Often under the definition of "guarantee" to understand the guarantee. These concepts have similarities, the guarantor and the guarantor shall be bound to repay the debt in case of default of the debtor.
Bank guarantee - it is the obligation of the bank to pay money to the beneficiary upon presentation of the payment request, if not the performance of their principal. Terms of fulfillment of these obligations are specified in the contract between the bank and the principal (the borrower).
In a bank guarantee details should be indicated on the license of the bank, allowing it to perform these operations. And it must be authorized to sign this fellow. To guarantee should also be accompanied by an original license or a notarized copy. This is to ensure that the beneficiary was sure that the warranty is valid.
Bank guarantees are very popular because it is very convenient and customers and the banks themselves. But the bank guarantee is not just a convenient financial tool, but still very reliable and marketable. For banks, this activity is useful in that it does not need to immediately divert working capital (the main advantage over the credit). After payment under the guarantee may not be, or it may be delayed, although the granting of a guarantee commission shall be charged in full.Most banks issue guarantees on the security. But for the regular customers of the bank, which have a positive credit history and a good financial position, the guarantee may be issued without security. In these cases, the contract usually made direct debiting of funds from the customer's account to cover payments that the bank makes the contract guarantees. The key contractual warranty is usually real estate, equipment, securities, goods in circulation, etc.
Under the terms of payment to the beneficiary of cash guarantees can be divided into unconditional (on demand) and conditional. The unconditional guarantee means that the bank is obliged to pay a certain sum to the beneficiary upon his request, observing all the conditions of the guarantee. A conditional guarantee means that the bank is also obliged to pay the beneficiary a certain sum on demand, but only if he provided proof of non-payment of the principal.Good bank guarantees are characterized above all the principles of urgency and irrevocability. These two principles mean that the bank has no right to unilaterally refuse to pay the beneficiary. Bank guarantees, which can be revoked - not very popular and virtually no demand, as cause distrust and fear of the beneficiaries.Bank guarantees are divided into secured and unsecured. Secured guarantees mean that the need to secure a mortgage. That may be the key to any property of the principal real estate, equipment, material assets, securities, and more. Unsecured bank guarantee shall be issued without collateral in the form of simple written commitment of the guarantor.
Another type of bank guarantees - is confirmed by a bank guarantee. Its meaning is that the other bank, which also has a joint and several liability to the beneficiary, confirms this guarantee in full or partial amount.There is a variety of syndicated bank guarantee. This type of guarantee means a guarantee that the issue several banks, which operate through a major bank. Such guarantees are usually issued in the implementation of costly transactions, including international ones. The cost of these guarantees depends on the number of banks taking part in this.Guarantees may be both direct and counter-. Direct guarantees mean that the payment obligations accepts direct bank itself. Counter-guarantee means that the bank issuing the guarantee, will require a counter to the obligation of another, involved in the transaction of the bank at the written request of the principal.
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