Bank Guarantee’s

A promise from a bank or other lending institution that if a particular borrower defaults on a loan, the bank will cover the loss. Note that a bank guarantee is not the same as a letter of credit. A Bank Guarantee often helps companies to conduct transactions with parties they usually would never have the chance to deal with. Many suppliers often prefer to do business with clients, which have a Bank Guarantee because it removes the risk that they will not get the proper payment for the goods they sell. Bank Guarantees can be issued for many purposes, for example, for credit enhancement of institutions that issue industrial development revenue bonds and commercial papers; to provide security for loans granted by third parties; to assure performance under construction or employment contracts, and to ensure the buyer fulfills financial obligations to its suppliers.

Performance Guarantees’

It is a surety bond issued by an insurance company or a bank to guarantee the satisfactory completion of a project by a contractor.

Demand Guarantee’s

A guarantee that must be honored by the guarantor upon the beneficiary’s demand. The beneficiary is not required to first make a claim or take any action against the obligor of the guaranteed obligation that the guarantee supports.

POF Messages

A letter of credit payable at a predetermined time/future date after the conforming documents are presented.

Usance Letter of Credit

A letter of credit payable at a predetermined time/future date after the conforming documents are presented.

Comfort Letters

Informal letter from a bank indicating its willingness to support a customer with a short-term loan, if and when required. It is not a letter of commitment.

RWA Messages

A bank-issued document on an applicant’s behalf to show readiness and intent in a financial transaction.