A « provider » enters into agreements to guarantee the borrower the use of its guarantees and transfer them to the borrower`s property for a period of time for an agreed contractual commission. Hence the term « collateral transfer. » The supplier effectively acts as an investment partner and places its assets (cash deposits) with the borrower for a financial return. This is often done through a bank guarantee letter (bank guarantee) from bankers, instead of investing physical money. It should be noted that if the client intends to use the guarantees to obtain lines of credit or credits, they also receive line of credit interest on funds borrowed for these guarantees. This may vary depending on the borrower`s jurisdiction, bank or credit database. As a general rule, however, the CFI can arrange credits for about 4.5% per year, fixed for a period of 12 months, our service charge being about 5% in addition to the intermediation fee of the supplier. This is done by the provider of the initial or underlying asset that allocates the assets to the medium-term bank (the issuing bank) so that the supplier can order the transfer of a bank guarantee to the beneficiary and his beneficiary bank. The bank guarantee that the results can be used in one way or another by the beneficiary. The underlying pledge by the issuing bank may be cash, bonds, shares, gold or other assets (or often a combination of many assets) and is provided by the « provider. » The supplier is a private equity or investment group or a securities management company that invests on behalf of its clients. A supplier often receives assets through equity brands or hedge funds, pension funds or high net worth individuals and family offices. Suppliers are able to offer their investors good returns on affected assets by offering collateral transfer facilities. This provides a good opportunity for investors who wish to obtain additional returns by placing their assets with the supplier. The supplier then in turn looks for appropriate customers (beneficiaries) to obtain collateral transfer facilities.
The contractual fees paid by the beneficiary to the supplier for the use of the bank guarantee are then distributed as a return among the investors (owners) of the original underlying. Part of the supplier as administrative costs. This allows investors to get good annual returns on assets they would not otherwise be able to invest. For example, works of art, real estate, stagnant capital, etc. The supplier will use its banking relationship to mortgage these assets of the issuing bank and give it a fixed-term bank guarantee (usually 12 months renewable conditions) to the beneficiary. The beneficiary pays the supplier a contractual fee for the use of the bank guarantee over time. The following diagram shows how the whole structure is organized. By « leaseback » of bank guarantees – collateral transfer A flexible means of financing in which a borrower has only reduced or limited guarantees to open new loans or extend existing credit or credit facilities. Collateral transfer allows the borrower to effectively « import » assets (assets) into his temporary property and use the same guarantee for loans and credits, or for improvements or other purposes. Collateral transfer is the provision of assets from one party (the supplier) to the other (the beneficiary), often in the form of a bank guarantee.