There is a widespread misunderstanding in the market that all BGs (Bank Guarantees) are the same in terms of value, LTV ratio when monetized, and attractiveness. That is totally incorrect in reality!

Comparing a Rated Banks Bank Guarantee to an Unrated Banks Bank Guarantee is like to contrasting chalk and cheese, the real with the fake, a Ferrari with a Broken Down Camakuza, or, in the case below…. Total Rubbish with Gold!

Being duped into thinking an Unrated Bank Guarantee is the same as a Rated Bank Guarantee is the most idiotic and hazardous thing you can do. The fact is that they are entirely unrelated and do not even belong in the same galaxy!

The quality of the financial institution offering the Bank Guarantee determines the value of the guarantee. Because a….. “Bank Guarantee” is the issuing bank’s “guarantee” of payment, the “guarantee” is only as good, strong, and valuable as the bank providing it.

Because they are huge, solid financial organizations that do not renege on their commitments, the World Top 50 Banks provide the finest Bank Guarantees, and ultimately, a Bank Guarantee is the Bank’s Promise to Pay!

The Unrated Bank Scam

There are several unrated bank scams in operation that trick clients into purchasing an unrated bank guarantee from a fraudulent or counterfeit bank guarantee provider because it is “cheap.” You always get what you pay for in life; if you purchase garbage, all you get is garbage! You can’t make a pig a princess by dressing it up; it’ll always be a pig!

Sadly many Unrated Bank Guarantees aren’t worth the paper they are written on!

Here is a list of some of the most common unrated bank guarantee scams:

  1. Unrated Bank Guarantee Scam 1: The Insolvent Bank – An unrated bank with less than $10 million in capital that provides $100 million bank guarantees numerous times every week, 52 weeks per year. Make the calculations…..
    When the Unrated Bank has less than $10 million in capital, this excellent financial institution (ha ha ha) has issued billions of dollars in bank guarantees before the end of the year.

    I understand what you’re thinking… How are they able to get away with it? The answer is simple: they issue Leased Bank Guarantees that cannot be paid when they expire, posing little or no financial risk or liability, allowing them to write as many Bank Guarantees as they like during the year.
  2. Unrated Bank Guarantee Scam 2: The Claytons Pretend Bank – When most people hear the term “bank,” they instantly think of something safe and secure; however, this is not the case! It is quite simple to create a bank; you may purchase a bank or a banking license here. Alternatively, you may start your own bank here for $30,000! Funny enough, some banks have charged less to set up than to issue you with one of their Bank Guarantees!

    Many unrated banks prey on unsuspecting customers by claiming to have integrity and credibility when they don’t. They “play” on the sense of security that the name “bank” evokes, implying that they are safe, secure, and valuable when, in fact, they are not! Clayton’s Banks are fictitious banks that use the bank name but are nothing more than a façade. Because they are a shell business with a banking license, when they issue a bank guarantee… It is worthless because their bank is worthless.
  3. Unrated Bank Guarantee Scam 3: Not a Bank – Many businesses avoid the bother of registering as a bank by simply referring to themselves as a “financial firm” with a banking-related name. After that, they must register with swift.com in order to be approved to send and receive bank SWIFT communications. This allows them to issue unrated Bank Guarantees on the Bank Swift Network despite the fact that they are not a respectable, dependable, or even unrated bank. They rely on the fact that they have a SWIFT Code to establish credibility and mislead consumers into believing they are (cough cough) a reputable bank guarantee provider.
  4. Unrated Bank Guarantee Scam 4: The Old Swift Machine in the Basement Trick – This is the most heinous of all the unrated bank frauds. These people are crooks who simply want to grab your money and flee. They have obtained access to a swift terminal by one means or another (legally or illegally), and they use that terminal to print fake Bank Guarantee swifts, which they fax or email to you, claiming that these swifts were sent on the swift system to your bank coordinates, and thus they have delivered the service you requested, and your money is all theirs to keep.

    From a slew of unrated suppliers, we’ve encountered both phony paper and fraudulent electronic swifts.

5. Unrated Bank Guarantee Scam 5: Swift.Net Only – This is a deceptive scam in which the Unrated Bank Guarantee Provider claims that they can only offer bank guarantees on swift.net rather than swift.com. That alone should raise a red signal! All actual banks and genuine bank guarantees are typically communicated and delivered using the swift.com bank-to-bank system, which is utilized and recognized by all banks worldwide, or through DTC or Euroclear. Any unrated bank who says they cannot deliver on swift.com is saying i don’t have access to the “real” bank guarantee delivery system, I can only use swift.net which is a completely different system by a very similar name. Swift.net DOES NOT HAVE ANYWHERE NEAR the credibility, recognition, security or acceptance of swift.com.

The most serious secondary issue with swift.net is that messages frequently do not get at their intended destination because they must be “downloaded” before they can be viewed. If you are unaware that a message is on its way and do not download it, you will never be aware of it and so will be unable to respond!

Many Unrated Providers use swift.net to send a worthless Bank Guarantee to the client via the widely unrecognized swift.net service, and when no one at the client’s receiving location acknowledges the message because they didn’t know how to download it, the bank guarantee provider claims they delivered the Bank Guarantee in accordance with YOUR BG Issuing Contract, and YOU breached YOUR contract by NOT responding to the message. It’s just another sad old trick repackaging your money in a new way.

Finally, not all Unrated Banks are crooks or con artists; there are some legitimate Unrated Banks that specialize in specialized markets or provide regional services. Even if an Unrated Bank is legitimate, monetizers will be hesitant to accept its Bank Guarantee, and if they do, the Unrated Bank Guarantee will often have a MUCH LOWER LTV than a comparable Bank Guarantee from a Rated Bank.

RECOMMENDATION

We recommend clients only get Bank Guarantees issued form Rated Banks so you can enjoy Higher Monetization LTVs and lower risk transactions. We recommend clients AVOID these Banned Assets and Financial Instrument Providers, we will NOT Monetize assets from any of these providers!

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