Forfaiting Glossary

Glossary Items beginning with : B

Back-to-Back Credit

Two letters of credit which cover a single shipment of goods, involving a middleman. The first letter of credit is issued on the application of the middleman to pay for his import of goods on the security of the second letter of credit under which he is paid by the ultimate buyer of the goods.

BAFT (IFSA)

The global financial services association formed by the merger of the Banker’s Association for Finance and Trade (BAFT) and the International Financial Services Association (IFSA).

Barter

The simple exchange of one set of goods for another with no money changing hands (see Countertrade).

Basel Committee

The Basel Committee on Banking Supervision (BCBS) is a committee of banking supervisory authorities that was established by the central bank governors of the Group of Ten countries in 1974. Basel I was implemented in 1993 whereas the implementation for Basel II started in 2006/2007. Basel III which is yet to be introduced, although already incorporated by some banks, is based on three pillars being eligible capital, stress testing and market liquidity.

Basis Point

One hundredth of a percentage point (100 basis points = 1 per cent).

BBA : British Bankers Association

The UK’s leading association in the banking sector.

Beneficiary

The seller or supplier of goods, in whose favour a Letter of Credit is issued.

Berne Union

The International Union of Credit and Investment Insurers. The Berne Union has always been made up of both public and private companies.

Bi Lateral Loan

A facility provided by one lender to a borrower typically with whom it wants to maintain direct relationship. It is used for less complex facilities and usually provided for smaller amounts.

Bid Bond

A bond/guarantee required to be issued by a bank or other financial institution on the application of company tendering for a contract to assure the prospective buyer that the company will comply with the terms of the tender should it be accepted.