Letter of credit guarantee
With a letter of credit guarantee the bank shares its risk in confirmed letters of credit with EKN. 50 per cent of the total confirmed amount can be guaranteed by EKN. The length of validity and credit period that can be accepted depends on EKN’s risk assessment.
The guarantee is tailored to the conditions that apply to the letters of credit market and processing is simple and rapid. EKN’s offer and guarantee are irrevocable. The applicant bank suggests a premium, which EKN considers when assessing the risk.
Letters of credit that can be guaranteed
Letters of credit must follow the ICC rules for letters of credit. Stand-by letters of credit are not covered by EKN’s guarantee.
The guarantee refers to letters of credit that are confirmed or guaranteed by a bank. For a letter of credit that is guaranteed, so-called unilaterally or silently confirmed, the guaranteeing bank must be the nominated bank. The letter of credit must be payable/negotiable at the confirming bank. EKN can also give an irrevocable offer for so-called binding promises for letters of credit that have not yet been opened.
Apply in good time, and no later than the first presentation of documents under the letter of credit or alternatively in connection with a binding commitment being made to the exporter. If the letter of credit has a credit period longer than 12 months, you must attach a supplementary form from the exporter describing the export transaction. When you apply you may request to have the guarantee issued immediately or to receive an offer first. An application for an offer costs nothing. Apply on EKN Online if the letter of credit is valid for no more than 12 months, or otherwise on a form.Apply forms Apply Online
EKN assesses the risk in the transaction and sends you an offer, unless you have asked in your application to have a guarantee issued immediately. The offer states the premium, or in other words what the guarantee will cost you.
It is very important that you read EKN’s general conditions and any supplementary conditions, prior to your requesting the guarantee, so that you know what is applicable to the guarantee.
You can ask to have the guarantee issued immediately when you apply. Otherwise the offer will state the latest date for contacting EKN to request the guarantee. No form is needed for this. The premium must be paid when the bank debits the exporter.
Non-payment by the opening bank must be notified to EKN immediately, and no later than 30 days after the due date. This notification of delay may be made on EKN Online or on a form. In principle, EKN will pay compensation immediately after you have sent a request for claims adjustment to EKN. No form is needed for this.
Web page last updated 7 Dec 2020