the collection is paid (if "sight") or accepted (if "time").

Collection types

  • Clean Collections
  • Documentary Collections
  • Direct Collections

Benefits of Collections

Benefits for the Exporter:

  • Control over the Goods
  • Bank Assistance in Collecting Payment
  • Lower Costs compared to Letters of Credit

Benefits for the Importer:

  • Lower Costs compared to letters of credit
  • Availability under credit lines is unchanged
  • Availability of Financing

3. Bank Guarantees

Bank Guarantees provide the Beneficiary with access to a sum of money if the Principal (You) fails to fulfill contractual or other obligations in respect of an underlying transaction, contract or order.

Types of Bank Guarantees

  • Advance payment guarantee
  • Performance bond
  • Guarantee for warranty obligations
  • Payment guarantee
  • Guarantee securing a credit line

Benefits of Bank Guarantees

Benefits for the Exporter

  • Security that the contractual obligations will be fulfilled.
  • Can be easily put into place by court action should that be necessary
  • Reduces risk of private transactions in emerging countries

Benefits for the Importer

  • Does not need to prove its creditworthiness or ability to perform its contractual obligations.
  • Bank guarantees are quite well-suited for foreign trade.
  • Opens new markets and Improves project sustainability.

For more information or to request one of our Trade Finance products

For more information, feel free to contact our feel free to contact Corporate Banking at T. 433 9130, F. 461 1388 or