Our aim is to ensure that with Capitalbank you and your business are provided with the right service solutions, products and financial services to enable you to operate efficiently and profitably.
- An import Letter of Credit is an unconditional undertaking, given by an "Issuing Bank" at the request of its customer (the Applicant or Importer) to pay the Beneficiary (or Supplier) against stipulated documents, provided all the terms and conditions in the Letter of Credit are complied with.
- Exporters can instruct their Bank (called the "Remitting Bank") to send commercial documents (such as invoices, Bills of lading or Airway Bills) or financial documents (such as Bills of Exchange) on a collection basis to the "Presenting Bank", normally located in the Importers' country. Upon receipt of such documents, CAPITALBANK will acknowledge receipt and release documents strictly in accordance with instructions received from the Remitting Bank either against payment (if the collection instruction calls for documents against payment or D/P) or acceptance (if the collection instructions call for documents against acceptance or D/A).
An import Loan is a short-term cash advance (with recourse) that enables the customer as an importer to meet the customer’s immediate payment obligations under a sight or usance Letter of Credit presentation or Import Documentary Collection.
A shipping guarantee is issued by CAPITALBANK on the customer’s instruction when the vessel carrying the goods arrives earlier than the original bill of lading, which requires the customer to clear the goods or face the possibility of incurring demur rage charges. Under such circumstances, the shipping documents may still be in transit to CAPITALBANK or may have been lost in transit.
Letter of Credit Advising is a service provided by CAPITALBANK whereby an Issuing Bank, on behalf of the Applicant or Importer (bank’s customer’s customer) duly transmits a Letter of Credit by SWIFT, authenticated telex or dispatches, or by mail or courier to CAPITALBANK.
Confirmation of a Letter of Credit constitutes an undertaking on the part of the Confirming Bank, in addition to that of the Issuing Bank, to pay a customer, without recourse, if documents are presented in compliance with the terms and conditions of the credit.
CAPITALBANK has a correspondent banking network across the globe and other emerging markets. CAPITALBANK offers Letters of Credit confirmations to exporters to help mitigate sovereign and bank risks subject to its internal approvals.
Letter of Credit negotiation is defined within Uniform Customs & Practice for Documentary Credits as the "giving of value". In effect, by negotiating export documents under a Letter of Credit, CAPITALBANK will pay the customer and the Exporter, with its own funds, and will rely on the reimbursement by the Issuing Bank at a later date.
A Letter of Credit Collection is similar to a Letter of Credit Negotiation in that CAPITALBANK, as the nominated bank will handle the export documents and present these to the Issuing Bank for payment or acceptance under the framework of UCP. The key point to note is that CAPITALBANK will continue to examine the documents, and will notify the customer if any of the documents that have been presented do not conform to the Letter of Credit.
An Export Bill for collection is a process whereby an Exporter can rely on international banking channels to control document movement and release.
Pre-shipment finance is working-capital finance that is provided by CAPITALBANK to an exporter, on a “with-recourse basis” against either a confirmed export order from the customer’s end buyer or against a Letter of Credit.
CAPITALBANK can offer a pre-shipment credit facility in both Local as well as foreign currency.
Invoice financing enables an importer or exporter who trades on an open account basis to raise short-term pre or post shipment finance using commercial invoices (not proforma invoices) and transport documents. This form of finance can be domestic or cross border.
By presenting these documents the Bank can provide short -term finance to the importer or exporter. The maximum amount advanced for imports is 100% and for exports, the maximum should not normally exceed 85% of the invoice value.
These are the Benefits you stand to enjoy should you patronise in any of the trade services
a. Better cash flow
b. The customer will enjoy cheaper financing compared to an overdraft facility
c. As a buyer the customer can reimburse the supplier on a sight basis and should be in a better bargaining Position
d. The customer will receive funds in advance, which may be used to fund working capital needs, such as the purchase or manufacture of goods, or to arrange for transportation or storage
e. Since the customer has either an Export Order or a Letter of Credit to support the customer’s your application, the cost of financing will invariably be much cheaper than an overdraft (in general, financing costs will be cheaper if supporting sales are through a letter of credit rather than the export order)
f. With a lower cost of financing the customer may be able to negotiate better contract terms with the buyers vis -a-vis competitors.
g. Documentary collections are typically a more secure method of payment than open account trading because the transaction is handled through the banking channels and documents are only released in accordance with the customer’s instructions.
h. By presenting documents through CAPITALBANK for presentation and examination, the bank will be in a position to notify the customer of any discrepancies under the Letter of Credit. If such documents can be amended by yourselves and represented as clean it will save the customer valuable time, money and risk since the Issuing Bank will not be obliged to reimburse the customer if documents are non-conforming (in this instance the Issuing Bank may also return documents, at the customer’s cost)
i. Confirmation of a Letter of Credit protects the customer and the exporter, against Issuing Bank and country risk. This means that if the customer had successfully performed under the terms and conditions of the Letter of Credit, CAPITALBANK will guarantee the export proceeds, irrespective of whether the Letter of Credit Issuing Bank honors its obligations or not
j. In gaining protection against country risks the customer can access new and emerging markets since the risk of non-payment are borne by the Confirming Bank
The customer can secure non-recourse financing upon presentation of compliant documents
k. As the Beneficiary, the customer may be reasonably assured that the Letter of Credit is genuine and if the customer presents the documents stipulated under the Letter of Credit, it is unlikely that the Issuing Bank should challenge the authenticity of such Letter of Credit.
l. If the customer decides to lodge the Original Letter of Credit and amendments with CAPITALBANK for safe-keeping, the customer will not need to worry about misplacing it (Note: Original Letters of Credit are required for negotiation)
m. The supplier is independent of the process of raising finance. They need not sign any documentation, but receive payment as per the original contract terms through the Letter of Credit or Bill for Collection
o. As the customer is able to reimburse the suppliers on a sight basis or when the tenor is due, this will increase the bargaining power of the customer - typically in terms of the contract price.
p. Documentary collections are a more secure method of payment than advance payment as they can provide comfort to an importer that goods have been shipped and, if an independent inspection certificate is presented comply with the order specification.
q. As an importer, the customer may be able to negotiate for better credit terms (such as making payment 30 days later) rather than paying the exporter at sight because the documents are handled by banks.
r. As the importer the customer does not have to make payment until the goods have been shipped and can negotiate better credit terms with customer’s supplier because documents will be handled through the banking system.
s. Customer is also assured that payment or acceptance will not be made unless the documents called for under the Letter of Credit and the terms and conditions of the Letter of Credit are strictly complied with Customer maintains control over the transaction through the Letter of Credit mechanism.
t. Customer can, for example, incorporate a latest date for shipment, payment terms and specific documentary requirements, all of which are irrevocable and therefore require the agreement of the Issuing Bank and the Confirming Bank (if any), and beneficiary before such can be revised
u. The customer will be able to receive funds in advance, which can be used to repay the pre-shipment loans that the customer may have taken to produce the goods, pay the suppliers if the customer was a an intermediary or fund the working capital requirements. This is especially useful if the customer had granted credit terms to the buyer under the Letter of Credit.