Bank instrument providers are written obligations of the
issuing Bank to pay a sum on to a beneficiary on behalf of their customer in
the event that the customer himself does not pay the beneficiary.
It is important to note that these bank guarantees apply only whenever the
issuing bank’s guarantee is not contingent on the existence, validity and
enforceability of its customer’s obligation; this is called an
“abstract” guarantee (i.e. the bank’s obligation is to pay regardless
of any disputes between its customer and the beneficiary).
The issuance of Bank instrument providers is a private transaction and does not result in the issuance of any publicly tradable instruments. There are two types of bank guarantees:
(1)
direct bank guarantees that have the issuing bank guarantee one’s of its
customer’s (called “Obligor”) obligations to a third party (called
“beneficiary); and
(2) Indirect bank guarantees that are issued in favour of a second bank which
has issued a guarantee on behalf of the of the original’s bank’s customer. With
an indirect guarantee, a second bank (usually a foreign bank with head office
in the beneficiary’s country of domicile) is involved
An assignment of proceeds requires notice to the issuing
bank of this action; otherwise the issuing bank would pay the beneficiary
rather than the assignee. Transfer of Bank instrument
providers - Bank guarantees can be transferred to a third party ONLY with
the written consent of the issuing bank AND the beneficiary.
No Public Market - There is no public market for the trading of bank
guarantees. Beware! Fraudsters or naive brokers are always erroneously
representing that there is a public market for the trading of bank guarantees (and
standby letters of credit). This is not to be confused with the trading of
other bank issued instruments such as medium term notes, etc. Bank instrument
providers can only be transferred or the proceeds assigned in private
transactions (See above).
Banks instrument provider are not trading securities, trading debt instruments, or trading investment funds, and therefore are not subject to the settlement procedures offered through Euroclear or DTC and most other settlement firms (and not Bloomberg). Obviously, therefore, they also are not issued CUSIP or ISIN numbers for trading purposes. However, Euroclear may accept such bank guarantees for "safekeeping” purposes only, and it is not assigned an ISN or CUSIP number (though it may have a number for identification purposes).
We are one of the leading Financial instrument providers with offices all over Europe. We are major/Direct providers of Fresh Cut BG, SBLC, POF, MTN, Bonds and CDs and this financial instruments are specifically for lease and sale, our we always deliver on time and precision as Set forth in the agreement. You are at liberty to engage our leased facilities into trade programs, project financing, Credit line enhancement, Corporate Loans (Business Start-up Loans or Business Expansion Loans), Equipment Procurement Loans (Industrial Equipment, Air crafts, Ships, etc.) And many more, Our Terms and Conditions are reasonable.
This post first appeared on Bank Draft Monetization … THE MYTH, please read the originial post: here