What is Collateral Transfer?

Collateral Transfer, incorrectly known as a Leased Bank Guarantee, is a financial product, offered by IntaCapital Swiss, that allows a company, (The Beneficiary), to temporarily borrow an asset, usually a Demand Bank Guarantee, from the issuing company, (The Provider). The financial product, is represented by the Collateral Transfer Agreement, a contract signed by both the Beneficiary and the Provider, who’s bankers, The Receiving Bank and The Issuing Bank respectively, provide expert due diligence, allowing the contract to run smoothly.

As recompense for the temporary use of the Bank Guarantee, and once both banks have agreed the viability of the Collateral Transfer Agreement, the Beneficiary will pay the Provider a fee, referred to as the Contract Fee. Ownership of the collateral reverts to the Provider upon expiry of the Bank Guarantee. The Issuing Bank will transfer the Bank Guarantee, to The Receiving Bank utilising the swift system, (“Society for Worldwide Interbank Financial Telecommunications”) using the dedicated message code MT 760, which provides for the transmission of Letters of Credit and Bank Guarantees.

The wording of the Demand Bank Guarantee as governed by ICC Uniform Rules for Demand Guarantees, (URDG 760), is not impacted by the CT Agreement, and therefore the Beneficiary is free to use the collateral for his own purposes. It is common practise for the Beneficiary to utilise the Bank Guarantee as security for a loan or a line of credit, referred to as Credit Guarantee Facilities.

IntaCapital Swiss are well known for their innovative Collateral Transfer Facility, and after significant negotiations, the Providers, in many cases Sovereign Wealth Funds, Hedge Funds, Private Equity Funds, and Larger Family Offices, are now offering more competitive rates, thus Collateral Transfer and the credit facilities it delivers, are now available to smaller companies.

IntaCapital Swiss is at the forefront of the Collateral Transfer market, and the positive effect that it has had on a declining credit market, is measured by the number of companies now enjoying access to Credit Guarantee Facilities, where before access had been denied.