Letters of credit and guarantees
Bank Respublika offers to clients financing of trade transactions from lines of credit from foreign banks opened for the Bank. Using inexpensive foreign resources allows for offering to clients attractive banking services that help conduct business more successfully and favorably.
Using such services provided to purchasers of goods allows for avoiding earmarking funds or making advance payments to the supplier of goods. Instead the issuing bank issues a letter of credit or guarantee, after which the supplier ships the goods to the purchaser. Thereafter, the supplier presents relevant documents to his bank (beneficiary’s bank), which pays for the goods and forwards the documents to the issuing bank. The issuing bank pays to the beneficiary’s bank and charges the paid amount to the purchaser of the goods. As a result, both the supplier and purchaser of the goods benefit.
Bank Respublika offers to corporate clients the following documentary foreign trade services:
- Documentary letters of credit
- International bank guarantees
- Stand-by letters of credit
- Documentary collection
Letters of credit
Bank Respublika offers to corporate clients a full set of Documentary Letter of Credit services.
How the Purchaser benefits by using a letter of credit:
- Guarantee of receipt of goods by the Purchaser only upon completion of his contractual obligations
- Guarantee of receipt of goods/services in accordance with the conditions and timeframes specified in the letter of credit
- Guarantee of creditworthiness and demonstration of holding of advanced financial instruments (availability of discounts)
- Flexible approach to payment terms
- Deferral of payment
How the Vendor benefits by using a letter of credit:
- Guarantee of receipt of payment for goods/services regardless of the purchaser (upon completion of all terms and conditions of the letter of credit)
- Possibility of earlier payment than upon delivery of goods to the purchaser
- Guarantee of receipt of payment for goods/services in accordance with the terms and timeframes specified in the letter of credit
- Possibility of implementing complex commercial contracts through the flexible scheme of letter of credit
Bank Respublika offers the following types of guarantees to clients:
- payment guarantee
- bid bond
- performance bond
- advance payment guarantee
- warranty performance guarantee
- loan repayment guarantee
- advice of guarantees
- issuance of guarantees against counter guarantees of other banks
Close partnership of Bank Respublika with leading international financial institutions allows for providing clients with letters of credit and guarantees asserted by first class international banks.
Since 2004 Bank Respublika has been a member of the International Trade Support Program of the European Bank for Reconstruction and Development, which allows for opening lines in all large banks of the world. In 2005 agreements were reached with Bank Gesellschaft Berlin for long-term financing of supplies of goods and equipment from Germany to Azeri companies. Also, cooperation has been successful with CitiBank, Commerzbank, Deutsche Bank, Dresdner Bank AG, HSBC, Banco de Sabadel, Raiffeisen, Agricole, Societe Generale, Nordea, Savings Bank, Vneshtorgbank, etc. Guarantees and letters of credit issued by Bank Respublika are ascertained by over 600 first-class banks of the world.
To formalize trade finance transactions the client applies to the Bank. Following a preliminary interview with the loan officer he fills out an application for opening a letter of credit or guarantee, which provides information about the applicant, his business activity and financial position, goals and amount of the requested financial instrument.
The client needs to present to the Bank a contract with a foreign partner containing a provision regarding settlements by means of the letter of credit or provide for receipt of a bank guarantee. Upon completion of a preliminary review the application will be reviewed by the Bank’s credit committee and following approval the financial instrument will be provided.