Standby Letters of Credit
An undertaking by the issuing bank to make payment on behalf of their Customer should that Customer fail to fulfill a contractual commitment with a third party.
- Irrevocable Standby Letters of Credit cannot be cancelled or changed without the consent of all parties involved (applicant, beneficiary and the issuing bank).
- Beneficiary relies upon the creditworthiness of the issuing bank and not the Applicant, and is assured of receiving payment if all terms and conditions of the Standby Letter of Credit have been complied with.
- May be transferred to a third party if stipulated in the Standby Letter of Credit.
- Facilitates the following types: Performance, Advance Payment, Bid Bonds, Financial, Direct Pay Letters of Credit.
- The Customer must have a credit facility in place in order to request that a Standby Letter of Credit be issued.