- 20 Marks
POB-LAW-APR-2016-L3-Q7-Guarantees and Handling Prospective Guarantors
Scenario where a customer's overdrawn account requires a guarantee from a friend/business associate who sees it as a formality and owes the principal debtor money; how to handle the situation and meeting actions, and if different if the guarantor is not a company director.
Question
Your Private Banking customer, Reginald Tageo’s account is overdrawn GHS4,000,00 and you have called on him to provide security. He telephoned last Friday and told you he can only provide a guarantee from his friend and a business associate Kofi Darko who is a customer known to you, will visit your branch to meet with you in this regard. Kofi Darko is a Director in the KofDarko Building & Civil Engineering Works Ltd which has an account with your KofOrndua Branch.
This afternoon, Kofi Darko indeed called to seek an appointment to enable him visit your office to discuss the guarantee, and indicated that when Reginald Tageo requested him to sign a guarantee as security for his indebtedness, he had sign a reservations, but has come to learn that it is a formality and he is happy to sign for the sake of their friendship.
He added that he owes Reginald Tageo GHS5,000,000,00 in respect of some subcontracted works he has recently completed.
a) How will you handle this situation and what action will you take during your meeting with him?
b) Would your answer be the same if Kofi Darko had not been a director in a limited liability company?
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