Trading companies typically receive Letters of Credit from their overseas buyers. When this occurs, they need to issue "back" to "back" or transfer the Letter of Credit to the suppliers. Such triangular trades can apply to domestic or foreign purchases.
Transferable Letters of Credit are a common business practice. However, because they establish a trading company as the middle man with regard to established credit between buyers and suppliers, they require the expertise of East West Bank to process the transaction. This protects the interest of the trading company. |
