What are Bank Instruments?

This is a commitment in form of writing issued by a bank to pay a particular sum of money to a beneficiary on behalf of a bank’s customer in a situation where the customer/purchaser do not have the ability to pay or perform its obligation financially to the seller.

For the fact that a bank’s client can use a bank instrument in a transaction is a show that the individual has a proof of strong credibility financially and also capable of repaying.

However, it is important to know that though the bank is in charge of the paperwork of the bank instrument, it does not have any say in the development of the contract or even in the commitment to it. It’s only the bank instrument and the terms and policies associated with it, that is of interest to the bank. Therefore, bank instrument will be reimbursed for since the bank have to compile with the term and conditions stated.

BANK INSTRUMENT

• Bank Guarantee (BG)
• Certificate of time deposits (CD)
• Stand by letter of credit (SBLC)
• Documentary letter of credit (DLC, SLC, LC)
• Bank Drafts (BD)
• Promissory Notes (PN)

MONETIZATION OF BANK INSTRUMENT

We also assist clients who out of their own efforts have bought or procured bank instrument and want to monetize them. Monetization of Bank instruments usually means converting the instrument into liquid cash. Some clients will simply apply the cash to a variety of projects while others may like to trade with it. To achieve this, A&G Finance works with providers who will establish a cash account or place the instrument in clients name in appropriate bank for monetizing and trading on behalf of the client and A&G Finance as a joint venture. To institute this process, Client puts small fee in escrow to cover account set up, swift and compliance documents charges. The fee in escrow varies depending on the instrument or size of cash account, but can range from $300,000 up to $3million. Escrow will go hard once client verifies the cash account or the instrument. Minimum bank instrument sizes range from $5million to as high as $1billion.

DISCOUNTING OF BANK INSTRUMENTS

Bank instruments can also be discounted. Discounting is a process of selling short or below value to achieve real time objectives. A&G Finance assist clients to procure off takers within the prospecting network.