Bank Guarantees

From: Rixter ®


Has anyone got any experiences on what a Bank Guarantee is, how it works & how much they are?

Happy Investing,
Rixter :)
 
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Reply: 1
From: Rolf Latham


Hi Rix

Instead of you using cash for something where the buyer does not want or cant use th cash anyway, you can use a bank guarantee.

Put simply tis a piece of paper that says the bank will pay the holder X at a particular time.

For eg, you dont want to tie up your 10 % depsoit for ever with a long settlement IP.
So you would use a bank guarantee instead of cash or Deposit bond.

The major advantage of guarantee over bond is that you do not need formal finance approval to get a guarantee for a deposit. With a bond you generally need finance approval.

Cost varies but is about the same as a bond.

Disadvante with guarantee, if youre a normal player you need to back the guarantee with a cash deposit or equity.

Ta

Rolf
 
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