Monetization Of Bank Guarantee (BG/SBLC)

<img alt="General Consulting Switzerland GmbH Monetization."

 

As monetizers of bank instruments, we constantly receive requests to monetize a small group of the same documents, over and over again. The huge majority of such valueless documents come from different intermediaries all the time, because the owners believe the previous intermediaries were not doing their job finding a buyer or a monetizer for said instruments, when in fact they did; it is just that most sellers/owners/beneficiaries ignore that what they have is a worthless document with no real market value.

Some documents have no value because they are plain and simple forgeries. Sometimes the owners know this, and sometimes the owners/beneficiaries were victims themselves of a scam, and then it becomes our task to explain to the owners of the documents, that what they have is a forgery, and that they will never be able to obtain a penny from such documents. The bottom line is, only banks can legally issue Bank Guarantees and Stand-By Letters of Credit. If you happen to have a BG or an SBLC issued by any of the entities cited by name and country above, you have a document that legally and commercially has no value, and because of that, no commercial bank in the world will accept it as method of payment, or even as collateral for a loan or a credit line. First of all ask yourself what is a bank? A bank is a financial institution or corporation, authorized by a government, to provide banking services to the general population, often by allowing them to receive deposits, extend credit, and other financial services restricted to be provided only by banks. Not one of the entities mentioned above currently holds a banking license from any country in the world.

Whatever way you want to see how they operate, the reality is, no commercial bank in the world will accept a BANK GUARANTEE or a STAND-BY LETTER OF CREDIT issued by any of the entities listed above, because they are not banks, and therefore their documents have no value for the banks. Perhaps some private company (out of ignorance more than anything else) will accept such a document as collateral for a private credit line with them, but that is about it, no commercial bank in the world will, and that is a fact. And because no commercial bank will ever accept those documents as collateral, no real monetizer will be able to work with said documents as well.

And of course, another problem we have when trying to monetize instruments is the fact that for political reasons, most Eurozone regulated banks avoid as much as they can, to work with banks of certain countries. Try to monetize an instrument issued by a Latin American country, and we wish you the best of luck with that. China? Unless it is from Hong Kong, you are out of luck too. Even Europe is not free of that problem; for example, while the list of embargo banks from Russia and Ukraine is very small, most Eurozone regulated banks prefer to not accept as collateral instruments issued by any Russian or Ukraine based banks, they say it is to reduce their risks as much as possible, and to avoid working with banks that while not currently on the embargo list, can be included in said list at any time. Some other countries have strong, reliable and highly praised banks with excellent credit ratings, like Azerbaijan, yet almost no Eurozone regulated bank wants to work with instruments issued by them; this limits the ability of most monetizers to work with instrument from banks of these countries regardless of the credit rating of the bank. And of course, there are always small banks from Eurozone regulated countries, which for some strange reason, issue instruments which seem to be well beyond their financial ability to cover in case of default, and for this reason bigger banks who are aware of this problem, simply will not work with these smaller banks’ instruments.

Now you know the main reasons why some documents that are supposed BGs and SBLCs, keep surfacing on the net and been promoted by different intermediaries every time the surface, because they are either plain forgeries, or because they are worthless documents issued by entities that are not banks, or because they are issued by banks from countries that for political reasons, Eurozone regulated and American banks do not like to work with. We see these “instruments” around often, but there is nothing we, or anyone else, can do about them, and this is why they keep circulating month after month. This is why, if you are looking to purchase or lease an instrument, make sure you are getting your instrument from a government licensed commercial bank, and not from one of those shoddy companies that just want your money and do not care if you will be able or not to legally use the document, by using it to cover your import/export needs, and perhaps selling it, using it as collateral, or monetizing it in any other form.

Secure Platform Fundings Standby Letter of Credit Monetization services are ideal for clients looking to Discount, Monetize, or create an immediate Non Recourse loan against a  Bank Guarantee (BG/SBLC) that they control. The Bank Guarantee Monetization process for Bank Guarantee (BG/SBLC) issues Non Recourse funds to the Client shortly after the Bank Guarantee (BG/SBLC) is delivered to the Monetizer.

Important: Our contracts also include the monetizer returning the Bank Guarantee (BG/SBLC) to the Issuing bank 15 days prior to the Bank Guarantee (BG/SBLC) expiration. This is a critical requirement of most Bank Guarantee (BG/SBLC) Issuers.

Bank Guarantee (BG/SBLC) Monetization LTV:
10 to 49M Standby Letter of Credit (SBLC) – 45% to 55% Non Recourse
50M+ Standby Letter of Credit (SBLC) – 55% to 65% Non Recourse

Bank SWIFT – We use the Bank SWIFT Network to have the Standby Letter of Credit (SBLC) delivered Bank to Bank using SWIFT MT799 followed by SWIFT MT760.

Closing Process – SWIFT
After execution of the Standby Letter of Credit Monetization contract by both parties the Client will instruct his bank to send SWIFT MT799 to the bank coordinates provided by the Monetizer.
The Monetizers bank on receipt of the SWIFT MT799 from the clients bank will reply with a SWIFT MT799.
On receipt of the Monetizers bank SWIFT MT799 the Clients bank will deliver the Bank Guarantee (BG/SBLC) by SWIFT MT760 to the Monetizers bank. Upon receipt, confirmation and delivery of the SWIFT MT760 the Standby Letter of Credit Monetizer will within maximum four (4) banking days grant a Non Recourse Loan for the LTV as agreed from its nominated bank to the Client. The Bank Guarantee (BG/SBLC) Monetizer agrees to return the Bank Guarantee (BG/SBLC) unencumbered fifteen (15) calendar days before the 1 year anniversary of the signed contract between the parties.