Regulatory Alerts2012-03-22
Added · Updated
Third-party Guarantees in Favor of a Banking Corporation
Banking corporations are prohibited from requiring unlimited guarantees without specific written disclosure of known indebtedness and must maintain a database of existing guarantees. The directive mandates specific notification timelines, including statements every one to three years depending on guarantee type and amount, and written notice of debt default within 90 days. Banks must provide at least 21 business days' advance notice before demanding immediate repayment or initiating legal proceedings, and must send a 10-day notice before realizing a guarantee for non-protected guarantors. Transitional provisions apply to obligations taken out before July 1, 1995, restricting the repayment of certain current account charges to within 90 days of the regulation's effective date.
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