Cross-guarantee

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-01

// THE SHORT ANSWER

A cross-guarantee is a guarantee given by each company in a group for the bank debt of the others, usually backed by each company's own security, so that the lender can look to the whole group's assets whichever company borrowed. It is how a bank lends to a group whose cash, assets and borrowings sit in different entities. Its consequence is the one most often missed: a subsidiary with no debt of its own can be liable for all of the group's, and its accounts should say so.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.