Letter of credit

About letter of credit

Letter of credit (L/C) gives securance for both transaction partners – exporter and importer. The seller has guaranteed payment in exchange for agreed documents, confirming that the goods have been shipped or services have been provided meanwhile the buyer receives a guarantee that the seller will not receive the payment, if goods or services are not provided in accordance the L/C.
This service is beneficial in case you have a new international business partner or if your cooperation partner requests this type of transaction. L/C is a separate transaction, independent of trade or other agreements – all banks involved in the L/C transaction are working only with documents, not goods or services that these documents refer to. L/C can differ also with the form of payment – you can choose the most appropriate payment for your transaction.

Are you the seller (exporter)?

The L/C is opened by the buyer and sent to your (seller’s) bank, who will advise it to you. You have to check whether the terms are acceptable.
You will receive the payment for goods on time. After submitting agreed documents to the bank, the buyer’s bank will pay you the amount specified in your L/C.
You will be able to manage the company financial flow better. You can offer the buyer to use the deferred payment and the bank can offer you the discounting of the payment.
L/C can be confirmed to cover issuing banks payment risk.

Are you the buyer (importer)?

Possibility to avoid advance payments.
You get the goods at the agreed time and the seller must also fulfill all other contractual conditions according to L/C in order to get the money.
If you use the L/C for a payment, you can apply for a loan from the bank.
The seller can improve buyer’s working capital by L/C with deferred payment
In cooperation with Altum we offer the option to get additional collateral (guarantee) to companies that need to increase the access to financing solutions.

Title

How does letter of credit work?

The buyer and the seller enter into a purchase and sales transaction agreeing to use the L/C for a payment.
The buyer submits an application to their bank to issue the L/C under the conditions agreed with the seller.
The buyer’s bank makes a decision regarding the issuing of the L/C, based on the latter’s reliability and forwards issued L/C to the seller’s bank.
The seller’s bank advises the seller of the L/C issuance and the latter checks the compliance of its terms and conditions.
The seller ships the goods to the buyer as agreed and presents the documents required in the L/C to their bank.
If the documents are in compliance with the terms and conditions of the L/C, the seller’s bank will forward them to the buyer’s bank which will make a payment against the documents. Once the seller’s bank receives the money, it will transfer it to the seller.
The buyer pays their bank and in return receives the documents accompanying goods.

Simple steps for the buyer to apply

1.
Register for consultation 

2.
We will contact and advise you 

3.
Send the filled application to info@seb.lv

4.
After a positive decision, sign the agreement if necessary

Service fees

Letter of credit line¹

Service	Fee
Processing of the Letter of credit line/its amendments	By agreement

Import letters of credit

Service	Fee
Issue of the Letter of Credit	100.00 EUR
Issuance of a letter of credit within the scope of the Letter of credit line	By agreement, min 70.00 EUR
Preparation and coordination of letter of credit template	By agreement, min 70.00 EUR
Amendment/cancellation of letter of credit	70.00 EUR
Handling and payment of documents	0,20%, min 85.00 EUR
Discrepancy fee	70.00 EUR/ 80.00 USD
Letter of credit utilisation (depending on the type of collateral):
type of collateral: cash cover in SEB bank	0,2% of the amount of the credit letter, min 70.00 EUR²
another collateral	By agreement, min. 70.00 EUR
Deferred payment fee	70.00 EUR

Export letters of credit

Service	Fee
Preparation and coordination of letter of credit template	By agreement, min 70.00 EUR
Advice of letter of credit	85.00 EUR
Advising of amendment/cancellation/non-utilisation of a letter of credit	70.00 EUR
Preliminary checking of letter of credit documents³	70.00 EUR
Handling and payment of documents	0,20%, min 85.00 EUR
Confirmation of a letter of credit	According to risk, min. 100.00 EUR
Discounting of documents	According to risk, min. 100.00 EUR
Preparation/advise of assignment of proceeds	70.00 EUR
Payment under assignment of proceeds	20.00 EUR
Transfer of a letter of credit	0,2%, min 150.00 EUR
Deferred payment fee	70.00 EUR

Additional services

Service	Fee
Processing and forwarding information of financial transactions on behalf of the customer	30.00 EUR
Preparation of agreement and collateral agreements in electronic format	Free of charge
Preparation of agreement and collateral agreements in paper format	35.00 EUR
Authorisation to receive goods addressed to the bank	70.00 EUR
Costs of courier services	Actual costs
Commissions charged by correspondent and cooperation banks	Actual costs
Verification of counterparties involved into deal (applicable for deals with high risk countries)^*	45.00 EUR

*In accordance with the bank’s related internal and external regulations at the moment of verification

¹ The commission fee must be paid on the day the agreement or amendments are signed.

² Account balance fee shall be applied for the balance of funds in the accounts as indicated in SEB bank’s General Price list for Corporate Customers.

³ The fee is applied in case of more than one document undergo prior inspection.