Bank guarantee: a document issued by a bank on behalf of a customer to pay the guaranteed party a certain amount of money if the customer fails to fulfil or improperly fulfils its obligations specified in the guarantee.
Types of guarantees issued by DnB NORD bankas :
- Bid bond prevents the buyer from failure to fulfil a commercial bid as well as from inconsiderable bids;
- Performance bond prevents the buyer from failure to perform obligations provided for in the agreement;
- Advance repayment guarantee ensures the advance to be paid back to the buyer in case of failed transaction;
- Payment guarantee ensures payment when due;
- Quality guarantee ensures compensation for non-qualitative goods.
Other types of guarantees are also issued taking into account a particular transaction.
Procedure for guarantee issue. DnB NORD bankas issues guarantees:
- Upon cash security or demand deposit collateral;
- Collateralised property;
- Against a guarantee or indemnity letter issued by a reliable bank.