Bank Guarantee

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Bank guarantee is an instrument issued by a bank on behalf of its customer to third parties to assure them that the customer will perform its obligation, as stated or envisaged in a particular transaction.

Unlike other forms of Guarantees, a Bank Guarantee is issued on behalf of the Contract Employer (Principal, and our customer in this instance). Commitment (usually backed by collaterisation of an asset) is given to pay a debt according to the terms of the original debt agreement. A payment guarantee or bond provides assurance that upon the Principal's default, the contractor will be paid for work performed.

This would be mitigated by receipt of cash collateral of the same value as the Payment Guarantee issued or an adequate analysis of the customer's ability to generate adequate cash flow to meet its repayment obligations under the Payment Guarantee, as when due.


  • Where goods are to be sold on credit
  • Where job completion precedes payment
  •   Contractors, Suppliers etc.

Conditions precedent:

  • Request Letter
  • Accepted offer letter
  • Board resolution
  • Copies of bank guarantee template (where applicable)
  • Satisfactory credit checks
  • Payment of upfront fees
  • Documentary evidence of previous activity (where applicable)
  • Provision of 100% cash cover or Legal Mortgage on property
  • Copies of contract/agreement or term sheet between the customer and 3rd party (where applicable).
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October 24, 2016
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