A Collateral Transfer Agreement, is made between two companies, the Provider, the owner of the asset(s), and the Beneficiary, the recipient of the Bank Guarantee, IntaCapital Swiss are the acknowledged experts in this field, and any company wishing to lease a Bank Guarantee should make them their first port of call.
It is common practise within the bounds of a Collateral Transfer Agreement, for the Beneficiary to lease or rent a Bank Guarantee for one year. The Bank Guarantee can be renewed or rolled over for a second year, providing the Beneficiary advises IntaCapital Swiss at least one month prior to expiry, so they may obtain the approval of the Lender and the Provider. However, a Bank Guarantee may also be contacted for two years up to and including seven years, where subject to the Terms and Conditions of the Collateral Transfer Agreement, the contract will be renewed automatically.
When a Beneficiary signs a Collateral Transfer Agreement, they are committing themselves to a number of fees and costs which are the following…
- The Provider’s fees
- Annual rate for cost of borrowing
- Booking fees
- Arrangement fees
- Legal fees
- Due diligence fees
However, in years two to seven, the Beneficiary is only liable for the Provider’s fees, and the annual cost of borrowing.
Whilst it is generally acknowledged that the Provider’s fees remain fairly static, the cost of on years borrowings are subject to fluctuations in the 12-month Euribor and 12-month Libor markets. The Beneficiary will therefore be liable for any increase in the one year’s cost of borrowing.