Below is an explanation for “leasing” Bank Guarantees. However, for those not in the know the term “Leased” Bank Guarantee is factually incorrect. The technical term is actually Collateral Transfer.
Financial experts have suggested that the term “leased” was plagiarised from a Commercial “Leasing” Contract. This is perhaps due to a “Leased” Bank Guarantee contract and a Commercial “Leasing” Contract being very similar.
The term “Leased” Bank Guarantee will not be found in any financial almanac or lexicon. “Leased” Bank Guarantee has been used for many years in financial conversations and correspondence. It has become an indelible part financial reference and is here to stay.
A “Leased” Bank Guarantees are utilised solely for raising loans and lines of credit. As such the only type of Guarantee that can be used is a Demand Guarantee (or Bank Guarantee) or indeed a Bankers Letter of Guarantee. The Demand Guarantee’s format contains very exact and specific verbiage. It is governed by ICC Uniform Rules for Demand Guarantees, (URDG). It is payable on first demand.
Utilising a Demand Guarantees in this way means banks are happy to accept this instrument as collateral for loans or lines of credit. In other words, a “Leased” Bank Guarantee is successfully used for monetisation purposes providing the issuing bank is of suitable standing.
The market leader in providing access to loans and lines of credit via “Leased” Bank Guarantees is right here in Zurich, Switzerland. Further details will be outlined below.
A company looking to raise credit facilities must enter into contract with a Bank Guarantee Provider. This contract is known as a Collateral Transfer Agreement. There are Bank Guarantee Providers in India, the Middle East, The Far East, South East Asia and Europe. These companies are usually recognised as Sovereign Wealth Funds, Hedge Funds, Private Equity Funds and larger Family Offices.
The company “leasing” the Bank Guarantee will sign the Collateral Transfer Agreement with the Bank Guarantee Provider. They will now be referred to as the beneficiary. Bank Guarantees are usually “leased” for one year.
The beneficiary will pay a fee to the Bank Guarantee Provider for “leasing” the Bank Guarantee. This is referred to as a Collateral Transfer Fee. Ownership of the Bank Guarantee will revert to the Bank Guarantee Provider upon expiry of the Collateral Transfer Agreement.
The Bank Guarantee Provider will instruct their bank to transmit the Demand Bank Guarantee by Swift to the beneficiary’s bank. Once received on their account the beneficiary can now apply for a loan or line of credit.
These facilities are often known as Credit Guarantee Facilities. The beneficiary will offer the Demand Bank Guarantee as collateral in return for a Loan Against the Bank Guarantee.
These transactions have been successfully completed over many years. To enter into a Collateral Transfer Agreement please see below.
Are you a company that is continually refused access to credit facilities? Then please contact IntaCapital Swiss SA Geneva. They are the recognised market leaders in collateral finance.
For over a decade IntaCapital Swiss have been providing access to credit facilities to companies starved of working capital. Their highly popular financial model the Collateral Transfer Facility utilises “Leased” Bank Guarantees.
IntaCapital Swiss have an envious data-base of Bank Guarantee Providers. Utilising the Collateral Transfer Facility, they match Bank Guarantee Providers with companies requiring “Leased” Bank Guarantees. Subject to due diligence, both parties will go on to sign a Collateral Transfer Agreement. To get in touch, please fill out our online enquiry form.