Division of letters of guarantee in terms of coverage.. Letters of guarantee are covered in whole or in part. Letters of guarantee is not covered

Divided into letters of guarantee in terms of liability coverage into two types: letters of guarantee is not covered, and covered withletters of guarantee in whole or in part. So that under the letter of guarantee, bear the bank's risk to meet the amount of security to the beneficiary in the case of non-implementation of the client of its obligations, so it may ask the bank from the customer to provide guarantees to cover the letter of guarantee, and vary the value of the cover according to the study of credit to the conditions of the customer and what is generated in the bank's confidence in its financial position in his seriousness in the implementation of thework assigned to him.

Letters of guarantee are covered in whole or in part: It is the lettersrequesting the issuing bank of the process of payment of the letter of guarantee, any amount secured in whole or part of it, and typicallythe proportion of cover required by the customer from 10 to 30%,depending on how confident the bank customer. And deposited the sum total or partial cover in a special account called "reserve letter of guarantee," the customer is not entitled to dispose of it until the end of the Bank's commitment arising from the letter of guarantee.

The cover may be critical is the simplest picture cover, whether the necessary payment to the treasury of the bank or his rival from his account or freeze, or be in kind, such as a mortgage recorded in the minutes of the property or pledge of shares in companies or other securities, commercial or waive certain rights.

Letters of guarantee is not covered: the letters that are not requiredwhere the issuing bank from the customer to provide any cover them.And apply the banks of this type if the client is a large company has a good reputation and has an important accounts of the bank.