Negotiating Bank Demands Issuing Bank To Authorize Them To Negotiate

[Nirups]

In a LC document.. We found discrepancy and since our Bank did not have rma arrangement with the other bank we sent Mt 799 to the negotiating Bank advising them of the discrepancy and accepting to honour their bill on due date. But the negotiating Bank requests us to authorise them to negotiate the bill. My doubt is when we have sent Mt 799 giving our acceptance to honour their bill, why the negotiating Bank is asking us specificaly to authorise them to negotiate. Mt 799 was sent because we couldn't sent Mt 754 to them. Please guide.

[picant]

Hi Pal,

frankly I dont understand. MT799 is probably a MT999, the negotiating bank required an authenticated Swift message to purchase or prepay the documents.
I think that MT999 is an authentic message not authenticated, but due to difficulties in obtaining RMA with banks, the manager of a bank should decide to accept MT999 i/o MT756.
Then after 5 days from receipt of documents, if no refusal arrives, documents will be deemed to be accepted.
Ciao

[cristiand969]

The negotiating bank would like to be on the safe side!
The definition of the negotiation makes reference of purchasing documents under a complying presentation.
As the documents were not found in order, maybe the negotiating bank felt that would exceed the scope of negotiation definition and places itself on a high risc .
Secondly, in case you sent them acceptance by means of 999 (not 799 because for this type you already have rma exchanged) , it may be regarded as an authentic message (cand identify the sender) but not an authorized one. Therefore you can send your authorization via a third bank, the one you sent the original LC