Bloomberg as of 10/29/08 reports: The cost of a letter of credit has tripled for buyers in China and Turkey and doubled for Pakistan, Argentina and Bangladesh, said Uwe Noll, director of country risk sales at Deutsche Bank AG. Banks are now charging 1.5 percent of the value of the transaction for credit guarantees for some Chinese transactions, bankers say.
Can any of you bankers confirm this ?
(this is your chance of competing with Deutsche Bank :) )
Costs have not changed in Canada
We are still pricing on the same criteria in Canada. Import LC's are priced on applicant risk and collateral held in support. Standby L/C's are the same. Confirmation charges have not risen but are subject to country risk and bank risk fluctuation.
There are pressures in our domestic market on liquidity and this is reflected in the inter-bank money market. Luckily, Canada has one of the strongest banking markets due to moderate leverage and minimal exposure to asset backed paper.
There will be a fair amount of "scalping" in the trade market now as unscrupulous financiers try to justify high rates with the uncertainty in the global economy.