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Uncovered Bank Guarantees and LCs

Bank guarantees

By issuing a guarantee, Evrofinance Mosnarbank (Guarantor), by a company's (Principal) request, provides a written obligation to pay a specified amount to a third party (Beneficiary) upon its written request made according to the guarantee terms. The Bank can guarantee only a payment but not any material obligation (delivery, service, etc) envisaged by the agreement between Principal and Beneficiary.

If needed, the Bank can secure a guarantee from a foreign bank acceptable for the beneficiary by issuing a counter guarantee.

Evrofinance Mosnarbank offers or helps to get the following major types of guarantees:

Offer guarantee (tender guarantee). When contests for equipment supply, construction and engineering and other services orders are held, participants are often required to include a tender guarantee in their bid. The guarantee should cover 1%-5% of the tender amount.

Guarantee of advance payment return. In certain cases, including construction works, equipment supplies, and especially making of certain products according to the customer's specifications, a contractor often requires an advance payment. Therefore, the customer is facing a risk that the partner may fail to meet the obligations under the agreement and to return the advance payment. This risk is covered by a guarantee of advance payment return. The Bank guarantees that it will return the advance payment amount if the contractor should fail to meet the obligations under the contract. As a rule, the amount covered by the guarantee equals the amount of the advance payment. This guarantee is often used in foreign trade deals.

Guarantee of proper performance. This guarantee covers the performance of a contractor under a contract, like delivery of goods or services, proper performance of tasks set forth in the contract (construction, assembly, installation, implementation etc.). The Bank guarantees that it should pay the amount specified in the guarantee agreement upon the first request of a beneficiary. The guarantee usually covers 5%-15% of the contract amount.

Guarantee of payment. This guarantee is normally used to secure a payment obligation of any kind. In particular, such guarantees cover obligations to pay for goods or services delivered against a down payment or delayed payment. They also cover obligations to redeem debt incurred by financial credits and loans.

Customs guarantees. Evrofinance Mosnarbank offers various types of customs guarantees which are used to secure custom fees payment according to Russian law, including special cases such as delayed payment of customs duties and fees, transportation or storage of foreign goods, performance of various customs operations (acting as a customs broker, owner of a temporary storage warehouse or a custom warehouse, or an authorized customs carrier).

Letters of credit

Under a letter of credit, the Bank undertakes to carry out a payment to a beneficiary or to accept or negotiate a bill of exchange or to authorize another bank (designated bank) to carry out a payment to a beneficiary or to accept or negotiate a bill of exchange upon presenting the documents specified in the letter of credit. The Bank itself can be the designated bank

To execute a letter of credit, the beneficiary should present the documents specified in the letter of credit to the designated bank. If the documents presented do not match those specified in the letter of credit, the letter is not executed.

Letters of credit are widely used in foreign trade because they guarantee that the supplier receives payment for shipped goods and the purchaser is protected in case the supplier fails to ship the goods.

If needed, the Bank's letters of credit can be confirmed by a foreign bank acceptable for the purchaser. The confirmation makes the foreign bank as responsible for the execution of the letter of credit as the bank that issued it.

Evrofinance Mosnarbank also issues reserve, or stand-by, letters of credit. They are used in some cases as an alternative to banking guarantees due to incumbent business practices or specifics of legislation.

For further information on main lending products contact Corporate Business Development Department:

by phone (+7 495 967 8130) or by fax (+7 495 967 8133)


Client Support:

Main office address:
29 Novy Arbat
Moscow 121099

Phone: +7 495 967 81 82
Phone: +7 499 300-9832
Fax: +7 495 967 81 33

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