MONETIZATION OF BANK INSTRUMENT

 

Bank Guarantee and Standby Letter of Credit

What are Bank Financial Instruments (BG/SBLC)?

Bank Financial Instruments (BG/SBLC) mean different things to different people but we will try to give different definitions of bank financial instruments for easy understanding by our readers, customers and the general public.

Bank financial instruments are documents or papers that are issued by banks or other financial institutions to a customer or investor and used for different financial purposes and solutions. They are asset based or cash based financial documents like bank guarantees, standby letter of credit, bonds, shares, bill of exchange, cheque, bank draft etc.

Bank instruments can also be described as denominated debt instruments (papers) issued by banks and other financial institutions for specified purposes and obligations. These bank financial instruments may be used to obtain funding from banks, they can also be used as collateral or to enhance credit, “trade” or to enter into private placement programs.

Bank financial instruments carry a monetary value and are legally enforceable. One can also create, modify and trade such instruments, which represent a binding agreement between two or more parties.

Some bank instruments may also be divided according to their asset class, which depends on whether they are debt-based or equity-based.

Bank instruments can assist individuals, businesses, organizations and governments to overcome conventional banking challenges and fund their projects, businesses, trade financing, import and export transactions or other strategic objectives.

Types and Examples of Bank Instruments

  1. Documentary Letter of Credit (DLC, SLC, LC)
  2. Standby Letter of Credit (SBLC)
  3. Deferred Letter of Credit (DLC)
  4. Certificate of time deposits (CD)
  5. Stand by letter of credit (SBLC)
  6. Medium term notes (MTN’s) 
  7. Long Term Notes (LTN)
  8. Promissory Notes (PN)
  9. Bank Guarantee (BG) 
  10. Treasury Bills (T – B)
  11. Bank Drafts (BD)
  12. Bonds

At Artley Finance (HK) Limited, all our Bank Instruments are issued through prime banks such as Standard Chartered Bank Dubai, Barclays bank London, UBS Switzerland, Deutsche Bank AG Germany, Citibank New York, JPMorgan Chase, Wells Fargo Bank USA, Bank of America, HSBC Hong Kong etc.

Bank Instruments Description 

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 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.


Financial instruments from Artley Finance (HK) Limited are cash backed so they can Stand as an obligation from our Bank on behalf of our Clients for their Credit needs, Business and Project Funding. All our Bank Instruments can be used to secure Funding for Projects, Business Expansions and Private Placement Programs (PPP).

Genuine Bank Instrument Providers – Who are they?

Genuine Bank Instrument Providers are banks or financial services providers like Artley Finance (HK) Limited that provide genuine bank instruments from AAA rated banks such as UBS Switzerland, Barclays bank London, UNICREDIT, Standard Chartered bank Dubai, Bank of America, Wells Fargo Bank or Citibank. 

To understand who these Genuine Bank Instrument Providers are and how they function, one must understand what is called Collateral Transfers in the financial industry. Collateral Transfer is basically the process of transferring assets from one party (the Provider) to another party (the Beneficiary) often in the form of a Bank financial Instrument (BG or SBLC). This occurs whereby the Provider agrees (through his Issuing Bank) to issue a “Demand Guarantee” to the Beneficiary in return for a “rental” or “return” generally known as the “Contract Fee”. The parties agree to enter into a Collateral Transfer Agreement (CTA) which governs the issuance of the instrument.

These instruments can come in form of ‘commitments’ such as;

  1. Collateral or credit enhancement commitment
  2. Loan or funding commitment
  3. Proof of fund, bank guarantees, letters of credit, etc.
In general, these instruments allow potential holders or beneficiaries to have:
  1. Collateral or credit enhancement; shore up financial statement and profile
  2. Loan or funding commitment; demonstrate project, business, venture or program has sufficient merit or cash flow returns to warrant funding and investments.
  3. Proof of funds, bank guarantees, letters of credit; to facilitate, secure or execute projects, trade and business transactions.

Artley Finance (HK) Limited can help you to obtain financing for your business or projects, activate credit lines, issue Letters of credit and bank guarantees, provide loans against your financial instruments, and monetize financial instruments.

Financial Solutions for Every Business

We are Trusted Financial Instrument Providers of BG/SBLC. As trade finance experts & Bank Instrument Providers (BG/SBLC), We Provide Reliable Financial Solutions and can provide you with the best deal to meet all your financial goals. 

Artley Finance (HK) Limited leads in the financial service industry in providing bank instruments, Leased Bank Guarantees (BG) and Standby Letters of Credit (SBLC) issued with prime banks for our global clients. We leverage our relationships with a wide variety of financial institutions and investors to provide the most favorable structure for your business.  We do all these for you because your success is our concern. 

