QUESTION
Hello,
I need help. Can someone tell me if it is posible to had a confirmation by another bank to an already confirmed LC? (both open confirmations)?
Thank you in advance.
Regards,
Emsequeira
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ANSWER
Dear Emsequeira,
Anything is likely possible.
I would like to give an assumption to evidence that a double confirmation is quite possible. Let’s assume that:
Bank I in Cambodia issues a confirmed LC in favour of Beneficiary B in Thailand. Yet, due to some reason Bank A in Thailand refuses to confirm the LC issued by Bank I in Cambodia. Hence, Beneficiary B refuses to accept the LC which is not confirmed. Bank I contacts Bank C in Singapore and Bank C agrees to confirm L/C to be issued by Bank I.
So, Bank I issues a new LC with Bank C in Singapore being the first advising and confirming bank and Bank A in Thailand as the second advising bank.
Upon receipt of the LC issued by Bank I in Cambodia Bank C adds its confirmation and advises the confirmed LC to Beneficiary B through Bank A in Thailand.
Yet, due to the global financial crisis, Beneficiary B still wishes to have LC confirmed by a local bank in Thailand.
Now Bank A sees that the payment risks in connection with the LC is minimized as Bank C is one of the very prestigious correspondent banks of Bank A. Therefore, it agrees to add its confirmation to the LC already confirmed by Bank C and advises the same to Beneficiary.
Remark:
The second confirmation added to the already confirmed LC is done based on the agreement between Beneficiary B and Bank A and should be treated as silent confirmation. i.e., confirmation without the issuing bank’s authorization. Bank A in Thailand receives no reimbursement undertaking from Bank I or Bank C.
Again, the above is just my own assumption. It rarely happens but is quite possible in our real life.
Best regards,
Mr. Old Man
