WHETHER AN SBLC CAN BE ADVISED TO THE BENEFICIARY IN CARE OF ANOTHER COMPANY

QUESTION

Dear Mr. Old Man,

Greetings from Istanbul City – Turkey,
I have 2 questions and need your “help please”,

Question 1:

Our company registered at UK-London and Buyer company located in Dubai, but because of Coronavirus we do not go back to London and work from here Istanbul home based. Buyer bank has correspondent bank account at Commerzbank and we choose one Turkish bank for Advice Through Bank.

Sender: Buyer Bank Dubai
Receiver: Commerzbank – Germany
Advice Through Bank: Turkish bank (who has relation same like buyer bank with commerzbank)
Confirmation: SBLC to be confirmed by Commerzbank
Applicant: DUBAI COMPANY
Beneficiary: ABCDE COMPANY IN LONDON

Does that create any problem?

Question 2:

Our Company name for example: ABCDE Trading Co. Ltd.-UK and SBLC send that name as beneficiary,
For example, after first shipment we request from buyer change SBLC beneficiary name to: ABCDE Trading INC. Turkey with swift amendment message.

IS THAT POSSIBLE? (we can but that clause to sales and purchase contract like that: When the Seller request Beneficiary name changes to their one of sub-company, buyer bank will do that in 24 hour with amendment swift message).

Thanks and Regards,

Kemak Tunc
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ANSWER

Hi,

Thanks for your questions. I would like to answer as follows:

Question 1:

From your description I understand that Dubai Company will open a confirmed SBLC in favour of your company based in London and the SBLC will be confirmed by Commerzbank Germany and advised through a Turkish bank to your office in Istanbul instead of London office which has been closed due to Covid – 19.

It is strange, but possible. Field 59 (Beneficiary) of MT 700 may be shown as in the following example:

ABCDE Company, London
c/o ABCDE Company, Istanbul
123 Street, Istanbul, Turkey

The address in Turkey is just a c/o address while the beneficiary remains to be ABCDE Company, London. I see there is no problem with the above solution, but I am not sure whether the Turkish bank agrees to advise such SBLC. Therefore, to avoid unexpected problems and facilitate the transaction, you should inform the Turkish bank in advance of the situation asking them if they agree to advise the SBLC to your company in London in care of your company in Istanbul.

Question 2:

As you may know, an LC can neither be amended or canceled without the agreement of (1) the issuing bank, (2) the confirming bank, if any, and (3) the beneficiary.

So, such amendment is possible if you as the beneficiary, the issuing bank and the confirming bank so agree.

Kind regards,

Mr. Old Man
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