Non-Refusal to Seize the Bank Guarantee Letter to Initiate Bankruptcy Proceedings and Suspend Claims Against the Issuing Customer
| No: 42025830 | Date(g): 6/12/2020 | Date(h): 21/4/1442 | Status: In-Force |
Translated Document
Based on SAMA's supervisory and regulatory role in the banking sector, and in order to maintain financial and economic stability in the Kingdom, and relying on established judicial principles and banking customs regarding bank guarantee letter, which represent an original, direct, and independent commitment of the issuing bank regardless of the circumstances surrounding the customer who requested the issuance of the guarantee, this type of credit tool grants acceptance and trust among beneficiaries in both the public and private sectors. Acting otherwise would adversely affect the credit reputation in the Kingdom and the stability of transactions.
Accordingly, and after coordination with the relevant authorities, SAMA emphasizes that all banks operating in the Kingdom must not refrain from confiscating bank guarantee letter due to the initiation of any bankruptcy procedures or the suspension of claims against the customer who requested the issuance of the guarantee. Banks must continue to fulfill their obligations as stipulated in the terms and conditions of the bank guarantee letter.