Collateral Management

Collateral management is our core service. We take independent control of goods pledged as security, so the bank can lend with confidence and recover with certainty. The client keeps title, VSM controls the goods, and the bank holds the security.

Bagged stock on pallets in a store under VSM control

What the Bank Holds

The security	Possession of the goods by VSM under the agreement, evidenced by a stock certificate in the bank’s name and monthly position reports.
The client’s position	Title stays with the client. The client cannot take delivery, sell or move the stock without the bank’s written release order.
Where the goods sit	The client’s premises under VSM control, or a partner warehouse where the premises are unsuitable.
Insurance	All risk cover on the goods and professional indemnity on VSM, with the bank named loss payee.
Cover	Three to five times the loan value plus bank charges, marked to the value agreed at appraisal.
Release	On the bank’s written order only, verified before any stock leaves the store.

What we do

Custody of pledged goods under a tripartite Collateral Management Agreement
Inspection, counting and reconciliation against the bank’s security position
Warehouse supervision for the life of the facility
Stock and movement reports, risk alerts and exception reports
Release only against the bank’s written authorisation
Placement with partner warehouse operators where needed

Two Facilities, One Discipline

Custody works the same way on both. What changes is where the goods come from, how they are valued, how long the facility runs and how it is repaid.

	Import facility	Local and export facility
What is financed	Goods arriving through customs: building materials, equipment, packaging, industrial inputs and other non-perishable imports.	Commodity bought in the local market or held for a contracted buyer, including coffee, grain and produce in non-perishable form.
How goods reach the store	Cleared by the clearing agent, then moved by VSM with its logistics partner to the agreed premises.	Collected from the supplier or aggregation point and moved to the agreed premises.
Basis of value	The tax value from the Uganda Revenue Authority assessment, read against the market value VSM proposes.	Market value proposed by VSM against prevailing prices, supported where available by the buyer contract.
Typical tenure	90 to 120 days, matched to the sales cycle of the stock.	Set against the buyer contract or the selling season.
Repayment	Sales proceeds banked into the flagged account as stock is released in tranches.	Proceeds of the contracted sale, or the client’s own resources.

Where Goods Are Held

Custody runs at the client’s own premises wherever the site can be secured. Before any facility is confirmed, VSM assesses the structure, security, access control, separation of financed from unfinanced stock, and whether dual key control is practical. Where the premises cannot be secured, the goods go to a partner warehouse under the same agreement and controls. We accept non-perishable goods with a shelf life beyond six months.

What the lender gains

Lower loss given default and stronger recovery
The ability to lend against commodities and warehoused goods the bank could not safely hold itself
Less fraud and stock loss
Specialist trade and collateral capacity without building the function in-house

Request a Proposal

How a Facility Runs

VSM assembles the client and stock documents and lodges the application with the bank.
The bank screens the client and appraises the stock.
The client, the bank and VSM sign the collateral management agreement, and the bank is named loss payee.
VSM takes custody, opens stock cards and issues a stock certificate in the bank’s name. The bank then disburses.
VSM counts the stock and reports every month. The bank releases stock in full or in tranches as funds arrive, and cover is recalculated on the balance.

See all fifteen stages or read the questions lenders ask.

Questions Lenders Ask

Does VSM lend money?

No. Partner banks provide the finance. VSM controls the goods that secure it.

Who can release the goods?

Only VSM, and only against the bank’s written release order.

What happens if the borrower defaults?

The goods stay under our control and are released only as the bank instructs.

How are your fees set?

Fees are agreed after the site inspection and depend on the goods, location and type of control.

Read all the questions lenders ask.

Collateral Management