SUISSE BANK PLC is not a public bank and may only act on behalf of its own shareholders. The trade finance specialists of SUISSE BANK PLC are always ready to promote your commercial transactions in the field of finance, by means of providing financial instruments that meet your requirements: guarantees and warranties.
A bank guarantee is an abstract payment commitment of a credit institution, or a bank, in the event that certain requirements are fulfilled. The bank assumes a guarantee that certain circumstances have arisen. In the case of a bank guarantee this can be a possible profit or also a loss, which arises or also does not arise. This means that the bank steps in if a beneficiary from the guarantee suffers a loss because either a negative or disadvantageous event has arisen or a desired profit has not arisen. The bank is obliged to pay upon demand if it is claimed on from the bank guarantee.
The sense and purpose of a bank guarantee is mainly to hedge itself against the non-fulfilment of contractual obligations or the failure to fulfil them in accordance with agreements and thus against a possible loss, or to cover the risk of the negative course of a business transaction of whatever type. The bank guarantee is not a payment tool but a hedging tool which brokers have enjoyed recommending mainly in the field of foreign trade since the 1950s due to its simple use and relatively low cost, and it is used by traders or project developers.
The forms which are most frequently used are the bid bond, the performance guarantee, the supply guarantee or the payment guarantee.
For the bank, a bank guarantee means an abstract liability as it can basically not raise any objections against its payment obligation which is linked to the business transaction of the foreign trade partners this is based on.
In this context reference is made to the abstractness of the guarantee undertaking. The abstract structuring of the bank guarantee is particularly due to the fact that the bank providing the guarantee is not involved in the legal relationship. In the conflict of interests between the client of the bank guarantee on the one hand, and the beneficiary on the other, concerning the realisation of the performances, goals and obligations commercially agreed upon, the bank can only act in accordance with its guarantee conditions.
A warranty is also frequently described as an aval and constitutes the assumption of a risk by the financial institution towards a third party which is agreed upon in writing. An aval is an accessory undertaking to pay by a financial institute offering a guarantee to make a payment to the beneficiary of the aval and to make the payment instead of its client if a specific event agreed upon between the parties to the contract arises.
The customer receives a creditworthiness advantage through the financial institution‘s trust, avoids capital commitments and has a liquidity advantage as a result.
The most widely used types of sureties are:
• Performance warranty
• Service warranty
• Advance payment warranty
• Rental payment warranty
Trade funding implies receipt of assets for business on more favorable terms than overdraft on your bank account at the bank. Trade funding includes transformation of internal and external accounts receivable into assets soon after the receipt. Insured accounts receivable have a set disposal date and, as compared to fixed assets, are easily realized. After selling the accounts receivable you may change your balance type and receive access to additional funding sources that you may use at your discretion.
SUISSE BANK PLC
53 Davies Street
+44 (0) 20 3159 5052
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