Proponents of the electronic letter of credit (L/C) are continuing to roll out and expand services that they claim will provide new opportunities for banks and efficiency gains and cost savings for companies.

LCconnect announced in August the completion of what it says was the first letter of credit application and bidding process conducted entirely online. According to the company, the US glass, coatings and chemical business, PPG Industries, successfully executed a US$30 million standby L/C using the LCconnect platform, with nine US-based banks and six foreign banks invited to bid on the transaction.

PPG's treasury manager Linda Mula said using the LCconnect platform was a "strong indicator of the effectiveness we can gain by moving our L/C bidding process online. LCconnect allowed us to reach multiple banks simultaneously and was a much easier than using the phone to obtain bids," she added.

A statement issued by New York-based LCconnect on the exercise gave no details of the bids submitted or accepted but Mula did indicate that PPG was "very satisfied with the results and look forward to using them for our future L/C origination needs".

The LCconnect platform aims to streamline the documentary and standby credit application and pricing process for both companies and banks. Through the LCconnect system, companies initiate an auction process with banks and ultimately award their L/C business to the bank offering the most attractive deal.

LCconnect says its platform provides greater opportunities for banks to bid for L/C business and that companies will find an online system for the origination and bidding on L/Cs more efficient than current systems that depend on the telephone and fax.

Founder and co-president of Lcconnect, Michael Moretti, says the company's electronic platform "does not alter the existing process or relationship between companies and banks" and says the company's primary objective is "to maximize the operating efficiency of the letter of credit execution process for all players".

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