A bank guarantee is a service that allows businesses to effectively interact and minimize risks at the same time. The bank takes them over. We can talk about the conclusion of an agreement after the tender, the fulfillment of all the terms of the agreement, the return of the advance payment. In this case, the bank acts as an intermediary who is trusted by both parties to the transaction. ConcordBank has prepared answers to the questions most often asked in connection with this service.
When did the bank guarantee appear and who uses it most often?
The bank guarantee appeared almost simultaneously with the banks. The negociants of Renaissance Genoa and Venice, their colleagues in Amsterdam and Ghent, used the guarantees of famous trading houses to establish new contacts.
In Ukraine, a bank guarantee was especially widespread in 2016, after the entry into force of the Law "On public procurement", according to which most of the contracts with state bodies and local councils are carried out as a result of tenders held in the ProZorro system and involves mandatory tender guarantees. They were issued by both banks and insurance companies. But gradually, due to the stricter regulation of banks' work, customers began to increasingly prescribe a mandatory bank guarantee in the conditions.
“ConcordBank started providing this service in 2016 in response to the demand for tender guarantees from our clients. Since then, we have guaranteed transactions worth more than UAH 3 billion. The largest payment of the guarantee by the bank was UAH 17 million, ”says Yuriy Zadoya, Chairman of the Board of ConcordBank.
In addition to the tender guarantee, ConcordBank offers guarantees for tour operators, a guarantee for the fulfillment of contractual obligations and other types of bank guarantees.
Who can use the bank guarantee service?
According to Yuri Zadoi, there are no restrictions. But it is important to understand that the process of making a decision to grant a bank guarantee is in many ways similar to making a decision to issue a loan. Bank experts find out to what extent the parties to the transaction are able to fulfill their obligations. And if the risks are too high, the bank may refuse to provide a guarantee.
Does the bank guarantee always get paid?
There are situations when clients - the customer or the contractor - do not behave quite within the law. In this case, the bank may raise a question about the legality of the tender, signs of fraud or unfair behavior of the parties. Consideration of the legality of payments can be carried out both within the framework of negotiations and in court in accordance with the terms of contracts and current legislation.
“This does not mean that the bank will refuse to pay the guarantee. This means that the bank is committed to strict compliance with Ukrainian legislation and contractual norms. In case of disagreement, the bank is ready to comply with the final decision of the court, whatever it may be. Fortunately, such situations are extremely rare, ”said Yuri Zadoya.
How to use the bank guarantee service?
You can use this service either by leaving an application on the website, or by contacting the ConcordBank Documentary Operations Department by phone: +38 (073) 443 0227.
