Bank guarantee represents the means of securing of liability which due to its adoption to the needs of business transactions is often used in business practice. 

Bank guarantee is a security instrument for payment and it represents an irrevocable statement of the bank that a certain amount of money shall be paid in case of instructing party’s non-performance or disorderly execution of contracted obligation.

 

Regarding the types of bank guarantees, the most common in the domestic business practice are:

• Tender guarantee,
• Performance guarantee,
• Repayment guarantee
• Guarantee of quality,
• Guarantee for refunding of retained sum,
• Payment guarantee,
• Guarantee for securing of neat loan repayment,
• Customs guarantee:

 

Guarantees for one single import:

• customs procedure of putting the goods into free circulation, customs procedure with economic effect and temporary storage of goods;
• customs transit procedure.

 

Guarantees for more than one import:

• customs procedure of putting the goods into free circulation, customs procedure with economic effect and temporary storage of goods;
• customs transit procedure.    

You can download the Request for guarantee issuing here.

 

Calculation of expenses per guarantee is done according to the official tariffs of the Bank:
Request processing fee: up to 2,0% of the guarantee amount, flat, min BAM 50

 

Fee for guarantee issuing:      

• In the country  0,2% up to  0,5% per month, min BAM 200 for the total period
• For abroad  0,2% do 0,5% per month, min BAM 200 for the total period
• With confirmation of a foreign bank 0,5% up to 1,0 per month, min BAM 400 for the total period

In domestic operations, bank business is regulated by the Law on obligatory relations, the Law on banks and other financial institutions, and the Law on exchange transactions.

In international operations, guarantee for one single import is regulated by Uniform rules for demand guarantees Rules URDG 458, Publication ICC 458. (International Chamber of Commerce in Paris ICC) (Uniform rules for demand guarantees).
However since the Law on obligatory relations regulated only some issues, uniform rules may be applied in internal operations as well, like a contract rule for those issues which have not been regulated by the Law, as well as when contracting parties explicitly stipulate them.
International Chamber of Commerce has recommended using of all those rules which are in any way included into an every day practice of issuing of demand guarantees.
All issued and received guarantees, towards abroad or in the country are subject to the provisions of Bank's procedure for this area and/or Uniform rules for demand guarantees Rules URDG 458, Publication ICC 458 and local laws which are effective.

 

Documentary letter of credit

Documentary letter of credit represents an irrevocable statement of the Bank that it will pay a certain amount of money to the beneficiary of letter of credit upon the presentation of documents out of which it is obvious the goods have been delivered or services have been made within a determined period thereof, and completely in accordance with L/C conditions.
Documentary letter of credit is at the same time the payment instrument and the security instrument for payment.  
By its nature, letter of credit represents a conditionally assumed liability by the bank: payment is made only under condition that the beneficiary has neatly delivered documents required by the letter of credit.
Calculation of costs for letter of credit is done according to the official tariffs of the Bank:
Opening of a letter of credit with deposited cover:                          0, 3% flat, min. BAM 150
Opening of a letter of credit with no cover:
Unconfirmed:                                                                                          0, 2% up to 0, 5% monthly, min BAM 200 for the total period
Confirmed:                                                                                              0, 5% up to 1, 0% monthly, min BAM 400 for the total period

All issued and received letters of credit, towards abroad or in the country, are subject to the provisions of approved Bank's procedure for this area and Uniform customs and practice issued by International Chamber of Commerce in Paris, which are new and amended (approved on 24.10.2006 and applied in practice since 01.07.2007) Revision 2007. Publication 600 (UCP).
All issued and received authorities to reimbursement under letters of credit are subject to the provisions of approved procedure of the Bank for this area and Uniform rules of International Chamber of Commerce in Paris, Publication 725 (Revised and applied in practice since 01.10.2008).
Letters of credit are irrevocable and they may be: unconfirmed and confirmed.
Special types of letters of credit are also in use, namely: Stand-by, Revolving letter of credit, Transferable letter of credit and Back-to-back letter of credit.

When applying for a documentary letter of credit you also need to submit »order 1451«– Order for opening of letter of credit to the bank, which is available in every bookstore.

 

Documentary collection

Documentary collection is a payment operations instrument by which collection is made and payment respectively, based on the transfer of certain (usually transport) documents regarding the goods delivery in accordance with a contract made between a seller and a buyer.
Bank's obligation is related exclusively to acting upon the seller's order i.e. forwarding and »releasing« of documents under certain conditions.
This instrument is of somewhat higher degree of security than the remittance, but much lesser degree of security than the letter of credit.

 

Documentary collection may be used only if:

• There is a mutual trust between a seller and a buyer
• There is no doubt that a buyer is willing and is able to pay for the delivered goods
• political, economical and legal conditions in buyer's country are stable
• there are no import restrictions and special limitations in the importer's country or all importing permits have already been provided.

Documents can be handed over to buyer:

• with simultaneous payment (documents against payment –D/P) or (cash against documents –CAD)
• with acceptance of a bill (documents against acceptance –D/A)

 

Calculation of costs per documentary collection is done according to the official tariff of the Bank:
Issued and received collection:                                  0,2%, min. BAM 100
Acquiring of acceptance per bill:                                0,3%, min. BAM 20
Collection of bills without protest:                              0,3%, min. BAM 20
Received collection with executed protest of a bill:      0,4%, min. BAM 20                               

Documentary collection is subject to the provisions of Bank's procedure approved for this area and to Uniform rules of International Chamber of Commerce in Paris, Publication 522, as well as effective local regulations.

For all additional information regarding documentary business feel free to contact us.

 

 

 

Contact person:

Mira Jerinić, Foreign Payments and Documentary Business
Tel: +381 51 243 223,

fax: +381 51 243 302

E/mail: mira.jerinic@unicreditgroup.ba