There are always two banks involved in a Collateral Transfer Agreement, (See Collateral Transfer), the Issuing Bank and the Receiving Bank. The Issuing Bank represents the company providing the Bank Guarantee, (See What Is a Bank Guarantee), known as the Provider, and the Receiving Bank represents the Beneficiary of the Bank Guarantee, known as the Beneficiary. In order for the Collateral Transfer Agreement to be executed, the bank to bank platform referred to as SWIFT, (“Society for Worldwide Interbank Financial Telecommunications”), will be utilised as detailed below.

For further details of a Provider please go to “Who Are Providers And What Are the Benefits?”

The Issuing Bank and the Receiving Bank have two major roles within the confines of the Collateral Transfer Agreement. Their first role is to due diligence the Collateral Transfer Agreement to make sure that the Terms and Conditions are within the bounds of International and local Financial Laws. The second role is to execute on behalf of their clients, the instructions contained within the Collateral Transfer Agreement.

In order to execute the Collateral Transfer Agreement both banks will utilise a messaging platform known internationally as SWIFT, (“Society for Worldwide Interbank Financial Telecommunications”). SWIFT is a globally secure financial messaging system, and enables member banks and financial institutions to process and send messages, payments and banking instruments such as Bank Guarantees between themselves.

The SWIFT system provides a dedicated message service, for sending and receiving Bank Guarantees, and it is usual for the Issuing Bank, prior to transmitting a Bank Guarantee to the Receiving Bank, to pre advise by SWIFT the impending arrival of the Bank Guarantee. Upon receipt of the pre advice, the Receiving Bank will confirm via SWIFT to the Issuing Bank, that are ready to receive the Bank Guarantee, at which point the Issuing Bank will transmit via SWIFT, the Bank Guarantee to the Receiving Bank.