Trade Finance

Our trade solutions facilitates local and cross-border activities to manage finance operations and liquidity, as well as mitigate risks inherent in trade.

Letters of Credit (Import & Export LCs)

Issued by the Bank at the request of the customer (applicant/importer) where the Bank promises to pay the beneficiary/exporter for goods and services.

Benefits

  • Payment is guaranteed by both the issuing bank and the confirming bank as long as compliant documents are presented.
  • Mitigates the buyer/country risks
  • Can allow multiple/continuous shipments and quality of products and price guaranteed by an independent pre-shipment inspection company
  • Allows access to other products e.g. pre-shipment finance and structured finance
  • Ensures delivery is done within schedule and payment

Qualifying Criteria

  • Beneficiary presents all documents called for
  • Meets all other terms and conditions set out in the LCs.

 

Pre-shipment financing

Facility for customers to purchase inputs for the production process of goods which are for onward sale/export.

Benefits

  • Helps to generate additional working capital to enable the client meet production demands
  • Provides additional working capital with flexible security requirements
  • Enables taking of  very large orders
  • Cheaper than other borrowing facilities
  • Can be used on a revolving basis

Qualifying Criteria

  • The facility and must be backed by an export LC or a confirmed export order.

 

Post import financing

A loan facility given to an importer (customer) to settle bills of exchange that have matured and the importer (customer) has not mobilized adequate resources to settle the same.

Benefits

  • The Bank allows its client an additional credit period which is un-disclosed to the seller and therefore allows to negotiate for better rates with the seller.
  • Extended credit period.
  • Lower lending rate (LIBOR plus a small margin).
  • Used by importers to pay the LC Bills as they fall due instead of debiting the current account.
  • It is ideal to use when Client account is not in credit balance as the fees charged are much lower that the O/D.

Qualifying Criteria

  • The facility is usually granted for bills drawn under a Usance Letter of Credit.

 

Guarantees/Bonds - (Bid/Perfomance/Transit) bonds

A written irrevocable undertaking is issued by the bank to pay the beneficiary on demand if customer has not fulfilled contractual obligations.

Benefits

  • Last longer
  • Client obtains credit hence easing increase in liquidity
  • Immediate compensation in case of default

 

Documentary Collections

Documentary collections are used to facilitate importation/exportation of goods between parties and collection of sale proceeds.

Benefits

  • Cheaper than LC’s in terms of  lower bank charges
  • Easy to establish and operate  with shorter processing time- speedy payments
  • If documents are against acceptance (DA), allows an importer a period of credit and at the same time assuring exporter of payments
  • Drawee has the flexibility on settlement of bills (especially  for documents against acceptance)
  • No impact on customer’s credit lines.

 

Structured Trade Finance (STF)

Is cross-border trade finance where the intention is to get repaid by the liquidation of a flow of commodities.

Benefits

  • Access to financing where no other financing is in place
  • Financing facilities are tuned to the producers production and trade cycle
  • Off balance  sheet operation/liquidity
  • Allows producer to benefit from his track record in a reduced risk environment


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