Types

There are different types of Bank Guarantees. Each worded for specific events and purposes.

There are effectively two main types of Bank Guarantees:

(1) A Direct Guarantee where the account holder instructs his bank to issue a Guarantee directly in favour of the Beneficiary, and

(2) An Indirect Guarantee where a second bank is requested to issue a Guarantee in return for a counter-Guarantee. In this case the Issuing Bank will indemnify losses made by this second bank in the event of claim against the Guarantee.

The most purposes for the uses of Bank Guarantees are:

  • Advance Payment Guarantee
  • Performance Guarantee (Performance Bond)
  • Payment Guarantee
  • Conditional Payment Guarantee (Conditional Payment Undertaking)
  • Guarantee securing a Credit Line
  • Order & Counter Guarantee

Draft Bank Guarantee wordings for these types of Guarantees, acceptable to most banks can be downloaded from our Downloads centre.

3 Comments

  1. I have a client holding a HSBC (London) cash-backed $20 Million Bank Guarantee, listed on Euroclear. The guarantee document lists a number of identifying numbers and references. Our client is attempting to monetize (sell) this instrument. We are attempting to determine whether: 1.) this is a legitimate instrument and 2.) can it be monetized?

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