Banks charge an annual fee for this service, typically a percentage of how much the bank would owe should the client default. Letters of guarantee are used in a wide variety of business situations.

A bank issues a letter of credit to guarantee the payment to the seller ... fails to perform the stated duty or meets certain service level agreements outlined in the letter of credit.

The cumulative balance of letters of guarantee and other credit ... financial institution has now launched the Al Rabeh Guarantee service, which is available to local business for zero processing ...