echnically speaking, “Banks DON’T issue Standby Letters of Credit” Instead, the bank is the deliverer not the initiator of the transaction, they CONFIRM their client has the sufficient funds. For example; let’s pretend you use a courier to deliver a parcel to a customer. You are the Provider of the parcel and the courier is the delivery agent who delivers your parcel to the Receiver. The courier isn’t the Provider of the parcel, they are just the delivery agent whom the Provider uses to send the parcel from the Providers location to the Receivers location.


Using the above example, banks operate exactly the same way when handling Standby Letters of Credit. The bank acts as the courier and they receive a financial instruction from a Provider to deliver one of the Provider's assets (Bank Guarantee – BG or SBLC) to the Receiver’s bank. In other words, the banks are in place of the courier, being that they are the Sender and Receiver of SWIFT messages most commonly known as MT messages. (Whether it be MT760, MT799..etc..)

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