Taking security over cash deposits in bank accounts
Taking security over cash deposits in bank accounts

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Taking security over cash deposits in bank accounts
  • Security over cash deposits in bank accounts—what is secured?
  • Security in favour of a third party bank—types of security
  • Mortgage—assignment by way of security
  • Charge
  • Security in favour of the account bank—types of security
  • Protecting the secured party when it is also the account bank—the triple cocktail
  • Charge-back
  • Flawed asset provision
  • Contractual right of set-off
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for lending lawyers?

Cash is commonly offered as security for a loan.

In commercial lending transactions cash may be offered as security:

  1. as part of a package of security over the whole of a company's assets

  2. in transactions where the borrower is required to reserve certain amounts of cash for specific purposes (eg in a mandatory prepayment account in acquisition finance, a rent account in real estate finance or a blocked collection account in receivables finance transactions)

  3. in transactions involving a special purpose company where the lender wants to control the flow of cash through the business (eg in project finance)

  4. in derivatives transactions, cash posted to central counterparties as financial collateral to cover exposures to their members, and/or

  5. as cash cover for a bank guarantee or collateral for a letter of credit

This Practice Note explains the key issues that arise when taking security

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