Tag Archive off balance sheet asset


Holidays by Design

John and Faith are always tagged by their peers as Young Millennial Executives. Everyone in the office knows that they like to ride their bikes to work and still bring their so-called health Keto-ish lunches, even though the company offers free restaurant-style daily lunches in the cafeteria, which are prepared by a Top notch Chef from Switzerland.

We also don’t like the fact that they finish their Christmas shopping by the end of October and everything is delivered to their Condos in Manhattan; while the rest of the team do all shopping the last minute at the Columbus Circle or Dubai Festival City Mall if they’ve been working at our UAE location.


So, it’s very surprising to see both of them downstairs in the restaurant eating not their regular Keto Meals but having the daily special lunch, just like every other executive in the room. Now, I guess a lot had changed while I was away on a 30 weeks special R&D project outside New York. So I could not help it, I went straight to the youngsters’ table and they quickly offered to sit with them. John looking at my face, discerned my thoughts and he started the conversation like this; “Judith I know you are wondering why we are here eating Chef  Kerr Special!”

I nodded and also was surprised that John even knew the Chef’s first name.

He began to tell me the story that changed both minds about Chef Kerr Cuisine.

The CEO had given them 25 weeks to come with a strategy that would reduce the liabilities on the balance sheet without launching another millennial marketing campaign since the sales projection numbers had come in and they did not look good. The idea that Rob had in mind was to give hope to our investors by presenting a clean and reasonable balance sheet by finding a way to cut off  30% of our liabilities which where about 2B. Rob, the CEO, and the team of executives  had assigned John and Faith to a new mission, a 150M from the company reserves which technically meant that if they failed at their little adventure there was not going to be any bonus checks that coming Christmas Hollidays. A lot of employees rely on the bonus check to boost their savings each year and some of them rely on the bonus check to pay for their kids college,not to mention that I always use it to take my family somewhere fancy in the world twice  a year!

John continued his exciting story saying; “So, Faith came up with an out of the box millennial -ish strategy! From the allocated 150M, we used 100M to create an off-balance sheet asset in the form of a tradable collateral transfer that did not show on our balance sheet because it is technically leased and has to be returned in one year.”

They had lost me already but I did not stop them for the sake of time and my order was coming soon anyway. So Faith quickly explained that tradable collateral transfer is basically a Tradable Bank Instrument that is issued by a Top 25 bank on behalf of our corporation for trading purposes , `it can be returned unencumbered within a year.The bank instrument is transferred to our corporate bank account in the form of SBLC with the ability to transfer it or  block it in the favor another entity and be assigned fully assigned to another entity for a price much higher than what we acquired it for, and lastly can be used for trading purposes in the OTC markets.

I wanted to ask why a price tag of 100M but I let her continue to explain. She continued saying that after the acquisition of the SBLC and had spent 100M in acquisition fees, without being obligated to include this amount on the balance sheet, therefore, increasing the liabilities which would have made Rob question their method, they moved on the next step.

“The next move we made was to fly to Geneva, Switzerland and met a trading group that agreed to  JV with us and engage in a trade program with the bank instrument blocked in their favor for the next 20 weeks. The SBLC was worth 600M and was monetized to generate cash to enter into a Managed buy and sell trade program. The trading program started within 5 days after signing the contract with the trade group. That’s when we fell in love with the city of Geneva and their cuisine. We always knew that they had the best cheese in the world but after trying their Malakoffs ooh man they were so delicious! we now understand why our Cafe-restaurant is always full on Fridays.”

At this time my favorite meal was in front of me but at the same time, I was curious to know the end of their little adventure. So I asked both of them; “what happened with the trading adventure? Were you able to meet the task?”

John replied with excitement, “we did way over what Rob expected. The first month the trade created profits of about 300M which were used to cut off the 5th portion of our goal and within 20 weeks we had exceeded the 1B and had created a 500M reserve funds!!”

To me this story was still pure fiction, I had to wait for my bonus to really believe that it did happen.

The next annual investors meeting was in a few days. In the meeting Rob the CEO of our corporation confirmed that we had enough reserve funds that will be invested in our R&D Division which I was heading, to improve our products and boost our sales in the next quarter and also proudly confirmed that the corporation had reduced their liabilities by 30%.

With that announcement, I knew my bonus cheque was safe so I immediately booked a family trip to Geneva and made an advance reservation to their famous restaurant Cafe du Soleil that John and Faith talked about. This is what I call Hollidays by design.

So was this story 100% fictional? Or is there are some truth in it?

Well the story was fictional that’s a fact… but the described strategy does exist.