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.