Regulatory Alerts2020-12-06
Non-Refusal to Confiscate Bank Guarantee Letters Upon Opening Bankruptcy Proceedings and Suspending Claims Against the Ordering Customer
The Saudi Central Bank (SAMA) directs all domestic banks and financial institutions to cease refusing the confiscation of bank guarantee letters when bankruptcy proceedings are opened against the ordering customer. The circular mandates that financial institutions must continue fulfilling their obligations under these letters according to their stipulated terms, preserving the independent and direct nature of bank guarantees. This directive ensures that suspending claims against bankrupt customers does not undermine the enforceability, credit reputation, or transactional stability of bank guarantees in the Kingdom.
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