A Leased Bank Guarantee, is a misnomer, whereas the technical term is Collateral Transfer. The generally agreed definition of Collateral Transfer, is the provision for collateral, usually a Bank Guarantee, from one company, (The Provider), to another company, (The Beneficiary), where the collateral is often represented by a Demand Bank Guarantee, and is loaned for a temporary period, the ownership returning to the Provider on expiry of the Bank Guarantee.
For legal purposes, the Beneficiary and the Provider enter into a contract, the Collateral Transfer Agreement, which upon successful due diligence by the Providers bank, (The Issuing Bank) and The Beneficiary’s bank, (The Receiving Bank), the Beneficiary, will transfer a pre-agreed payment (for the use of the Bank Guarantee), representing the Contact Fee. The Issuing Bank, will transfer the Bank Guarantee to The Receiving Bank by swift, (“Society for Worldwide Interbank Financial Telecommunications”), using the designated swift message MT 760, a dedicated swift message for sending Bank Guarantees and Letters of Credit.
The Demand Bank Guarantee is governed by ICC Uniform Rules for Demand Guarantees, (URDG 758), and as its name suggests, will use a dedicated format that will not suffer contradiction, even from the verbiage contained in the Collateral Transfer Agreement. Therefore, the Beneficiary is free to approach their bank and request a loan or line of credit referred to as Credit Guarantee Facilities.
It is now possible for IntaCapital Swiss, by utilising the Collateral Transfer Facility, to offer cheaper access to loans and lines of credit, as they have reached agreement with The Providers, (Sovereign Wealth Funds, Hedge Funds and Larger Family Offices), to reduce their Contract Fees, thus making available Credit Guarantee Facilities to the smaller company.
Collateral Transfer is a hugely popular facility, especially in the current financial markets where there is a drought regarding access to credit facilities. In today’s world, IntaCapital Swiss, by utilising the Facility, has brought the availability of Credit Guarantee Facilities, to a new and impoverished market.