Summary

Monetization means the process of borrowing money against bank instruments, primarily Bank Guarantees (BG) and Standby Letters of Credit (SBLCs). This approach allows businesses to unlock value of a financial instrument, raising capital to finance projects or secure trading positions. The bank instrument is considered as collateral against the borrowed fund, it usually requires the client (borrower) to have a good credit history with the bank.

Banks typically lend 50% – 80%, or sometimes more, of the instrument’s face value for a term matching the duration of the bank instrument (usually one year extendable to 5 years). This allows the client or business to raise substantial capital to erect a project, start new trading ventures, or even manage cash flow.

Some of businesses seeking funding for any reason would not be able to receive and monetize a bank instrument, as they do not have a credit limit with their bank to borrow fund against the bank instrument. Here comes the role of third party companies that have solid credit lines with banks, to receive and monetize the bank instruments on behalf of the end-client / borrower against agreed fees, terms, procedures, etc.

At Strategia Finance, we have strong business connections with offshore banks and business groups that have sizeable credit lines with banks in the United Arab Emirates, Asia, Europe and the United States. We facilitate the monetization of bank instruments, including the Letters of Credit (LCs), Bank Guarantees (BGs), Standby Letters of Credit (SBLCs), Medium Terms Notes (MTNs), Bonds issued from different parts of the word.

We are able to manage the complexities of securing credit and monetizing financial instruments, making the process as seamless as possible for our clients. From initial consultation to the finalization of credit facilities, our dedicated team ensures your experience is as efficient and straightforward as possible.

Loan to Value (LTV)

Step-by-Step Procedures

The following is a simple and standard illustration of monetizing a bank instrument, primarily a Standby Letter of Credit (SBLC) or a Bank Guarantee (BG), which is issued by a highly rated bank. The monetization will be facilitated through one of our partners, an offshore bank, located in the UAE (Licensed by UAE Central Bank as representative office).

The client will need to open an account with the offshore bank, he would also need to maintain USD 0.01% of the instrument’s face value he wants to monetize in his account during the transaction. Here are some details:

• The Client visits the offshore bank in their office in Dubai to discuss his funding requirements and at the same time submits the needed documents to open a company account
• The documents are viewed and verified by the bank and once accepted then the client will be requested to deposit the account opening fee
• Once the account opening fee is paid then the account is opened and the account details are shared with the client
• The Client provides the bank instrument details along with the Provider’s details, like the CIS, KEY, etc.
• Once conceptually cleared by the offshore bank, the Client gets an Indicative Terms Sheet (ITS) which will serve as a BCL / facility approval against the bank instrument (as Collateral) by a secured email from the bank to the Client
• The Client will need to sign and return to the bank as acceptance of the facility offer
• The Client then initiates the issuance of the bank instrument based on the verbiage given by the offshore bank
• Once the bank instrument is received by the bank, the Client will sign the loan contract, followed by a disbursement schedule of the loan

Fees & Charges:

1. Account opening fee: USD 20,000 paid to the bank, non-refundable
2. Minimum deposit in the account: 0.01% of the face value of instrument to be monetized
3. Commitment fees: USD 22,000 paid to Strategia on signing contract
4. Credit limit success fee: 1% of the instrument face value, paid to Strategia on issuing the Indicative Terms Sheet by the offshore bank
5. Loan disbursal fee: 2% of the loan amount, paid on disbursing the loan into the Client’s account with the offshore bank

What you should expect:

1- Simple, flexible, reasonably priced monetization transaction

2- Dealing with regulated institutions only

3- Transparent procedures

4- Fast processing