In Return for the Risk Assumed, the Bank Receives Certain Commissions, Depending on the Term, Type & Risk of the Guarantee. Bank Instrument Monetization Can Be Defined as Indefinite.

1. T H E H A N S O N
G R O U P O F
C O M PA N I E S
W W W . T H E H A N S O N G R O U P O F C O M P A N I E S . C O M /

2. W H AT I S B A N K I N S T R U M E N T
M O N E T I Z AT I O N A N D H OW
D O E S I T W O R K S
Bank instrument monetization is a guarantee
operation by which the guarantor (bank)
undertakes to answer for the fulfilment of an
obligation of the guarantor (usually a client)
before a third party (beneficiary), in case the
guarantor does not do so. Frequently the
guaranteed obligations consist of the payment
of a certain amount of money, although
guarantees can be issued to guarantee other
obligations (successful completion of work,
supply of material, participation in contests and
tenders).

3. For the bank, a guarantee implies a risk, like a loan. The
difference with this is that the guarantee does not imply an
immediate disbursement of money by the bank in favour of the
beneficiary of the guarantee. But it can suppose it in the future if
said beneficiary executes it, that is, demands compliance. At that
time, the bank, which has complied with the beneficiary of the
guarantee, will require the client to repay the said amount.

4. Therefore, the bank in these operations undertakes to fulfil,
if the client (guaranteed) does not do so, the obligation that
it would have contracted towards the beneficiary. The
payment of the obligation that is guaranteed may or may
not be of a financial nature.
For the client (guaranteed), having a bank guarantee lease document allows him to comply with the requirements of the
beneficiary, derived from a commercial relationship (contract for the sale of goods, execution or bidding for works, etc.).

5. W H Y L O O K F O R B A N K
I N S T R U M E N T M O N E T I Z AT I O N ?
For the bank instrument monetization by the bank, it is
necessary for the client (guarantee) to formalize before a
notary a Bank Guarantee Coverage Policy, or a Coverage
Policy for the Limit of Bank Guarantees if several guarantees
are to be formalized. It regulates the relations between the
bank and the guaranteed party derived from the bank
guarantee provided (payment of commissions, interest and
stipulated expenses, reimbursement of the amounts that the
Bank has paid as a result of the guarantee, etc.).

6. T Y P E S O F B A N K
G U A R A N T E E L E A S E :
All those guarantees in which the bank agrees to pay a
certain amount in the event that the guarantee does not
do so.
Financial

7. T E C H N I C A L
This is the bank guarantee lease in which the bank responds in case of breach of
commitments other than a payment obligation, which has its guarantee. Generally, these
obligations are before public bodies or before administrations, but they can also be
before other third parties, and the bank is responsible for the breach of the commitments
that the guaranteed party had before said third parties, contracted for reasons such as
participation in contests or tenders, execution of works or supplies, proper functioning of
sold machinery, in cases of administrative appeals, etc.

8. In return for the risk assumed, the bank receives certain
commissions, depending on the term, type and risk of the
guarantee. Bank instrument monetization can be defined as
indefinite. The duration is one of the most important aspects
of the guarantee since it delimits the temporary validity of the
guarantee granted by the bank.

9. T H A N KY O U