Confirming Bank

A Confirming Bank in shipping is a financial institution that adds its confirmation to a Letter of Credit (LC) issued by another bank. When a confirming bank confirms a LC, it provides an additional level of security to the seller, as it guarantees that the LC will be honored even if the issuing bank is unable to fulfill its obligations. 

In international shipping transactions, a confirming bank may be used to provide additional reassurance to the seller that they will receive payment for goods or services provided. This is particularly important in situations where the seller may have concerns about the creditworthiness of the buyer or the political or economic stability of the buyer’s country. 

The use of a confirming bank can help mitigate risk in international trade transactions, as it provides an additional layer of protection against non-payment or other issues that may arise during the course of the transaction. However, it is important to note that the use of a confirming bank may result in additional fees and costs, which should be carefully considered before entering into any transaction.