Leased Bank Guarantee Providers

By
Property Manager with Kingrise Finance Limited

What Is a Leased Bank Guarantee?

 

A leased bank guarantee is a bank guarantee, which is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer, looking to secure the bank guarantee. Following this it will lease a guarantee to that customer for a set amount of money and over a set period of time (typically less than two years).

Leasing Bank Guarantee’s (BG) or Leasing Standby Letters of Credit (SBLC) are common phrases associated with Collateral Transfer. However, leasing is not really the correct term to use as it is not possible to actually lease a bank guarantee in this manner.

 

It is a misnomer. We use the term loosely as its process is almost exactly that of commercial leasing. In effect, the Provider offers temporary ownership of his assets to the Beneficiary in return for a fee and at the end of the term the assets revert back to the ownership of the Provider. The assets are used to raise specific and non-transferable bank indemnities which the Beneficiary may utilise.

 

It is a misnomer as in effect no leasing takes place. Through a Collateral Transfer Agreement, a Provider will agree to place his assets with a facilitating bank. The bank will charge the asset and will raise a bank indemnity against it in favour of the Beneficiary. This bank indemnity will commonly be in the form of a Bank Guarantee issued specifically for the purpose to the Beneficiary.

 

These Collateral Transfer (or C/T) facilities are useful for when a business needs to import or create security (collateral) to underpin credit lines or loans, otherwise referred to a monetization.

Lease Bank Guarantee - Leased Bank Guarantee ProvidersLease Bank Guarantee – Leased Bank Guarantee Providers

What Is a Bank Guarantee?

A bank guarantee is a promise from a bank or a financial institution that if a particular borrower defaults on a loan, the bank will cover the loss.
A Bank Guarantee is a method to secure or guarantee a payment. They are commonly used as Credit Facility Guarantees to secure or underpin credit lines, loans and other forms of credit advancement. Equally, SBLC’s (or Standby Letters of Credit) are used for the same purpose, although a Bank Guarantee is better suited for the job.

Bank Guarantees can be effectively ‘rented’ from a third party known as a ‘Provider’. Providers are often Financial Services Providers like Kingrise Finance Limited, private equity companies, hedge funds and wealthy family offices. They enter into Collateral Transfer Agreements with entities that wish to ‘borrow’ or ‘rent’ security in the form of a BG or SBLC. The Provider will pledge his assets (cash, gold, liquid stocks and shares, etc) with his bank and instruct the issue of a BG or SBLC to the recipient in return for a Contract Fee (or ‘rental’ payment) generally on an annual basis. The recipient will indemnify the Provider against loss and will therefore agree to extinguish any loans or credit secured on the Guarantee prior to its expiry. As there is a ‘promise’ to remove any encumbrances or effectively to ‘return the Guarantee at expiry’ it resembles the act of leasing, hence the term ‘leasing of Bank Guarantees’.

The Parties to these transactions are the Provider and the Recipient, they are known as the lessor and lessee in the BG/SBLC Deed of Agreement (DOA). Their respective banks and bankers are not party to the Collateral Transfer Agreement as they will simply “accept instructions” from both parties. The Issuing Bank will act for the Provider and take his instructions, the Recipient Bank will act for the Recipient and further take his instructions. Banks do not directly enter into these facilities as the assets underpinning the whole transaction belong to a third party outside the bank (i..e the Provider). The Recipient Bank may offer to extend credit to the Recipient against the security of the incoming Guarantee. However, the Recipient Bank will have no other role than to receive the Guarantee and accept it as security for any credit granted to the Recipient or Beneficiary of it.

There are several new private banks being formed specifically for collateral management and we may see in the next few years, private banks offering these services by utilise their own balance sheets to make such commitments. However, currently, they are done off the banks balance sheet. This means that the Guarantee being issued is not issued on the strength of the bank or the banks rating. All Guarantees issued under this manner are for ‘value received’ and therefore the bank’s rating is not so important.

A Recipient Bank may judge the strength of the incoming Guarantee by the Issuing Banks performance on honouring its payments as depicted by their own experiences with that certain bank. As Bank Guarantees cannot be bought or sold or traded in any way, bank ratings are not affirmed to the instrument.

Recipients of Bank Guarantee or indeed SBLC’s have a specific purpose and requirement. The Guarantee is therefore worded for such purpose, i.e. to secure a credit or loan or to secure (third party) performance or contractual obligations.

Uses of Leased Bank Guarantee

Leased Bank Guarantees are used in foreign trade. Apart from trade finance, Leased Bank Guarantee can be used for credit enhancement to get loans from banks or financial institutions. Importers and exporters can also use Leased Bank Guarantees in their import and export transactions. Contractors can also use Leased Bank Guarantee to secure their contracts. 

Leased Bank Guarantee Explained

Leased bank guarantees tend to be very expensive; in most banks fees can run as high as 15% of the guarantee amount every year. The fee usually consists of an initial setup fee and an annual fee, both of which will be a percentage of the dollar amount that the issuing bank “guarantees” (or covers) in the event that the company is not able to promptly pay its debts. Smaller enterprises typically only use this option for financial backing (particularly those who are desperate to expand operations and/or fund a specific project). These enterprises will have typically exhausted other opportunities to raise financing or obtain a letter of credit from their own bank.

