The procedures are very clear and simple, and the steps are largely uniform. To assist our potential clients, we’ve laid out the entire process in detail.
Procedural Overview for Obtaining a Bank Guarantee via Collateral Transfer
The process for arranging a Bank Guarantee through Collateral Transfer is structured, yet efficient, and designed to ensure transparency, regulatory compliance, and clarity at every stage.
1. Initial Application & Client Onboarding
To initiate a facility, the applicant is required to complete and submit a Client Information Profile (CIP). This can be done through the provided CIP form.
Upon receipt, we promptly acknowledge the submission. In accordance with legal and regulatory obligations, our Compliance Department will conduct full due diligence and identity verification. Once cleared, the application is reviewed for preliminary acceptance by our network of financiers.
2. Preliminary Approval & Indicative Terms
Following internal assessment, our financiers identify the opportunity to extend the facility to the applicant, subject to contract. At this stage, Balkan Capital Assets issues Indicative Terms. These terms provide a non-binding outline that includes the potential structure of the facility, estimated pricing, and the maximum face value of the proposed Bank Guarantee.
3. Issuance of Formal Terms (Term Sheet)
Should the applicant find the Indicative Terms acceptable, we proceed to secure the formal Term Sheet. This document includes all commercial terms: the facility amount, tenor, issuing and receiving banks, provider details, associated costs, and a draft format of the Bank Guarantee (MT760). The Term Sheet constitutes a binding offer upon execution.
If the Applicant agrees to the conditions, they must execute and return the Term Sheet within its validity window (typically fourteen (14) days), together with payment of the Booking Fee. This formalises the contractual relationship.
Upon receipt of the Booking Fee, the Issuing Bank shall confirm to the Receiving Bank, via authenticated SWIFT message, the reservation of the facility in the contractual amount, such SWIFT confirmation being typically issued within five (5) banking days.
4. Allocation & Collateral Transfer Agreement
Upon execution, the Collateral Transfer Agreement shall be transmitted to the Beneficiary, thereby irrevocably confirming and establishing the binding commitment of both parties to proceed with the issuance process.
In most cases, we may request a face-to-face meeting for execution of the Collateral Transfer Agreement. If not feasible, Balkan Capital Assets’s representatives may attend on the Beneficiary’s behalf, ensuring seamless execution at every step.
5. Execution of Collateral Transfer Agreement (CTA)
The Collateral Transfer Agreement (“CTA”) shall constitute a legally binding and enforceable contract between the Parties. Execution of the CTA shall take place within seven (7) to fourteen (14) business days from the date of its delivery by Balkan Capital Assets to the Beneficiary.
Where the constitution of a Security Deposit is stipulated, the Beneficiary shall be obliged to constitute such deposit within three (3) business days from the date of execution of the CTA, either through an escrow mechanism selected by the Beneficiary and approved by Balkan Capital Assets, or by depositing the funds with an intermediary bank designated by Balkan Capital Assets.
The Security Deposit shall remain in place until fulfillment of the contractual obligations that condition its release. Failure by the Beneficiary to constitute the Security Deposit within the stipulated term shall constitute an event of default and shall entitle Balkan Capital Assets to suspend or terminate the CTA.
6. Issuance Process
Upon securing the equivalent of the Contract Fee, either through an escrow mechanism or by constituting a Security Deposit, the Beneficiary shall be obliged to
- establish the securities required by Balkan Capital Assets, consisting, as the case may be, of a share pledge agreement over the company’s shares or a mortgage duly agreed by the parties.
- Following the constitution and formalisation of such securities, the Issuing Bank shall transmit to the Receiving Bank an authenticated MT799 Pre-Advice message.
- Upon receipt of the corresponding confirmation from the Receiving Bank, the Issuing Bank shall proceed with the issuance of the Bank Guarantee by means of an authenticated MT760 message, in accordance with the applicable rules.
7. Fee Settlement & Credit Support
In the event that the Beneficiary elects to utilise an independent escrow account, the funds deposited therein shall be released in favour of Balkan as follows: thirty percent (30%) upon issuance of the Pre-Advice message and seventy percent (70%) upon issuance of the MT760 message, or one hundred percent (100%) in the event of the Beneficiary’s failure to comply with its contractual obligations.
Where the Contract Fee is secured by way of a Security Deposit, such deposit shall be released in full (100%) upon issuance of the Bank Guarantee, or, as the case may be, in the event of the Beneficiary’s failure to comply with its contractual obligations.
In the event of non-performance or breach of obligations by Balkan Capital Assets, the Contract Fee shall be refunded in full to the Beneficiary, either by the escrow agent or directly by Balkan through the intermediary bank with which the deposit was constituted.
In the event that the Beneficiary requests support for the identification of a lender in connection with a credit facility, such request must be submitted in writing either at the time of application or no later than the issuance of the Term Sheet.
Balkan Capital Assets does not guarantee the identification of a lender and shall not be held liable for the terms and conditions imposed by such lender. Balkan’s role is strictly limited to identifying a potential lender and presenting to the Beneficiary the terms proposed by such lender.
By accepting the terms communicated by the lender, the Beneficiary assumes full contractual and legal responsibility towards the lender, thereby fully releasing Balkan from any obligation or liability in this respect.
Should the Beneficiary fail to comply with its obligations towards the lender, and as a result the lender calls upon or draws down the guarantee issued by Balkan on behalf of the Beneficiary, Balkan shall be entitled to enforce the pledge agreement entered into with the Beneficiary in order to safeguard its rights and legitimate interests.
8. Maturity & Discharge
Five (5) days prior to the instrument’s expiration, the Beneficiary is expected to clear any encumbrances associated with the Guarantee.
While full transaction timelines may vary, we advise allowing a standard processing window of 4 to 12 weeks. Expedited completions are possible when all parties are responsive and cooperative, though a minimum of 4 weeks should be anticipated.
We strongly encourage prospective clients to fully understand all procedural and financial aspects of the facility prior to engagement. Our team remains available to provide clarity and guidance throughout.