Bank guarantee: types, terms, conditions and features

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Bank guarantee is one of the most effective ways to ensure the security of the transaction. A financial institution charges a fee for providing such a service.

In essence, a guarantee is a loan product, but its cost is much cheaper than a cash loan. Any banking organization licensed by the Central Bank may issue guarantees. However, each beneficiary sets its own requirements for them.

These wishes of customers are unified and enshrined in Article 45 of 44-FZ, according to which the Ministry of Finance is responsible for establishing requirements for financial organizations issuing bank guarantees. Every month, the Ministry of Finance publishes an updated register of institutions that are eligible for this activity.

Basic concepts

A bank guarantee is a written obligation of a financial institution to pay a certain amount of money to a customer if the principal fails to fulfill the terms of the contract. This tool allows you to ensure the proper executionobligations under the contract. For some transactions, this method of risk reduction is a prerequisite for cooperation.

Three subjects are involved in this process:

• The beneficiary is the creditor (customer) under the main contract. It is his interests that will be protected.
• Principal - the debtor (executor) under the main contract. This is the one who initiates the commitment.
• Guarantor - a bank that assumes obligations for a certain fee. That is, the guarantor is a bank that provides a credit line, payment of uncovered expenses or the amount specified in the contract to the beneficiary. Lists of accredited institutions capable of acting as guarantors are regularly updated (Sberbank of Russia, VTB 24, others). Previously, not only banking organizations, but also ICs could act as a guarantor. However, today (in accordance with the law) insurance companies are not endowed with such powers.

Varieties

The main classification of bank guarantees is determined by the type of secured transaction:

• Tax, customs. Such bank guarantees make it possible to ensure the proper fulfillment of obligations to the indicated state bodies.
• Advance. Allows you to ensure the return of advance payments if the terms of the transaction are not met in terms of time or volume.
• Payment. Allows you to ensure timely payment for delivered goods or work performed.
• Guaranteeexecution. Provides full-scale and timely delivery of goods, provision of services, performance of work.
• Competitive (tender). Allows you to reduce the risk of the customer if the winner of the tender refuses further cooperation.

The most popular product is a tender guarantee, through which banks ensure the participation of the principal in tender drawings, auctions, contests, and auctions. The cost of the tender guarantee is usually 5% of the contract amount. Such a product is valid until the customer and the winner conclude an agreement.

One more case when the bank issued guarantees is a purchase. Usually it is wholesale deliveries. For example, the supplier sends the goods to the customer without prepayment. In the event that the client does not pay for the products received, the seller applies to the bank and receives compensation for the damage. That is, a payment guarantee is a tool that allows you to cover the risk of the supplier from non-payment of funds by the buyer. A similar service is often used for deferred payments and commodity loans.

There are other types of bank guarantees, depending on the purpose of the underlying transaction. In addition, they are classified according to other criteria - irrevocable and revocable.

What do you need

Understanding the essence of a bank guarantee is quite simple, considering a simple example. The scheme of its work is as follows:

• The principal (company X) concludes a contract for the supply of a consignment of goods with the beneficiary (company Y), acting as the buyer or customer of the specifiedgoods.
• The beneficiary requires a guarantee that the terms of the contract will be fulfilled in full, that is, all goods will be delivered on time.
• To this end, the principal or executor of the contract turns to a third party - the guarantor (Bank Z) to obtain a guarantee in the form of a written agreement.
• The bank, for a certain fee, undertakes to pay the beneficiary a certain amount, for example, 30% of the cost of the main contract, if the principal does not fulfill its conditions.
• If such a guarantee event occurs, the principal demands payment of remuneration in writing.
• The guarantor pays the specified amount to the beneficiary, and then requires the principal to regressively refund the amount paid.

You can secure the transaction in another way - by demanding a cash deposit from the company, however, in this case, the executing company will have to withdraw the specified amount from its turnover. This approach is unprofitable, because often it is necessary to attract borrowed funds for this. Then doing business on these terms is unprofitable..

What does it take for a bank to issue a bank guarantee?

Design and stages

The entire registration procedure can be described in seven steps:

• The emergence of the need to secure a contract.
• Search for a bank-guarantor by the executor.
• Drawing up an application for a guarantee.
• Sending the application and documentation to the bank.
• Clarifying the solvency of the client.
• Execution of an agreement between the client and the bank.
• Designwarranty contracts.

You can find a suitable bank on your own or use brokerage services. In addition, you can contact any representative office of Sberbank - it works without intermediaries, exclusively directly.

List of documents

By providing a guarantee obligation, a banking organization risks its own funds, which will have to be paid if the case specified in the contract occurs. Subsequently, the client will have to return the specified funds, so the bank needs to make sure of its solvency.

