Guarantee payment without having to use your working capital.
A Bank Guarantee is an alternative to providing a deposit or bond directly to a supplier or vendor. It is an unconditional undertaking given by the bank, on behalf of our customer, to pay the recipient of the guarantee the amount of the guarantee on written demand.
Bank Guarantees require security in the form of cash held on deposit with the bank, or real estate of a type and value acceptable to the bank.
What are the benefits of a Bank Guarantee?
1. You can meet your contractual obligations to a supplier or vendor, whilst having the comfort of your cash being held on deposit in your name with the bank.
2. Term Deposit funds held as security for a Bank Guarantee attract prevailing credit interest rates on the full amount of the deposit, with interest earned paid to your nominated transaction account. If you prefer to offer real estate as security, speak to a banking representative for more information about this option.
3. A Bank Guarantee can have an expiry date after which the guarantee automatically ceases. Alternatively, it can be open-ended, providing maximum flexibility where completion dates are not certain. The vendor or supplier will advise you whether they require the Bank Guarantee to have an expiry date or to be open-ended.
4. For the supplier or vendor, a Bank Guarantee assures them of payment if they make a written demand to the bank on the Bank Guarantee.* There is no need for them to hold or manage individual bonds from their customers.
An Establishment Fee is payable once only on the day the bank issues the Bank Guarantee. An ongoing Service Fee is payable in advance every six months for the duration of the Bank Guarantee. These fees can be automatically debited from your transaction account.
Things you should know
Only Australian or United Kingdom licensed insurers / underwriters are acceptable.
The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. Customers must seek their own independent tax advice in relation to their individual circumstances.