New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter IV - Financial Condition Of Insurer and Reports to Superintendent
Subchapter A - Rules of General Application
Part 79 - Letters Of Credit
Section 79.4 - Letter of credit issued by an unqualified bank-confirmation of

Universal Citation: 11 NY Comp Codes Rules and Regs ยง 79.4

Current through Register Vol. 46, No. 39, September 25, 2024

For a letter of credit issued by a bank or trust company which is not a qualified bank to be acceptable it must, in addition to meeting the required conditions specified in section 79.2(a), (b), (d)-(h) and (j) of this Part, meet all of the following conditions:

(a) notwithstanding section 79.2(b) of this Part, name and formally designate the confirming bank (i.e., qualified bank) as agent for the receipt and payment of drafts;

(b) contain an evergreen clause which provides at least 60 days' written notice to the beneficiary prior to expiry date for nonrenewal;

(c) be presentable and payable at an office of the confirming bank in the United States;

(d) state that it is subject to and governed by the Laws of the State of New York and the 1993 revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 500)[FN*] and that, in the event of any conflict, the Laws of the State of New York will control. If the beneficiary is a foreign insurer, then such insurer's state of domicile may be substituted for New York. The letter of credit must contain a provision that in the event that one or more of the occurrences described in article 17 of Publication 500 occurs to the issuing or confirming bank, the issuing bank agrees to effect payment if the letter of credit is drawn against within 30 days after the resumption of business from such interruption;

(e) be confirmed by a qualified bank and such confirmation must:

(1) be irrevocable;

(2) be clean and unconditional, except by way of reference to the letter of credit it is confirming;

(3) be issued, presentable and payable at an office of the qualified bank in the United States. The aggregate of all letters of credit issued or confirmed to one beneficiary by any one qualified bank on behalf of any one applicant must not exceed five percent of such bank's consolidated capital and surplus as shown in its annual report as of the end of its preceding fiscal year, as filed with the Federal or state regulatory authority having jurisdiction over such bank;

(4) contain a statement that identifies the beneficiary and includes the definition set forth in section 79.1(b) of this Part;

(5) contain a statement that it is not subject to any agreement, condition or qualification outside of the confirmation or the letter of credit it is confirming;

(6) contain a statement to the effect that the obligation of the confirming bank is an individual obligation of such bank and is in no way contingent upon reimbursement with respect thereto;

(7) contain an issue date;

(8) contain a stated expiration date and time which shall be prior to or coincide with the expiration date and time of the letter of credit it is confirming;

(9) contain an evergreen clause which provides at least 60 days written notice to the beneficiary prior to expiry date for nonrenewal;

(10) state that it is subject to and governed by the Laws of the State of New York and the 1993 revision of the Uniform Customs and Practice for Documentary Credits of the International Chamber of Commerce (Publication 500)* and that, in the event of any conflict, the Laws of the State of New York will control. If the beneficiary is a foreign insurer, then such insurer's state of domicile may be substituted for New York;

(11) conform in substance to section 79.9(b) of this Part; and

(f) conform in substance to section 79.9(c) of this Part.

[FN*] ICC No. 500, UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS/1993 Revision. Copyright 1993 by the International Chamber of Commerce. All rights reserved. Reprinted with the permission of the International Chamber of Commerce through ICC Publishing, Inc., in New York.

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