Letters of credit and bank guarantees

JSC Belagroprombank offers a wide range of services on documentary operations, including:

• Opening import letters of credit;
• Advising and confirmation of export letters of credit;
• Issuing and advising all kinds of bank guarantees;
• Opening and advising reserve letters of credit.

While rendering documentary operations JSC Belagroprombank makes use of standard banking products in the documentary business and offers individual settlement schemes, using foreign trade finance tools to provide all-inclusive services for foreign trade agreements for its customers. A letter of credit as a form of settlement is multifaceted and is able to take into account the unique character of the structure of any foreign trade agreement.

At the customer’s request we will open a letter of credit without requiring customer’s own funds to secure fulfillment of a letter of credit until the payment is made thereon. Coverage can also be arranged through the credit line provided to the customer by JSC Belagroprombank. JSC Belagroprombank offers the possibility to obtain a loan on favourable terms at the expense of raised credit facilities from foreign banks. Furthermore, a letter of credit serves as a basis for various payment deferment schemes for a customer with the possibility of arranging the successive discounting documents by the non-resident bank.

Depending on the peculiarities each foreign trade transaction there are options of opening confirmed, transferable, reserve, revolving and other types of letters of credit.

Fast-developing cooperation with first-class European banks enables to consider the issue regarding confirmation of documentary letters of credit opened by the Bank on the instructions from clients.

For rendering the methodological help to the clients of JSC Belagroprombank the following information is offered:

•  Recommendations concerning the opening of the import letters of credit to the clients of JSC Belagroprombank (download);
•  An example of settlement terms in the foreign trade contract (download);
• The application for the letter of credit (download)

The benefits of making settlements with the letter of credit:

Benefits to the importer:

• Payment for goods is made only after the actual confirmed documentary shipment; 
• Guaranteed goods delivery in accordance with the stock list and due dates, as well as the possibility to control product quality; 
• The Bank will not make a payment unless all documents presented under the letter of credit comply with its terms.

Benefits to the exporter:

• Guaranteed proceeds from shipped goods regardless of the financial position of the customer; 
• The possibility to receive a loan from the local bank under the letter of credit opened in his address to finance the production of respective goods or to purchase the necessary components.

At the moment reserve letters of credit enjoy a growing popularity as they guarantee that the beneficiary will receive money in case the ordering customer fails to fulfil his contractual obligations. 

Benefits of using the standby letter of credit: 

• The possibility  of receiving goods without prepayment;
• Guaranteed fulfillment of obligations of the issuing bank to the beneficiary;
• The possibility of early termination of the standby letter of credit if the obligations to the beneficiary have been fulfilled.

JSC Belagroprombank on the instructions from its clients issues international bank guarantees, the most widespread of which are the following:

• Advance payment guarantee (secures the fulfillment of obligations to return advance payment to the buyer if the supplier fails to fulfil its contractual obligations);
• Performance guarantee (secures the fulfillment of contractual obligations to deliver goods, perform work, render services);
• Tender guarantee (secures the fulfillment of the obligations of the tenderer to sign the contract for the supply of goods, performance of work, service rendering);
• Guarantee of payment (secures the fulfillment of the obligation to make a payment in case the buyer fails to make a payment under the contract).

The bank guarantees ensure proper fulfillment of all financial obligations of a customer’s counteragent, allow deferment of payment under a foreign trade agreement and do not require own circulating assets for the purpose of advance payment etc.

Further information is available in any branch office of JSC Belagroprombank.