Application
The applicant completes a request specifying the beneficiary, amount, tenor and expiry date.
Trade Finance
Bank Guarantee
A bank's undertaking to pay a stipulated sum if a contractor or counterparty fails to fulfil a specified contractual obligation — giving the receiving party assurance that the work, or the payment, will be honoured.
What It Is
A safety net for parties without an existing relationship
A Bank Guarantee is a surety issued by a bank, addressed to a government agency, organisation, or other legal entity, in which the bank undertakes to pay a stipulated amount if a contractor fails to fulfil a specified obligation. From the obligor's side, obtaining a guarantee from a reputable bank supports their ability to win and begin work. From the beneficiary's side, it provides assurance of compensation if the work is not completed.
Guarantees can be conditional (the beneficiary must demonstrate that conditions have been met before payment) or unconditional / on-demand (the beneficiary can claim by simple demand). Common forms include bid, advance-payment, performance, customs and payment guarantees.
Who issues this instrument
Bank Guarantee instruments are issued by a bank or other authorised financial institution, not by MTG. MTG is a non-bank financial company that facilitates access to these instruments and coordinates the process on the client's behalf. See the disclaimer for full detail.
Key benefits
- Provides assurance to a counterparty with no prior relationship
- Supports bid, performance, advance-payment and customs obligations
- Backed by a bank's undertaking rather than a personal promise
- Can support access to further financing or contracts
- A recognised structure in international and domestic trade
How It Works
The typical process.
Every transaction is different; this is the general shape of how bank guarantee arrangements proceed.
Assessment
The issuing bank assesses the applicant's credit standing and any collateral required.
Issuance
The bank issues the guarantee in favour of the named beneficiary.
In force
The guarantee remains available to be called upon, per its terms, until expiry or release.
MTG's Role
How MTG helps
MTG assists clients — importers, exporters, traders, or contractors — in obtaining guarantees or bonds from banks and financial institutions on behalf of their counterparties, coordinating the application and supporting documentation.
The issuing bank provides the guarantee and carries the payment undertaking; MTG's role is to facilitate the process and keep clients informed of status throughout.
- Digital onboarding and document collection
- Transaction tracking through to issuance
- Automated notifications on status and deadlines
- Intelligent document processing for supporting paperwork
Get Started
Discuss a Bank Guarantee requirement.
Tell us about the transaction and we'll confirm whether this instrument fits.