Financial news

Lloyds Bank has launched a new initiative enabling clients to request digital Direct Guarantees or Standby Letters of Credit, helping them to trade more efficiently, safely, and securely.

Lloyds Bank’s new Paperless Guarantee initiative supports businesses that have a high volume of transactions requiring bank guarantees to be issued. It also enables instant delivery to recipients while reducing their carbon footprint.

By increasing investment in digitising trade, Lloyds Bank closely follows the completion of the first digital trade transaction under the UK’s new Electronic Trade Documents Act (ETDA), which came into force on 20 September 2023.

Lloyds Bank also became the first in the UK to complete a transaction utilising a digital promissory note purchase [in August 2022]. It also recently announced it has invested €3million in Enigio to help expand and accelerate the use of digital documentation in trade.

It is estimated that trade finance results in around 28.5 billion pieces of paper moving around the world each year. Through the new Paperless Guarantee initiative, Lloyds Bank aims to further support clients who are looking to secure new business and meet contractual obligations, reduce time, cost and logistics, as well as cut carbon emissions by reducing the need to courier paper.

Gwynne Master, head of lending, trade and working capital at Lloyds Bank, said: “By working closely with our clients and their buyers and their sellers, we have a deep understanding of the nuances and challenges of trading internationally.

“Our latest development, the Paperless Guarantee initiative, offers clients a solution to some of those challenges. It is much more efficient, saves time, and removes costs.

“Removing the need for the physical delivery of paper is the future of trade and we are proud to be supporting our clients to achieve this with our new initiative.”

Improving operational efficiencies and cost savings

ABTA, the largest travel trade body for UK travel agents, tour operators and the wider travel industry, manages a high volume of guarantees (bonds) for its members. ABTA has worked with Lloyds Bank to switch to a paperless format and is aiming to introduce this new process to other approved bond providers. Once complete, the change could eliminate at least 3,500 pieces of paper each year.

Rachel Jordan, director of membership and financial protection at ABTA, said: “We’re always looking for new ways to deliver sustainable, efficient, and cost-effective services to our members, so we’re really excited about our new paperless arrangement with Lloyds Bank.

“As one of ABTA’s approved bond providers, this initiative will not only speed up the bond renewal process for ABTA members who are Lloyds Bank clients, it will also result in operational efficiencies and cost savings.”

Lloyds Bank started to reduce the amount of paper used in 2022 by delivering the UK’s first Digital Promissory Note (DPN). The next step in its multi-year trade digitisation programme is to offer its clients Paperless Guarantees and Standby Letters of Credit (SBLC).