Corporate business Trade finance transactions Bank guarantees Payment and performance guarantees

Payment and performance guarantees

Bank guarantee for payment, performance of contractual obligations or return of advance payments.

Payment guarantees — refers to the obligation of the bank to pay an amount to the seller if the buyer violates the terms of the contract and/or defaults on the payment by the date as defined in the contract.

Performance guarantees – refers to the obligation of the bank to pay the buyer an agreed amount if the seller does not fulfil its contractual obligations.

Guarantees of return of an advance payment – refers to the obligation of the bank to re-pay the buyer the advance payment paid by the buyer under the contract in case of the seller’s failure to fulfil the conditions of the contract on the supply of goods/services or refusal or inability to return the advance payment received.

Advantages of bank guarantees:

  • The ability to get a payment deferral (commodity credit) for buyers from the counterparties.
  • Ability to ensure return of the advance payment for the buyer if the seller defaults on contractual commitments.
  • Minimising the risk of non-fulfilment of the contractual obligations by the counterparty.
  • A more cost-effective financial instrument in comparison with lending or factoring.

The main conditions for issuance of guarantees by Pivdenny Bank

Requirements for clients under the guarantee:
(with the exception of those receiving guarantees under 100% cash coverage)

  • business activity for at least 12 months.
  • stable financial position.

Maximum term of the guarantee – no more than the period foreseen for the performance of the contractual obligations which are safeguarded by the guarantee

Currency - UAH, USD, EUR.

Format in which the guarantee can be issued:

  • paper;
  • electronically, signed by qualified electronic signature;
  • as a SWIFT message.

Collateral – balances in a coverage account or collateral in the form of: real estate; vehicles; goods in circulation; property rights to funds on deposit accounts, etc.

The bank makes decisions on guaranteeswith 100% cash couverage within 3 working days from the moment of submission of the full package of documents to the bank by the client.

The fee for the guarantee in Hryvnia
Guarantee (counter-guarantee) management commission:
- as a pledge of property rights on a physical person's deposit – in UAH from 1.80% per annum, in USD/EUR from 1.00% per annum;
- under 100% cash coverage or under the pledge of property rights for a deposit of a legal entity – in UAH from 2.60% per annum, in USD from 1.00% per annum, in EUR from 1.35% per annum;
- under other security/without security – by agreement.
Change of warranty conditions (counter-guarantee)
- Increase of the term - UAH 1,000;
- increase of the amount -0.2% of the increase amount (min UAH 1,000 - max UAH 10,000);
- other changes (including cancellation) - UAH 500 .
Consideration of the payment requirement and execution of payment under a guarantee (counter-guarantee)
0.2% of the payment amount (min. UAH 1,000, max. UAH 5,000)
The fee for the guarantee in foreign currency
Guarantee (counter-guarantee)/guarantee letter of credit
0.2% of the amount (min USD 100 – max USD 1,000)
Commission for managing a guarantee (counter-guarantee)/back-up letter of credit
by appointment
Consideration of payment request and payment under the guarantee (counter-guarantee)/guarantee letter of credit
0.2% of the request amount (min USD 100 – max USD 500)
Change of conditions or cancellation of guarantee (counter-guarantee) (including its notification)
Increase in the amount – 0.2% of the amount of increase (min USD 100 – max USD 1,000); extension of the guarantee period (counter-guarantee)/guarantee letter of credit – USD 100; other changes – USD 50 (in UAH at the NBU exchange rate)
Fee to change the duration or conditions of the guarantee
Increase of the guarantee amount in Hryvnia
0.2 % of the amount of increase (min. UAH 1,000 - max. UAH 10,000)
Increase of the guarantee amount in the foreign currency
0.2 % of the amount of increase (min. USD 100, maximum – USD 1,000) (in UAH, according to the NBU exchange rate)
Extension of the duration of the guarantee = in Hryvnia
UAH 1,000
Extension of the duration of the guarantee in a foreign currency
USD 100 (in UAH, according to the NBU exchange rate)
Other changes to the terms and conditions of the guarantee in Hryvnia (including cancellation at the client’s request)
UAH 500
Other changes to the terms and conditions of the guarantee in foreign currency (including cancellation at the client’s request)
USD 50 (in UAH, according to the NBU exchange rate)
Fees on other guarantee operations
Review of payment request and actual payment under the guarantee in Hryvnia
0.2 % of the amount paid (min. UAH 1,000 - max. UAH 5,000)
Review of payment request and actual payment under the guarantee in a foreign currency
0.2 % of the amount (min. USD 100, maximum – USD 500) (in UAH, according to the NBU exchange rate)
Advising notices received under the guarantee in Hryvnia
UAH 250
Advising notices received under the guarantee in foreign currency
USD 50 (in UAH, according to the NBU exchange rate)
Giving notice (investigation under the guarantee in Hryvnia) to other banks at the client’s request
UAH 500
Giving notice (investigation under the guarantee in foreign currency) to other banks at the client’s request
USD 50 (in UAH, according to the NBU exchange rate)

Procedure for issuing a bank guarantee:

  1. The client submits the required package of documents.
  2. Based on this package, the Bank determines the possibility to issue the guarantee.
  3. If the issuance is duly approved by the bank, contracts are signed on the guarantee and any other required collateral agreements with the client. If the guarantee is issued against 100 % cash coverage by the client, the contract for the guarantee is singed directly.
  4. The bank issues the guarantee on paper to send it directly to the beneficiary or to the client to send on to the beneficiary, or sends an electronic copy of the guarantee via the ProZorro system, or sends it as a МТ760-format message via SWIFT system to the beneficiary’s bank for further transfer to the beneficiary.

How do I apply?

  • Contact your personal manager

    for existing clients of the bank.

FAQ

Documents

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Retail deposit guarantee system
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