Negotiating Bank

Definition

Negotiating Bank. It is the bank to which letter of credit documents are presented by the beneficiary for the collection of the payment. The name derives from the fact that the negotiating financial institution is normally authorized by the issuing financial institution to negotiate documents. It may or may not choose actually to do so. Furthermore,realizing that this financial institution may be authorized to pay or accept drafts, rather than negotiate them, UCP500 now uses the term nominated financial institution rather than negotiating financial institution. Unless otherwise instructed, negotiating financial institutions inNorth America generally examine the documents for discrepancies before forwarding them to the issuing financial institution. It is properly viewed as a service separate from negotiating and is not necessary when negotiating with recourse.