People who hold an asset – often with a bank trust service – usually receive a custody certificate. It is apparent from this evidence that the person`s assets do not become assets of the institution and that the institution must return the assets to the person upon request. An institution often charges a fee for these services. People who deposit an asset – often with a trusted banking service – usually receive a custodian certificate. It follows from this revenue that the assets of the person do not become assets of the institution and that the institution must return the assets to the person on request. An institution often charges a fee for these services. When a natural or legal person subtracts an ancillary loan, he pledges an asset as collateral. The borrower can ask the lender to use a custodian bank to protect the asset from fraud, loss or abuse. If the lender accepts this request, the lender and the borrower sign an extension of the collateral loan agreement, called a security guarantee agreement. Once both parties have signed the contract, the borrower can access the collateral with the written consent of the lender.
Many of those who invest in brokerage firms hold their shares or bonds. In addition, companies may hold other valuables (gold, jewelry, rare paintings) or documents, including certificates of actual physical title. As such, a brokerage firm acts as an intermediary for a client. The COB concludes a written hedging contract with each bank before using the custodian bank`s custody services. The purpose of the guarantee agreement is to ensure that compliance with the laws pledged by borrowers applies to securities and debentures and that the amount of deposits is limited. The COB must sign a written custody agreement with each bank before using the depositary`s custodian services. The agreement ensures that the guarantee, if it is worth more than the loan amount, is protected against fraud, abuse and other risky measures. The use of a custodian bank or custodian may also increase the risk of holding securities in physical form (p.B.B by theft, loss, fraud, damage or delay in delivery). New York Mellon Bank (BNY), State Street Bank and Trust Company, JPMorgan Chase and Citigroup are among the largest deposit banks in the world. Here are the advantages of a guarantee agreement: As a guarantee agreement with assets given as collateral, it is imperative that the agreement contains all the necessary details. Financial institutions are custodian banks and therefore legally responsible for all items in custody. .