About Collateral Transfer

Collateral Transfer is the technical term for what is incorrectly referred to as a Leased Bank Guarantee. Collateral Transfer, is the provision of assets from one party, (The Provider), to another party, (The Beneficiary), often in the form of a Demand Bank Guarantee. The two parties enter into and sign a contract, The Collateral Transfer Agreement, which accordingly undergoes due diligence by the Provider’s bank, (The Issuing Bank), and the Beneficiary’s bank (The Receiving Bank).

Once the two banks have agreed the viability of the contract, the Beneficiary will pay the Provider an agreed sum for the temporary use of the Bank Guarantee, known as the Collateral Transfer Fee. In return, the Provider will instruct their bank to transfer the Bank Guarantee via SWIFT MT760 to the Beneficiary’s bank.

The underlying agreement which is the Collateral Transfer Agreement, has no bearing or impact on the usage of the Bank Guarantee or the wording contained within it. The Bank Guarantee itself remains an autonomous, irrevocable payment obligation of the issuing bank, issued under internationally recognized rules such as ICC Uniform Rules for Demand Guarantees (URDG 758).

The Collateral Transfer Facility, as offered by IntaCapital Swiss, is now available to smaller companies due to more competitive pricing by the asset providers and easier access to structured facilities.

Where a borrower has very little security to apply for credit from their bank, Collateral Transfer allows the borrower or Beneficiary to effectively import third-party collateral, enabling them to raise the necessary debt financing, loans, or project funding.