Bank guarantee
Bank guarantee
A bank guarantee is an instrument popular worldwide that secures payments or substitutes the cash deposit.
Fibank Cyprus offers its customers the opportunity to use the following services:
- Guarantees in favour of domestic and foreign beneficiaries who are the business partners of our customers;
- Counter-guarantees issued in favour of a foreign correspondent bank which issues its own guarantee to a foreign partner of our customer;
- Advising on a guarantee issued by foreign banks in favour of our customers;
- Making a demand under the guarantee accepted by our customer (beneficiary).
Types of guarantees
Payment guarantee
Payment guarantees are issued to secure the payment obligations of the buyer (importer) towards the seller. The exporter delivers the goods on the basis of a deferred payment, but his/her risk is secured by a bank guarantee. The importer has an opportunity to postpone the settlement for the delivered goods.
Advance payment guarantee
An advance payment guarantee is issued on the exporter’s (seller’s) request and secures any claims by the buyer against the seller for reimbursement of the buyer’s down payment in cases where the seller is in breach of its obligations to supply the goods under the contract.
Tender guarantee / bid bond
A tender guarantee is mainly used by tenderers under invitation to tender for a project. A tender guarantee substitutes the cash deposit.
Performance guarantee / bond
Performance guarantee is issued in order to secure proper delivery or performance under the terms of the contract. The most commonly performance guarantees are used in construction companies.
Guarantee for warranty obligations
A guarantee for warranty obligations secures any demand for payment against the manufacturer during the defects liability period.