Bonds and Guarantees and Standby Letters of Credit

Protection to ensure you
receive payment

Bonds and Guarantees

If your business is concerned about the risk of international trade, Bonds are worth considering. Bonds are synonymous with Guarantees. They're an irrevocable commitment by us - or another bank acting on our instructions - to effect a payment, provided the terms of the bond are met. If the customer fails to comply with the terms of the underlying contract, then the beneficiary 'calls' the bond and receives financial compensation from us. Your business can choose from different classes and types of bond, each designed to cover varying trading circumstances.

Classes of Bond

There are two classes of bond: On Demand and Conditional. On Demand Bonds, which overseas beneficiaries often insist on, can be called whenever the beneficiary presents a demand. However, Conditional Bonds can only be called if an independent arbitrator agrees.

Key benefits

  • Bespoke solution - within certain limits, bonds can be drafted to suit the specific needs of you and your trading partner
  • Widespread acceptance - bonds can be issued in virtually every country in the world, either on our own paper or through our partner bank network
  • Proof of capabilities - if your business is the exporter, a bond demonstrates your ability to meet the terms of the contract, backed by your bank
  • Provide reassurances - if your business is the importer, a bond provides reassurances that you can settle debts relating to goods or services purchased
  • Promote trade - bonds support international trade by providing customers the security to develop their international business by entering into markets that were previously closed to them

Standby Letters of Credit

Is your export business looking for protection against unreliable buyers? Standby Letters of Credit (Standby L/Cs) are often used in the trade of perishable goods - but as with Bonds and Guarantees, they can cover a number of different transactions. An importer can arrange to issue a Standby L/C in favour of the exporter to cover non-payment by an importer. The exporter is then able to claim the unpaid amount if the importer doesn't deliver on their promises to pay. An exporter may be required to arrange for a Standby L/C to be issued in favour of an importer to cover his contractual obligations. In some markets, for example the USA, Standby L/Cs are preferred to Bank Bonds.

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