Letters of Credit

A Letter of Credit (LC) is an undertaking by a buyer’s bank to pay its suppliers for goods or services, subject to agreed conditions.

LCs are used extensively in financing of international trade because they offer assurance that both the parties will fulfil their obligations in the trade.

Compared to traditional methods, such as cash payments or wire transfers, LCs provide increased protection against the risks associated with cross-border transactions. They also ensure timely payment and facilitate easier access to working capital finance.

For buyers, Import LCs can potentially help you secure your international purchases and give you the ability to negotiate better contract terms, such as increasing supplier’s credit period.

For suppliers, Export LCs minimise export payment risk and provide easier access to financing without the need for a credit facility.

To meet your dynamic business needs, we offer competitive pricing for discounting your Export LC and offer various types of LCs (e.g. Transferable LCs) at HSBC offices across the globe.

As a leading international bank backed by a strong balance sheet, HSBC consistently manages large trade flows, holds a strong reputation, and is trusted by corporations globally.

• A global footprint: We have the one of the largest network of bank relationships, and can support LCs between trade counterparties virtually anywhere and in multiple currencies.
• Dedicated expertise: Our experienced on-ground teams manage your LC issuance and document checking processes efficiently.
• Digital innovation: With HSBCnet, you will have real-time visibility of your transactions 24/7 and can streamline your processes of applying and managing LCs.

Contact your HSBC representative to find out more.