EURO EXIM BANK
Ready, Willing and Able Letters
An RWA letter says that we are ready, willing and able to issue a particular instrument. The readiness is ours, not our client's. That gets blurred constantly in this market and it is worth being plain about, because a letter saying a company is generally able to transact is a far vaguer thing than a letter saying a named bank will issue a named instrument to a named beneficiary for a stated amount.
The letter identifies the client, the underlying relationship document and the purpose. It names the beneficiary and the beneficiary's bank. It sets out the instrument, the SWIFT message type it will go under and the face amount. All of it is subject to our terms and conditions governing issuance.
We issue an RWA letter only alongside an instrument, never on its own. If there is no letter of credit, standby letter of credit or bank guarantee in contemplation, there is nothing for us to be ready to issue and no letter to write.
A pre-advice does much the same job at a slightly different point. It gives the beneficiary the details of a letter of credit before documents are presented, usually tagged with a note to the effect that the SWIFT will be issued once the requisite due diligence is complete. Unless it says otherwise, we are then committed to issue or amend the credit in line with what the pre-advice said.
Neither document is the instrument. Until the instrument is issued there is nothing to present against and nothing to draw on. An RWA letter is not security. It is not transferable. It is not something a third party can lend against, and anyone suggesting otherwise is not describing what we issue. Both letters can be verified through SWIFT. KYC is completed before issuance.
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Frequently asked questions
Is an RWA letter a guarantee?
No. It says we are ready, willing and able to issue a particular instrument. It creates no payment obligation and there is nothing in it for a beneficiary to present against. The guarantee is the instrument that follows, not the letter that precedes it.
Can I get one without applying for an instrument?
No. We issue an RWA letter only alongside an instrument application. If there is no letter of credit, standby letter of credit or bank guarantee in contemplation, there is nothing for us to be ready to issue and nothing to write a letter about.
How is it different from a proof of funds letter?
A proof of funds letter is about what our client holds. An RWA letter is about what we are prepared to issue. Different subject, different purpose, and neither is an undertaking to pay.
Can it be used to raise finance or as security?
No. It is not security, it is not transferable, and it is not something a third party can lend against. Anyone suggesting otherwise is describing something we do not issue.
Do I pay KYC again for each product?
No. KYC is completed once. Having been through it for one product, you do not repeat it or pay for it again when you come back for another.