LC Does Not Specifically Authorise Any Bank To Transfer The Credit

[Finance]

Dear All,

We are presented with an interesting scenario:

transferable Letter of credit was issue by bank A. The letter of credit does not specifically authorise any bank to transfer the credit.
Letter of credit is available with any bank in Bangladesh by negotiation

Bank B is the advise through bank

Bank B transfers the lc to a second beneficiary and notifies bank A of the transfer and the name of the second beneficiary via SWIFT

Bank C forwards documents to Bank A under a cover letter.

Cover letter states that the documents are being sent on a collection basis under UCP 600. Cover letter also states that they have endorsed the letter of credit on it’s reverse for the negotiated amount.

A number of questions

1) as per UCP 600 article 38 b second paragraph -"Transferring bank means a nominated bank that transfers the credit or, in a credit available with any bank, a bank that is specifically authorized by the issuing bank to transfer and that transfers the credit. An issuing bank may be a transferring bank.”

As this letter of credit is available with any bank in Bangladesh by negotiation and does not specifically authorise any bank to transfer the credit - is Bank B the transferring bank?

2) To whom does the second beneficiary have to submit documents? As per article 38 k - Presentation of documents by or on behalf of a second beneficiary must be made to the transferring bank.

3) How can Bank C endorse the LC for the amount negotiated, but at the same time send documents on a collection basis?

Thank you

[picant]

Hi Pal,

more that indicate in the credit, transferability is an action and the l/c must be worded in the way to make the credit
workable. If the transferring bank is not indicated, l/c must be amended.
If transferred 100% documents could be presented directly to Issuing Bank.
Pay attentation to the l/c advice, it may contains prescription beyond the UCP or its opinions.
Other comments appreciated -Ciao