Why banks never ask for any money in advance

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If you have ever asked your own bank to issue a Letter of Credit, then you will have already learned the lesson: Banks are inclined to issue Letters of Credit without asking for any fees up front, at lowest rates, for companies who have sufficient cash, investments and financial assets in the bank to cover any eventual financial risks. If you are not in such a fortunate financial situation, it is not only a question of terms to arrange an instrument and the price, but it becomes a question if an instrument is considered to be arranged for you in the first place. You probably will have to deposit 100% or more in cash to get the same service a financially well situated bank customer can access for free.

Ask your bank and find out!

Banks daily issue and send multimillion dollar assets for customers, and they do not charge anything upfront for valuable clients parking significant wealth in the bank. If you are not cash rich, do not have significant financial assets on account or on safekeeping in the bank, then they NEVER issue, or send any instruments for you, and definitely not for FREE, or engage into risks that are not covered by your existing wealth parked with them. They will never engage into a transaction and provide any financial services for you and hope that you will pay them later. If you are a cash rich client of the bank, it is a completely different story. So you see the difference?

Anybody who can truly cover potential risks is qualified!

THE PRINCIPAL AMOUNT

No one will ever lend you a valid financial instrument if you are not qualified and be able to account for an eventual financial risk you might create on the basis of the guarantee instrument. “Did you ever think of what happens in case you default on your commitments, and the instrument backing up your loan or transaction is being called by your lender?” NO BANK will take the risk on a transaction for a customer, unless the bank is covered by hard cash, tangible assets or investments you have in the bank.

THE FEES INVOLVED

All banks charge fees to reserve, to emit, and to transmit a bank Instrument on behalf of a client. NO BANK will do that for free or wait until you pay, and no bank provides you with any kind of a service unless you have already sufficient cash in the bank to cover any eventual risk. Isn’t that strategy a smart way to cover up the true scenario of an advance payment?

YOU EXPECT THIS SERVICE ON YOUR TERMS

You cannot walk into a bank and expect to receive a loan or bank instrument under your own terms. Banks work on their own terms and if you need the loan or the service, you are the one who will have to comply with the terms of the bank. “He who has the money makes the rules!”

If you do not get the service from your own bank, providing a Standby Letter of Credit, a Bank Guarantee or any kind of a Letter of Credit to your benefit, becomes a very risky business for any provider. How can you seriously ask for a financial guarantee service, to issue an instrument for you, carry the risks you may create, and on top of that, advance the costs and fees involved – for a service you do not get from your own bank in the first place?

Even if your own bank does not provide the service to you, all your ingenious financial plans and scenarios can be considered, if you convince us, and back up your plans with your firm financial commitment. If you want to try a financial scheme in which your own bank does not support you, we may be able to help. But don’t expect to gamble with our time and financial resources if your own bank does not support you.

We may support you with our financial resources and instrument services if you qualify and if you can evidence that you run an established business with substantial annual revenues in excess of the financial instrument service that you seek. If you can’t, then you may be able to compensate lack of background, past performance and financial capacity by placing a commitment fee, if we can accept you as a client in the first place.

If you are not qualified, how can you lease a car or rent a house without committing yourself with a cash deposit? You cannot tell an airline to fly you to your destination before you pay. You will have to be an acceptable passenger and you will need to purchase an airline ticket before you board an airplane. The same scenario is applicable to any bank instrument transaction.

If you understood the message, call us and let us talk about your transacton!