A borrower will have to evidence last annual revenues in excess of the face value of the Collateral Guarantee service that is required.
Backing up the emission of a Bank Guarantee or Standby Letter of Credit through public listed, highly rated securities, a Securities Borrowing and Lending transaction is probably the only way to emit a valid SBLC or BG for a private company, to use as collateral for an agreed period of time, without the client having to come up with cash funds of equal value to secure the instrument.
It is expected that revenues (personal, corporate or the sum of both) exceed the face value of the Collateral Guarantee service that is required. If a financial institution, or a company does not qualify accordingly, but a borrower’s bank supports the transaction, in lieu of a qualified financial background, the borrower can offer to place a refundable retainer of Euro 30,000 to be placed in trust, directly into the account of the facilitating company.
• If your bank supports you with their conditional payment,
• and you wish to compensate your lack of financial substance with a refundable retainer,
Key Take Aways:
Companies of less substance may qualify by placing a retainer. This option is available only if the Borrower's own bank is prepared to support the Collateral Lending transaction .
IF YOU ARE NOT SUPPORTED BY YOUR BANK OR YOU DO HAVE THE FINANCIAL QUALIFICATIONS OR THE CAPABILITY TO PLACE A RETAINER, THEN YOU SHOULD READ THIS.