Banking guarantee

Bank guarantee is a tool of proper and timely fulfillment of contractual obligations in relations with your counterparties which represent written bank’s obligation to pay the beneficiary (your counterparty) in case of non-fulfilment of your obligations as per the contact terms and receipt of payment demand by the bank.

CREDIT AGRICOLE proposes the following types of guarantees to the clients:

payment guarantee – ensure fulfillment of buyer’s payment obligations in favor of the seller as per the contract’s conditions;
bid bond (also in electronic form with imposition of an electronic digital signature) – ensure fulfillment of tender obligations by bidder (seller);
performance guarantee - ensures delivery of goods / performance of works / rendering services in a clear and timely manner in accordance with the contract conditions;
advance payment guarantee – ensures return of advance payment to the buyer in case of the seller's failure to perform its contractual obligations and to return obtained advance payment

CREDIT AGRICOLE also provides stand-by letter of credit – which, same like guarantee, secures the obligation to pay or fulfill other contractual obligations, however it is used when the legislation of the seller’s country prohibits using of guarantee or such seller requires stand-by letter of credit as a form of settlements.

Advantages

For buyer	For seller
possibility to obtain deferred payment under the contract possibility to use working capital for other purposes much cheaper tool than traditional lending	absence of risk of non-payment for delivered goods / provided services / preformed works possibility to increase volume of deliveries extension to new markets

Conditions of guarantee / stand-by letter of credit issuing (hereinafter - guarantee)
Amount and validity	as per contract/tender documentation conditions
Requirements for collateral	cash cover, property rights for deposit	real estate, equipment, vehicles, other assets and their combination
Insurance of pledged property	-	at any insurance company approved by the bank on client’s choice
Issuing guarantee cost ^[1]	commission for guarantee issuing: 2%-2,4% p.a., min. 33 USD ^[2] per month – in case of commission payment on a monthly basis / min. 100 USD ^[2] per quarter – in case of commission payment on a quarterly basis	commission for setting the limit (one-time): 0.5%, мін 100 USD ^[2] commission for guarantee issuing: 4,5%-5,5% p.a., min. 33 USD ^[2] per month – in case of commission payment on a monthly basis / min. 100 USD ^[2] per quarter – in case of commission payment on a quarterly basis
Other bank’s commissions under issued guarantee ^[1]	1) commission for guarantee amendment: 50 USD ^[2]/each amendment (except of amendment in part of guarantee amount increasing or guarantee prolongation) 2) commission for guarantee cancellation (one-time): 50 USD ^[2] 3) commission for taken-up demand under guarantee and/or payment: 0,2% from the amount of demand/documents, min 100 USD ^[2]/ each demand under guarantee 4) commission for issuing guarantee in SWIFT-message form (one-time): 25 USD ^[2]
Other possible costs	1) payment for the services of third parties (insurance company, notary, property appraiser, etc.) - according to the tariffs of such third parties chosen by the client for receiving the relevant services 2)third bank’s commissions (advising bank, confirming bank, correspondent bank etc.) – in case of occurrence should be paid according to the tariffs of such banks.

[1] issuing guarantee cost/other bank’s commissions could be set individually as per arrangement with a client

[2] сommission indicated in foreign currency to be paid as per official NBU rate indicated on the date of its payment

Package of documents and type of application form for banking guarantee depend on structure of the operations and collateral.
You can obtain detailed information by contacting your personal manager or by visiting our branch in your city/town.

Application

Significant traits of banking services