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Collateral transfer is the delivery of assets from one party to another, often in the form of a bank guarantee. This happens whereby the provider agrees to issue a demand guarantee through their bank, to the other party in return for a rental, known as a contract fee. Both parties will then enter into a collateral transfer agreement, which governs the issuance of the guarantee.
‘Leasing a bank guarantee’ is a common phrase associated with Collateral Transfer. Since it is not possible to physically ‘lease’ a bank guarantee, we use the term loosely as its structure resembles that of a commercial lease. These arrangements should be correctly referred to as ‘Collateral Transfer Facilities’ as effectively no leasing takes place. A bank guarantee is issued specifically for the purpose to the beneficiary and each contract is bespoke. A Bank Guarantee cannot be transferable, purchased or sold.
A collateral transfer facility is where the provider uses his own assets to raise a specific bank guarantee through his bank for the sole use of the specified beneficiary, for the specified term. It is effectively a form of securities lending and often a derivative of re-hypothecation. There is no reference to ‘leasing’ when receiving a bank guarantee in this fashion.
Over recent years, these facilities have become more popular since they enable the beneficiary to have access to substantial credit facilities by using the guarantee as loan security. Since the guarantee is effectively imported to the account of the beneficiary, the underwriting criteria is considerably less than that of conventional lending.
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We have worked with clients in over 28 Countries Worldwide, successfully facilitating bespoke financial funding
In the last 10 years alone, we have provided funding solutions to clients worldwide in excess of 800,000,000 Swiss Francs
Proudly operating in one of the worlds most highly regulated countries, Switzerland