Open website’s mobile version Top

Business

Bank Guarantees

Bank Guarantees

Bank guarantee ensures the buyer's solvency

  • Decreasing the risks associated with advance payments
  • Easy payment claim submission
  • Handling according to international rules

A bank guarantee is the bank’s obligation to pay the beneficiary of the guarantee the amount specified in the letter of guarantee, if the guaranteed obligation is not fulfilled. As a rule, the beneficiary does not need to prove to the bank the violation of the guaranteed obligation.

A bank guarantee is a separate obligation, which is not legally bound by the purchase and sale contract. The claims submitted under a letter of guarantee are paid by the bank on demand. The bank can issue letters of guarantee for securing various obligations, e.g. a payment or advance payment guarantee, bid bond, performance guarantee or warranty bond. A letters of guarantee also enables securing of loan obligations, obligations arising from lease contracts and obligations before the Tax and Customs Board.

We issue foreign guarantees in accordance with the international rules URDG 758 (Uniform Rules for Demand Guarantees) and the Estonian legislation. Domestic guarantees are issued in accordance with the Estonian legislation.  

Payment guarantee
The bank guarantees payment to the seller of the goods, if the buyer has not fulfilled their payment obligation by the payment date.

Advance payment guarantee
The bank guarantees to the buyer returning the advance payment, if the seller does not deliver the goods for the specified amount. The advance payment guarantee is issued usually before making the advance payment, but it becomes valid after the advance payment is made.

Bid bond (tender guarantee (bond))
The bank guarantees that a person who participates in a public tender will not take back their bid and will enter into a contract on the offered terms. Usually, the amount of a bid bond (the amount received by the person who organised the tender as compensation) is 2-5% of the bid amount.

Performance guarantee (bond)
The bank guarantees due performance of a contract, e.g. providing a service or doing a job. In such case, the secured amount is a contractual penalty or any other amount demanded by the beneficiary of the guarantee.

Warranty bond
The bank guarantees the payment of penalty, if anything happens with a secured device or building during its warranty period.

Customs surety
The bank guarantees payment of tax arrears to the Tax and Customs Board.

See also standby letter of credit.

Example of transaction for a payment guarantee

  1. The buyer and the seller enter into a purchase and sale contract, in which they agree that the buyer’s payment obligation is secured with the buyer’s bank guarantee.
  2. The buyer submits an application to their bank for issuing a guarantee in favour of the seller.
  3. The buyer's bank issues a letter of guarantee by mail or e-mail to the seller or via the seller's bank. For a foreign guarantee, the seller may request that the guarantee is issued by their own bank in conformity with the local legislation or in the local language. In such case, the bank shall issue a counter-guarantee to the seller’s bank, which will issue its own letter of guarantee pursuant to the instructions of the buyer’s bank.
  4. The seller dispatches the goods to the buyer according to the conditions agreed upon in the contract. Then the seller submits the required documents to the buyer and asks the buyer to pay for the goods by the agreed payment date.
  5. If the buyer pays the required amount to the seller by the payment date, the guarantee expires unapplied.
  6. If the buyer does not pay the required amount, the seller shall submit a written claim to the bank, in which they request the settlement of the unpaid amount under the letter of guarantee.
  7. After verifying the validity of the claim, the buyer’s bank shall pay the requested amount to the seller.
  8. The buyer’s bank informs the buyer of the claim and the buyer will pay the requested amount to their bank.

Before you apply for a bank guarantee, we recommend that you agree on the terms of the transaction with your business partner , including the required type of guarantee, its amount, term (validity period) and how the bank is to forward the letter of guarantee to its recipient.

Several options for submitting an application

If you complete an application in the PDF format, e-mail it along with any other required documents to .

If you would like a consultation at the branch, kindly contact our corporate client executive or e-mail us at

Documents required for applying:

  • application on the SEB form.
  • contract (guarantee of performance) or invoices (guarantee of payment) concerning which the issuing of a letter of guarantee is being sought (for a guarantee for a bid, the contract notice, unless this has been published on the website used to publish contract notices);
  • annual report for the last financial year and the most recent interim report for the current financial year (the most recent financial information must not be older than 120 days);
  • permits and licences required in the business operations of the applicant;
  • expert assessment for any real estate collateral (may be prepared up to six months before the application is submitted);
  • if a guarantee by a legal entity is being proposed as collateral, the annual report for the last financial year and the most recent interim report for the current financial year (the most recent financial information must not be older than 120 days);
  • for a surety by a private individual, the guarantor’s personal information sheet.

Depending on the project, the bank may also require other documents necessary for analysing the application.

Any reports submitted need to be approved by the director of the company and, if so required by the bank, also by its auditor.

Once the guarantee contract has been concluded, if you would like a letter of guarantee issued under the guarantee limit, you will need to submit

  • application on the SEB form;
  • contract (guarantee of performance) or invoices (guarantee of payment) concerning which the issuing of a letter of guarantee is being sought (for a guarantee for a bid, the contract notice, unless this has been published on the website used to publish contract notices).

Amendment of a bank guarantee

E-mail the PDF file of the application along with the other required documents to .

Guarantee issued by AS SEB Pank  
1. Agreement conclusion and/or amendment as agreed
2. Fee for issuing a letter of guarantee under a limit agreement EUR 95
3. Guarantee fee determined as a percentage rate individually for each applicant on the basis of the client's risk and the validity of the guarantee, min. EUR 95
Fee for issuing a letter of guarantee with special wording EUR 150
5. Preparation of a draft or a guarantee or an amendment EUR 70
6. Payment of claims filed on the basis of guarantee 0.1% of the amount of claim, min. EUR 150
7. Amendment of a guarantee (the relevant guarantee fee is added if the amount is increased and the validity extended) EUR 95
8. Cancellation of a guarantee EUR 70
9. Default interest (calculated on any debt from due date until actual date of payment) 0,5% per day
10. Information processing and forwarding fee (added to foreign guarantees) depending on costs, min. EUR 10
11. Handling of documents or their drafts and payment fee 0,15% of the amount of documents, min. EUR 95
Guarantee received by a client of AS SEB Pank  
1. Advising EUR 70
2. Advising of an amendment EUR 70
3. Filing a payment claim to the bank that issued the guarantee when requested by client EUR 100
4. Preparation of the draft of a guarantee, an amendment or a claim depending on costs, min. EUR 70
5. Verification of the guarantee authenticity EUR 70
6. Advising the issuing bank of cancellation of a guarantee EUR 70
7. Information processing and forwarding fee depending on costs, min. EUR 10
8. Handling of documents or their drafts and payment fee 0,15% of the amount of documents, min. EUR 95

NB! The services charges of another bank may be added if another bank is used.
AS SEB Pank reserves the right to charge for additional services and/or time-consuming transactions in addition to the price list.

Base rates

Valid as 16.08.2019
1-month EURIBOR® -0,4230
3-month EURIBOR® -0,4200
6-month EURIBOR® -0,4270
12-month EURIBOR® -0,3850
EONIA® -0,3640
Bank's base interest 0,0000
EURIBOR® historical data
EONIA® historical data

 

Contact

S|E|B

Tähelepanu! Teie veebilehtiseja ei vasta SEB kodulehe külastamiseks vajalikele nõuetele. Palun vahetage veebilehitsejat või seadet, millega te veebilehte sirvite.

Attention! Your web browser does not correspond to the requirements needed to visit SEB website. Please change web browser or device that you use for browsing the site.

Внимание! Ваш браузер не отвечает требованиям, необходимым для посещения сайта SEB. Просим поменять браузер или устройство, при помощи которого вы производите поиск в браузере.