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Issuing a Bank Guarantee

Key Facts

Issuing a Bank Guarantee.

A bank will look for 100% security before issuing a Guarantee and this can take the form of cash or assets.

Any company can apply to their bank to issue a Bank Guarantee on their behalf. The bank will look for 100% security before issuing a Guarantee and this can take the form of cash or assets. If the client is credit worthy the guarantee can be issued on margin.

The usual application forms will have to be filled out. Giving details of currency, amount, expiry date and the name of the Beneficiary, along with the reasons for applying and if for a project, the requisite business plan must be supplied.

If the Issuing Bank agrees to issue a Bank Guarantee the mechanics of transferring the Guarantee to the Beneficiaries account is straightforward.

Utilising the Swift system, (“Society for Worldwide Interbank Financial Telecommunications”), the bank will transfer the guarantee to the beneficiary’s bank, using the dedicated message code for transferring Bank Guarantees, Swift MT 760.

In some instances, The Issuing Bank will send a pre advice to the Receiving Bank, using the Swift Message Code MT 799 informing them to expect a Bank Guarantee in favour of their client.

For more details on swift, please go to our swift page.

If you have any further questions on this or any other subject related to bank guarantees, then you can search our frequently asked questions where you will hopefully find the answer you are looking for. Alternatively you can ask us a question and we will answer it for you.

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