Generally, a loan granted by someone – usually a bank, but sometimes other companies, such as a corporate parent – by assuming a surety or providing a guarantee. This means that the bank does not provide liquid funds, but rather its own creditworthiness or a parent company’s good name (place in public esteem). – In the case of a surety, the bank undertakes to guarantee the liabilities of the borrower to a third party, e.g. another institution, tax office, carrier, court. It is accessory, i.e. strictly tied to the underlying claim. – In the case of a guarantee, on the other hand, the bank undertakes to indemnify a third party for a certain future outcome – e.g. advance payment to the supplier, warranty: For example, advance payment to the supplier, warranty. This obligation is abstract and therefore not linked to the underlying receivable. Both forms are contingent liabilities that must be recognized in the balance sheet under Basel II. In Germany, guarantee transactions fall under Section 1 of the German Banking Act (KWG) and therefore require a license. – A guarantee fee is the fee charged by a bank for its services. – In particular, surety for a bill: by co-signing a bill of exchange, an acknowledgement that one is liable for the bill amount if necessary. – See accommodation, off-balance sheet transaction, blanket, discount, contingent claim, fixed income arbitrage, guarantee transaction, accommodation obligation, letter of comfort, bill of exchange.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/

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