What Parts Do Banks Play in SBLC Transactions?

The Bank not the initiator but is the Deliverer of the Transaction. Technically speaking, “Banks DON’T issue Bank Guarantees or Standby Letters of credit instead, the bank is the deliverer not the initiator of the transaction; they CONFIRM their client has sufficient funds. The Bank is just the delivery courier who works for the BG and SBLC Provider, the actual asset owner, asset holder, or asset manager. For example; pretend you use a courier to deliver a parcel to a customer. You are the provider of the parcel. They are just the delivery agent who delivers you parcel to the Receiver. The courier isn’t the Provider of the parcel. They are just the delivery agent whom the Provider uses to send the parcel from the Provider’s location to the Receiver’s location.

Using the illustration above, banks treat Bank Guarantees and Standby Letters of Credit the same way. As the bank serves as the courier and receives a financial order from a supplier to send to the receiver’s bank one of the providers’ assets (BG or SBLC), In other terms, the banks are instead of the courier becoming the most Widely known as MT messages as the Sender and Recipient of SWIFT messages.(If it’s MT760, MT799. and so on).

Apart from receiving fees for “cutting” (initiating) and “delivering” the Bank instrument, the Bank holds no interest in the transaction. As the financial instrument was launched secured since then against the cash position in the Bank the Provider at the issuing Bank, all other responsibility for the asset is theirs.

Reasons Why Banks Don’t Issue Bank Instruments BGs & SBLCs

If Bank wants to raise capital, it DOES’NT uses BGs or SBLC because the bank either issues:

1. Bank Bonds
2. MTNs (Mid Terms Notes)
3. Bank stock or shares
• The bank NEVER uses its cash to secure encumber a Bank Instrument BG or SBLC. In the Bank, BG or SBLC are secured against client cash accounts Of the Provider.
• BGs or SBLCs are niche market clients’ products instead of Bank products created at high net worth Bank clients’ requests with significant cash holdings at the Bank.
• Tell the Bank Officer at your local world Top 25 Bank Branch that you want to buy a Leased Bank Guarantee. As BGs and SBLC is NOT a publicly offered Bank product, most will not know what you are talking about. They are privately available to high net worth Bank clients with having enough funds to cut the instrument against the funds in their Bank account.
• You need to have an individual Bank account called a custodial account to issue a BG or SBLC.A custodial account is a particular Bank account that can release, receive, and hold financial instruments. Establishing custodial account at a bank takes three months+ and Costs approximately €250,000 to 350,000 Euro during setup. Such accounts are generally available to the Top 1% of Private Banking clients only. You cannot just walk into a bank and ask to set up a custodial account!
• Once a client has a custodial account, it can then issue BGs and SBLCs and Sell it to any clients not as a bank product but as his own bank instrument as a provider since the bank plays no part of the lease agreement between provider and the lessor.

Genuine Bank Instruments Providers
It can be hard to get genuine BG/SBLC providers through. The banks do not market BGs/SBLCs as their own banking goods, only because they are not authorized to Bank Guarantees and standby Letters of credit are issued in an account at the bank by high-net-worth client with substantial capital reserves. Clients of high net worth are typically private equity, hedge funds, pension funds, major companies, etc. Not only is it very challenging to get in contact with providers of bank instruments, but they are also very stringent, but they don’t tangle around

There are 4 Monetization that We Utilize:

1. Euroclear – The Euroclear process is extremely fast, and the best part is there are no SWIFT fees. Euroclear is one of the most established financial transaction networks globally and was founded by JP Morgan in 1968,
2. Bank SWIFT – This (BG) is delivered between the two banks through SWIFT MT799 and SWIFT M760.
3. DTCC – The Depository Trust and Clearing Corporation issues BGs that we accept. Again, through this process, there are no SWIFT fees and this company was founded in 1999 and is seen as one of the leaders in the industry.
4. Bloomberg – The Bloomberg process is extremely fast, and there are no SWIFT fees. Bloomberg was founded in 1981 and is one of the most established financial transaction networks in the world.