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    What is Forfaiting?

Forfaiting is the discounting of trade finance instruments such as Promissory Notes and Bills of Exchange on a “Without Recourse” basis, enabling exporters to receive cash once shipment has taken place and goods have been received and accepted by the importer. We provide financing solutions in relation to longer tenor trade finance transactions with emerging markets. All major currencies can be financed and swapped. You can find the countries we can finance and the length of the credit period in the attached country list.


  

    Advantages of Forfaiting
  • If an export has been invoiced in a foreign currency, the exporter can cover the exchange rate risk;
  • Because the financing is guaranteed against Promissory Notes, Bills of Exchange or other trade finance instruments, the documentation is concise and straightforward, enabling rapid completion of the deal;
  • Other banking facilities are unaffected;
  • The exporter receives payment in cash at the time of sale of the trade instruments, thus achieving a cash sale upon shipment of the goods while at the same time avoiding carrying out collections under emerging market laws;
  • Political, transfer and currency risks are eliminated;
  • The possibility of bad debts caused by importers or guarantor banks being unwilling or unable to pay is eliminated;
  • Up to 100% of the contract can be financed;
  • We can quote a fixed rate of interest when commitment is taken, even if there is a shipment period.
    Documentation Required for Forfaiting

The documentation required for forfaiting is simple and not excessive. The documentation includes

Debt Instruments

  • Promissory Notes
  • Bills of Exchange

Security Instruments

  • Aval on the promissory note and bill of exchange/draft
  • Letter of Credit
  • Letter of Guarantee

Support Documentation

  • Assignment and delivery declaration of the exporter in accordance with our sample
  • Conformed copy of commercial invoice, bill of lading, signature confirmations, import license and currency transfer permit (if required)
    Requesting a Price Quotation

The following information is needed by us in order to provide a price quotation:
  • Name and location of both the exporter and importer
  • Name of Guarantor
  • Amount and currency to be financed
  • Period of financing required
  • Status of the negotiation of the commercial contract
  • Underlying transaction
  • Shipment date
  • Type of instrument (i.e. Promissory Note/Bill of Exchange) to be used in the financing
The countries listed below are those for which the bank is prepared to consider discounting on a “without recourse” basis and/or silent confirmation up to the period of credit shown for bill of exchange, promissory notes, irrevocable letters of credit or receivables, normally guaranteed by an acceptable bank and available within six months or such periods as may otherwise be agreed.
 

** case by case basis only
The above is indicative only. Please contact us to discuss specific transactions.



 
 
 
 

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