We guarantee your business by ensuring the development of sustainable cooperation with partners.
A bank guarantee is significantly more affordable compared to a loan.
You can make payments using your own resources without attracting credit funds.
With a guarantee, you can import goods with deferred payment terms and avoid the requirement for cash payment.
What is a bank guarantee:
A bank guarantee is a written obligation issued by a bank whereby the Bank guarantees the fulfillment of the Principal’s (customer’s) obligations, undertaking to pay the amount stipulated in the guarantee agreement to the Principal’s partner (Beneficiary) upon their first demand.
Due to the high level of trust it has gained, a guarantee issued by Acba bank is currently accepted by numerous foreign companies, allowing customers to cooperate with them directly without the intermediation of another bank, which in turn reduces the service fee charged for the guarantee.
It should be noted that a number of leading banks and financial institutions (CREDIT AGRICOLE CIB, ADB, IFC, EBRD) have provided the Bank with credit limits for carrying out trade financing transactions. Therefore, in all cases where the Beneficiary requires a guarantee issued by a local or other bank, Acba bank, in cooperation with the aforementioned banks, ensures the satisfaction of the Beneficiary’s requirement.
A bank guarantee is used when you are preparing to:
The Bank provides the following types of guarantees:
tender participation guarantee - ensures compensation for the expenses of the company conducting the tender if the participant declared the winner refuses to fulfill its subsequent obligations, as a result of which a new tender must be conducted,
contract performance guarantee - ensures the proper fulfillment of the contractual obligations of the party performing the contract toward the customer,
qualification security guarantee - ensures the proper fulfillment of the contractual obligations of the party performing the contract toward the customer, as well as the professional qualification of the performing party (contractor),
payment guarantee - ensures the proper fulfillment of the payment obligations of the buyer (importer) toward the seller (exporter),
advance payment refund guarantee - ensures reimbursement of the advance payment to the buyer (importer) or customer in the event of failure by the seller (exporter) or contractor to fulfill the contractual obligations undertaken,
quality guarantee - ensures the quality characteristics of the work performed/services provided/goods supplied by the contractor or the timely elimination of identified defects,
counter-guarantee (indirect guarantee) - a guarantee issued by the Bank in favor of another leading bank to secure the issuance by that bank, independently and under its full responsibility, of a guarantee in favor of the ultimate Beneficiary.
| Guarantee provided in favor of a Beneficiary operating in the territory of the Republic of Armenia | |
|---|---|
| Issuance of a guarantee secured by a pledge of monetary funds | 1% per year of the guarantee amount
|
| Issuance of a guarantee secured by other collateral | tender participation or bid security guarantee: 1.5% one-time of the guarantee amount,
|
| Issuance of a guarantee secured by a counter-guarantee issued by another bank | contractual |
| Guarantee provided in favor of a Beneficiary operating outside the territory of the Republic of Armenia | |
| Issuance of a bank guarantee/counter-guarantee secured by a pledge of monetary funds | 1% per year of the guarantee amount, minimum: AMD 35,000 |
| Issuance of a bank guarantee/counter-guarantee secured by other collateral | 2-3% per year of the guarantee amount, minimum: AMD 40,000 |
| Issuance of a guarantee by another bank secured by a counter-guarantee issued by the Bank | according to the tariffs of the intermediary bank/banks |
| Amount deposited by the customer to cover intermediary bank fees | contractual |
| Other transactions | |
| Amendment to the terms of the guarantee | AMD 30,000 + intermediary bank expenses (in case of an increase in the amount or extension of the term, an additional proportionally calculated issuance fee will be charged for the amendments, without applying a minimum threshold) |
| Payment of the guarantee amount against a demand | 0.5% of the amount demanded under the guarantee, minimum: AMD 35,000 |
| Transmission of the SWIFT message of the guarantee letter to another bank | AMD 25,000 |
| Servicing of a guarantee issued by another bank | |
| Guarantee notification | AMD 30,000 |
| Notification of a guarantee amendment | AMD 15,000 |
| Preparation of a payment demand under the guarantee | AMD 20,000 |
Collateral securing the guarantee may include real estate, a vehicle (car), agricultural machinery, equipment, monetary funds, other tangible assets, guarantees, guarantees issued by other leading banks, and cash flow.
