MISTAKES MADE BY CUSTOMERS WHEN ISSUING BG
When you want to monetize Bank Guarantees with our organization, it is very important that you do it in the right way as there are many traps that hinder the successful implementation of the process. We are hereby providing you with professional advice to avoid unnecessary mistakes and get your BG issued and monetized in the proper way as the success of transaction depends on the type of BG.
Mistake 1. NEUTERED BG: Some companies issue neutered BG’s. Neutered BG can only be used for credit enhancement but can never be monetized or traded.
Mistake 2: LEASED BG:
Leased BG’s cannot be monetized. If you provide a BG that is Leased, you have no chance to monetize it. In order to monetize a BG for the client, our company must be the unrestricted beneficiary of the BG for a validity of period of 12 months. This gives us the full control and monetization rights.
Mistake 3: NON MATCHING Procedures– If the delivery procedures of the BG issuer don’t exactly match with the BG Monetizer, the BG cannot be delivered because the two parties are incompatible with each other. Both parties blaming one another and no deal ever gets done.
Mistake 4: BG FROM NON BANK INSTITUTION: When your BG issuer is a non bank entity you can never monetize it with banking institution. Banks will not reply via swift system or communicate with non bank entities or private companies.
Mistake 5: BG WITHOUT CUSIP OR ISIN NUMBERS – Some monetizers will only accept Bank Guarantees with CUSIP or ISIN Numbers. This means they will NOT accept a fresh cut bank guarantee, ONLY seasoned instruments. Seasoned BG’s cost more and are generally available to be purchased from secondary owners, not banks.
Mistake 6: DELIVERY REPORTS: After SWIFT transmission of the banking instruments e.g. via MT 799, MT 999, MT 760 etc, the issuing bank must provide evidence of delivery to the beneficiary bank Quite often, the issuing banks provide sending transmission reports, but do not confirm delivery. It is the obligation of the issuing bank to proof that they actually issued the instrument and successfully delivered it to the final recipient bank. Once delivered, our bank will automatically send alert to our Foundation.
Without confirmed delivery report, we cannot take necessary action and the transaction will be jeopardized.
Mistake 7: Making phone calls or writing email letters to banks: Some Customers do choose to make contacts with banks on their own. This will not solve the problem or guarantee successful transaction. We advise customers not to disturb banks with irrelevant phone calls or e-mail letters. The safest and fastest way is via the Swift system on a bank to bank decorum of communications.