Glossary

Cash-Backed Bank Guarantee

The term ‘cash-backed’ Bank Guarantees is another misnomer. Whether a Bank Guarantee is issued on the strength of the instructing party pledging cash with his bank or stocks, shares, bonds or other assets makes no difference to the acceptance of the Guarantee whatsoever. The Issuing Bank will honour the Guarantee according to its wording alone, regardless of its underlying security. Parties offering facilities where they refer to ‘Cash-Backed BGs only’ should be avoided.