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Financial guarantee guide

the SWIFT MT799 interbank message to confirm the availability of financial guarantees and secure commercial transactions

What is the SWIFT MT799 interbank message?

SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. It is a global messaging network used by financial institutions to securely exchange messages and transactions between banks and other financial institutions.

The SWIFT MT799 interbank message is a type of message used by banks to communicate collateral or commitment information to another bank.

Specifically, the MT799 is a message that informs a bank that a financial guarantee is in place for a given customer. This can be a bank guarantee, a letter of credit, a payment guarantee or any other form of financial guarantee. The MT799 is used to prove the availability of these guarantees and reassure the other party that payment will be made in accordance with the agreed terms and conditions.

The MT799 does not transfer funds or commit parties to a financial transaction. It is simply a commitment message that confirms the availability of a financial guarantee. Parties can then use this message to negotiate the terms of a transaction with confidence.

It is important to note that the MT799 is an interbank message and is not intended to be used to communicate directly with customers or suppliers. It is generally used in international business transactions involving large amounts and where trust between the parties is essential.

How does the SWIFT MT799 interbank message work?

The SWIFT MT799 interbank message works by allowing banks to exchange information in a standardized and secure way through the SWIFT network.

Here are the main steps in the process:

  1. A bank customer requests a financial guarantee from his bank for a specific transaction.
  2. The bank issuing the financial guarantee sends an MT799 message via the SWIFT network to the bank of the other party, informing the latter of the availability of the financial guarantee. The MT799 contains detailed information about the financial guarantee, including the amount, duration, terms and conditions, and details of the issuing bank.
  3. The receiving bank of the MT799 receives the message and can verify the authenticity and validity of the financial guarantee with the issuing bank.
  4. The receiving bank can then use this information to negotiate the terms of the transaction with the issuing bank’s customer, knowing that the financial guarantee is in place.
  5. If the parties agree on the terms of the transaction, the issuing bank can then issue a formal guarantee, such as a bank guarantee or letter of credit, to secure the transaction.

The SWIFT MT799 interbank message and financial guarantees on the African market

The SWIFT MT799 interbank message is used in Africa as in the rest of the world to facilitate financial transactions between banks and financial institutions.

In some African countries, the MT799 can be used to confirm the availability of financial guarantees, such as letters of credit, bank guarantees or payment guarantees, to secure trade transactions. African banks can also use the MT799 to confirm the authenticity and validity of financial transactions with foreign banks.

However, it should be noted that the use of SWIFT interbank messages, including MT799, may be limited in some African countries due to poor banking infrastructure and local regulations. In some cases, banks may use alternative methods to confirm financial guarantees and secure transactions, such as manual letters of credit or local payment guarantees.

As for manual letters of credit, it should be noted that these are paper letters of credit that are prepared manually by the issuing bank. Unlike electronic letters of credit which are issued and transmitted electronically through the SWIFT network, manual letters of credit are usually sent by post or courier.

In a manual letter of credit, the issuing bank guarantees payment to the beneficiary of the letter of credit, by providing a bank guarantee for the transaction. The manual letter of credit contains detailed information about the terms of the transaction, such as the amount of the transaction, the documents required to make the payment, the shipping terms and the payment terms.

Although manual letters of credit are still used in some countries, they have in most cases been replaced by electronic letters of credit issued via the SWIFT network. Electronic letters of credit are more efficient and faster than manual letters of credit because they can be issued and transmitted electronically in minutes rather than taking days or weeks to arrive at their destination.

However, it should be noted that manual letters of credit may still be necessary in certain situations, such as when a bank does not have access to the SWIFT network or when the parties agree to use more traditional methods to secure the transaction. .

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