International bank guarantees
Guarantee of payment, performance, or tender guarantees from PrivatBank for reliability of your transactions.
Basic types of guarantees
Bank guarantee is a Bank's obligation to pay the beneficiary a certain amount in case one's counterparty (the principal under the guarantee) fails to fulfill one's contractual obligations.
- A Payment Guarantee ensures timely payment to the supplier for the goods delivered or the work performed under a contract.
- A Bid Bond ensures compliance of all tender participants with the tender conditions (issued for the tender authority).
- A Performance Guarantee ensures compliance of the seller with obligations on delivery of goods or performance of work under a contract.
In which cases are guarantees used?
In terms of delivering goods and services, risks may appear at different stages varying from raw material acquisition, manufacture and storage of goods to timely delivery and provision of services and payment.
Use of bank guarantees in such situations allows for the protection of the interests of both the seller and buyer.International bank guarantees are used most frequently in the following cases:
- Business partners have established a new, untried business relationship;
- The seller is not confident as to the buyer's solvency, while the buyer is not confident as to the seller's capability to deliver goods/perform work/provide services;
- The subject of the contract implies large-scale projects or tailor-made products;
- In the event an international tender is organised.
Benefits from the use of bank guarantees
- Possibility of guaranteeing fulfilment of obligations under a contract without prepayment;
- Possibility of obtaining trade credit from the counterparty, the cost of which is lower than that of borrowing funds;
- Reimbursement pursuant to a written payment demand only for the actual goods delivered;
- Possibility of deferring payment for supply of goods or services under a contract.
Why are guarantees issued by PrivatBank beneficial?
20 years of experience in the international market.
Availability of partner banks in Georgia, Latvia, Portugal, Cyprus and more than 1,000 correspondent banks worldwide.
Promptness of guarantee issuance: a covered guarantee (secured by cash funds) is issued within one day without need for a contract.
Low fees and charges.
Individual approach in terms of drawing up guarantee taking the nature of your business into account.
For issuing a guarantee you need to take just 2 steps:
Step 1. File the signed application for guarantee issuance with a financial manager and transfer cash cover under the guarantee to the account specified by the manager (in the event the guarantee is issued against cash cover).
Step 2. Provide the bank with three types of documents: the constituent documents, financial statements and documents certifying the title to property which may serve as collateral (unless the guarantee is issued against cash cover).
For advice on international documentary instruments consult with the Head Office experts by emailing: email@example.com
All collections are to be forwarded to below address:
PJSC CB 'PRIVATBANK',
32 NABEREZHNAYA POBEDY STR., OFFICE 608,
49094 DNEPROPETROVSK, UKRAINE
ATTN: TRADE FINANCE DEPT.
We assume no responsibility for documents sent to any other address unless it is agreed with us by SWIFT.
Fees and charges for bank guarantees and standby letters of credit
- Guarantees and standby letters
of credit issued by the Bank
- Guarantees and standby
letters of credit advised by the Bank
|Issuance or amount increase of guarantee / standby letter of credit
For amounts exceeding USD 0.5 mln - USD 1,500;
minimum fee - USD 50
|Obligation fee under an uncovered transaction
min 3% per annum — covered by the pledge of rights on deposit or covered by counter-guarantees of other banks;
min 4% per annum — covered by the pledge of property or real estate;
||Calculated as per fees of the courier service
|Advising or authenticity request of guarantee, standby letter of credit
For amounts exceeding USD 0.5 mln - USD 500; minimum fee - USD 50
||Calculated as per fees of the courier service
Frequently asked questions
- What is a standby letter of credit? A standby letter of credit is essentially a bank guarantee issued in the form of a letter of credit stipulating obligation of the bank to pay the guaranteed amount to the beneficiary under the letter of credit in case of a guarantee event (i.e. failure of the standby letter of credit applicant to fulfil obligations to the beneficiary). If, in the opinion of the beneficiary, its partner is in breach of the obligations, the beneficiary may use the standby letter of credit. Normally, to this end it is sufficient to provide the bank with a written statement that the partner has failed to fulfil the specified obligations (often the statement is provided in conjunction with other documents during validity period of the letter of credit and on the agreed terms). In case the partner being the applicant under the letter of credit has fulfilled the obligations, the letter of credit shall expire at the end of its validity period.
- What is advising? Advising implies sending an official notification letter to another party to the letter of credit deal regarding performance of a certain operation (issue, amending, cancellation, etc.).
- What kind of verification is implied under the ‘Verification of documents and payment demand processing’ tariff? This implies bank's verification of the payment demand from the beneficiary as well as accompanying documents for compliance with all conditions of the guarantee. In case of detecting discrepancies, the bank has the right to refuse payment. The fee may also be charged for verification of documents provided by the applicant for reducing amount of the guarantee.
- What do the preliminary activities imply? The preliminary activities may include drafting of a guarantee, expert examination or advising the customer on drawing up the payment section of the contract, development of a non-standard scheme for securing obligations using guarantees, etc.
- What is implied by sending messages to other banks? Sending messages to other banks implies the service of sending messages by special authenticated channels (SWIFT or TELEX). Such messages include the following: guarantee opening notifications, reports on the results of verification of documents, customer instructions, etc.
- What is a 'obligation fee'? This implies a fee charged as remuneration to the bank for the risk and obligation provided (i.e. obligation to pay under the guarantee) with the obligation not covered by the customer's financial funds. As a rule, this fee is expressed in percent per annum.