Bank Guarantee

A bank guarantee is a promise from a bank to pay money to a third party if its customer fails to fulfill a financial obligation, like repaying a loan or completing a contract. Essentially, it acts as a safety net for the beneficiary, ensuring they receive payment even if the customer defaults. Businesses often use bank guarantees to build trust and secure contracts, as this assurance reduces the risk of non-payment. It’s a form of risk management that helps facilitate transactions between parties by providing financial security.