Collateral Arrangements in Trade Financing

January 31, 2005 | BY

clpstaff &clp articles

By Richard Nie and Eric [email protected]; [email protected] arrangements may take various forms in cases where…

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By Richard Nie and Eric Liu

Security arrangements may take various forms in cases where a bank offers financing to a purchaser to buy goods from one country and to re-sell them to a subsequent buyer in another country. In such types of cross-border trade, the bank may face some security issues. This is especially true when the goods have been physically transported into the PRC.

Trust Receipts

Generally, a bank under a documentary credit arrangement may hold shipping documents as security, which protects it against the bankruptcy of