Trade Services/ International Banking/ Products
Documentary Letter of Credit (LC)
The letter of credit is treated as import letter of credit on a buyer’s side and as export letter of credit on a seller’s side. CBO renders the following types of Letter of Credits:
Irrevocable Letter of Credit
It is a letter of credit bearing a term on an instrument to indicate that it cannot be amended or terminated prior to its expiry date without the consent of parties involvedthat is the applicant and the beneficiary of the Letter of Credit.
A confirmed letter of credit is one in which another bank, on the instructions of the issuing bank, has added a confirmation that payment will be made as long as compliant documents are presented. This commitment holds even if the issuing bank or the buyer fails to make payment.
Standby Letters of Credit
It is a document issued by a bank, guaranteeing payment on behalf of a client. A standby letter of credit is used as support where an alternative, less secure, method of payment has been agreed. Unlike other letter of credit, a standby letter of credit is NOT meant to be used for payment instead it is used as a form of "back-up" guarantee. If the exporter fails to receive payment from the importer he may claim under the standby letter of credit.
Revolving Letter of Credit
The revolving credit is used for regular shipments of the same commodity to the same importer. It can revolve in relation to time or value. If the credit is time revolving once utilized it is re-instated for further regular shipments until the credit is fully drawn. If the credit revolves in relation to value once utilized and paid the value can be reinstated for further drawings. The credit must state that it is a revolving letter of credit and it may revolve either automatically or subject to certain provisions. Revolving letters of credit are useful to avoid the need for repetitious arrangements for opening or amending letters of credit.
Transferable Letter of Credit
A transferable letter of credit is one in which the exporter has the right to request the paying, or negotiating bank to make either part, or all, of the credit value available to one or more third parties. This type of credit is useful for those acting as middlemen especially where there is a need to finance purchases from third party suppliers.
Back-to-Back Letter of Credit
A back-to-back letter of credit can be used as an alternative to the transferable letter of credit. Rather than transferring the original letter of credit to the supplier, once the letter of credit is received by the exporter from the opening bank, that letter of credit is used as security to establish a second letter of credit drawn on the exporter in favor of his importer.
Import /Export CAD
Handling commercial documents with or without financial documents in accordance with instructions received from the seller. Documents delivered to buyer (importer) against payment and/or acceptance or against other terms and conditions through importers bank.
Facilitate payment for the seller from a buyer prior to shipment or rendering of service.
Consignment basis payment
A payment in which the title to the goods remains with the supplier until a distributor in foreign country sells them. Payment is to be made to the supplier when the distributor sells the goods.
Foreign Bank Guarantee
A letter of guarantee issued by the bank to compensate to the Beneficiary in the event that the Obligor/Principal fails to honor its obligations in accordance with the terms and conditions of the guarantee/agreement/contract.
Foreign Exchange service CBO renders comprise of four major categories
Prompt remittance services or a transfer of funds from remitter through intermediary banks or money agents or Demand Draft.
CBO International money transfer service partners:
Western Union, Dahabshiil, X-press Money, Taran Express, MoneyGram,Juba Express, Amana Express, Kaah Express, Bakaal Express, AMAL Express./Logo of the mentioned agents can be utilized/
Swift code of the bank is also used for International money transfer service. Swift Cod of CBO is CBORETAA.
Cash foregin currency buying and selling
Buying and selling a foreign currency notes used as a legal tender in the country of issue.
Traveler's check buying and selling
Purchasing from travelers upon the bearer's endorsement against the original signature on the draft and receiving from Corresponding Banks on consignment or purchase basis for sale to travelers abroad respectively.
Accept Foreign Bank checks for Deposit
Deposit foreign checks for clearance and sent to the issuer bank in foreign country. Deposit accepting bank may either purchase the bill (OBP) or sent in collection basis (OBC).
Eligibility Criteria for Trade Services
Customers that request for the Trade Services should fulfill the following criteria:
- Should maintain deposit account with CBO;
- Should be in possession of valid trade license for import/export as appropriate or business license or investment or industry license or must exist in the list of budgetary government organizations issues by National Bank of Ethiopia (NBE) or in case of non-government organization, Certificate issued by Ministry of Justice;
- Should have Tax Identification Number (TIN); and
- Should not be reported as delinquent by NBE.