Whether you’re looking for project funding, exploring SBLC Standby Letter of Credit (SBLC) monetisation, or securing a cash-backed SBLC issued by top-tier institutions like HSBC, understanding the process can transform your financial strategies.
This guide will demystify the process and showcase how SBLCs can unlock new opportunities for your business.
What is an SBLC and Why is it Valuable?
A Standby Letter of Credit (SBLC) is a guarantee issued by a bank to ensure payment obligations are fulfilled in financial transactions. Commonly used in international trade and business funding, SBLCs are trusted by companies worldwide to secure funding, mitigate risks, and enhance liquidity.
Procedures to Secure a Newly Issued SBLC from HSBC UK
Acquiring a Standby Letter of Credit (SBLC) issued by HSBC UK provides businesses with a dependable and efficient solution for securing project funding and liquidity. Below is the updated process for purchasing and monetising a newly issued SBLC as of November 2024.
Step 1: Compliance Approval
Before the issuance of an SBLC, buyers must complete compliance checks, including:
- Submitting a Client Information Sheet (CIS).
- Providing a valid passport or identity document for the account signatory.
- Supplying an updated Proof of Funds (POF) directly to the Owner/Seller.
POF Verification Methods:
- A secure email from the Buyer/Investor’s bank officer with IP address confirmation.
- An Account Transaction Verification (ATV) with bank account details from HSBC UK.
- A Bank Capability Letter signed by two bank officers.
This verification ensures transparency and is typically completed within two hours.
Step 2: Engagement and Agreement
Once compliance is cleared:
- The Owner/Seller will issue a Sales Purchase Agreement (SPA). This document includes:
- Banking disclosures.
- Counter-KYC verification.
- The SBLC’s identifier in accordance with banking rules and regulations.
No preliminary bank-to-bank Proof of Funds (POFs) or Delivery Order Agreements (DOAs) will be countersigned.
Step 3: Pricing and Payment
- The current price is 42% + 2%, subject to slight adjustments based on market conditions.
- We strive to secure the best possible pricing set by the issuing bank.
Payment is processed via MT103 SWIFT after the SPA is signed, ensuring a smooth transaction.
Step 4: Delivery of the SBLC
The SBLC is delivered directly to the Buyer’s designated bank within 48 hours or less using MT760 SWIFT. All transaction details are confirmed by the issuing bank officer, ensuring security and transparency.
Step 5: Monetisation Options
If desired, the newly issued SBLC can be monetised at up to 70% of its value. Monetisation includes:
- Cash funds deposited into the SBLC Owner’s account within 30 days.
- No repayment obligations on the monetised funds.
- Full-face value of the SBLC retained until maturity.
These funds can be utilised for any purpose, offering flexibility and enhanced liquidity.
Why HSBC SBLCs Stand Out
- Reliable, cash-backed SBLCs.
- Competitive pricing tailored to market conditions.
Transactions can be completed internally for accounts held with HSBC London, Barclays Bank London, UBS Zurich, or DBS Singapore. If the client has funds deposited in another top Bank, the Provider may be able to set up an Account at that Bank and settle internally.
Key Benefits of SBLCs
- Access trusted bank instruments for project funding and trade.
- Monetise SBLCs efficiently for immediate liquidity.
- Receive transparent pricing and secure delivery.
Are you ready to secure an HSBC SBLC or explore SBLC monetisation? With competitive pricing and expert guidance, we help you leverage bank instruments to elevate your financial strategy.
Contact us today to get started and unlock the full potential of SBLCs for your business needs.
