• A letter of credit, often abbreviated as an LOC or LC, and also referred to as a documentary credit, is a document issued by a financial institution (the "issuing bank") which essentially acts as an irrevocable guarantee of payment to a beneficiary
• Once the beneficiary has presented to the issuing or negotiating bank documents complying with the LC terms, the issuing bank is obliged to pay irrespective of any instructions of the applicant to the contrary
• the issuing banks obligation to honor a letter of credit depends upon the presentation of specified documents and not upon non-documentary conditions or resolution of questions of fact or law at issue between the account party and the beneficiary
• Letters of credit are used nowadays almost exclusively in international trade transactions of significant value, for deals between a supplier in one country and a wholesale customer in another
• Parties to a letter of credit are usually

• A beneficiary who is to receive the money,
• The issuing bank of whom the applicant is a client
• The advising bank of whom the beneficiary is a client

• Since  almost all letters of credit are irrevocable
  (i.e. cannot be amended or cancelled without prior agreement of the beneficiary, the issuing bank and the confirming bank, if any)
• The applicant is not a party to the letter of credit

In general, letters of credit are considered by the agencies to be the functional equivalent of loans and are subject to the same types of prudential regulations regarding capital, parties, etc. as any other type of loan

OCC

FRB

SEC_CODE_REF_0090001192884

FDIC

OTS

NCUA - Credit unions do not issue letters of credit

FCA

{reserved}