A bank guarantee is a security instrument rather than a payment instrument.
As a rule, the guaranteed amount should not be paid. By issuing the bank guarantee, the bank assumes the irrevocable obligation to provide monetary compensation. This occurs when you fail to perform your contractual obligations. When this happens, the beneficiary is entitled to invoke the bank guarantee.
Depending on the purpose, there are the following types of guarantees:
- payment guarantee,
- advance payment and down payment guarantees,
- bid bond,
- performance bond,
- warranty bond,
- retention guarantee,
- credit facility guarantee,
- customs guarantee, and
- letter of indemnity.
We submit the bank guarantee to the beneficiary either directly or via an advising bank. Bank guarantees for other countries are issued in cooperation with international banks. These banks will issue a direct guarantee subject to recourse against our bank. We would also be happy to review bank guarantees issued to you by banks in foreign countries.