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Guarantee

Guarantee

Securing obligations to you

  • The bank undertakes to pay unconditionally to the beneficiary of the guarantee under the guarantee terms
  • The option of replacing advance payment with an obligation to pay
  • The guarantee may be subject to international rules

A bank guarantee is a security that allows managing risk related to loss should the trade partner or service provider default on his obligation. By issuing a guarantee, the bank undertakes to pay the beneficiary a specific amount of money at his request, which specifies that the guarantee holder has violated the obligation secured by the guarantee and the content of violation.

Apart from minimising the risk of contracts and ensuring fulfilment of obligations by parties to the contract, the service helps to improve mutual trust between business partners. The guarantee, however, does not protect from the risk of unfairness of the other party because payment is made at a request that meets the terms of the guarantee without requiring to prove the violation.

Basic features

  • The guarantee ensures compliance with obligations, but this is not a settlement method.
  • The bank's commitment does not depend on the terms of the contract between the guarantee holder and beneficiary.
  • The guaranteed amount is paid at the beneficiary's request that meets the terms of the guarantee without requiring to prove the violation.

Basic types and purpose of guarantees

Type of guarantee The bank undertakes to pay the guarantee amount:
Tender guarantee for a company/organisation calling for tender if tenderer fails to fulfil tendering requirements
Performance guarantee for buyer of goods or services if seller fails to fulfil its obligations, e.g. to dispatch goods
Advance repayment guarantee for buyer who makes advance payments for goods or services if seller defaults on delivery
Payment guarantee for seller of goods or services if buyer fails to pay for delivered goods or services
Credit repayment guarantee for lender if borrower fails to repay the credit
Promissory note guarantee for creditor if debtor fails to pay the promissory note
Guarantee term obligations guarantee for buyer of goods or services if seller defaults on guarantee term obligations

Guarantee fees applicable to stand-by letters of credit!

Guarantees and sureties Charges
Guarantee (SEB Bank’s standard letter of guarantee text*) or surety issuance 0.5 % of the guarantee amount
(min. EUR 100) and 30 EUR, if paper application is submitted. If funds are not deposited, an agreed commitment fee is applied
Guarantee issuance (non-standard letter of guarantee text) 0.6 % of the guarantee amount
(min. EUR 150) and 30 EUR, if paper application is submitted. If funds are not deposited, an agreed commitment fee is also applied
Other fees related to guaranties and sureties Charges
Urgent delivery of guarantee / amendment of guarantee** Guarantee delivery / amendment fee plus min EUR 150
Change to guarantee (surety) terms and conditions, including a reduction of a relevant amount EUR 45 and 30 EUR, if paper application is submitted
Confirmation of authenticity of the guarantee or its amendment at the customer’s request EUR 45
Advice of guarantee (surety) or of its amendment EUR 45
Cancellation of the request to issue a guarantee (surety) EUR 45
Handling of request for payment under the guarantee (surety) 0.1 %, min. EUR 190
Confirmation of signature of the person who signed request for payment and / or dispatch of request for payment under the guarantee as agreed, min. EUR 60
Preparation of request or information related to the guarantee at the customer's request EUR  25
Drafting of the guarantee or deal structure as agreed, min. EUR 45
Dispatch of documents abroad by courier EUR 55
Dispatch of documents in Lithuania by courier EUR 20

  * SEB Bank’s standard-text letters of guarantee are available at www.seb.lt

** Urgent delivery of a guarantee / amendment of a guarantee is performed within one business day since the moment in time when relevant request, correctly filled out and duly signed, is submitted to our bank. When filing a request, any and all terms and conditions of Guarantee Issuance Agreement must be met.


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