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The Fronting Fee Letter of Credit is utilized when a company requires letter of credit services but prefers or needs to work through a fronting bank with stronger credit standing or better market recognition. This document, governed by Dutch law, establishes the commercial terms between the fronting bank and the applicant, particularly focusing on the fee structure and payment obligations. It is commonly used in international trade finance where the fronting bank's reputation and credit rating are leveraged to facilitate trade transactions. The letter details the fronting fee calculation methodology, payment terms, duration of the arrangement, and related operational aspects, while ensuring compliance with Dutch banking regulations and international banking standards. This document is essential for establishing transparency in the fronting relationship and securing the fronting bank's compensation for extending its credit standing.

1. Letter Header: Formal business letter header including date, recipient details, and reference number

2. Subject Line: Clear identification of the document as a Fronting Fee Letter of Credit arrangement

3. Reference to Main LC: Details of the primary Letter of Credit being fronted

4. Fronting Bank Role: Clear description of the fronting bank's obligations and responsibilities

5. Fee Structure: Detailed explanation of the fronting fee calculation and payment terms

6. Payment Terms: Timing and method of fee payments, including currency and account details

7. Duration: Term of the fronting arrangement and any renewal provisions

8. Governing Law: Specification of Dutch law as governing law

9. Signature Block: Execution section for both parties