Bank Guarantees
The issuing bank's commitment to pay if a contract is not fulfilled, so your company can bid, build and deliver without locking up cash.
What a Bank Guarantee does
A Bank Guarantee is a promise from a bank to pay the beneficiary a fixed sum if the applicant fails to meet a contractual obligation. It gives the beneficiary certainty of compensation while leaving the applicant's cash free for the project itself.
Guarantees come in several forms: bid or tender guarantees, performance guarantees, advance payment guarantees, retention guarantees, and payment guarantees for rent or supply. Each has its own trigger and wording.
Finance House determines which form the counterparty requires, drafts the guarantee text to the applicable rules, and arranges issuance through an A-rated partner bank.
How Finance House arranges it
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Identify the requirement
We review the tender or contract to determine the guarantee type, amount, wording and validity the beneficiary needs.
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Draft the guarantee
We prepare the text, often on the beneficiary's own format, and assemble the application file.
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Bank issuance
The partner bank issues the guarantee and transmits it to the beneficiary's bank.
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Manage the term
We support extensions, reductions and release once the obligation is complete.
Where it is used
Tenders and projects
Bid and performance guarantees required by public and private project owners.
Advance payments
Security for a buyer who pays part of the price before delivery.
Commercial leases and supply
Rent and payment guarantees that replace cash deposits.
Common questions
What happens if the beneficiary makes a demand?
Under URDG 758 the bank pays against a compliant demand without investigating the underlying contract. The applicant then settles with the bank. Clear wording limits the risk of unjustified calls.
Can the guarantee be issued on the beneficiary's own format?
Usually yes. Many project owners require their own wording; we check it for issues before the bank issues it.
How is a guarantee released?
It expires on its stated date or is released earlier when the beneficiary returns it or confirms the obligation is complete.
Discuss your transaction with a consultant.
Tell us about the deal, the counterparty and the timeline. We will come back with the instrument and structure we recommend.