Sberbank finances major grain exporter via export letter of credit

Dec 24, 2020

Sberbank has completed the first deal confirming and discounting an export letter of credit for AST Group of Companies, which is part of a large grain supply to Egypt. AST, one of the Top 10 largest grain exporters in Russia, obtained a solution from the bank that allows to mitigate the risk of non-receipt of funds under commercial credit provided to the customer and to get revenues ahead of schedule.

Sberbank has once again lived up to its reputation as a reliable partner for companies operating in international markets by supporting a large grain supply to Egypt. AST GC has been a Sberbank customer for more than 15 years and for the first time on record, the company has used the discounting of a letter of credit securing supply of over 60,000 metric tons of grain to fulfill an order placed by a foreign government. According to the terms of the deal and upon receipt of the necessary documents, the bank will pay the customer its revenues ahead of contractual maturity. AST GC has got the opportunity to use these funds to finance new contracts.

Evgeny Kravchenko

Senior Managing Director, Director of Trade Finance, Sberbank

A letter of credit is a settlement solution reducing the risks that the supply will fail or a buyer will not pay to a seller, with banks guaranteeing the payment. Under export letter of credits Sberbank also offers discounting, when the contract provides for a deferred payment and the supplier needs money immediately. Upon receipt of the documents required under the letter of credit, the bank, complying with the risk limit set for a foreign bank of the buyer, immediately pays the supplier its proceeds less certain discount. Thus, a Sberbank customer receives low cost off-balance sheet financing without collateral and loan documentation.