ICC Digital Library Forum

I would like to have your opinion on the following topic: The Bank has purchased the portfolio of a Bank that is closing operations in our country and among them are several Stand By LC's I would like to know if it is necessary that we obtain the consent or agreement of the aplicant in order to manage us these Stand By LC's?
The issuing Bank (the Bank that is closing operations)is proceeding to send an amendment to the advising banks indicating the name of the Bank that will now assume the responsability of honoring the Stand By's.
Could you inform us if this procedure is the correct one?

Thierry,

This is not a simple question and I would have thought you’d have ‘in-house’ legal advisers that could answer this. (What about my ‘vieux pote’ Georges Affaki?) I would merely observe that the UCP (sub-Art 9d(i)) / ISP (Rule 1.06b) does not allow the terms and conditions of an irrevocable instrument to be changed without the beneficiary’s, and any confirming bank’s, agreement.

On a slightly different subject, I’m looking forward to Wales restoring the pride of Great Britain on 26 Feb by giving our opponents a good thrashing. Allez le Pays de Galles

Salutations, Jeremy

[edited 2/17/2005 1:13:10 PM]

I agree with Jeremy that the amendment is contingent upon agreement of the confirming bank and beneficiary, but agreement of the applicant may also be required. This is not a UCP requirement, but may be necessary from a legal standpoint concerning the original agreement concerning the issue of the LC.

Laurence

Would it be an amendment ? I would rather assume that in today's world of M&A where buying/selling or acquiring operations of banks is becoming order of the day, as evidenced by increased number of SWIFT broadcast messages, the Issuing Bank would notify sale of operations and then the buying bank would, by way of another notification confirms that the assets and liabilities of the issuing bank have been acquired by the buying bank and accordingly the buyer bank would be responsible for any claim(s) under the standby LCs. That’s the normal legal manner in which such notices are sent. It is of course up to the beneficiary whether to accept the guarantee from the buyer bank. IN the event that the buyer bank is not a strong entity, beneficiary would rather prefer to have recourse on the original issuing bank.

Regards,

Pradeep