EURO EXIM BANK
Bank Guarantee Services
A bank guarantee is an undertaking by a bank to pay a beneficiary if the bank's customer fails to meet an obligation owed to that beneficiary. Bank guarantees are exclusively issued by Euro Exim Bank Ltd in St. Lucia, under its Class "A" international banking licence from the Financial Services Regulatory Authority.
A guarantee lets a company commit to work it could not otherwise take on, which supports business growth and entrepreneurial activity. Euro Exim Bank issues performance guarantees, without requiring cash cover of the same value.
Seven forms are issued: advance payment guarantee, retention guarantee, bid bond guarantee, tender bond guarantee, deferred payment or trade guarantee, foreign bank guarantee, and performance bond guarantee.
Bid bonds and tender bonds both sit behind a bid. The bidder asks us to issue, and the guarantee runs in favour of the party inviting the tender. What it secures is that the bidder will not withdraw or amend the bid while it stands, and that if the bid wins, the bidder will sign the contract or produce the performance guarantee the tender documents call for. Procurement and construction tenders ask for these as a matter of course, and the format is usually specified by the party running the tender rather than chosen by the bidder. Send us the wording the tender documents require and we will work to it.
The applicant applies to Euro Exim Bank, submitting an application, the underlying agreement and other necessary documentation. Euro Exim Bank evaluates the applicant and assesses the risk involved in issuing the guarantee, which may include financial standing, business reputation and ability to fulfil the terms. A draft instrument and a quote follow. Once issuance fees are paid, the guarantee is issued to the advising bank in the beneficiary's country, where the beneficiary verifies that it meets the requirements specified in their contract with the applicant. If the guarantee expires without being drawn upon it becomes null and void, and depending on the agreement it may be renewed or extended. Once obligations have been fulfilled or the instrument has expired unused, it is closed and any collateral or security provided by the applicant is released.
Onboarding comes first. A member of the team makes contact within two working days of an enquiry and provides an E-KYC consent letter and a request to begin the KYC process. The E-KYC fee is non-refundable and is not adjusted against issuance fees, and third-party payments are not accepted. Once the fee is paid, the required documents are uploaded through the client KYC portal, where a third-party provider reviews the submission and advises on anything outstanding.
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Frequently asked questions
What does cash cover mean, and why does it matter?
Cash cover is a deposit of the same value as the guarantee, held by the bank for the life of the instrument. Many banks will issue a guarantee only on that basis, which solves the bank's problem by immobilising the applicant's money for the whole term. Euro Exim Bank issues performance guarantees without requiring cash cover of the same value. Security requirements are set case by case against the instrument and the underlying contract.
Which type of guarantee do I need?
Usually whichever one the contract or the tender document already names, and the terms are ordinarily set by the party asking for it rather than chosen by the applicant. A bid or tender bond supports a bid. A performance bond sits behind delivery. An advance payment guarantee sits behind an advance the buyer has already paid. A retention guarantee stands in place of retention money held back. Send the clause that asks for the guarantee and it can be read against what is issued.
Who funds an advance payment guarantee?
The buyer funds the advance. The guarantee is issued so the buyer can recover that advance if the supplier takes it and does not perform. It secures a payment that has already been made and does not release funds to either party. This one is worth stating plainly because it is the guarantee most often described the wrong way round.
Do you issue for oil and gas work?
Performance bonds and guarantees for companies servicing the oil and gas sector are within scope, covering pipeline work, maintenance, logistics and oilfield services. What the guarantee secures there is contract performance. Instruments covering the import or physical trade of the commodities themselves are treated as high risk and are rarely issued, and the same applies to sugar, gold, dore, precious metals and diamonds. Where a transaction involves those goods, say so at the outset so it can be assessed before any fees are paid.
My bank has already declined. Does that matter?
It depends entirely on why. A bank that has reached its own concentration or exposure limit for a sector, a country or a single customer is describing its balance sheet and not your business, and that is the most common reason a growing importer runs out of room at a bank it has been with for years. Euro Exim Bank is a second trade finance relationship alongside your existing bank rather than a replacement for it, and your application is assessed on its own terms.