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Dear all,
pls comment on following issue:
an irrevicable transferable credit has been issued by Bank X, where credit available with a nominated bank[bank Y]. but credit didn't stipulated that the bank Y is the transferring Bank,
Can the Bank Y act as a transferring Bank?
Regards
nesar

Dear Nesar,


article 38 (b) UCP600 defines Transferring Bank as "a nominated bank that transfers the credit". It further states that "An issuing bank may be a transferring bank".

Being the nominated bank and in the absence of any condition to the contrary, which may be included in a documentary credit, the nominated bank (in your example Bank Y) may agree to act as transferring bank.


Kind regards


Currer

Sub article 38(b) of UCP-600 requires the Issuing bank to indicate the name of the transferring bank when the credit is freely available.In all other cases the bank that is nominated to honor or negotiated will be deemed to be the transferring Bank.

So in this case Nominate Bank can play the role of Trans. Bank.

when a transferring bank is not mentioned in the letter of credit,

If the LC is restricted to a nominated bank then that nominated bank is the transferring bank. If the LC is available with any bank, then any bank is transferring bank; such situation is not desirable.

to close this loophole, UCP asks for a definite transferring bank.

regd

shahriar

Hi!

The only addition.

In such a case nominated bank CAN, BUT IS NOT OBLIGED TO.

Since 38(a):

A bank is under no obligation to transfer a credit except to the extent and in the manner expressly consented to by that bank.

Good luck

Dear shahriar,

according to Art. 38
"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."

considering above " in a credit available with any bank" any bank is not authorized to transfer but transfering bank mus be specifically (determined and)authorized by the issuing bank.

hassan

Dear All,
Thank a lot. It helps me a lot
nesar

dear hassan

good point. but, still i will consider any nominated bank is a transferring bank in this case. what if the LC didnt mention the name of the transferring bank at all? i am sure you will say that the nominated bank must revert to the issuing bank. correct! but what if the nominated bank doesnt do that? since the credit is ambiguous to you, the issuing bank has to bear all the liability.

iLC