If the guarantee is secured by monetary funds in the same currency as the guarantee amount, the minimum guarantee-to-collateral ratio (the ratio of the appraised value of the collateral to the guarantee amount) is 100%, while if it is secured by monetary funds in different currencies, the minimum ratio is 120%.
At the time the guarantee is issued, the fee for the entire contractual term of the guarantee is charged and, regardless of the actual duration of the guarantee, is not subject to recalculation or refund.
If there are insufficient funds in the Customer’s current accounts in the currency of the fee to be charged, the Bank has the right to convert the fee or part thereof from funds held by the Customer in another currency, based on the Bank’s non-cash selling exchange rate(s) established for the relevant currency when converting AMD into another currency and non-cash buying exchange rate(s) when converting another currency into AMD, carrying out the conversion from the Customer’s accounts in different currencies in an order determined by the Bank, unless the Customer specifies another order.
In case of a guarantee secured by collateral, the guarantee amount must not exceed 90.91% of the appraised value of the collateral.
For more details:
Detailed information on the amount of possible additional payments and all the points presented is available in the Trade Financing Instruments tariffs
Previous terms of the Trade Financing Instruments
List of excluded and subject-to-approval activities
Factors for making a positive decision on the guarantee application include assessing the Principal’s creditworthiness and the Principal’s clear understanding of the obligations to be assumed toward the Beneficiary, as well as the possible consequences of their improper fulfillment.
Factors for rejecting a guarantee include insufficient financial indicators resulting from the analysis, poor credit history, insufficient or lack of required collateral, the professional opinion of the Business Consultant, and the professional opinion of the Credit Committee.
The guarantee is processed at the Bank’s Head Office and branches, except for the Komitas, Yeritasardakan, Teryan, Shinarnarner, Homplex Mall, Gyumri, Ashtarak, and Aragats branches. The complete list of the Bank’s branches is available here.
A decision on the guarantee application is made within 1-20 banking days after the customer submits the application and the required package of documents.
The Bank communicates its decision regarding the guarantee application to the customer within 1 banking day after the application has been reviewed.
The guarantee is provided within 1-5 banking days after the customer submits the complete package of documents required for the guarantee and the collateral process has been completed.
If the guarantee is provided against collateral in the form of real estate, a vehicle, agricultural or other machinery, equipment, and the property is appraised at AMD 30 million or more, the property must also be appraised by a qualified independent appraiser cooperating with the Bank.
The Bank has the right, in the event of fluctuations in the interest rates on funds raised and placed by the Bank in the financial market and/or changes in the financing rate and/or the existence of such prerequisites, to unilaterally change the interest rates and fees stipulated by the Agreement by notifying the Customer and/or Debtor at least 30 calendar days in advance. The changes will apply from the date specified in the notice.
During the term of the Agreement, the loan account statement and other information required to be provided under the legislation of the Republic of Armenia are provided free of charge. Statements not required to be provided under the legislation of the Republic of Armenia and duplicate statements are provided as follows:
for a period of up to 6 months (inclusive) - free of charge,
for a period of more than 6 months and up to 12 months (inclusive) - AMD 2,000 (including VAT),
for a period exceeding 1 year - AMD 3,000 (including VAT),
Information on the loan may be provided in the form of a statement as required:
within the business day following submission of the application - AMD 5,000; when applying through the acba digital system - AMD 3,000 (including VAT),
on the same business day, within 1 hour - AMD 7,000; when applying through the acba digital system - AMD 5,000 (including VAT),
within one to four business days - through the delivery service - AMD 6,000; when applying through the acba digital system - AMD 4,000 (including VAT).
For a guarantee secured by collateral, the customer may incur the following payments:
Real estate appraisal service fee - AMD 5,000 and more, depending on the area and type of the property,
Notary service fee - AMD 3,000-15,000,
Fee for the registration certificate of the right to pledge real estate - AMD 2,000-25,000,
Fee for a unified statement regarding restrictions on real estate - AMD 10,000,
Fees related to pledging other property - AMD 2,000-10,000.
