Documents Discounting Resrtricted To Confirmed L/Cs Only

[Gart]

Dear colleagues,

I kinda see a tendency that the nominated banks discounting the L/Cs in favour of their customers on without recourse basis tend to require the L/Cs to be confirmed by them.
What is the rationale of such an action: is the confirming's bank position in some kind 'stronger' towards the issuing bank instead of being just the nominated bank, or this action just allows allocation of the financial risks (limits) to various issuing banks?

There some big players in the world which actually refuse to issue their L/Cs allowing the nominated banks to confirm them (or add confirmation at beneficiary's request - May add), is silent confirmation the only option then?

Sharing your highly esteemed opinion on the above would be highly appreciated.

[shahriar]

Dear Gart,

Very good question. In absence of any special mentioning about the relationship between the issuing bank and confirming bank, their is no scope for the confirming bank to enjoy stronger position under the UCP600. Instead, the confirming bank's have greater liability than that of a simple nominated bank. I think, since the interest rate is quite low at this moment, simple negotiation or discounting does not provide sufficient incentive for the nominated banks to prepay or purchase a document. Perhaps for that reason, they try to make some extra money in this way. I have experiences where the nominate bank did negotiated without confirmation but charging a very high interest rate.

regd
shahriar