Confirming of Assets to Underwrite Your Projects
Updated: Aug 26, 2020
Since introducing our "Asset Backed Credit Line" program, there has been tremendous interest from clients interested in utilizing it. However, one issue that clients are running into when trying to put the offering together with their bank is the bank's ability to confirm the gold bullion being used to underwrite the credit line.
The simplest methods of pledging our bullion to the bank to underwrite a credit line are (a) a SafeKeeping Receipt (SKR) from G4S, or (b) a Letter of Credit. There are a couple of elements to consider for both of these options, that we have continued to refine to make it easier for banks to confirm the gold assets pledged.
If the bank decides they prefer to use a SKR, one of the common issues is that they need to have confirmation of the gold from another bank (rather than only from G4S). We have now made that a simple process - if the bank requires such a confirmation it will be provided to them by JP Morgan in London, via a SWIFT199 communication. JP Morgan will confirm our holdings with G4S to the credit-issuing bank, and that those holdings are unencumbered and in "Good-Standing". Since JP Morgan is one of the two largest banks (along with HSBC) in the western world, this confirmation should satisfy any banking group's due diligence requirements.
If they prefer a Letter of Credit, we have set the process up so that they will tell us which Italian Bank they prefer to receive the Letter of Credit from. The vast majority of banks have affiliate international banking relationships, so we will pledge the gold to whichever Italian bank they are affiliated with, and that affiliate bank will issue the Letter of Credit. For banks that have no affiliate in Italy, we would arrange to issue the Letter of Credit from UniCredit, which is the largest bank in Italy, and the LC would be transferred and confirmed via bank-to-bank SWIFT communication.
IMPORTANT NOTE ** It is necessary that the Letter of Credit come from an Italian bank because the gold bullion we will be pledging to generate the Letter of Credit is vaulted with the Italian Central Bank. The only banks that can communicate directly with the Italian Central Bank are other central banks, OR banks within their banking jurisdiction (in other words, Italian Banks). By pledging our bullion to the affiliate bank in Italy, that affiliate can easily confirm it with the Central Bank, and then issue the Letter of Credit to the bank that will use it to underwrite the credit line.
FundingNet continues to refine this offering to always try to make it as easy as possible for client banks to work with us in setting up financing for our client projects. Go to our "Contact" page to get in touch and get started funding your projects today!