Sector Focus: Trade Finance, FX & Letters of Credit
Letters of Credit Are the Most Overcharged — and Least Audited — Banking Importers Do
Every LC carries layers of charges — establishment, confirmation, offshore correspondent fees, refinancing, FX — and an interest entitlement most companies never collect. The 2024 Bankers' Committee framework on FX-linked obligations confirms exactly where banks overreach. We audit it line by line.
₦8M – ₦90M
Typical recovery range for LC-active importers
6 – 12 weeks
Average audit to settlement timeline
6 years
Maximum retrospective recovery window under BOFIA Act 2020
The entitlement most importers never claim
Cash you lodge as LC cover is a special-purpose deposit — locked and inaccessible. Under the CBN Monetary, Credit, Foreign Trade & Exchange Policy Guidelines (§3.2) and the Guide to Bank Charges, the bank is obliged to pay you credit interest of at least 30% of the MPR on it. At a 27.5% MPR that is roughly 8.25% per annum on every naira of cover, for as long as it is held. Across multiple LCs over several years, the uncollected interest alone routinely runs into tens of millions — and it is recoverable up to 6 years back.
What is your bank holding from you?
Estimate the interest owed on your LC cash-collateral
Enter your cover amount and months held to see what you're owed.
Indicative estimate of the minimum entitlement (30% of MPR on cash cover held as a special-purpose deposit; cover funded by a bank loan is excluded). Not legal advice — a forensic audit against your statements and LC documents is definitive.
Where Trade-Finance Customers Are Most Exposed
LC pricing is opaque by design — establishment and confirmation commissions, offshore correspondent fees buried in SWIFT Field 71D, confirmation-line and refinancing charges, and FX differentials all stack on a single transaction. Each is governed by a specific rule, and each is a place banks routinely overreach.
Interest owed on LC cash-collateral
When you lodge cash cover for an LC, that collateral is a special-purpose deposit — the bank MUST pay you credit interest of at least 30% of MPR (≈8.25% p.a. at a 27.5% MPR). Most importers are paid little or nothing. The shortfall, compounded across years of LCs, is recoverable — unless the cover was funded by a bank loan.
Offshore charges in SWIFT Field 71D
Advising, amendment, confirmation, negotiation, transfer and reimbursement charges (and any 'all overseas/offshore charges' line) are recoverable from you only at actual cost. Undisclosed margins added to correspondent-bank charges, or costs defaulted to you without a documented instruction, are recoverable.
Confirmation-line & refinancing 'pre-/post-negotiation' fees
'Pre-negotiation' and 'post-negotiation' are not recognised CBN or UCP600 terms. Where these labels are used to apply margined charges that were never properly disclosed on the offer letter — or stacked on top of other offshore charges — they are disputable.
FX differentials from bank delay or inaction
On LCs left unsettled during FX scarcity, you should not bear differential or penal/overdraft costs caused by the bank's own delayed engagement, failure to evidence genuine FX sourcing, or poor disclosure. Nostro-overdraft penalties must be passed through at cost and prorated — not marked up.
Undisclosed amendment, SWIFT & courier fees
Section 4 of the CBN Consumer Protection Regulation is explicit: a fee that was not disclosed and agreed before it was applied cannot be earned. Recurring telex/SWIFT, amendment and courier charges that never appeared on your offer letter are recoverable.
Anonymised Case Study
An importer of industrial raw materials had opened dozens of Letters of Credit across two banks over five years, lodging substantial cash cover for each. Our forensic team found the bank had paid no credit interest on collateral that sat locked as special-purpose deposits — a clear breach of the 30%-of-MPR floor. Layered on top were offshore correspondent charges in Field 71D carrying undisclosed margins, and "post-negotiation" refinancing fees that never appeared on a single offer letter. The combined recovery exceeded ₦46M.
What Our Audit Covers for Trade-Finance Customers
Credit-interest reconstruction on all LC cash-collateral / cover deposits against the 30%-of-MPR floor
LC establishment (tenor-based) and confirmation (≤0.5%) commission verification on every LC
Line-by-line review of SWIFT Field 71D offshore charges for undisclosed margins (cost-recovery only)
Confirmation-line & refinancing / 'pre-/post-negotiation' fees tested against your offer letters
FX-differential and nostro-overdraft penal costs caused by bank delay or non-disclosure
Full disclosure audit against Section 4 of the CBN Consumer Protection Regulation
Grounded in the regulations banks are bound by
Our trade-finance findings are benchmarked against the CBN Guide to Bank Charges, the Monetary, Credit, Foreign Trade & Exchange Policy Guidelines 2022/2023, the CBN Consumer Protection Regulation, UCP600, and the Bankers' Committee (CIBN) framework on FX-linked obligations, Letters of Credit and Trade Instruments. Every charge we flag is cross-referenced to a specific rule and to your own statements and offer letters — a report built to withstand challenge and, where needed, formal escalation to the CBN Consumer Protection Department.
Find Out What Your Letters of Credit Are Owed
No upfront fees. Success-fee only. Your LC documentation and 2+ years of statements are all we need to start.