The package of documents that will be required when issuing a guarantee obligation at a bank may differ slightly in different financial institutions. As a rule, the following documents are required:

• Application, questionnaire.
• Extract from ERGUL, copies of TIN received within the last month.
• Copies of the registration certificate and minutes of the meeting of founders, certified by a notary.
• An up-to-date list of all LLC founders, copies of their passports.
• Copies of certificates, licenses.
• Documents confirming the ownership of the premises, or contracts for their lease.
• Copies of orders on the basis of which the chief accountant and manager were appointed, copies of their passports.
• A report reflecting the profit and loss of the organization for the last year, the balance sheet.
• Copy of secured transaction agreement.
• Financial statements for the previous 6 months.
• Ifthe organization works under the simplified tax system, you will need to provide a declaration of expenses and income for the previous 12 months.
• If the company operates on UTII, you need a tax return.
• Auditor's report on the audit.
• Certificate confirming the absence of debts.

In addition, a banking organization has the right to require copies of documents for similar contracts that have been successfully completed earlier, and other evidence of the reliability of the organization.

The bank guarantee is regulated under 44 FZ.

Provision

Some financial institutions offer to purchase an unsecured bank guarantee from them. But in practice this rarely happens. As a rule, banks prefer not to take risks. Therefore, they generally always require the client to provide highly liquid collateral. An integral part of formalizing the obligation to pay funds is to provide a bank guarantee. It is worth noting that the amount that can be obtained from the sale of collateral must cover all expenses of the financial institution related to the obligation to a third party. Applicants can offer the bank:

• Precious coins.
• Promotions.
• Products.
• Property.
• Vehicles.

That is, the collateral that secures the contract must have high liquidity.

Requirements

Before the bank agrees to issue a guarantee, it checks the financial stability of the client without fail and most carefully. Of course, forging any documents is unacceptable.

Principal must meet the following requirements:

• Credit history should not contain overdue debts. In some cases, banks require no credit at all.
• Reporting should not contain unprofitable periods, except for seasonal ones.
• The organization's turnover must match the amount of the obligation.
• The organization must operate on the market for at least six months.

Often, banks issuing bank guarantees require a current account with their financial institution.

Sample contract

The legislation does not impose strict requirements regarding the drafting and appearance of a bank guarantee agreement. However, the main provisions of such an agreement are dictated by the regulatory framework. They must be reflected in the agreement.

Among the main legislative documents:

• Civil Code of the Russian Federation, art. 368, part 1, item 4.
• FZ-223 - for some legal entities.
• FZ-44 - for municipal, government contracts.

Registry check

Each bank guarantee under 44-FZ must be entered into the Register. To check it, you should visit the website of the Unified Procurement Information System. In accordance with the specified law, information must be entered into the system one day after the registration of payment obligations.

Other guarantees issued in accordance with Federal Law 223 are not included in the register. You can check them on the website of the Central Bank in the section "Referencecredit institutions". In this case, you will need to find the bank, its turnover sheet, and then column 91315, reflecting the turnover on guarantees.

This column will display a number. It must be compared with the amount of the issued bank obligation. If the amount is not very large, then it is allowed to deposit it with bank guarantees at the end of the quarter.

List

It is very easy for entrepreneurs to find out where to go for this service. The Ministry of Finance updates the list of bank guarantee banks every month. That is, you can check the right of the organization for this activity. This can be done by visiting the portal of the Ministry of Finance. Banks issuing bank guarantees:

• JSC "UniCredit Bank".
• JSC "GUTA-BANK".
• VTB Bank (PJSC).
• PJSC Svyaz-Bank.
• PJSC Sberbank.

This is just some of it. There are more than 250 financial institutions on the list.

Justification of receipt

The beneficiary can only receive compensation under the guarantee if there are justifications. They can be:

• Violation of the terms of the main agreement by the contractor.
• Refusal of the contractor to provide documents confirming the proper performance of the contract.
• Failure to fulfill the terms of the transaction by the contractor.

The list of required documentation should be included in the warranty agreement.

How much do you needpay

The cost of the warranty obligation depends on many factors and conditions of the transaction, on the subject of the contract, its validity period, and the amount. As a rule, it is 2-10% of the contract amount.

An important factor is the availability of monetary or property security, as well as a guarantee. If there is no collateral, the fee for issuing a guarantee almost doubles.

Often, banks issuing guarantees under 44 FZ set minimum fees equal to a fixed amount, for example, 10 thousand rubles. The commission cannot be lower than this figure, even if the guarantee amount is 50 thousand rubles.

Calculation example

Let's say the contract amount is 10 million rubles, and the amount of the guarantee is 30% of this figure, that is, 3 million rubles. If the contract is valid for 12 months, and the annual commission is 6%, obtaining a bank guarantee will cost 180 thousand rubles (1 year6%the amount of the bank guarantee).

Banks under 44 FZ provide such services to ensure maximum security of the transaction. This procedure is mandatory in the implementation of tenders and public procurement. This product is much more profitable than a loan for collateral under a contract, therefore it has a fairly high popularity.