Letter of Credit Forum

If an issuing bank empowers a nominated bank to examine and
honor documents under an LC  the issuing
bank has to reimburse the secondary bank. Two ways of reimbursement are
available:

1. Direct reimbursement by the Issuing Bank
2. Indirect reimbursement by a third party bank
   which the Issuing Bank has authorized to reimburse the secondary bank.

Standby letters of credit are bank guarantees. However, since passing of the Glass-Steagal Act in 1932, American banks were separated in commercial and investment banks where commercial banks were not permitted to issue guarantees. 

To overcome this competitive disadvantage, Amercian banks circumvented the Glass-Steagal Act by issuing letters of credit, where the beneficiary only had to demand payment but not present commercial documents. Glass-Steagal was repealed in 1999, however, banks continued to offer standbys since their clientele was used to them. 

Even though the payment
obligation under a letter of credit is independent of the underlying
transaction, courts and the law have recognized, that if the beneficiary
defrauds the applicant, banks need not pay. Originally this doctrine was
developed in the case of Sztejn, now the Uniform Commercial Code (UCC) in its
Article 5 ruling which deals with letters of credit, has incorporated the Sztejn

The following graph shows the search volume globally for the term "letter of credit". As one can clearly see, there is a steady decline. I expected to see a drop after the financial crisis, reflecting a general slowdown in international business. However, the decline has been going on steadily over time. 

Swarm intelligence and crowd intelligence are all the rage. Let people bet on terrorist attacks and hope that the intelligence of the multitude will top the insight of the expert. The collective is maybe not always right, but maybe more right than the individual. 

I observed in these days difficulties with chinese ports:

L/C terms Tianjiing Xingang of china, bill of lading and World Ports reference Port of Xingang, the same with Shenzen Port in l/c where Port of Chiwan in bill of lading.
Only on shipment the carrier states that it was not possible to insert ports in bill of lading as requested by the credit terms.
Who will bear an eventual discrepancy liability?
Thanks and Ciao

The good news: www.letterofcreditforum.com is attracting more and more visitors every month. The bad news: We are attracting more and more spammers. 

To facilitate my fight against spammers I am disabling any link-posting. It will be impossible to post any links. 

Also, it is no longer possible to comment on discussions that are more than a month old. I found that most comments thusly aged do not contribute to the discussion in substantive ways.