Online trade finance portal LCconnect is proclaiming the completion of its first online letter of credit bidding application. PPG Industries successfully executed a $30 million standby letter of credit using the LCconnect platform, with nine US-based banks and six foreign banks invited to bid on the transaction
"The transaction went very smoothly," says Linda Mula, PPG's treasury manager. "Using the LCconnect platform was a strong indicator of the effectiveness we can gain by moving our LC bidding process online. LCconnect allowed us to reach multiple banks simultaneously and was much easier than using the phone to obtain bids. Overall, we were very satisfied with the results and look forward to using them for our future LC origination needs."
Through the LCconnect system, companies can run a negotiated "reverse auction" with their relationship banks, ultimately awarding their LC business to any of the participating banks. Currently, the origination and bidding on letters of credit remains heavily dependent on the telephone and fax.
Michael Moretti, LCconnect founder and co-president, comments: "LCconnect does not alter the existing process or relationship between companies and banks; our primary objective is to maximise the operating efficiency of the letter of credit execution process for all players."
New York-based LCconnect completed its five-month pilot programme in March 2001, which involved the participation of seven Fortune 500 companies and eight global banks.