The following are the most common Participants in a Reimbursement Transaction,
- Authorizing Bank: This is the Issuing Bank, which issued a Letter of Credit and authorized the Reimbursing Bank to honor the claims of the Negotiating Bank. In most cases, the authorization will be sent by SWIFT (MT740 or MT747 for an amendment to the authorization) but may also be sent by telex or by mail
- Covering Bank: The Covering Bank is the bank, which according to the Reimbursement Authorization, is to be debited by the Reimbursing Bank when valid claims are received. In most cases, the Issuing Bank will have a direct account relationship with the Reimbursing Bank, and the Covering Bank will therefore be equal to the Issuing Bank. However, in cases where the Issuing Bank instructs the Reimbursing Bank to debit the account of another bank (e.g. its Head Office Account), this party is defined as the Covering Bank.
- Claiming Bank: The claiming Bank negotiates the documents under the L/C and lodges the claim with the Reimbursing Bank, usually by SWIFT (MT742) but can also be through telex or mail. If the Reimbursement Authorization restricted the negotiation to a specific bank, then the Reimbursing Bank may only claim from this bank. If the L/C was a freely negotiable L/C, the Reimbursing Bank will honor claims from any bank which quotes the Issuing Bank L/C number.
- Other Participants: Additional participants may need to be defined in Reimbursement Deals. For example, if the Claiming Bank does not have any account relationship with the Reimbursing Bank and requests the funds to be transferred to their account with another bank, many additional participants may be defined in the transaction, such as Account With Bank, Sender’s Correspondent Bank, Receiver’s Correspondent bank, Intermediary Bank etc.