The bank guarantee is an irrevocable undertaking of a bank to pay the sum of money in case of non-performance of the contractual obligations.

The payment under guarantee is made against first beneficiary's demand, indicating that the contract party has failed to fulfill his contractual obligations.

The following types of guarantees are widely used:

• Payment guarantee is used to ensure a payment to the seller for the supplied goods or services. Bank-guarantor has to pay a sum of money against first Seller's written declaration, that he has delivered the goods but has not received payment at maturity.
• Bid bond (tender guarantee) is used in connection with the public tenders and secures tender's organizers' losses in the event of withdrawal by the tender participant its offer or reject to sign the contract after being awarded the tender.
• Performance bond secures buyer's claims in the event if the seller fails to fulfill his contractual obligations. Guarantee remains in force till seller's contractual obligation's fulfillment.
• Advance payment guarantee is issued by the seller's bank in favor of the buyer and enters into force only upon receipt of the advance payment made by the buyer. The guarantee ensures repayment of the advance payment by the seller in the event of non-performance of his contractual obligations to supply the goods. The guaranteed amount equals to advance payment amount and is automatically reduced in proportion to the value of each shipment made.

Depending on the customer's needs and terms of the contract, JSC SMP Bank can issue also other types of guarantees.

JSC SMP Bank can issue guarantee either directly to the beneficiary or through the beneficiary's bank. In the event when the beneficiary has any doubts regarding bank-guarantor it is possible to use the third bank, which will issue its own guarantee under counterguarantee, issued by the Principal's bank.

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