Leasing of London///
Your Bank Guarantee Leasing Company
 

The instrument is sent to the bank of the Lessee

 

"Leasing of Bank Instruments means not the same as leasing of a car! Leasing in this regard is taken out of the context because it means you only rent the benefit of the instrument. “

 

Reasons and Fallacies

Leased financial instruments have to be properly used and the leasing scenario has to be professionally structured. No person or institution will lease you the use of their credit without some economic benefit coupled with controls over the use of the credit. A properly utilized leased bank guarantee might be, when an individual (Party 1, the lessor) can use his credit to allow a company (Party 2, the lessee) to borrow for themselves, thereby creating their own credit lines to perform the day to day operations, and to secure those credit lines based on Party 1's guarantee.

 

Party 1 can use his credit, without using his cash, to obtain ownership interest in Party 2 and or their production and/or profits. Party 1 may acquire stock ownership and control of some sort over how the credit line of Party 2 is utilized and repaid. Example: to buy material, manufacture a product, sell the end product and reduce the credit line while obtaining a profit. The use of Party 1's credit could make worlds of difference for the company of Party 2.

 

If Party 1 leases their credit for 4% to 15% or whatever number, Party 1 needs to have some sort of control of the ultimate use of Party 2's new credit established based on Party 1's guarantee.

 

If Party 1 does not have some controls and ownership interest in the use of the new credit Party 2 has generated with Party 1's guarantee, then a controlling feature would have to be incorporated in the guarantee (see Accommodation Letter of Credit).

 

How are leased instruments commonly used?

Leased instruments have a limited, but important, role in commercial situations where they are used primarily (if not exclusively) for enhancement purposes. Typically, a business owner will lease a bank instrument, such as a Bank Guarantee or Standby Letter of Credit, where the business needs to enhance  its credit position (or bolster its balance sheet) in order to facilitate its commercial operations

 

What do you actually lease?

When you lease a bank instrument, you acquire no legal title to the instrument itself. Instead, what you acquire is a limited or conditional assignment of the instrument - basically, the right to the "use and enjoyment" of the instrument for a specified period of time, subject to the terms and conditions of the Lease Agreement and Indemnity Agreement.

 

 

 

 

 

 

NOTICE: We are not involved in their uses at the beneficiary's end and we give no warranty that they can be used as described, and we are not responsible if the client cannot use the L/C after it is issued. Our responsibility ends once the L/C is issued. We work on a full-disclosure basis and it is important that our clients fully understand that such L/Cs cannot be negotiated, presented or cashed until such time as the L/C applicant has received the full 100% cover. This is over and above any amount already paid as handling charges and commissions which are not refundable once the L/C is established.

 

NOTICE: This website is for general information purposes only. It should not represent any sort of professional advice, or an offer to buy, or an offer to invest, or a recommendation to engage in leasing of financial instruments. This website does not provide professional financial advice of any sort. By reading this website, you confirm that you are a qualified investor. All information presented on this website is subject to change without notice. Any concept described here is subject to availability at time of contract. All terms and warnings of our Disclaimer apply to this page and the entire website.

 

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