The bank del credere is a powerful guarantee mechanism, but one that is often overlooked in banking law. For a company, securing the payment of its trade receivables is a fundamental issue. Offered as part of an intermediation activity, the del credere commitment offered by a banking institution meets precisely this need by covering the risk of a customer's insolvency. This tool, at the crossroads of financing and security, has a character and legal features that make it unique in the banking sector. This article provides an overview of its principles, legal nature and applications, which are developed in more detail in our dedicated publications. Understanding this mechanism is a first step towards better protecting your cash position, a process that may require the assistance of an expert lawyer in banking law.
Introduction to bank del credere: understanding a central mechanism in banking law
A bank del credere is an agreement whereby a credit institution undertakes to guarantee a creditor, usually a seller, against non-payment by its debtor. In practical terms, if the buyer fails to pay his debt on the due date, the del credere bank takes his place and pays the debt. This guarantee is a form of signature banking, as set out in article L. 313-1 of the French Monetary and Financial Code, in which the bank lends its name to cover a financial risk.
Definition and essential features of banker's draft
The main purpose of the del credere commitment is to transfer the risk of the debtor's insolvency from the creditor to the bank. In exchange for a commission, the bank assumes this risk, thereby offering security of payment to the beneficiary of the guarantee. The use of this service does not change the nature of the initial commercial contract between the seller and the buyer, but adds financial security. The banker is not a party to the sale transaction; it acts as a third-party guarantor under a separate contract with its own customer, the creditor.
The historical development and modern context of the del credere
Originating in Italian commercial practices in the Middle Ages under the name "del credere" (of trust), the del credere was first developed in foreign trade to secure long-distance transactions and exports. The seller, unable to assess the solvency of a foreign buyer, turned to an intermediary, often a commission agent, to guarantee the successful completion of the transaction. Today, while documentary credit has largely taken over the international market, the bank del credere has found new applications on the domestic market, particularly with the widespread assignment of trade receivables and the development of modern payment methods such as the bank card, a universal payment service.
The controversial legal nature of bank del credere: analysis and distinctions
The legal status of del credere has long been the subject of debate. Although it is a payment guarantee, its regime is not the same as that of credit insurance or surety bonds. In the absence of a specific legal text, contractual practice and doctrinal analysis have helped to define its contours, while case law on the subject remains rare.
The del credere and credit insurance: fundamental similarities and dissimilarities
In both cases, a third party undertakes to compensate a creditor in the event of the debtor's default, in return for payment. However, there are major differences. Credit insurance is based on a pooling of risks, whereas del credere is an individual commitment linked to a specific banking intermediation transaction. In addition, credit insurance contracts are autonomous, whereas del credere contracts are grafted onto a pre-existing relationship between the bank and its customer. For a clear view of the differentiation criteria, consult our detailed comparative analysis.
Ducroire and suretyship: why the majority of legal writers reject classification as such
It is also common to refer to a del credere as a suretyship, a personal surety governed by the Civil Code. However, suretyship is by nature an accessory contract that follows the fate of the principal obligation. A del credere, on the other hand, is considered to be a principal contract, independent of the commercial contract it guarantees. It is systematically onerous and entered into in the interest of the creditor, whereas a surety bond is often entered into in the interest of the debtor. It is therefore essential to understand the profound differences with surety bonds to correctly qualify this agreement.
The thesis of the indemnity guarantee and modern doctrine
Given the impossibility of linking it to existing regimes, modern doctrine tends to see del credere as an original indemnity guarantee, a sui generis agreement born of practice. Some authors analyse it as a clause increasing the bank's liability in its role as intermediary. The reason for the bank's commitment is said to lie in its commercial interest in developing a business relationship with its customer, which constitutes its main advantage. This characterisation as an autonomous indemnity guarantee is currently the most widely accepted, in the absence of a clear legislative reference.
Modern banking applications of del credere: overview and mechanisms
The del credere uses a number of banking techniques, some ancient and some very contemporary. It adapts to the need to secure various commercial and financial flows.
Ducroire and discounting: fixed-price discounting without recourse
One of the most significant applications of the del credere is in discounting, where it guarantees payment even in the absence of recourse on a draft. In a traditional discounting transaction, if the debtor fails to pay, the bank takes recourse against its customer. In fixed-price (or non-recourse) discounting, the bank contractually waives this recourse and therefore assumes the ultimate risk of non-payment, which constitutes a del credere commitment. Find out more how fixed-rate discounting works.
Irrevocable documentary credit: an essential international payment guarantee
In international and foreign trade, the security of transactions is paramount. The del credere mechanism has a major role to play in this respect. irrevocable documentary credit. When a bank issues or confirms a documentary credit, it makes a firm and independent commitment to pay the seller against the submission of compliant documents. In legal terms, this commitment is very similar to a del credere, as the bank guarantees payment regardless of the buyer's solvency or any disputes over the goods.
