International Trade
Trade is the buying and selling of goods and service, between a buyer in one country and a seller in another country.

Parties to International Trade

• Importer - buyer
• Exporter - seller
• Agents – for clearing, insurance, transport etc.
• Correspondent banks

 

Trade Services
A. Documentary Credits/Letters of Credit

Documentary Credit or Letter of Credit is an undertaking by the issuing bank (importer’s bank) on behalf of the applicant (importer) to pay a certain sum to the exporter, through his bank, provided that the exporter complies with all the terms and conditions as stipulated in the Letter of Credit.

Benefits of using Letters of Credit:
Letters of Credit protect importers as banks can only effect payment when documents comply with credit terms. The importer can therefore call for a variety of documentation, some from third parties, to ensure he receives what he ordered.

Documentary credits enable importers to obtain rebates and discounts more easily as the exporter is assured of payment upon presentation of conforming documents.

If used properly, the exporter has a host of benefits, including L/C discounting.

 

B. Documentary Collections
As a seller/exporter, a documentary collection offers greater security than sellin on open account, but not as much as a documentary credit.

Under a Documentary Collection, the exporter presents documents of title to the bank with an instruction for collection of payment. The buyer/importer is the drawee of the collection. Payment may be made by sight draft or on maturity of an accepted draft or letter of undertaking. The bank’s liability is limited to the forwarding and release of documents against payment, acceptance or promise of payment (letter of undertaking) by the importer.

Types of documentary credits

• Documents against payment
• Documents against acceptance
• Documents against letter of undertaking

Please note: As the exporter makes an advance commitment in terms of the production/shipment of underlying goods or provides another service, we advise that the exporter uses documentary collections only when there is a solid relationship of trust between the importer and exporter, and there must be no doubt about the importer’s willingness and ability to pay.

C. Bonds/Guarantees.

Guarantees and bonds refer to the same product. We issue the following types of bonds/guarantees.

• Bid Bond
• Performance Bond
• Advance Payment Bond
• Retention Bond
• General Payment Guarantee

Standby Letters of Credit (SBLCs) are basically payment guarantees in and internationally recognized format.

Requirements for Establishment of Inward L/Cs and Guarantees
• You need to have pre-approved facilities in place
• Necessary commercial documentation for the Letters of Credit
• Other specific documentation for the L/Cs or guarantees like applicant and beneficiary details and specific transaction details

Funds Transfer
We handle both inward and outward funds transfers through SWIFT. SWIFT stands for Society for Worldwide Inter-Bank Financial Telecommunications. It has the following attributes:
• Secure
• Efficient
• Internationally recognised
• Used to transmit and receive financial and non-financial information
• Stanbic Uganda is linked to over 75000 financial institutions worldwide.

Pricing
We provide very competitive pricing and a complete price guide is available on request.

Trade Finance Loans
These are specific loans made to facilitate a purchase, sale or both. Normally there is a high degree of control over the associated flows, which mitigates many of the risks associated.

Trade Finance Loans also includes pre-shipment finance; buyers credits etc

Inventory/commodity/warehouse Finance
• The bank pays for and takes title to physical goods in transit or in a warehouse
• Commodity finance is preferred because of the resale value of the goods
• There is usually an undertaking to repurchase the goods by a reliable party

Receivable Based e.g. Channel Finance and Bill Discounting
• A bank purchases trade receivables from its customers, “with” or “without” recourse to the seller, based on its credit appetite and available credit enhancement, e.g. a guarantee
• Receivables may be evidenced by bills/notes/drafts/invoices or LCs
• The form of transfer, and therefore documentation, depends on the instrument

Structured Trade Finance

• Structured Trade Finance provides specific, self-liquidating finance against sales or purchases – no open ended commitments
• Through structuring, risks are typically lower than for other forms of financing
• The bank always requires documentation to evidence the trade transaction, that is, evidence of an underlying bona fide trade transaction – whtehr movement of goods or a service performed.
MOST transactions also have the following characteristics:
• Short-term financing (up to 1 year)
• Revolving
• Degree of customisation.

Download Application (PDF)

Question: What is a Letter of Credit?

Answer: Also known as Documentary Credit, a Letter of Credit is and undertaking by the issuing bank (importer’s bank) on behalf of the applicant (importer) to pay a certain sum in cash to the exporter through his bank, provided that the exporter complies with all the terms and conditions as stipulated in the Letter of Credit.

Question: Does one have to be SBU’s client to have an L/C drawn up for them?

Answer: SBU needs to carry out the necessary ‘Know-Your-Customer’ checks before we can establish an L/C. We would therefore not be able to open an L/C for non-SBU customers, as we would not have the necessary verification information. We would, however, welcome the opportunity to use that particular transaction as a starting point for a banking relationship, after all checks are completed.

We are able to handle inward L/C on an advisory bank role.

Question: What are the charges for an L/C?

Answer: These will vary with client’s risk grade, transaction size and whether cash is covered or not. In general, fees, applicable are establishment fee (per quarter basis), advising fee, confirmation fee, amendment fee and negotiation fee. Some will apply on a particular L/C, while others may not apply. Our Trade Services specialists are happy to provide a more detailed explanation on request.

Question: How long does it take to open an L/C?

Answer: If within existing facilities or full cash cover has been provided and all requisite documentation is at hand, we guarantee a 48 hour turn-around time.

Question: What type of products would Stanbic Uganda typically finance?

Answer: We finance a whole range of products, including exports of coffee, tea, cocoa, cotton, manufactured goods and imports like fuel PMS/AGO/BIK and fuel related products and motor vehicles. We also offer trade related TAX LOANS against the collateral of the stock imported.