ADDING CONFIRMATION TO AN LC ALREADY CONFIRMED

QUESTION

Hello,

I need some help. Is it possible for another bank to add confirmation to an LC that has already been confirmed? In other words, can an LC have two open confirmations from two separate banks?

Thank you in advance.

Kind regards,

Emsequeira

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ANSWER

Dear Emsequeira,

In trade finance, almost anything is possible—provided the parties involved are willing and the risks are acceptable.

To illustrate that double confirmation can happen, let me walk you through a hypothetical (but realistic) scenario:

Let’s say Bank I in Cambodia issues a confirmed letter of credit (LC) in favor of Beneficiary B in Thailand. However, for some reason, Bank A in Thailand declines to add its confirmation to the LC issued by Bank I. As a result, Beneficiary B refuses to accept the LC due to the lack of local confirmation.

To address this, Bank I approaches Bank C in Singapore, a reputable institution, and requests it to add confirmation. Bank C agrees. So, Bank I reissues the LC, this time routing it through Bank C, which acts as both advising and confirming bank. Bank A in Thailand is now merely an advising bank, receiving the confirmed LC from Bank C and passing it to the beneficiary.

However, due to a global financial crisis, Beneficiary B still insists on local confirmation by a Thai bank. Seeing that Bank C is a well-regarded correspondent, Bank A now feels comfortable enough with the payment risk and agrees to add its own confirmation—even though the LC has already been confirmed by Bank C.

This results in a second confirmation on an already confirmed LC.

Important note:

Bank A’s confirmation in this case would be considered a silent confirmation, as it is done without the knowledge or authorization of the issuing bank (Bank I). It is an arrangement solely between the beneficiary and Bank A, and Bank A does not receive a reimbursement undertaking from either Bank I or Bank C.

To sum up:

Double confirmation is rare, but certainly possible—especially when structured carefully and supported by trusted relationships.

Best regards,

Mr. Old Man