The del credere associated with the payment card: securing current transactions
Every bankcard payment is based on an implicit del credere mechanism. The cardholder's bank guarantees the merchant payment of the transaction, provided that the merchant complies with security procedures. The merchant is thus protected against the risk of insufficient funds on the customer's account, which helps to protect consumers. The del credere bank assumes the del credere risk and then collects its debt from the cardholder.
Other forms of bank del credere: factoring
The del credere is also found in factoring contracts. When a factor approves a debt, it guarantees that it will be paid, even if the debtor defaults. It acts as del credere and guarantees payment to its customer, thereby transferring the risk of non-payment from the supplier to the factor. This intermediation activity is often carried out by a specialised payment institution.
The effects of bank del credere: implementation, liability and exemptions
The del credere undertaking is particularly robust, but its activation and limits are subject to precise rules. If the guarantee is solid, it is essential for creditors and banks to know the precise conditions under which it will be used and the cases that can lead to an exemption.
Invoking the guarantee: from simple non-payment to insolvency
Unless there is a clause to the contrary, the majority of legal writers consider that the del credere guarantees payment on the due date, and not only the proven insolvency of the debtor. Thus, a simple delay on the agreed date is in principle sufficient to trigger the guarantee. The creditor does not have to prove the debtor's insolvency; the mere fact of non-payment on the agreed due date allows the creditor to turn to the del credere bank.
The impact of force majeure on del credere commitments
There is some debate as to whether force majeure can exonerate the bank. However, the prevailing view is that the guarantor remains liable even if the debtor's non-performance is due to force majeure. The purpose of the del credere is precisely to offer the creditor maximum security against any risk of loss or non-payment.
Exoneration of the del credere bank's liability
However, the guarantee is not without limits. The bank may be relieved of its obligation in three main situations. Firstly, if the creditor is at fault, for example if he has not delivered the correct goods, he will be held civilly liable and the guarantee will lapse. Secondly, manifest fraud on the part of the creditor (fictitious invoices) also invalidates the guarantee. Finally, if the principal debtor's debt is extinguished, in particular by set-off, the guarantee becomes irrelevant.
Prudential framework and the bank's obligations
As a banking transaction, del credere exposes the institution to a counterparty risk. This commitment therefore falls within the scope of banking prudential regulations (such as the European Union's CRD directives and CRR regulations). The bank must assess this risk, set aside provisions for it and maintain a level of capital sufficient to cover it, under the supervision of the Autorité de contrôle prudentiel et de résolution (ACPR), which is backed by the Banque de France. Any person or agent offering this type of service must comply with banking and financial regulations.
Under the terms of the French Monetary and Financial Code, in particular article L519, this intermediation is subject to a strict framework. An intermediary in banking and payment services (IOBSP), such as a credit broker, must demonstrate professional competence and be registered in the single national register managed by ORIAS. This obligation, which governs access to the profession, goes hand in hand with an obligation to provide advice and transparency. Whether they are agents or brokers, professionals are bound by a contractual obligation to work in the interests of their customers and to comply with the rules of banking distribution law.
Bank del credere is a sophisticated guarantee instrument whose proper implementation depends on the quality of its contractual wording. For any questions relating to the implementation or litigation of a del credere undertaking, our firm, with expertise in banking law is at your disposal for any advice you may need.
Frequently asked questions
What is bank del credere in simple terms?
This is a guarantee whereby a bank undertakes to pay a seller if the seller's buyer fails to do so. The bank takes on the risk of the debtor's insolvency in exchange for a commission, thereby assuring the seller that he will be paid. This is a financial intermediation service.
What is the main difference between del credere and surety bonds?
A del credere is a principal and autonomous undertaking, whereas a suretyship is an accessory contract that depends on the principal debt. A del credere is always onerous and made in the creditor's interest, which is not always the case with a surety bond, which is a guarantee technique of civil origin.
Does the del credere cover simple late payment?
Yes, unless the contract expressly limits it to insolvency. Case law and doctrine consider that del credere guarantees "failure to pay when due", which includes late payment on a given date and refusal to pay, whatever the reason.
When does the del credere guarantee not apply?
The guarantee is excluded mainly in the event of fault or fraud on the part of the beneficiary creditor. For example, if the seller has failed to meet its own contractual obligations (non-delivery, defective goods), the bank is not obliged to pay. This is an essential condition for accepting the risk.
Is "non-recourse" discounting a form of del credere?
Yes, fixed-price or "non-recourse" discounting is a typical application of del credere. By waiving its right of recourse against the seller who assigns the debt to it, the bank assumes the final risk of non-payment by the debtor, which is what characterises the undertaking to act as del credere.
Is the del credere still used today?
Absolutely. Although the term is sometimes less visible, the mechanism is at the heart of many modern banking operations such as payment by bank card, irrevocable documentary credit, factoring and fixed-price discounting.
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