Bank Guarantees can be either direct or indirect.
A Direct Guarantee : it occurs when a authorized bank is structured to issue a guarantee by its account holder, in favour of the beneficiary.
An Indirect Guarantee : it occurs when a second bank is asking to issue a guarantee in return for a counter guarantee. If the second bank may loss in the event of claim against the guarantee, the issuing bank reimburse any losses the second bank suffers.
A breakdown of BG types is provided below:
Bid Bond
Performance Bond
Advance Payment Guarantee
Warranty Bond
Letter of Indemnity (LOI)
Payment Guarantee
Rental Guarantee
Confirmed Payment Order
The bank's guarantee to pay may be subject to conditions which specify that the bank would be obligated to pay the beneficiary the a fixed promised amount on behalf of it's client if the conditions are fulfilled.