Confirmed Letter of Credit

A Confirmed Letter of Credit is a Letter of Credit supplemented with an additional guarantee from a second bank, typically the seller’s bank, offering greater assurance to the seller.

Financial institutions involved in the transaction include the issuing bank (buyer’s bank) and the confirming bank (seller’s bank). Key functions include payment guarantees and risk mitigation. For example, Company A in Germany sells products to Company B in Brazil. Company B’s bank issues a Letter of Credit, which Company A’s bank confirms, ensuring payment upon meeting specified conditions.

Confirmed Letters of Credit facilitate international trade by providing multiple levels of financial security, reducing the risk of non-payment.