Bank Guarantees: Providing Financial Assurance
A bank guarantee is a bank's written promise to pay another bank, company, or anyone under a contract, loan, or debt security for a third party if that party fails to fulfill its obligations.
Benefits of a Guarantee for the Executor (Principal)
- To take part in the provision of services for municipal and state customers and supply goods.
- To receive a commodity credit from the counterparty, which is provided by a bank guarantee.
- To receive a deferred payment of the amount according to the contract for the services provided and goods for which a guarantee was issued.
- Typically, the guarantee fee is less than the loan interest.
Advantages of the Guarantee for the Customer (Beneficiary)
- Guarantees are highly reliable and can be implemented quickly.
- Fulfillment of obligations by the contractor.
- Distribution between the customer and the contractor of all possible risks.
- Fulfillment of all obligations stipulated by the contract on both sides.
- Protection of the customer from the risks associated with periodic and advance payments.
Bank's Tariffs
| Fee | Rate | Min | Max |
|---|---|---|---|
| Issuance fee (for non-cash collateral) | 6% per annum or 1.5% per quarter | USD 150 | |
| Issuance fee (for a cash deposit) | 1% (one time) | USD 150 | |
| Fee for amending the text of the BG | USD 100 | ||
| SWIFT Message Fee | According to the Bank's tariffs | ||
| Confirmation fees | By agreement | ||
| Advising | USD 100 | ||
| Advising Changes | USD 50 | ||
| Certificates, requests, authentication guarantees | KGS 2,500 | ||
| Cancellation fee | n/a |