Financial Instrument Provider (Leased BG / SBLC Providers)

We provide financial instruments and trade finance services. The financial instruments we provide include BG Bank Guarantees,SBLC Standby Letter of Credit, Deferred Letters of Credit, Usance LC, Bank Comfort Letters,  etc.

Lease BG SBLC Provider

Artley Finance (HK) Limited provides bank instruments used to secure loans from banks, trade financing, Private Placement Programs, Trade Platforms, Non Resource Funding and project financing for various commercial projects.  

Bank Guarantee BG

Bank Guarantees (BG)  provides a targeted method for securing performance and payment. The bank guarantee is used in both local and international transactions in the import and export business.

Bank Instrument (BG/SBLC) Monetization

Bank Instrument (BG/SBLC) Monetization is the process of liquidating or converting bank instruments (BG/SBLC)  into cash or legal tender.

Artley Finance (HK) Limited are bank instruments monetizers. We can arrange and assist clients to discount or monetize bank instruments, especially sblc or bg, or arrange a Non Recourse loan against a Standby Letter of Credit (SBLC) issued from prime banks. The Standby Letter of Credit Monetization arrangement issues Non Recourse funds to the Client shortly after the Standby Letter of Credit (SBLC) is delivered to the Monetizer.

Our SBLC monetization rate is 80% LTV which is the highest in the industry, and above all, all our sblc are issued by either HSBC, Credit Suisse or Barclays Bank. 

Standard Monetization Terms For BG / SBLC.

  • BG and SBLC to be monetized must be issued by top 20 AAA rated banks such as HSBC, Citi, barclays, Stanchart etc.
  • BG and SBLC from unrated banks cannot be monetized.
  • Instruments with a Value OVER 5 Million Dollars
  • BG & SBLC MUST have at least 11 months validity prior to expiry
  • We prefer monetization transactions of $10 million or more, but we will accept transactions as low as $5 million transaction amount
  • Transaction turnaround time between 10 to 14 working days or less
  • Exceptions can be made to minimum transaction
  • Brokers and intermediaries must have a legally binding agreement

     BG / SBLC Monetization Process using the swift system. 

  1. After execution of the BG / SBLC Monetization contract by both parties, the Client will instruct his bank to send SWIFT MT799 to the bank coordinates provided by the Monetizer.
  2. The Monetizers bank on receipt of the SWIFT MT799 from the client’s bank will reply with a SWIFT MT799.
  3. On receipt of the Monetizers bank SWIFT MT799 the Clients bank will deliver the Bank Guarantee (BG) / Standby Letter of Credit (SBLC) by SWIFT MT760 to the Monetizers bank.
  4. Upon receipt, confirmation and delivery of the SWIFT MT760 the Bank Guarantee (BG) / Standby Letter of Credit (SBLC) 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.
  5. The 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.

    BG / SBLC Monetization Process using  Euroclear:

  1. After execution of the BG/SBLC Monetization contract by both parties, the Client will instruct his bank to assign the BG/SBLC using FREE Euroclear Delivery to the bank coordinates provided by the BG/SBLC Monetizer.
  2. The Clients Banker shall immediately email a certified Euroclear execution receipt of the Bank Guarantee (BG) Standby Letter of Credit (SBLC) delivery to the Bank Guarantee Monetizer.
  3. Upon receipt and confirmation of the Euroclear assignment and delivery, the Bank Guarantee /Standby Letter of Credit (SBLC) Monetizer will within maximum three (3) banking days grant a Non Recourse Loan for the LTV as agreed from its nominated bank to the Client.
  4. The BG/SBLC Monetizer agrees to return the Bank Guarantee (BG) / Standby Letter of Credit (SBLC) unencumbered fifteen (15) calendar days before the 1 year anniversary of the signed contract between the parties.

Estimated Completion Time For SBLC Monetization:

The SBLC Monetization process typically takes between 7 to 10 Days after all documents are signed and verified or 3 to 4 Days After Instrument Delivery on the SWIFT or Euroclear Networks.

MT-760

MT 760 belongs to a category of SWIFT Message a type of inter-bank message used on SWIFT system to enable financial institutions can correspond. You can read the Difference Between Swift MT799 And Swift MT760 on this post: 

Ready Willing and Able Letter (RWA)

RWA is a letter issued by a bank or financial institution on behalf of their clients. It demonstrates the intent and capability.

We have been providing these bank financial instruments to our numerous customers all over the world including importers, exporters as well as business owners that need credit enhancements or trade finance facilities to execute projects locally / internationally.