PART 7Credit cover
CHAPTER 1General
Downgrade of letter of credit57.
(1)
If A becomes aware that the bank issuing the letter of credit ceases to be a qualifying bank (a “
downgrade
”
), then A must give notice to the Settlement Body as soon as it becomes so aware.
(2)
If the Settlement Body becomes aware of a downgrade, the Settlement Body may give notice to A to that effect.
(3)
A must within F110 working days of the giving of such notice by the Settlement Body or A, whichever is the earlier, provide replacement credit cover so that the total amount of credit cover provided which conforms with regulation 54 is equal to or more than the secured amount.
(4)
If A does not comply with paragraph (3)—
(a)
the Settlement Body may immediately draw down on the letter of credit to the full amount stated in the letter of credit and on receipt of funds from the paying bank place the funds in a bank account which satisfies the conditions in regulation 54(4); and
(b)
funds placed in a bank account under sub-paragraph (a) shall continue to be treated as credit cover provided by A.