Guarantees can also be financial in nature, governing payment obligations between the parties. They back the financial solvency of the bank’s customer. Another type of financial guarantee secures credit facilities and it enables a company’s foreign subsidiaries to obtain financing.
The issuance of international guarantees, also commonly known as bonds or standby letter of credits, involves the participation of two foreign financial institutions. This requires the support of experts such as the BBVA International Financial Institutions team. BBVA bankers create and maintain relationships with international banks, that enables them to play a key role in getting better terms and achieving agile and effective service delivery of international guarantees. BBVA has the capability to provide business customers with preferred terms and conditions in various regions around the world and information about usual business practice in foreign markets. Benefits are maximized when guarantees are structured between BBVA Group entities, thanks to the very close relationships between them and to the agreements in place, which facilitate and speed up the process from beginning to completion.
An excellent opportunity to leverage guarantees has now emerged from the Next-Generation EU program, an instrument adopted by the European Council to drive recovery by using investment and reform to counteract the adverse effects of the pandemic on the economies of European Union countries. A further goal is to make the overall economy and employment more sustainable and resilient, while getting it ready for future challenges. Under this plan, banks such as BBVA act as conduits for proposed projects, and, in this key role, international guarantees are an essential tool.