Depending on various circumstances, the Bank may require additional documents and information. For the purpose of proper customer due diligence as defined by the RA Law “On Combating Money Laundering and Terrorist Financing,” the Bank may, based on the “Know Your Customer” principle, require the customer to provide additional documents or other information, as well as ask additional questions during verbal communication. If proper identification of the customer is impossible or account servicing is impossible, access to the service provided by the Bank may be restricted. In addition, in accordance with the agreement signed with the United States under the Foreign Account Tax Compliance Act (FATCA), the Bank may collect additional information to determine whether you are a U.S. taxpayer.
The guarantee may terminate in the following cases:
Upon payment of the entire guarantee amount to the Beneficiary,
Upon expiration of the guarantee validity period,
If the Beneficiary waives its rights under the guarantee and returns the original guarantee to the Bank, with the notation “the original guarantee is returned to the Bank,” signed and stamped by the Beneficiary,
If the Beneficiary submits a letter waiving its rights under the guarantee and releasing the Bank from its obligations undertaken under the guarantee,
If, according to the publication of the results of the tender announced by the Beneficiary, the Principal is not declared the winner,
If, after being declared the winner of the tender announced by the Beneficiary, the Principal submits the Contract Performance and Qualification Security Guarantees to the Beneficiary.
The guarantee cannot be terminated early by the Bank based on an application from the Principal.
Civil Code of the Republic of Armenia, Article 386.
A guarantee cannot be revoked by the person who issued the guarantee unless otherwise provided by the guarantee.
Civil Code of the Republic of Armenia, Article 387.
The Beneficiary’s right to a claim under the guarantee against the person who issued the guarantee cannot be transferred to another person unless otherwise provided by the guarantee.
Procedure for Calculating the Bank Guarantee Fee
The bank guarantee fee is charged at the time of issuance and is calculated using the following formulas:
Annual calculation of the bank guarantee fee = Bank guarantee amount × Annual interest rate × Bank guarantee term
Calculation of the one-time bank guarantee fee based on the guarantee amount = Bank guarantee amount (outstanding balance) × one-time rate
Example of calculating the annual bank guarantee fee:
Bank guarantee amount - AMD 5,000,000
Bank guarantee term - 36 months
Bank guarantee fee - 3% per year
The fee calculated for the entire contractual term will be:
5,000,000 × 3/100 × 3 = AMD 450,000
Example of calculating a one-time fee based on the bank guarantee amount:
Bank guarantee amount - AMD 5,000,000
Bank guarantee term - 36 months
Bank guarantee fee - 1.5% one-time based on the bank guarantee amount
The fee calculated for the entire contractual term will be: 5,000,000 × 1.5/100 = AMD 75,000
YOU HAVE THE RIGHT TO COMMUNICATE WITH THE FINANCIAL ORGANIZATION IN YOUR PREFERRED WAY, BY POSTAL OR ELECTRONIC MEANS. RECEIVING INFORMATION ELECTRONICALLY IS THE MOST CONVENIENT. IT IS AVAILABLE 24/7, FREE FROM THE RISKS OF LOSING PAPER INFORMATION AND ENSURES CONFIDENTIALITY.
THE AMOUNT OF PENALTIES AND CASES OF APPLICATION IN THE EVENT THAT THE CONSUMER FAILS TO FULFILL THEIR OBLIGATIONS ON TIME:
IN THE EVENT THAT, BASED ON A LEGALLY VALID WRITTEN DEMAND FROM THE BENEFICIARY (IN THE CASE OF AN INDIRECT GUARANTEE, THE ISSUING BANK), THE BANK PAYS THE GUARANTEE AMOUNT IN FULL OR IN PART IN COMPLIANCE WITH THE REQUIREMENTS ESTABLISHED BY THE CONTRACT WITH THE BENEFICIARY, THE BANK HAS THE RIGHT TO COLLECT, WITHOUT ACCEPTANCE, THE AMOUNT PAID UNDER THE GUARANTEE, AS WELL AS THE INTEREST AND PENALTY CALCULATED IN THE MANNER AND AMOUNT STIPULATED BY THE CONTRACT (IF APPLICABLE), FROM ALL ACCOUNTS OF THE PRINCIPAL OPENED WITH THE BANK, INCLUDING FOREIGN CURRENCY ACCOUNTS.
