Why check the official bank guarantee fraud warnings publications?
This website and many others carry warnings about unscrupulous traders, companies and individuals offering Bank Guarantees for sale. Bank Guarantees are non-transferable and can not be bought, sold or traded. A Blacklist of bank guarantee providers Search the bank guarantee fraud warnings to check if companies have been added.
It is possible such companies have just misunderstood the subject rather than acting fraudulently but in our experience it is best to work with experienced companies and individuals who would know the difference.
If you offered to buy or sell a Bank Guarantee you should report the company or individual to the relevant Financial Services Authority. Some are listed at the bottom of the page.
Can a Bank Guarantee be traded?
A Bank Guarantee is a non-tradeable instrument and therefore carries no Cusip or ISIN identification code. A Bank Guarantee cannot be utilised to enter into, guarantee, or underwrite any form of trade or investment program as it is a non-transferable and non-divisible instrument, and as such has no value for trading purposes.
For more information on Cusip and ISIN, please got our Format of a bank guarantee page.
A Bank Guarantee however, can be used to raise cash, such as loans or lines of credit, (also referred to as Credit Guarantee Facilities). The Beneficiary, should they so desire, would be able to use the advance from their banker to invest in a trading opportunity, a structured investment, or utilised for project finance.
Again, any individual, company or institution who purports that they are able to use a Bank Guarantee for trading purposes, should be reported to the relevant Financial Service Authority.
Can a Bank Guarantee be discounted?
Discounting is a financial term and can be expressed in different terms for different transactions. For this example, a bond can be discounted for 10% of face value, but the owner can receive full value at maturity. However, a Bank Guarantee cannot be sold, therefore cannot be discounted.
The confusion arises where a lender offers an LTV, (Loan to Value), of say 90% of face value of the Bank Guarantee, which could look like a 10% discount. The Bank Guarantee is not being discounted it is being lent against or credit lined, which is exactly the purpose for which it was issued.
There are many companies and individuals who purport to be able to discount Bank Guarantees, and they should be avoided at all costs.
Be on the look out for professionally produced Fake Bank Guarantees
Fraudulent Bank Guarantees can look the real deal especially if presented on what looks like hight grade bank paper. Most Bank Guarantees are sent by Swift, so be aware if offered a Bank Guarantee on what looks like a swift print out purportedly from a bank.
Please be aware that there are organisations and individuals who will tell you they are experts in the bank guarantee market. However all they will do is take your money and disappear.
As advised earlier please remember the following:
- Never Part with Any Money If Offered the Above Paper – You Will Lose It
- Always check for fake providers of Bank Guarantees on the Official Blacklist
If you have any further questions on this or any other subject related to bank guarantees, then you can search our frequently asked questions where you will hopefully find the answer you are looking for. Alternatively you can ask us a question and we will answer it for you.
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