The bank to bank platform used for transmitting Bank Guarantees is the SWIFT system, (“Society for Worldwide Interbank Financial Telecommunications”). SWIFT have a global membership and provides a secure and dedicated platform for transmitting authenticated financial messages between banks and financial institutions throughout the world.

If a company, (referred to as the Beneficiary), wishes to utilise a Bank Guarantee, to obtain a line of credit, also known as Credit Guarantee Facilities, they will enter into a Collateral Transfer Agreement, with another company referred to as the Provider. Both the Beneficiary’s bank, (the Receiving Bank), and the Provider’s bank, (the Issuing Bank), will due diligence the Collateral Transfer Agreement, and if successful, the Provider can then instruct the Issuing Bank to Swift transfer the Bank Guarantee to the Receiving Bank for the account of the Beneficiary.

For further details on the Provider, please go to “Who Are Providers And What Are Their Benefits From Leasing Bank Guarantees”.

It is incumbent upon both the Provider and the Beneficiary to ensure their banks are members of SWIFT in order for the Collateral Transfer Agreement to be executed. The process is extremely straightforward whereby the Provider will instruct the Issuing Bank, who under Terms and Conditions of the Collateral Transfer Agreement will SWIFT transfer a Bank Guarantee or similar instrument to the Receiving Bank for application to the Beneficiary’s account.

When a bank SWIFT transfers a Bank Guarantee to another bank, it is usual for a SWIFT pre-advise to be sent before the actual Bank Guarantee is transmitted. The Receiving Bank will reply by SWIFT, confirming they will accept the Bank Guarantee, at which time the Issuing Bank will transmit by SWIFT the Bank Guarantee.