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Trade risk

Confirmation of documentary credit

In instances where the exporter is concerned about the financial standing of the issuing bank [of the documentary credit (D/C) as well as the ability of the importing country to provide the foreign exchange for payment] the exporter should request confirmation of the D/C by a reputable local or foreign bank. By adding its confirmation to an irrevocable D/C, the confirming bank provides the exporter with a second guarantee of payment, in addition to that of the issuing bank (provided that the terms and conditions of the credit are met). Confirmation of the D/C takes place irrespective of whether payment is forthcoming from the issuing bank or not.

How you will benefit

An irrevocable confirmed D/C is the most favourable type of credit, as the country and bank (counterparty) risks of the non-resident importer are eliminated.

Avalisation on bills of exchange

It is a guarantee of payment given by banks to the holder of the bill of exchange. The avaliser (bank) incurs primary liability for payment at maturity date.

How you will benefit

Unlike in the case of D/Cs, the avalising bank is not part of the trade transaction. However, as with confirmations, the avalising bank guarantees payment.


Forfaiting is a method of trade finance whereby a forfaiting bank, such as Nedbank London, purchases debt instruments falling due at some future date, arising from the provision of goods and services, without recourse to any previous holder of the debt obligations. The forfaiting bank would therefore assume not only the commercial and country risk in the transaction, but also the associated foreign exchange and interest rate risk.

Contact us

Tell us about your business needs, and we will provide flexible and innovative solutions to make your business grow. Call our dedicated Nedbank Global Trade Call Centre now to discuss how we can assist you. · Business Banking clients call · Corporate Banking clients call +27 (0)860 111 055 or email [email protected] +27 (0)860 102 187 or email [email protected]

· Small Business Services clients call +27 (0)860 116 400 or email [email protected]

Nedbank Ltd Reg No 1951/000009/06, 135 Rivonia Road, Sandown, 2196, South Africa. We subscribe to the Code of Banking Practice of The Banking Association South Africa and, for unresolved disputes, support resolution through the Ombudsman for Banking Services. We are an authorised financial services provider. We are a registered credit provider in terms of the National Credit Act (NCR Reg No NCRCP16).


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