Stand By

  • A guarantee is a commitment given by a bank to a third party

    That ensures the successful conclusion of an obligation or commitment contracted by a client of the issuing entity

  • Advice in the operations. Maximum agility in the operations. Access from Oficina Internet Empresas.

    Introduction

    A guarantee is a bank's commitment towards a third party, which guarantees the performance of an obligation or commitment contracted by a client of the issuing entity.

    In your international business relations your suppliers may require the issuance of a surety that guarantees, for example, payment for your purchases, services received, etc.

    A guarantee is a flexible product which adapts to any object or guarantee (payment of merchandise, fulfilment of a service or a contract, refund of an advance payment, etc.)

    If you are an importer, you can also benefit from its advantages.

    For example, you can ask your suppliers to issue in your favour any guarantee which refunds you any cash advances which they have demanded from you and the refund of which you are entitled to claim in the event of non-compliance.

    If you are an exporter need to make use of this product, for example when you bid in a tender abroad, requesting a guarantee of the type Bid Bond o Lay Bond. If finally you are awarded the tender project, you will be required to issue a Performance Bond.

    International guarantees are not, therefore, an exclusive product for importers or exporters, but a product which adapts to any need, the payee of the guarantee being offered the security that the issuing bank will answer for its execution. Therefore, it is important to study the guarantee received: text, object, legislation, etc., including as a fundamental part in this study the solvency of the issuing bank.

    What you need to know with regard to guarantees

    • Bankia can give you extensive, expert advice to facilitate your operations. Often, the country's regulations require the guarantee to be issued by a local bank, which in turn demands the counter-guarantee from a leading bank in the country of the requester. Bankia has an extensive network of correspondents, which allows us to offer our clients a broad coverage.
    • Maximum operational agility in processing the operations.
    • Bankia has standard templates for international guarantees, allowing for maximum operational agility. The texts of guarantees that do not match these templates will be checked be our Legal Advisory Department.
    • International guarantees may be regulated under different International Chamber of Commerce rules:
      • URDG758: Uniform Rules Regarding First Demand Guarantees.
      • For Stand by:
        • ISP98: International Standby Practice.
        • UCP 600: Uniform Customs and Practice for Documentary Credits.
    • From the OIE, through our Expert Line Mailbox you can pose any question or request any action regarding your international guarantees.

    Issued Guarantees

    • To order Bankia to issue guarantees it is necessary to have the Comercio Exterior Facility.
    • Through the Oficina Internet Empresas (OIE): you have access to the documentary dossier of each international guarantee that you have ordered to be issued, accessing the main data of the guarantee and you can also consult the message sent.
    • At the time the requested guarantee is issued, you will receive a Comex Notification learning more about the issuance.
    • Bankia, you offers the possibility of obtaining the additional backup of the ICO via the International Guarantee ICO facility, facilitating your participation in tenders, direct adjudication or contracting of projects with public or private entities.

    Received Guarantees

    To receive guarantees in your favour it is not necessary for you to have a Foreign Trade Facility.

    Types of Guarantees

    For the commitment acquired

    • Guarantees on First Demand and Standby Letters of Credit (SBLC): they are the most common. The payee can execute the guarantee certifying non-compliance independently of the purchase and sale agreement, and without the need to file any proof thereof. The text of the guarantee may state that this certificate must be accompanied by a specific document, but it is not necessary to prove the breach of contract.
    • Contractual guarantees: guarantees of the fulfilment of certain obligations that must be agreed in the purchase and sale agreement between the exporter and importer, and will be executed at the time it is breached upon submission of proof at the paying bank . This type of guarantee is not very common in international trade because of the complexity of execution.

    For the object

    For Exporters:

    • Garantía de Licitación / Tender Guarantee (o Bid Bond): this type of guarantee is necessary for international tenders, which is why they are usually requested by companies that are participating in international projects exporting their services or goods. It guarantees the obligation to fulfil the conditions of the tender and that the bidding company will be able to undertake the work or service in the event that it is awarded.
    • Garantía de Pago Anticipado / Advance Payment Guarantee: this type of guarantee is requested by exporting companies that receive an advance payment. It guarantees the obligation of returning the advance payment in the event that the work, the delivery of goods or the provision of service is not correctly undertaken by the exporter.
    • Garantía de Cumplimiento / Performance Guarantee: this type of guarantee is requested of the companies that require a period of time to manufacture and export their goods or services. It guarantees the correct execution of the contract by the exporter.
    • Garantía de Retención de Pago / Retention Money Guarantee: this type of guarantee is required to free an amount of the price which, as per the contract, is retained until it is verified that the goods or services subject to the purchase and sale agreement have been correctly provided. It guarantees the quality obligations of the seller once the goods or services subject to the contract are delivered.
    • Garantía de Calidad / Quality Guarantee: guarantees the quality of the product after it has been delivered to the buyer.

    For Importers:

    • Garantía Comercial de Pago / Payment Guarantee: this type of guarantee is requested by companies with import activity that need to provide repayment guarantees to their suppliers. It guarantees the payment obligation of the importer (buyer) in supply contracts.

    Financial:

    • Garantía Financiera / Credit Facility Guarantee: it guarantees the obligations that a company acquires to pay a financial institution that has granted it a loan or credit.