Collateral Transfer, often mistaken for the colloquial term, Leased Bank Guarantee, is a financial product, that facilitates the transfer of an asset, usually a Demand Bank Guarantee, from one party, (the Provider), to another party, (the Beneficiary), for an interim period of time, (usually one year), the ownership of the asset returning to the Provider on expiry of that time period. Both parties sign and enter into a contract, the Collateral Transfer Agreement, which accordingly undergoes strict due diligence from the Provider’s bank, (The Issuing Bank), and the Beneficiary’s bank, (The Receiving Bank).

The Beneficiary, under the terms of the Collateral Transfer Agreement, has to pay a fee to the Provider for the use of the collateral, and is referred to as the Contract Fee. Upon receipt, the Provider will instruct The Issuing Bank to transfer the Demand Bank Guarantee to The Receiving Bank by SWIFT, (“Society for Worldwide Interbank Financial Telecommunications”), using the MT 760 dedicated swift message for Bank Guarantees and Letters of Credit.

The terms and conditions of the Agreement govern the transfer, time period, amount and the currency of the Demand Bank Guarantee, whereas the strict verbiage of the Demand Bank Guarantee as governed by ICC Uniform Rules for Demand Guarantees, (URDG 758), governs the use of the Bank Guarantee by the Beneficiary. The overwhelming use of the Demand Bank Guarantee is to act as security for loans and credit lines, alluded to as Credit Guarantee Facilities.

Underpinning Collateral Transfer, is the group of companies referred to as Providers, Larger Family Offices, Hedge Funds, Sovereign Wealth and Private Equity Funds to mention but a few. These companies in conjunction with IntaCapital Swiss, have reduced their charges or Contract Fees, making Credit Guarantee Facilities more available to companies with smaller balance sheets.

The availability of Collateral Transfer is making IntaCapital Swiss, the go to company for providing access to loans and lines of credit. Their undeniably popular Collateral Transfer Facility, is paving the way for companies struggling to arrange loan facilities, to companies reaping the rewards of having access to Credit Guarantee Facilities.