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Commission Fee

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Mon, 01/14/2008 - 22:40
JessR
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Joined: 07/23/2007
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Dear L/C experts,

Can anyone give me idea on how banks calculate the commission fees when issuing a Letter of Credit.

Thanks

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Tue, 01/15/2008 - 00:06
#1
shahriar
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Joined: 08/25/2007
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what i do

dear JSSR

the comission issue differs from bank to bank. i can tell u abt the practice in my bank -

LC Value xxxxx

Comission = LC Value*0.xx%

SWIFT Charges = xxxx

Misc Chages = xxxx

 this is the basic one. there may be other charges. for example, if the LC validity is more than 90 dats, extra comission will be charged. again if  there is add cinfirmation, there is extra charges. besides, if the reimbursing / advising charges on the applicant account, they will be chagred on the applicant. most of this charges are certain percentages of the LC value. hope that answer the question.

 

Shahriar

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Tue, 01/15/2008 - 00:46
#2
Armagedo
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Joined: 09/10/2007
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Hi! Thanks to Shahriar who

Hi!

Thanks to Shahriar who gives You the scetch of those commissions.

But, of course, all those commissions are individual which means that they are depending on:

1/ policy of the issuing bank

2/ scheme of the deal for which an LC is called to be issued

3/ difficulcy and risks of such a deal

4/ whether applicant will use its own money or will ask a credit to cover LC obligations

etc, etc, etc

Each bank - separate situation.

And it's difficult to say how much it will cost.

In one case it will cost You 0.1% of the max LC amount as flat commission, in other 2% per quater, in other 8% annually etc etc etc

Good luck

Good luck

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Tue, 01/15/2008 - 00:59
#3
JessR
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Joined: 07/23/2007
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Commission

Thank you guys for your prompt replies, I was thinking there is standard formula or rules in computing commissions.

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