CKB

Loro letters of credit

  • Professional expert assistance in formulating and opening L/C

Product description

Documentary letter of credit is an international payment instrument.

Loro letter of credit represents a written obligation of the Bank of applicant (buyer of goods/services) to execute payment, through CKB, in Montenegro, to our client (L/C beneficiary) on account of exported goods/services.

This transaction will be executed provided that the L/C beneficiary (CKB client) has presented conforming documents to the Bank within the specified time frame.

IN LETTER OF CREDIT OPERATIONS, “ICC UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS”, UCP NO.600 REVISION 2007 ARE OBSERVED.

Fundamental principles governing documentary letters of credit are as follows:
1. Principle of dealing with documents only and not with goods or performance
2. Principle of independence of L/C obligations from underlying contract
3. Principle of autonomy of legal relationships
4. Principle of examining documents

There are two key elements of a documentary letter of credit:

  1. issuing bank (in this case, the applicant’s/buyer’s bank) opens/issues an irrevocable letter of credit in favour of beneficiary (in this case, the Bank’s client – seller of goods/services) and assumes an irrevocable undertaking to pay the beneficiary;
  2. the beneficiary will collect the funds provided that the bank is presented the documents specified in the L/C that are in strict compliance with all terms and conditions stipulated in the L/C within the foreseen time.
Letters of credit may be used by all legal entities which are the Bank’s clients.

There are different types of documentary letters of credit, including: COVERED, UNCOVERED, TRANSFERABLE, NON-TRANSFERABLE, REVOLVING DOMICILE IN THE COUNTRY OR DOMICILE ABROAD, PAYABLE AT SIGHT, ACCEPTANCE, TIME, STANDBY.

It is very important for a foreign trade company, which is the Bank’s client, to consult the Bank, prior to concluding a foreign trade contract, on defining the FINANCIAL CLAUSE adequately:
  • what type of letter of credit the buyer should open,
  • when the letter of credit must be opened,
  • under which terms and conditions.
The Bank has had over 10 years experience in working with L/C. In combination with expert assistance it renders, CKB represents the most reliable partner on the Montenegrin market. This is also evidenced by its larger than 60% market share. One of the most important factors in establishing an L/C is to formulate it properly. Therefore, the most important part of the service is not the price, but professional support extended by the Bank.

Product price

Price of a loro letter of credit depends on the L/C type and agreement on cooperation with particular client and ranges from 0.3%-0.5%.