How does the confirming bank fix the confirmation interest.
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Nazmul
- Posts: 1
- Joined: Tue Oct 12, 2010 4:08 pm
- First Name: Nazmul
- Last Name: Ahsan
- Organization: Pubali bank limited
- Filter: Two Plus Two =: 4
How does the confirming bank fix the confirmation interest.
I want to know how does the confirming bank set the interest rate of the confirmation charges? how the fix the rate? Why confirmation rate in the same country can vary between two banks?
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picant
- Posts: 2026
- Joined: Wed Aug 20, 2008 1:49 pm
Confirmation
Hi Pal,
Confirmation means to give credit to the issuing bank, considering the Country Risks etc. So the confirmation fees will represent the cost of the risk incurred in the political risk for the Country and commercial risk for the issuing bank. Any bank in the world is classified by Agency as Standard and Poors, Fitch etc that indicate the rating, starting from AAA(triple A) to B, C tc this grade represent the grade of the possibility to reimburse the debt. Naturally if I work with an AAA Rated Bank I will charge my customer something less that working with a bank rated BB or CC:
So for the same Country, prices can vary for different bank.
Hoping all clear
Ciao
Confirmation means to give credit to the issuing bank, considering the Country Risks etc. So the confirmation fees will represent the cost of the risk incurred in the political risk for the Country and commercial risk for the issuing bank. Any bank in the world is classified by Agency as Standard and Poors, Fitch etc that indicate the rating, starting from AAA(triple A) to B, C tc this grade represent the grade of the possibility to reimburse the debt. Naturally if I work with an AAA Rated Bank I will charge my customer something less that working with a bank rated BB or CC:
So for the same Country, prices can vary for different bank.
Hoping all clear
Ciao