Letters of Credit

Our Letters of Credit service opens doors to new contracts, markets and opportunities for our business customers.

We can assist you in the sale and purchase of goods and services on terms that best serve the interests of buyer and seller. Our Letters of Credit service plays a vital supporting role to many businesses by offering advice and guidance on managing credit, political issues, performance, documentation, financial institution credit as well as various risks involved.

Several participants are involved in a letter of credit transaction:

The applicant is the party that arranges for the letter of credit to be issued.
The beneficiary is the party named in the letter of credit in whose favor the letter of credit is issued.
The issuing or opening bank is the applicant's bank that issues or opens the letter of credit in favor of the beneficiary.
The advising bank is the bank that may be named in the letter of credit that advises the beneficiary that the letter of credit was issued.
The paying bank is the bank nominated in the letter of credit that makes payment to the beneficiary without recourse, after determining that documents conform and upon receipt of funds from the issuing bank or another intermediary bank nominated by the issuing bank.
The confirming bank is the bank which, under instruction from the issuing bank, substitutes its creditworthiness for that of the issuing bank. It ultimately assumes the issuing bank's commitment to pay.

Export Letters of Credit

QNB offers prompt letters of credit confirming, advising, paying, negotiating bank services and LC discounting facilities to exporters.

QNB’s Letters of Credit confirmation service is used when exporters may have to deal not only with unknown foreign buyers, but also with their banks which are less well known institutions and whose letter of credit may not provide sufficient assurances. By requesting QNB to confirm your export LCs, you obtain a guarantee of payment from a first class international bank for document presented in compliance with the credit.

QNB's high document checking standards ensure that your pre-checked documents will not be rejected. Our outstanding service standards are applied to ensure that all documents are negotiated and dispatched timely.

Save time and visits to the bank to collect your export letter of credit, QNB will safely keep your original and send you a working copy to facilitate the preparation of documents.

Import Letters of Credit

Sellers in an international trade transaction recognise Import Letters of Credit issued by QNB as a first class guarantee of settlement of their receivables provided that they submit valid documentation to us.

QNB's Import Letters of Credit service provides assurance to its customers that payment will only be made upon the beneficiary’s compliance with LC terms and conditions.

QNB has one of the strongest credit ratings in the MENA region, as such, when a Letter of Credit is issued by QNB the counterparties of a commercial transaction do not usually need to arrange and pay for further confirmation charges from a third-party bank. This creates a strong value proposition to our customers and demonstrates that QNB has outstanding capability in delivering efficiencies to our customers’ procurement process.

Guarantees & Standby Letters of Credit

While a commercial letter of credit is usually accepted as payment against the presentation of specified documents evidencing the shipment of goods, a standby letter of credit may be required.

In the Guarantee and Standby Letter of Credit transaction the credit risk is transferred from the applicant to the issuing bank.

The beneficiary is assured of payment as long as he complies with the terms and conditions of the Standby Letter of Credit. The Letter of Credit identifies which documents must be presented and the content of those documents.

In addition, QNB offers bid bonds, performance bonds, advance payment guarantees, retention guarantees, payment guarantees and other instruments with non-standard wording to its customers.

Similarly to Import Letters of Credits, Standbys issued by QNB normally do not require confirmation from third-party banks as QNB has one of the strongest credit ratings in the MENA region. This results in a substantial cost saving for our customers and greatly enhances the efficiency of the tendering and procurement processes.