Insurance of letters of credit

Eximgarant of Belarus offers an insurance product designed to protect the property interests of a bank confirming a letter of credit issued by a foreign issuing bank, against the risk of non-performance by the latter of its obligations under the letter of credit, issued for the payment of goods (works, services) exported from the Republic of Belarus – insurance for letters of credit (including with discounting) opened by foreign banks.

Discounting a letter of credit involves the Development Bank of the Republic of Belarus providing the beneficiary (exporter, non-resident organization) with funds before the payment due date under the letter of credit, provided that the beneficiary presents documents constituting a proper presentation to the Development Bank of the Republic of Belarus.

The Development Bank of the Republic of Belarus carries out the discounting of letters of credit opened by foreign banks to finance payments by non-resident organizations for goods included in the list and other goods (works, services) sold by residents of the Republic of Belarus, and to finance payments by non-resident organizations for goods included in the list and other goods (works, services) sold by organizations that are not residents of the Republic of Belarus.

Discounting is provided up to 100% of the export contract value.

Discounting rates:

EUR and USD - Commercial Interest Reference Rate (CIRRs);

RUB – 2/3 of the Key Rate set by the Central Bank of the Russian Federation

BYN – 2/3 of the Refinancing Rate set by the National Bank of the Republic of Belarus

The insurance policy requires both a waiting period (up to 90 calendar days) and the insured’s participation in covering potential losses through a non-deductible excess of up to 10% of the loss amount.

The procedure of interaction:

1.      Conclusion of an export contract;

2.      Opening of a letter of credit;

3.      Shipment of goods ;

4.      Documents for the shipped goods;

5.      Conclusion of an insurance contract;

6.      Fulfillment of obligations under the letter of credit by the domestic bank;

7.       Non-performance by the foreign issuing bank of its obligations under the letter of credit;

8.      payment of the insurance compensation, transfer of the right of claim to Eximgarant of Belarus;

9.       submitting a claim against the issuing bank.

The list of documents required for the conclusion of an insurance contract:

•         Application for insurance contract conclusion;

•         Insured’s title documents;

•         The issuing bank’s title and financial documents;

•         The export contract, the letter of credit opening agreement, and other relevant documents.

Procedure for the Insured to follow upon the occurrence of an accidentthat may constitute an insured loss under the terms and conditions of the insurance policy.

Upon the occurrence of an insured accident, the Insured must notify the Insurer of the event which could be deemed an insured accident within 5 business days.

For the purpose of receiving insurance compensation, the Insured shall submit a claim to the Insurer concerning the insured accident not later than 30 calendar days following the conclusion of the waiting period as determined by the insurance contract, accompanied by the following documentation:

·         Original of the insurance contract (insurance policy);

·         Documents confirming the occurrence of the insured accident and the amount of losses;

·         Documents required by the terms of the letter of credit;

·         Documents confirming measures taken to prevent and/or mitigate potential losses;

·         A written explanation from the issuing bank regarding the reasons for non-performance of its obligations;

·         Court documents confirming the initiation of bankruptcy proceedings against the issuing bank, and a copy of the court decision in case of the issuing bank’s bankruptcy;

·         Any other documents as requested by the Insurer.

For inquiries regarding this type of insurance coverage, please contact the Export Risk Insurance Department by phone/fax in Minsk at +375 (17) 371-00-65 or to any of the Eximgarant of Belarus offices..