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Corporate and
Investment Banking
Trading with confidence
with bank guarantees
Bank Guarantees
Standard Bank – your trade partner in, for and across Africa
Trading with confidence with
bank guarantees
Requesting bank guarantees in a commercial contract is a
common practice in the market. In large-scale transactions,
especially in international trade, it goes without saying that
bank instruments that secure performance and payment
obligations are a vital part of managing risk in business.
When concluding contracts, it is prudent to partner with
a bank that has the cross-border transactions expertise
and knowledge of international trade to provide tailored
solutions and sage advice.
Among national and international banks, Standard Bank is a
preferred trade bank with the client base and accolades to
stand testimony to our capabilities.
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Bank Guarantees
Types of guarantees matched to
your needs
Standard Bank facilitates the issuance of this guarantee on
your behalf, and also receive on your behalf the advance
payment amounts to your accounts held with us.
Standard Bank can advise on and issue guarantees on your
behalf. We also provide guarantees to you on behalf of our
international bank clients when requested by your clients.
Retention guarantees
Tender guarantees
Also known as a bid bond, a tender guarantee discourages
companies from submitting tenders only to:
Securing performance and
payment obligations
Through bank guarantees, Standard Bank provides you and
your contracting parties with assurance through a written
undertaking that the terms and condition of the contract
will be met. This is crucial for international trade, where you
enter into commercial contracts with parties from different
legal and cultural backgrounds.
Standard Bank intervenes and provides you and
counterparties with the assurance we will pay a
predetermined amount of money in the event of default.
When purchasing goods or services offshore, it is difficult to
assess the potential expertise or financial prospects of your
supplier of goods and services. For this reason, you should
request your counterparties to provide a bank guarantee
that the supplier will perform as agreed. Standard Bank
facilitates the issuance of this guarantee to you through
our widespread network of international banks, that covers
where your counterparties are banked.
Sellers of goods can also require you to provide guarantees
to secure your payment obligations.
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•
withdraw from the tender before its expiry
Why Standard Bank?
•
attempt to amend the tender
•
refuse to sign the contract when awarded to them
With over 150 years’ experience, representation in 20
countries in Africa and key financial centres, Standard Bank
is best equipped to connect your company to Africa and to
the world.
•
fail to furnish the required performance bond or other
required guarantees.
We have well-established partnerships with banks in
countries where we are not present to facilitate the
issuance of guarantees where a local bank is required.
However, Standard Bank guarantees are generally
acceptable by beneficiaries world-wide.
Our in-house specialists bring in-depth knowledge and
experience to bear on all aspects of your international trade
needs. These specialists have comprehensive knowledge and
wide-ranging experience in different legal regimes in Africa.
We support you with international best practices as outlined
in the International Chamber of Commerce rules (ICC).
With a guarantees book in our Africa operations in excess of
R40 billion, Standard Bank has the scale and experience to
issue guarantees in Africa and beyond. In choosing Standard
Bank as your financial partner and guarantor bank, you can
rest assured that your transactions are in good hands and
you can trade with confidence.
In helping you to secure the contract, we can issue
these guarantees on your behalf when tendering for a
contract where tender guarantees are required with
tender documents.
Performance bonds
Once a tender has been awarded to you, you may be called
to issue a performance guarantee to guarantee performance
under the contract. Standard Bank can help you structure
and issue a performance bond to satisfy the request of
the company.
Advance payment guarantees
Following the award of a tender, you may require an
advance payment before you commence the contract.
In return, your client may require an advance
payment guarantee.
A contract may permit your client to retain a certain
percentage of payments due to you as security against
latent defects on your workmanship.
Standard Bank can issue this guarantee on your behalf so
you have immediate release of retention money that would
otherwise be withheld for the retention period.
Warranty/maintenance guarantees
This type of guarantee protects your client by covering the
cost of any defect or malfunction that may manifest itself
after the completion of the project.
Standard Bank can help you structure and issue this
guarantee to satisfy the requisite requirements.
Facility guarantee
While this is not normally trade-related, it provides security
to another bank to advance money to a related company. It
is often used when the company does not have any credit
record and wishes to expand offshore.
Standard Bank can issue this guarantee to the lending bank
to support your related company when looking to borrow
monies or for general credit facilities with a particular bank.
Shipping guarantees and airway release
guarantees
This guarantee mitigates the risk of liability where shipping
documents have been lost or delayed.
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Standard Bank can issue this guarantee to indemnify a
shipping company against any liability that may arise from
releasing imported goods to the consignee without the
documents of the title (bill of lading).
Standby letter of credit
This has similar wording to other documentary credits but
includes the qualities of a demand guarantee as it provides
you with security of payment in the event of default.
Contact us for expert advice and
information on guarantees in, for
and Africa
For further information on our products and
services, contact:
Email: [email protected]
Standby letters of credit are predominantly used in the
United States where banks are legally barred from issuing
certain types of guaranties.
We work with you on negotiating
contracts and issuing guarantees
to give you the edge in
international trade
Our Trade Sales Managers can advise you on the type of
guarantee to meet your specific needs and assist you with
wording the guarantee. This ensures that you enter into a
contract with the backing of a bank with the experience and
capability to help your business succeed.
Disclaimer
This document has been prepared solely for information purposes by The Standard Bank of South Africa Limited, acting through its Corporate and Investment Bank Division (“SBSA”). Any
indicative terms provided to you are provided for your information and do not constitute an offer, a solicitation of an offer, invitation to acquire any security or to enter into any agreement,
or any advice or recommendation to conclude any transaction (whether on the indicative terms or otherwise). Any information, indicative price quotations, disclosure materials or analyses
provided to you have been prepared on assumptions and parameters that reflect good faith determinations by us or that have been expressly specified by you and do not constitute advice by
us and it should not be relied upon as such. The information, assumptions and parameters used are not the only ones that might reasonably have been selected and therefore no guarantee is
given as to the accuracy, completeness, or reasonableness of any such information, quotations, disclosure or analyses. No representation or warranty is made that any indicative performance
or return indicated will be achieved in the future. This document is not an official confirmation of terms, and any transaction that may be concluded pursuant to this document shall be
in terms of and confirmed by the signing of appropriate documentation, on terms to be agreed between the parties. The information in the document is also subject to change without
notice. SBSA, or an associated company, may have effected or may effect transactions for its own account in any investment outlined in the document or any investment related to such an
investment. Prospective investors should obtain independent advice in respect of any product detailed in this document, as SBSA provides no investment, tax or legal advice and makes no
representation or warranty about the suitability of a product for a particular client or circumstance. Transactions described in this material may give rise to substantial risk and are not suitable
for all investors. SBSA will only provide investment advice if specifically agreed to by SBSA in appropriate documentation, signed by SBSA. This information is to be used at your own risks, and
SBSA makes no representation with regards to the correctness of the information herein.
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Authorised financial services and registered credit provider (NCRCP15)
The Standard Bank of South Africa Limited (Registered Bank) Reg. No. 1962/000738/06 SBSA 182806-7/14