Lc confirming bank = same bank?

[Oilguy]

Hello all, I wanted to pick the brains of the Lc experts here. Is my security of a confirmation compromised if my confirming bank is , say, the subsidiary bank of the issuing bank but located in a different country? It can be a subsidiary or a different branch of the same bank. Eg: Citibank New York confirming for Citibank Pakistan.

[picant]

Hi Pal,

UCP 600 state that are two different bank, responding to different law and regulatory.
Other comments appreciated
Ciao

[SAAQIAN]

Sir can you advise your opinion on this:
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Q. Credit issued by Citibank India available by Sight Payment with Citibank South Africa, the credit is confirmed by Citibank US. The Confirming bank is NOT obligated to pay, if the documents are presented at the counter of:

1. Citibank India
2. Citibank US
3. Citibank South Africa
4. Any Bank in US

Options:
A. 1 Only
B. 2 & 3 only
C. 2 Only
D. None of the above

Need your expert advice with reason.

[dinesh2476]

Saaqian,

There is no clarity on what basis the LC has been confirmed by CITIBANK US.

1. claim that nominated bank/issuing bank fail to make payment despite credit compliant presentation by the beneficiary.
or
2. Documents to the confirming bank.. we usually see that to enjoy the benefit of confirmation, confirmation would request document at their counter to determine complying presentation..

above clarification is missing in your question.. However, with the given details if we analyse, none of the above is best suit.

Thanks & Regards
Dinesh Kumar

[Sanaur]

Is my security of a confirmation compromised if my confirming bank is , say, the subsidiary bank of the issuing bank but located in a different country?

Hi, I do not think so. I understand you are concerned of default risk/credit risk of the confirming bank. And it does not get affected just for being a subsidiary because liability is generally limited in the host country. To my opinion, it is rather advantageous in many ways- e.g. priority service being a group customer and quick solution if any dispute arises.

Trust above clarifies.

[Sanaur]

Hi Saaqian, to act as confirming bank, you must need "request/authorization" from issuing bank. (Article 2)

Here, in your example, Citibank US added silient confirmation to the DC and do not have the rights/obligations of confirming bank as mentioned in UCP.

[TaiOanlan]

``....Sight Payment with Citibank South Africa, the credit is confirmed by Citibank US.....``. So, you got a confirming bank which is not a restricted bank and other bank is a restricted bank......It is pain in the neck scenario.
As far a I`m concerned, banks hate seeing such L/C and banks will ask for changing the structure.........either changing confirming bank to Citibank South Africa or making Citibank US as restricted bank.