IF THERE ARE INSUFFICIENT FUNDS IN THE PRINCIPAL’S BANK ACCOUNTS, THE BANK HAS THE RIGHT TO SUBMIT A DEMAND TO THE PRINCIPAL TO PAY THE AMOUNT PAID AND/OR PAYABLE UNDER THE GUARANTEE TO THE BENEFICIARY, WITH A REPAYMENT PERIOD OF 14 (FOURTEEN) CALENDAR DAYS, RECORDING THE SPECIFIED AMOUNT AS THE PRINCIPAL’S OBLIGATION TOWARD THE PERSON WHO ISSUED THE GUARANTEE AND, FOR THE SPECIFIED PERIOD, CHARGING INTEREST ON THE PRINCIPAL’S OBLIGATION AT TWICE THE BANK INTEREST CALCULATION RATE SET BY THE CENTRAL BANK OF THE REPUBLIC OF ARMENIA. IF THE PRINCIPAL FAILS TO REPAY THE AMOUNT WITHIN THE 14-DAY (FOURTEEN-DAY) PERIOD, THE BANK IS ENTITLED TO CHARGE A PENALTY OF 0.13% OF THE SPECIFIED AMOUNT FOR EACH OVERDUE DAY.
PAYMENT PRIORITY:
IN THE EVENT OF AN OVERDUE OBLIGATION UNDER THE CONTRACT, THE PAYMENT IS FIRST DIRECTED TOWARD REPAYMENT OF OVERDUE OBLIGATIONS IN THE FOLLOWING ORDER: PENALTY CALCULATED ON THE LOAN AMOUNT AND INTEREST, OVERDUE MONTHLY FEE (IF ANY), OVERDUE INTEREST, OVERDUE LOAN AMOUNT, AND IF THE AMOUNT PAID EXCEEDS THE OVERDUE OBLIGATIONS, THE EXCESS AMOUNT IS DIRECTED TOWARD REPAYMENT OF THE LOAN AMOUNT.
FORECLOSURE OF COLLATERAL:
PLEDGED PROPERTY MAY BE FORECLOSED IF THE PRINCIPAL FAILS TO FULFILL THE OBLIGATIONS UNDERTAKEN UNDER THE CONTRACT ON TIME. IF THE VALUE OF THE COLLATERAL IS INSUFFICIENT, THE PRINCIPAL’S OBLIGATIONS WILL BE REPAID FROM THE PRINCIPAL’S OTHER PROPERTY.
INFORMATION PROVIDED TO THE CREDIT REGISTRY:
ATTENTION: IF YOU FAIL TO FULFILL OR IMPROPERLY FULFILL YOUR OBLIGATION, THE BANK WILL SEND THE DATA TO A CREDIT BUREAU, WHERE YOUR CREDIT HISTORY WILL BE FORMED. YOU HAVE THE RIGHT TO OBTAIN YOUR CREDIT HISTORY FROM THE CREDIT BUREAU FREE OF CHARGE ONCE A YEAR.
ATTENTION: A POOR CREDIT HISTORY MAY PREVENT YOU FROM OBTAINING A LOAN, GUARANTEE, OR ANY OTHER BANK-FINANCED PRODUCT IN THE FUTURE.
FOR GUARANTORS
If the Principal fails to fulfill their obligations, you will have to make the payments on their behalf, your credit history will deteriorate, and you may lose your property.
You will be provided with a copy of the guarantee and guarantee agreements.
Communication will be carried out through the method selected by you.
You will be notified 7 days in advance of any changes to the terms of the agreement.
A reminder regarding the existing obligation will be sent 1 day in advance.
If the Bank pays the guarantee amount at the Beneficiary’s demand and the Principal delays repayment of that amount to the Bank, you will be informed of this no later than the following day.
THE GUARANTOR HAS THE RIGHT TO:
Request information from the Bank at any time regarding the outstanding amount of the Principal’s obligations toward the Bank.
Recover from the Principal the amounts paid by the Guarantor to the Bank for the guarantee, as well as any other damages incurred on behalf of the Principal.
Credit history and credit score information
For more details:
Penalties applicable in case the Borrower fails to fulfill their obligations on time.
Qualified independent appraisal companies cooperating with the Bank
