A bank guarantee is a written assurance provided by the Bank (Guarantor) that payment will be made to the Beneficiary (Seller/Creditor/Contractor) if the Principal (Buyer/Debtor/Purchasing organization) fails to fulfill its obligations according to the contract. The payment on the guarantee is made by the Bank on demand in case of default by the Principal.
It is important to note that the guarantee itself is not a payment instrument; instead, it ensures payment in the event of default.
Types of guarantees provided by ABB OJSC:
- Tender Guarantee (Tender/Bond Guarantee): This guarantee is given by the Guarantor based on the Principal's order to participate in a tender, quotation, or competition announced by the Customer (Beneficiary);
- Performance Guarantee: It assures the Customer (Beneficiary) of the timely completion of works or services specified in the contract by the Contractor (Principal);
- Advance Payment Guarantee: This type of guarantee ensures the return of the advance payment when the Seller does not fulfill their obligations, despite receiving the advance payment as per the contract terms;
- Payment Guarantee: It obligates the Guarantor to ensure timely payment to the Buyer-Seller. After the payment guarantee is approved, the Seller gains the advantage of receiving payment after the realization of goods sent to the domestic or foreign market by the Buyer or after a certain period of time;
- Quality Guarantee (Warranty Guarantee): This guarantee ensures that the quality of the supplied goods or completed work adheres to the contract conditions;
- Customs Guarantee: It is a bank guarantee given to customs authorities for the payment of existing or potential customs debts. This guarantee is often used during re-export of goods, import and export of excise goods, re-export of equipment, or utilization of customs warehouses;
- Property Guarantee: A guarantee issued by the Property Buyer to insure the initial payments made by the HCC (Housing Construction Committee).
ABB OJSC can provide other types of guarantees in addition to the ones listed above.
Bank guarantee services
ABB OJSC provides you with the following services under guarantees:
- Issuance, confirmation and notification of guarantees;
- Provision of consulting services during work with guarantees;
- Approval of guarantees by first-class correspondent banks;
- Provision of guarantees at the expense of clients' own funds or Bank funds;
- Taking into account the risks, the possibility of isolating the funds in one currency and opening the guarantee in another currency;
- Approval of guarantees by ABB OJSC which are provided by other banks;
- Transfer of warranty information via SWIFT, etc.