International “first demand” guarantees

Guarantees issued by the Bank to support your needs

The guarantee is an unsecured credit through which the Bank grants a credit obligating itself to guarantee the fulfilment of obligations undertaken by your company towards third parties.

In the event of enforcement, the Bank is called upon to pay the sums of money in accordance with the terms of the guarantee.

These guarantees are autonomous and abstract: the beneficiary can demand immediate payment by simply attesting that the debtor (transferor) is in default, regardless of the underlying contract.

Types of international first demand guarantees:

• Payment Guarantee: guarantees to the seller the payment of what is owed by the buyer;
• Bid Bond (or Tender Guarantee): enables your company to participate in tenders and is issued to cover the fulfilment of the conditions set out in the invitations to tender;
• Performance Bond: ensures the exact fulfilment of contractual terms;
• Advance Payment Bond: guarantees the repayment of advance payments in the event of contractual defaults;
• Retention Money Bond: guarantees the payment of the contractually agreed balance upon completion of the supply or works.

The First demand bank guarantee can also be indirect (or a counter-guarantee): an irrevocable commitment made by an issuing Bank (the counter-guarantor Bank) to perform a financial service in favour of a local Bank (the guarantor Bank) for the commitment which the latter makes to a beneficiary (normally a client of the guarantor Bank).

Standby Letter of Credit: this is a particular form of Documentary Credit, from which it differs in that Standby letters, due to their guarantee function, are not used for the purpose of obtaining regular payment of the export, but only in the event that the debtor fails to settle the transaction within the contractually agreed terms, thus activating their function as a guarantee instrument.