Bank guarantee is a warranty of a guarantor-bank for its client’s performance of financial and other commitments under the contract. On client’s (principal) request the guarantor-bank issues a commitment letter according to which it is obliged to pay to a beneficiary after its written request an amount under the terms of the guarantee agreement.
Bank guarantee can be issued to any legal entities or private entrepreneurs that can perform the commitments under the guarantee agreement.
The amount of guarantee fee and order of its payment is determined by the Bank according to the Credit Committee decision and is included to the guarantee agreement.
The bank provides:
Payment guarantees
Prepayment guarantees
Tender guarantees
Performance guarantee
Credit guarantee, etc
Payment guarantee is a bank guarantee to secure performance of payment commitments of a purchaser (principal) to a seller (beneficiary)
Prepayment guarantee is a bank guarantee by order of a seller (principal) in favour of its partner (beneficiary) to secure the return of the prepayment in case of non-performance of obligations under the contract by the seller.
Tender guarantee is a bank guarantee by order of a participant in tender (principal) to secure reimbursement of the lost profit to the organizer of the tender in case if the successful tenderer (principal) refuses:
a granted proposal;
to complete an order after the tender.
This type of guarantee gives our clients an opportunity to participate in tenders and sustains their business image.
By giving performance guarantee the Bank is obliged to pay a guaranteed amount to the injured purchaser in case if the supplier didn’t perform its commitment under the contract.
What is the advantage of bank guarantees?
Risks of external economic contracts are minimized
