Guarantees (sureties) are provided by the Bank under conditions outlined in a guarantee (surety) agreement, the following being mandatory:
Enforceability. The Bank has the right to protect its interests, prevent losses caused by the non-payment of a debt as a result of the principal's insolvency.
Definite term. Guarantees (sureties) are made for a fixed term, set forth in an agreement.
Repayment. The principal repays the debt covered by the Bank according to the guarantee (surety).
Payability. The guarantee (surety) is made against a relevant payment.
Credit purpose. Requires the availability of documents, confirming the principal's obligations, which are secured by the guarantee (surety).
A guarantee (surety) can be granted to all legal entities and private individuals involved in business activities, registered as private entrepreneurs, having the realistic capability to meet their obligations under a guarantee agreement.
Resolution of guarantee (surety) provision issues is preceded by an analysis of the financial-economic activities of the potential principal, determination of his creditworthiness and solvency. To do this, when turning to the Bank, the client must present all necessary documents (see attached list).
The fee for the use and repayment of a guarantee (surety) is determined by the Bank in accordance with a resolution of its credit committee and is fixed in a guarantee (surety) agreement.
According to existing Aval tariffs, commission for guarantee (surety) provision is 2 -3% of the guarantee amount per quarter, min — UAH 400.
Payment of the commission to the Bank is made in advance, once per quarter. If the guarantee term is less then 90 days, commission is paid for the actual number of days of guarantee use.
A guarantee can be used either in cases where both parties are residents of Ukraine, or in cases where one of the parties is a non-resident.
Aval issues both direct and indirect guarantees (counter-guarantees):
Direct guarantees are issued by the guarantor on the principal's orders directly to the beneficiary.
If a counter-guarantee is required, Raiffeisen Bank Aval addresses another bank with a request to provide a guarantee in favour of the beneficiary.
Raiffeisen Bank Aval issues the following guarantees:
Payment guarantee: the guarantor's obligation to pay money in favour of the beneficiary if, in accordance with this obligation, the latter produces a written payment demand and, if necessary, other documents. As a rule, a payment guarantee supports a seller's claim against a buyer regarding payment of the contract value within the determined timeframe.
Loan repayment guarantee: the guarantor's obligation to pay a creditor's payment demands if the debtor fails to meet his financial obligations in accordance with the loan agreement.
Tender guarantee: the guarantor's obligations provided on the request of the principal to the party conducting the tender (beneficiary), according to which the guarantor (should the principal fail to meet his obligations) undertakes to pay the beneficiary a sum, within the limits of the amount defined in the guarantee.
Performance guarantee: the guarantor's obligation, provided on the request of the principal (seller, supplier), to a beneficiary, according to which, the guarantor undertakes to pay the latter a certain amount within determined limits, or (if foreseen by the guarantee) to guarantee the execution of the agreement drawn up between the beneficiary and principal, should conditions be inadequately executed by the latter.
Repayment guarantee: the guarantor's obligation, provided on the request of the principal to a beneficiary whereby the guarantor should make a payment in favour of the latter if, in accordance with the conditions of the agreement, the principal fails in his obligations to repay any amount or amounts in the form of advances or paid to him by the beneficiary
Validity term of a guarantee (surety) agreement or a guarantee letter shall be agreed by the parties and shall be recorded in the guarantee (surety) agreement.
Guarantee (surety) agreement shall be terminated when:
The amount set forth in the guarantee is paid to the beneficiary;
Validity term of guarantee (surety) is expired;
Beneficiary waives his rights under the guarantee (surety) by filing a written application, releasing the guarantor from his obligations;
Original guarantee letter is returned.
The validity period of a counter guarantee should be longer than that of the guarantee. This is related to the necessity for the guarantor to receive compensation from the counter-guarantor of the amounts paid according to the guarantee. According to international practice, the validity period of a counter-guarantee is, as a rule, 14 days longer than that of the guarantee.
Raiffeisen Bank Aval has considerable experience in granting guarantees to dealers of companies — tobacco product manufacturers (Reemtsma Ukraine, a foreign investment company, JT International Company Ukraine CJSC, and Philip Morris Ukraine). Aval also provides guarantees to agencies which sell airline tickets on behalf of the IATA Association, as well as to British Airways, Aeroflot, Ukraine International Airlines and others.
Enforceability. The Bank has the right to protect its interests, prevent losses caused by the non-payment of a debt as a result of the principal's insolvency.