A bank guarantee is a means
of securing obligations that:
- obliges the bank to pay the beneficiary the amount specified in the guarantee if the secured obligation is not fulfilled.
- improves liquidity by allowing you to optimise working capital and use funds for other business needs or growth when you use a credit line rather than your own funds to obtain the guarantee.
- creates opportunities for business development – allows you to buy or sell goods, participate in new projects and markets more safely.
- allows you to participate actively in procurement tenders, as many large-scale contracts or government projects require bank guarantees.
- reduces financial risk in transactions by providing the beneficiary with financial assurance that obligations will be fulfilled.
- is irrevocable and independent of the underlying contract, i.e., upon receipt of a demand that complies with the terms of the guarantee, the bank pays it unconditionally, without examining any disputes between the applicant and the beneficiary of the guarantee regarding the performance of the obligations specified in the guarantee.
Types of guarantees
Ensures the payment of the amount specified in the guarantee to the organiser of the tender if the tender participant fails to comply with the terms and conditions of the tender.
Ensures the payment of the amount specified in the guarantee to the buyer if the seller fails to fulfil the terms and conditions of the contract.
Ensures the payment of the amount specified in the guarantee to the beneficiary if the applicant fails to meet their payment obligations.
Ensures that the buyer will receive a refund of the advance payment made to the seller if the seller fails to fulfil the terms and conditions of the contract.
Ensures the payment of the amount specified in the guarantee to the buyer if the seller fails to fulfil their warranty obligations under the contract.
Why choose a guarantee
from Artea Bank?
Flexibility
We issue guarantees in both local and foreign currencies, in Lithuanian or English languages.
Tailored solutions
We can draft a guarantee in accordance with the bank’s standard text or your own text, taking into account market practices and legal requirements.
ILTE guarantees
The possibility to obtain a credit line for bank guarantees using ILTE portfolio guarantees.
International access
You will be able to use our network of correspondent banks – we advise international guarantees securely and quickly via the SWIFT system.
International standards
All guarantees issued by the bank are subject to the Uniform Rules for Demand Guarantees (URDG 758) issued by the International Chamber of Commerce.
Accessibility online
You can track all information about the guarantees issued in your online bank.
Bank guarantee
process
The applicant and the beneficiary agree on the issuance of a guarantee to secure obligations.
The applicant submits an application to the bank for the guarantee issuance.
Upon granting the approval the bank issues the guarantee in favour of the beneficiary.
The guarantee may be issued in electronic or paper form or be advised via the beneficiary’s bank using the SWIFT system.
If the applicant fails to perform its obligations, the beneficiary of the guarantee has the right to submit a demand for payment to the bank that issued the guarantee. The bank pays the amount demanded if the demand complies with the terms and conditions of the guarantee.
The guarantee is valid until the end of the expiry period specified therein.
Are you an applicant seeking a guarantee for your company?
Fill out the Guarantee Issuance Application and submit it to your corporate client manager at our bank. If the application is submitted in electronic form, it must be signed with a valid qualified electronic signature of your company’s head.
Are you a beneficiary and wish to receive a guarantee issued by a bank in another country via the SWIFT system through our bank?
Please provide the SWIFT code of Artea (CBSBLT26) to the applicant. The bank issuing the guarantee will advise it to our bank via the SWIFT system, and we will inform you about the received document.
We understand your goals and appreciate your individual circumstances. Adapting to your needs is our mission. Yours is to build your future with confidence.
Frequently Asked Questions
Detailed information about the guarantees issued by our bank can be accessed by logging into the Internet Bank section Credits and leasing → Guarantees.
- You must be a corporate client of Artea Bank and have a bank account with us.
- You must provide a financial collateral – your own funds deposited in a special bank account (except in cases where the amount of the financial collateral is transferred to a special account as an advance payment by the beneficiary), or a credit line granted to your company by the bank for the purpose of issuance of guarantees.
- You must have a contract, tender specification conditions or other document stipulating the need for a bank guarantee.
Usually, the bank issues a guarantee within 2–3 business days of receiving a properly filled out and signed Guarantee Issuance Application from the client, after the financial collateral and/or other measures to secure the fulfilment of obligations specified in the application have been provided and the fees related to the issuance of the guarantee have been paid.
If the guarantee is required urgently (by the end of the next business day), please indicate the desired deadline for issuance of the guarantee in your application.
If you wish to change the terms of the guarantee, please fill out the Application for Guarantee Amendment. The bank will amend the terms of the guarantee by issuing a guarantee amendment. If the guarantee amount is decreased or its validity term is shortened, the amendment shall only take effect upon receipt of the beneficiary’s written consent to the guarantee amendment.
The guarantee may only be terminated when the bank receives a written document from the beneficiary waiving its rights under the guarantee.
Yes, in this case we will issue the guarantee indirectly: we will ask this bank to provide its direct guarantee to the beneficiary, and we will provide a counter-guarantee to this bank to secure the fulfilment of our obligations.
Information about the ratings assigned to our bank by international agencies can be found on the bank’s website under Bank investors: Ratings granted by international agencies.
A bank guarantee and a standby letter of credit are similar financial instruments used to secure the performance of obligations, but they differ in their application, regulation, structure and practices.
Bank guarantees are more commonly used in Europe and are often subject to the Uniform Rules for Demand Guarantees (URDG 758) issued by the International Chamber of Commerce. They are less standardised and can be better tailored to individual needs.
Standby letters of credit are much more common in the US; they are usually governed by the International Chamber of Commerce’s International Standby Practices (ISP98) or the Uniform Customs and Practice for Documentary Credits (UCP 600), and are more standardised.
Log in to your online banking account and submit a free-form request to the bank to verify the authenticity of the guarantee received, attaching a copy of the guarantee. The bank will verify the authenticity of the document by contacting the bank that issued the guarantee via the SWIFT system and will inform you of the result.
The beneficiary may submit an unjustified demand for payment. Upon receiving a demand that complies with the terms of the guarantee, the bank that issued the guarantee is obliged to pay it unconditionally, without requesting additional proof of the breach and without examining disputes between the applicant and the beneficiary regarding the performance of the obligations specified in the guarantee.
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