In many cases, yes, some form of security or collateral is required – but it might not always be cash. For issued instruments like LCs or guarantees, typically we will ask for cash collateral or a secure lien on goods/receivables. For example, if you want a Bank Guarantee, we might hold an equivalent deposit or asset. In structured trade loans, the collateral could be the merchandise itself (which we finance and hold title to until resale) or an export insurance policy guaranteeing payment. The collateral requirement can sometimes be mitigated by the structure: e.g., if an LC is fully confirmed by a top bank, our collateral ask might be lower. Prominence Bank’s aim is to facilitate trade, so we will consider the self-liquidating nature of a trade – if the transaction has reliable cash inflows, we may not need 100% collateral. However, as a rule, we take prudent measures to secure any credit exposure. The exact requirement will be discussed with you during application; it could range from 0% (rare, for extremely strong transactions) up to 100% of the value. Each deal is unique.
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