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Letter of credit is an irrevocable undertaking of the issuing bank to honour a complying presentation.
The beneficiary of the letter of credit must be ascertain that she/he will get the payment from the issuing bank as long as she/he comply with the terms of the credit....

Letter of credit is a payment method in international trade. I have been writing articles covering a variety of topics of letters of credit.
So far, I have defined what letter of credit is and explained its types, parties involved in and their roles and responsibilities, transaction steps and risks associated with different involving parties....

In theory, it is possible that a nominated bank and a confirming bank are present as two separate banks in a letter of credit transaction.
But in reality it occurs very seldom, mainly because of the fact that confirming banks do not add their confirmations to letters of credit, which are not available by themselves....

In most cases, the advising bank and the nominated bank is the same institution in a typical letter of credit transaction.
Only in rare occasions, these two banks are apart from each other.
Because, there are significant differences exist between the advising bank and the nominated bank, each side of the transaction, both exporters and importers, should understand the roles and responsibilities of these two banks very well....