Confirmed Letter of Credit

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Confirmed Letter of Credit

A letter of credit which a bank other than the bank that opened it agrees to honor as though they had themselves issued it. This additional confirmation is in addition to the obligation of the bank which issued the letter of credit.

Confirmed Letter of Credit

A letter of credit guaranteed by two banks. That is, a bank agrees to honor the letter of credit and make the required payment in case both the letter's holder and the original, issuing bank both fail to make payment. This reduces the risk of the letter of credit to an absolute minimum.
References in periodicals archive ?
The corporation stated that its banks have less than $25 million of total exposure, mostly in the form of confirmed letters of credit issued for the benefit of domestic customers, that are directly linked to Latin America and Asia.
Use of irrevocable letters of credit is quite common; however, AEW does not utilize confirmed letters of credit because the Bank of China considers itself backed by the Chinese government and, therefore, AEW feels that confirmation by a foreign bank is unnecessary and would be an insult to China.
Payment terms for these sales are 50% cash-in-advance and the remaining balance paid through an irrevocable confirmed letters of credit.