External Guarantee/Counter Guarantee
External guarantee is a written commitment issued by a bank to cover financial losses of the beneficiary in the event that the applicant (the obligor) fails to honor its obligations in accordance with the terms and conditions of the agreement/contract. An external guarantee is an irrevocable &unconditional payment undertaking of the issuing bank to be exercised upon first demand of the beneficiary.
External and Counter guarantees enable local companies to do business abroad and companies abroad to do business in Turkey. The difference between External and Counter guarantees is that in the former, the guarantee letter is directly submitted to the beneficiary, whereas in the latter, a bank (Corresponding Bank) where the beneficiary is located is required to issue its guarantee letter.