Which Bank Is Authorized To Confirm A LC

[berry]

dear all,

its not uncommon to have second advising bank in these days. may of the credits have add confirmation request. if the credit is silent on the confirming bank's name, then who is to confirm the credit? first advising bank, second advising bank or any other nominated bank.

another question. UCP 600 article 2 defines confirming bank as the bank that adds confirmation to the credit upon issuing bank's authorization or request.

is it correct to says that authorization means "may add" while request means "add".

[bdesh]

Hi Dear Berry,
Point 1: Both Article 2 & article 8d of UCP 600 indicate that Issuing Bank is to authorise/request a bank to add it's confirmation to the Credit i.e. the credit cannot be silent on the confirming bank's name. Confirming bank may be first advising bank, second advising bank, nominated bank or any other bank as per stipulation by the IB in the LC.
Point 2: I also think that authorization means "may add" while request means "confirm" in SWIFT MT700.
.
More comments appreciated.
.
Regards.

[ldt5205]

As we all know,the mt700 is sent to the first advising bank ,if there is no a named confirming bank,the first advising bank will be deemed to be the authorized bank.
The second advising bank is maybe unknown to the issuing bank .It is the first advising bank who elects to utilize the second advising bank .In this case,the second advising bank will be deemed to be the confirming bank.
More comments appreaciated.

[Judith]

If the LC was sent via SWIFT MT 700 with field 49 as "CONFIRM" / "MAY ADD" to the First Advising Bank and there is no proper instruction as to which bank ought to add confirmation, the "CONFIRM" / "MAY ADD" instruction is for the First Advising Bank.

The answer lies not in UCP but in the SWIFT handbook!

MT 700 Scope:
This message is sent by the issuing bank to the advising bank.

Field 49: Confirmation Instructions
This field contains confirmation instructions for the Receiver.

As such, the first advising bank cannot change the terms and conditions of the credit while advising it to the second advising bank. So, while sending out the MT 710, if they retain the information in field 47 as CONFIRM or MAY ADD, they're actually modifying the terms of the credit!! Technically, they can only retain these codes if the LC includes a specific instruction for confirmation by the second advising bank.

[iLC]

Great answer dear judith. was thinking to post a similar answer hour back. but you have done it great

[ajoy]

Regards
Ajoy

[Caterin]

dear colleagues,
Please help to understand the correct procedure.
In case the first advising bank received mt700 with field 49 stating CONFIRM, and it does not decide to add the confirmation, can it advise further LC to ATB, with field 40B without our confirmation and field 49 to read CONFIRM? or rather WITHOUT? Of an importance may be the fact that LC was availble with the first advising bank.
What is more appropiate? In case I chose field 49 to read without, the ATB may not even know that we, as first adv bank, were requested to add confirmation, right? So it will not be very correct in view of UCP600
The second question, how about MAY ADD LC. Can I advise LC to ATB with field 49 to read MAY ADD, so that beneficary can choose which bank shall add it confirmation? Or shall I treat field 49 as the instruction reserved for receiver of original mt700 only?
appretiate your opinion regarding this matter.

[picant]

Hi Pals,

first of all I think that banks are not aware if a correspondent is ready to add its confirmation!
However the instructions contained in MT700 are for the receiver, in case of CONFIRM or MAY ADD
this receiver will act as per UCP by inserting one of the sentences in field 40B in MT710 and
modify the field 49 in WITHOUT, unless a proper instruction in the originary MT700.
Remember that any bank has its own standing, so if the IB asked for confirmation, it is a request of credit facility, that may be covered by its Country ECA. The same may happen to a not yet correspondent bank, but insert in the ECA list. So a credit may contain the request to add confirmation only for the second advising bank.
As for the first line of this post, I was used to contact the possible confirming bank before issuing
the l/c to avoid the refusal as per art 8 d UCP 600, prohibiting to advise beneficiary. So it could
be possible to ask another bank without cancelling the first l/c and re-issue another one.
Other comments appreciated
Ciao

[Caterin]

Thank you for the reply. So you field 49 in mT710 should always read without, unless LC clearly states that 2nd adv bank is requested/authorised to confirm LC, right?
And in case we, as 1st adv bank, do not decide to add the confirmaiton, regardless field 49 stating CONFIRM or MAY ADD, would you inform ATB in mT710 about original field 49 and our refusal of confirming LC? Otherwise ATB would not even know that we were so instructed/authorised..?

[picant]

Hi Pals,

The bank received a MT700 with instructions to add confirmation. The bank is not prepared to do so and inform promptly the issuing bank. I thinh that if the l/c indicated a different advising bank in field 57, the bank must wait for further instruction by the issuing bank. IMHO the conditions in UCP 600 art 8 d, are for the receiver bank only. The intervention of a third bank will cause extra problems.
Other comments appreciated
Ciao