ICC Digital Library Forum

Bank A in Australia add its confirmation to an L/C issued by Bank B in Belgium. The L/C is subject to UCP 600 and URR 725.

Bank A also received an Irrevocable Reimbursement Undertaking from Bank N in New York subject to URR 725.

Not sure whether Bank A will book the liability in its books of account in the name of Bank B (issuing bank) or Bank N (reimbursing bank) !

Please let us have your comments on it.

Shahed



[edited 12/1/2010 3:39:02 PM]
[edited 12/2/2010 6:46:11 PM]

Depends on your laws and bank policies. However, many banks will change the country risk and/or bank risk based upon receipt of an Irrevocable Undertaking.

Glen,

Thanks for your response. I showed it to my boss, Herold Laval, who said he knows you very well.

His questions to you, personally, are [a] how exactly do you handle such situations at your bank (i.e., do you take the country and bank risks of the reimbursing bank ?) do you have any expert commentaries (from ICC gurus) on the matter ?

Best regards,

Shahed

Hi Shahed

We book our lines with the reimbursing bank because we consider the reimbursement undertaking as an independent undertaking, and not one done in addition to the obligation of the issuing bank. RU is not subject to the terms and conditions of the credit. Usually when we require a reimbursement undertaking it's because we don't have risk appetite on the IB and thus no risk lines.
[edited 12/3/2010 3:41:15 PM]