These Are The Top Reasons Why Leased Bank Guarantee Transactions Fail:

Leased Bank Guarantee Providers

Leased Bank Guarantee Providers are bank or financial institutions such as Kingrise Finance Limited that issue or provide leased bank guarantees to customers. Kingrise Finance Limited are Leased Bank Guarantee Providers, Genuine Bank Instruments Providers as well as lease sblc providers.

As Genuine Bank Instrument providers, all our leased bank instruments such as bank guarantees (BG) and standby letters of credit (SBLC) are issued by World’s rated Top 25 Banks. We use the Bank SWIFT Network to have the leased bank guarantee (BG) and standby letter of credit (SBLC) delivered to the beneficiary’s bank account by SWIFT MT799 followed by SWIFT MT760. We operate an extremely reliable, efficient delivery and authentication process.

We can issue any bank instrument (bg/sblc) from any of the worlds biggest banks in France, Germany, London, Paris, New York, Spain, Italy, Malaysia, Indonesia, Turkey, Hong Kong, Singapore or USA. We can also monetize any bank instrument such as bg or sblc. The bg/sblc monetization arrangement issues non recourse loans to the customer shortly after the bg/sblc is delivered to the monetizer.

CLICK HERE TO MONETIZE YOUR BANK INSTRUMENTS (BG/SBLC) FROM PRIME BANKS.

Leased Bank Guarantee and Determining Credit-Worthiness

To determine if a borrower is worthy of a leased bank guarantee, many banks will undertake a credit analysis. Credit analyses focus on the ability of the organization to meet its debt obligations, focusing on default risk. Lenders like Kingrise Finance Limited will generally work through the five C’s to determine credit risk: the applicant’s credit history, capacity to repay, its’ capital, the loan’s conditions, and associated collateral. This form of due diligence can revolve around liquidity and solvency ratios. Liquidity measures the ease with which an individual or company can meet its financial obligations with the current assets available to them, while solvency measures its ability to repay long-term debts. Specific liquidity ratios a credit analyst may use to determine short-term vitality are current ratio, quick ratio or acid test, and cash ratio. Solvency ratios might entail the interest coverage ratio.

Global Market For Leased Bank Guarantees

Many top worldwide banks will lease bank guarantees, usually with a minimum amount of $5 million to $10 million, all the way up to $10 billion and more.

Kingrise Finance Limited are genuine providers of leased bank guarantee and Lease SBLC at 4% annual leasing fee. These Leased Instruments can be obtained at minimal expense to the borrower compared to other banking options. This offer is open to both individuals, SME’s and corporate bodies. We also provide loans and international project funding, our loan interest rate is only 3% per year.

 

Description of Instruments:-Bank Guarantee {BG} / StandBy Letter of Credit {SBLC}
1. Instrument: Fully Cash Backed Bank Guarantee {BG} / StandBy Letter of Credit {SBLC}
2. Total Face Value: Eur/USD 1Million (Min) to Eur/USD 5 Billion (Max)
3. Issuing Bank: HSBC London/Hong Kong, Barclays Bank London, Citibank New York, Deutsch Bank Germany or any AAA Rated Bank.
4. Age: One Year and One Day (with rolls and extensions where applicable)
5. Leasing Price: 4% of Face Value plus 2% brokers commission (Applicable only if there are brokers in the transaction)
6. Delivery: SWIFT MT-760
7. Payment: MT103 Swift Wire Transfer
8. Hard Copy: Bank Bonded Courier within 7 banking days.

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Once the transaction is in progress, we ensure we keep you posted on the progress of your paper. Instead of stressing yourself out looking for a financial instrument or company why not let professionals like us deliver financial instruments to you within the time frame required by you.

OUR SERVICES ARE:
Loans: (Non Recourse Loans, Business Loans, Secured Loans, Unsecured Loans, International Project Financing)
Purchase Bank Instruments (Bank Guarantees and Standby Letter of Credit)
Lease Bank Instruments (BG, SBLC, DLC, Letters of Credit)
Letters of Credit (DLC, L/C, Usance LC)
Investments and Wealth Management
Insurance Underwriting Services
PPP and Trading Platforms
Corporate Finance

 

BROKER INQUIRIES ARE WELCOMED AND APPRECIATED: Our brokers receive 2% commission for referral. Daisy Chains of Brokers, Scammers & Time Wasters Will Not Be Entertained. We assist Clients and brokers in their attempt to secure funding by working on their funding requests that may require innovative financing.

We would welcome the chance to earn your trust and deliver you the best financial service in the industry. Have a look at some of our recent projects here: https://kingrisefinance.blog/deals-projects/

 

Contact us today to know how a Leased Bank Guarantee mt760 from barclays bank, hsbc bank, Chase Bank, Standard Chartered Bank or Bank of America can help you conclude worthy deals with your suppliers and contractors. 

Email: info@kingrisefinance.com
Blog: https://kingrisefinance.blog
Website: https://www.kingrisefinance.com

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