Bank guarantees
Bank guarantees issued in favour of third parties can form part of the credit exposure of financiers. These guarantees have many forms and names: performance guarantee, completion guarantee, performance bond, performance payment bond or surety bond. The issued guarantees are an off-balance sheet exposure for the financier.
Insight
In certain scenarios it is crucial to gain rapid and clear insight into the total amount of bank guarantees issued to beneficent third parties. In the assessment the following aspects play an important role:
Terms and conditions, period of validity and the link with contracts
Overall financial position of the beneficiary (creditor, debtor, stakeholder, etc.)
Jurisdiction
Consequences of unjustified claims
Guarantees
In addition, guarantees may also have been issued by third parties (e.g. other financial institutions). Rapid insight must also be obtained into such guarantees in order to determine the overall position vis-a-vis the various stakeholders.