Abu Dhabi Commercial Bank (ADCB) has announced the launch of aback-to-back letter of credit (L/C) facility.

The facility will be a core component in the bank's structured trade finance capability according to ADCB, which is one of the UAE's larger banks.

Rare offering

According to ADCB, a back-to-back L/C facility is something "not too many banks currently offer in the UAE market because it requires banks to have a complete understanding of international trade and the risks associated therein including geo-political issues".

The bank reckons its new facility will appeal to customers involved in international trading and the re-export business as well as dealers in commodities, such as oil and gas or agricultural products.

Potential benefits

The bank hopes the new facility will assist customers in today's difficult trading circumstances.

In times of global liquidity constraints, the back-to-back product provides businesses with the required liquidity they need in order to sustain their international trading business, according to ADCB.

The bank says it can provide the back-to-back facilities for qualifying companies with a minimal cash margin requirement.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.