Letter of Credit Forum

A Nominated bank is the specific bank with which the LC is available, as indicated in field 41A, and to whom douments must be presented. The "nomination" originates from the issuing bank. If this field states "Any Bank", then the Nominated bank is de facto, any bank where the beneficiary elects to present documents.  

A Negotiating bank is a Nominated bank under an LC which is "available by Negotiation", and which acts on its nomination by "buying" the documents (subject to the presentation being in order) from the beneficiary, and paying the beneficiary the proceeds of the presentation from its own funds, before the bank has received reimbursement from the issuing bank. Because of the time factor, the negotiating bank would usually a deduct an elementof "interest" from the payment.

So, the terms "Negotiating" bank and "Nominated" bank are not mutually exclusive. A Nominated Bank only becomes a Negotiating bank if it elects to act on its nomination under an LC available by negotiation", otherwise its status remains as a Nominated bank. A Negotiating bank on the other hand, must necessarily be a Nominated bank, beacause it will have elected to effect the act of negotiation.

Unless the Nominated bank is a confirming bank, and unless otherwise agreed with the beneficiary, any negotiation which it may effect will always be with recourse to the beneficiary.