Confirming the Credit

Confirming the Credit is a bank process that guarantees payment to the beneficiary of a letter of credit.

Financial institutions involved in confirming the credit include issuing banks, confirming banks, and advising banks. The issuing bank originates the letter of credit. The confirming bank adds its guarantee, ensuring payment despite possible default by the issuing bank. The advising bank communicates the credit terms without assuming payment risk.

Confirming the credit reduces transaction risk, increasing the likelihood of successful international trade. Specific examples of confirming banks are HSBC, BNP Paribas, and CitiBank.