Standard Chartered Bank (SCB) and Union Bank of India (UBI) have reportedly entered into a trade services agreement in which SCB will handle all letters of credit (L/Cs) issued by UBI to Asian countries.

According to The Economic Times of India, the two banks will share issuance fees in transactions in 10 Asian countries. Under the agreement, UBI's Asian L/Cs will be routed through SCB Hong Kong, which will then reissue the L/Cs to ultimate beneficiaries.

Variable fees

The fee structure for L/C issuance varies from country to country and from borrower to borrower depending on their risk profiles according to India's top-selling English language business daily.

It says that UBI is in talks with other foreign banks with a view to making similar arrangements in the US and UK. "We would like to streamline the issue of L/Cs at Union Bank and for this, we are speaking to other foreign banks as well," UBI's chairman and managing director Mr V Leeladhar, is quoted as saying.

Asian network

London-based SCB ranks amongst India's top correspondent bank revenue earners and writes most of its business in emerging Asian markets.

Each year UBI issues L/Cs worth around US$9 billion in Asia and aims to take advantage of SCB's extensive network in the region.

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