LC Views Next Step

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Dear All (Members of the Editorial Board),

My inputs are in yellow blocks following your questions immediately as shown here below:

Best regards,

T. O.

Dear Editorial Board,

I have been working on an update of the website; am almost done - and will show the result soonest.
Thought there should be something new material - so here are two questions that I hope you give your view on:

UCP 600 - day 50
50 days have now gone since the implementation of the UCP 600. How has it been received in the market? Are there articles in the rules that have caused problems - or at least a change in practice?

In providing consultancy to an annual retainer client, I have found a credit received after 1 July 2007 has sub-article 12 (b) excluded to pass the buck back to the nominated bank in discounting DPU without authorization from the issuing bank.

Many special clauses in UCP 500 that are now included in the provisions of UCP 600 still find their way to a credit subject to UCP 600. They are no more necessary but they are still there. I recommend my client to remove them to make the credit not so wordy.

Examples are:

(1) After sending notice of refusal, the issuing bank bank has the right to release the documents to the applicant against a waiver (if also accepted by the issuing bank) before receipt of instructions to the otherwise from the presenter.

(2) Forwarder's bills of lading acceptable. This is probably due to the fact that the beneficiary is worried that the provisions of article 30 of UCP 500 now disappear in UCP 600. The beneficiary is not properly trained. Otherwise he should have known that the scope of tolerance in UCP 600 sub-article 14 (l) is even wider.

I also find a credit subject to UCP 600 allowing e-presentation subject to eUCP version 1.1 as an option. This is a good sign to move on e-credit.

The future of the LC
The UCP 600 is now implemented - but it seems that that market in general is pulling away from the LC (e.g. the so-called move to open account trade). What are the current trends - and what does it take to ensure that the LC is an important payment instrument - also in the future.

As far as our consultancy is concerned, we do not see any decrease in use of credit in our global market. In the Middle East use of credits are increased. So are some USA banks from the news reported.

However, it is sad to see that the bank managers are getting tougher and tougher jobs in the banks, whether big or small, because there is a broken stratum between old hands and new comers. Young people are not interested in learning credit operations and they look for fast promotion. As a result, the managers have to do some follow up and checking after five to ensure no unpleasant surprises. Some managers apply to HR department to seek metal therapy. This is a bigger problem than whether credits are used more or less these days.

Kim, why not create a new section for the bankers to air their grievances, as their outlet for relief? A pressurized cooker has to find a safety vault to release the steam in order to avoid explosion. This is an effective way to handle the high pressure they are facing. Tell somebody with their names under disguise.

In the consultancy and training market, the competition is also getting very keen as many UCP 600 courses are held even in remote places. Life as a consultant and trainer is getting tough as well. After the training boom is over, it is time to consolidate the market.

[This last question will be placed under a new topic called "LC ACTION"]
(Thanks Claire).

Venlig hilsen / Best regards

Kim Christensen
TF Business & Product Specialist
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Nordea
Trade Finance
P.O. Box ###
DK-#### Copenhagen C