The bank to bank platform utilised for Collateral Transfer, and Collateral Transfer Agreements, is referred to as SWIFT, (“Society for Worldwide Interbank Financial Telecommunications”). The SWIFT system allows banks to transfer Bank Guarantees, other instruments and payments to each other, and is a membership only, secure international and authenticated financial message platform, that is used by banks and financial institutions throughout the world.

A Collateral Transfer Agreement put simply, is an agreement between two companies, referred to as the Provider, (the owner of the Bank Guarantee) and the Beneficiary, (the Beneficiary of the Bank Guarantee), where the Beneficiary leases a Bank Guarantee from the Provider. The Provider will instruct their bank, (the Issuing Bank), to utilise the SWIFT system, and transfer a Bank Guarantee to the Beneficiary’s bank, (the Receiving Bank).

For further details on the Provider please go to “Who Are Providers And What Are Their Benefits From Leasing Bank Guarantees”.

Both the Issuing Bank and the Receiving Bank will due diligence the Collateral Transfer Agreement to ensure the details conform to international and local financial regulations, and upon successful completion, will utilise the bank to bank platform referred to as SWIFT, to execute the agreement in accordance with the details contained therein.

It is often the case that the Issuing Bank will utilise the SWIFT system to pre advise the Receiving Bank, that they will be transferring by SWIFT a Bank Guarantee in favour of their client, the Beneficiary. It is pertinent to note, that both the Provider and the Beneficiary, must make sure their banks are members of the Society for Worldwide Interbank Financial Telecommunications.