Renewing Collateral Transfer Agreements

A Collateral Transfer Agreement, is a versatile contract in so far as a company wishing to lease or effectively rent a Bank Guarantee, can contract for one year and up to and including seven years. The company leasing the Bank Guarantee is referred to as the Provider, whereas the company receiving the Bank Guarantee, is referred to as the Beneficiary. IntaCapital Swiss, a Geneva based boutique finance company, are Europe’s leading experts in Collateral Transfer and Collateral Transfer Agreements, and any company wishing to lease a Bank Guarantee, should contact them accordingly.

Historically most Collateral Transfer Agreements are for one year, and as such the Bank Guarantee will have an expiry date of one year. However, in the event the Beneficiary wishes to renew the contract/agreement for a second year, they must inform IntaCapital Swiss no later than one month before the expiry of the Bank Guarantee, so they may get the approvals of both the Lender and the Provider. If a Collateral Transfer Agreement has an end date in excess of one year, and providing all the terms and conditions have been met, the contract will renew automatically.

The Beneficiary will be advised before signature, of all costs relating to a Collateral Transfer Agreement. The costs are fairly straightforward and consist of the Provider’s fees, cost of borrowing for one-year, due diligence fees, arrangement fees, booking and legal fees. In years two up to seven, the Beneficiary is only liable for the Provider’s fees and the cost of borrowing for one year.

It should be noted that costs may vary from year one through to year seven, and though the Provider’s fees remain fairly stable, the 12 month Libor and 12 month Euribor rates, are subject to on-going market forces. In the event, the Beneficiary is faced with an increase in interest rates, the costs are for their account.