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Bank Guarantees

Overview

Bank Guarantees include performance guarantee, advance payment guarantee, bid guarantee, warranty guarantee, retention money guarantee, counter guarantee for tax payment, and customs risk margin guarantee.

A performance guarantee is a guarantee issued upon the request of the service provider or contractor (the applicant) to the employer of the construction projects (the beneficiary). If the performance obligator fails to complete the construction projects within the time for completion, or in line with the quality and quantity as specified in the contract, or does not perform any other obligations thereunder, ABC will pay the employer an amount up to the guarantee amount. The guarantee amount is usually 5%-10% of the contract value.

An advance payment guarantee, also called the repayment guarantee, is a guarantee issued to the employer of the construction projects (the beneficiary) that ABC will refund full (or part) of the advance payment up to the amount specified in the L/G if the applicant fails to perform its obligations or fails to use the advance payment in strict compliance with the contract. The guarantee amount of an advance payment guarantee shall not exceed the amount of advance payment received by the contractor.

A bid guarantee is issued to the tenderee (the beneficiary), committing that the tender (the applicant) will not withdraw or amend its bid nor change the original bid conditions before the validity of the bid and will sign the contract with the tenderee in accordance with the procurement documents and the tender's bid once winning the bid. ABC will, in the case of the tender's breach of contract, pay the tenderee the amount up to the guarantee amount. The guarantee amount is usually 1%-5% of the bid price quoted by the tender.

A warranty guarantee is a guarantee issued upon the request by the contractor (the applicant) to the employer of the construction projects (the beneficiary) that ABC will make payment up to the guarantee amount to the employer if the quality of the construction projects does not conform to contract provisions and the contractor fails to repair the defect. The guarantee amount is usually 5%-10% of the contract value.

A retention money guarantee, also called a retention money security, is a security issued upon the request by the contractor (the applicant) to the employer of the construction projects (the beneficiary) that ABC will refund the retention money as specified in the guarantee if the contactor withdraws the balance of the contract price in advance and fails to make repayment due. The guarantee amount is usually 5%-10% of the contract value.

A counter guarantee for tax payment is a counter guarantee issued by ABC at the request of an enterprise in processing trade business which opens accounts with ABC. The beneficiary of the counter guarantee shall be Bank of China (BOC). The enterprise shall, in order to be exempted from deposit tax margin with the Customs, obtain a tax payment guarantee from BOC in favor of the Customs.

A customs risk margin guarantee is a kind of guarantee issued by ABC at the request of an enterprise in processing trade business with the Customs as the beneficiary for the purpose of depositing margin with the Customs.

Features

The performance guarantee satisfies the need of domestic enterprises for projects related security.

The advance payment guarantee satisfies the need of domestic enterprises for security for repayment of advance payment.

The bid guarantee satisfies the need of domestic enterprises for bid related security.

The warranty guarantee satisfies the need of domestic enterprises for warranty related security.

The retention money guarantee satisfies the need of domestic enterprises for security for repayment of retention money.

The counter guarantee for tax payment satisfies the need of enterprises in processing trade business, which open accounts with ABC, for presenting a counter guarantee with BOC as the beneficiary which has issued a tax payment guarantee for that enterprise to the Customs.

The customs risk margin guarantee satisfies the need of enterprises in processing trade business to render security in order to be exempted from depositing margin with the Customs.  

Procedures

1. Documents required in case of application for performance guarantees, advance payment guarantees, bid guarantees, warranty guarantees, and retention money guarantees:

The duly completed Application for Issuing Bank Guarantee.

The feasibility study report or invitation for bids of the project under the guarantees as well as the relevant approvals issued by government authorities and other permits.

The underlying contract and/or the letter of intent under the guarantee.

The letter of intent for the guarantee agreement. 

The letter of commitment for counter guarantee and relevant documents of properties collateralization.

The form of guarantee.

The basic credit standing of the applicant, the annual or half-year financial statements (the balance sheet, the income statement and the capital verification report) of the applicant which have been audited by certified public accountants and certified by affixing the corporate seal of the accounting firm or signature of the accountants; and

Basic credit information of the beneficiary.

2. Documents required in case of application for counter guarantee for tax payment:

The duly completed Application for Issuing Bank Guarantee.

The duly completed Agreement for Issuing Bank Guarantee.

The copy of the processing trade agreement.

The business license as approved by and registered with the administrative authority of industry and commerce.

The filing list with the State Administration of Foreign Exchange (SAFE) .

The approvals of the Ministry of Commerce; and

The export permit.

3. Documents required in case of application for customs risk margin guarantee:

The duly completed Application for Issuing Customs Duty Deposit Guarantee.

The originals and copies of the business license and the ID cards, the originals and copies of the certificate of legal representative or the Power of Attorney signed by the legal representative.

The originals of the financial reports of the previous year (including the balance sheet, the income statement, and cash flow statement) which shall be certified by the fiscal authority or accounting firms if possible.

The articles of association or the contract or agreement for establishing equity joint venture or contractual joint venture approved by competent authorities as well as the capital verification report.

The articles of association of the corporate legal person as well as the resolution of the board of directors or the Power of Attorney if the capacity of the legal representative to make credit business is restricted in the articles of association.

The loan certificate (card) issued by the People's Bank of China.

The organization code issued by the technology supervision authority; and

The authorized seal card/book and specimen of the signature of the legal representative in the case of new customers.
Note: Please contact your local branch for detailed information about the service.

Customer Service Center : 95599

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