TYEPES OF BANKS IN TRADE FINANCE

Advising bank
A bank normally located in the country of residence of an Exporter, used by an Importer's bank to validate the authenticity of a Letter of Credit before the Letter of Credit is passed to the Exporter.

Issuing Bank
Buyer's or importer's bank which establishes (opens) a letter of credit (L/C) in favor of a beneficiary (seller or exporter), forwards it to an advising bank for delivery to the beneficiary, and commits itself to honor demand drafts drawn by the beneficiary against the amount specified in the L/C. Also called opening bank.

Nominated Bank
A bank designated by the issuing bank which is authorized to pay, to accept draft(s), to incur a deferred payment undertaking, or to negotiate the letter of credit (L/C) is known as the nominated bank. The nominated bank can be a party other than the advising bank.

Correspondent Bank
The term correspondent bank or correspondent used in international trade refers to another bank in another country with which the first bank maintains a banking service agreement.

Confirming Bank
A bank which engages to honor a letter of credit issued by another, or engages that such letter of credit will be honored by the issuer or by a third bank.

Paying, Accepting or Negotiating Bank
The nominated bank which:
* makes payment to the sight draft(s) drawn by the beneficiary is known as paying bank,
* accepts the term draft(s) drawn by the beneficiary is known as accepting bank,
* negotiates the draft(s) and/or documents presented by the beneficiary or bona fide holder is known as negotiating bank.
When the bank negotiates the draft(s) and/or documents, that is, the negotiation, it gives value to such draft(s) and/or documents, not just examination of the documents.

Transferring Bank
The paying, accepting or negotiating bank that makes the credit available in whole or in part to one or more second beneficiaries at the request of the first beneficiary is known as the transferring bank.

Reimbursing Bank
Reimbursing bank" means the bank instructed or authorized to provide reimbursement pursuant to a reimbursement authorization issued by the issuing bank.

Collecting bank
In documentary credit, the bank (usually the buyer's bank) that collects cash payment or a time draft from a buyer, in exchange for bill of lading and/or other documents which enable the buyer to take delivery of the shipment. The collecting bank then forwards the payment to the remitting bank (usually the seller's bank) for eventual remittance to the seller.

Remitting Bank
intermediary bank in documentary collections that forwards a seller's shipping documents to the collecting-bank, and the payment in the opposite direction
Presenting BankBank that submits (presents) a financial instrument (check, draft, letter of credit, etc.) to the advising or paying bank to seek a payment