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Guarantees

Typically, the terms that are to be secured by guarantees are defined once both parties have agreed on contractual arrangements and may be specific to that particular trade. Nordea will work with you to draft the appropriate guarantees when some of your obligations are to be secured. 

Guarantee types

The most common bank guarantee types in an import transaction are:

  • Payment guarantees: Secures the applicant’s ability to fulfill its payment obligations to the beneficiary. Usually the guarantee will cover the entire value of the underlying contract, less any advanced payments made by the applicant. 
  • Guarantee for a missing bill of lading (letter of indemnity): Authorizes a transport carrier or its agents to release specified cargo to a consignee named in the bill of lading without the surrender of the original bill of lading. 
  • Customs guarantee: Issued in favor of customs offices as security for payment of customs duties by an importer.

The most common bank guarantee types in an export transaction are:

  • Bid bond/tender guarantee: Usually issued for an amount up to 5% of the value of the tender. The purpose of these guarantees is to cover the risk that the company submitting a tender will not abide by its offer or deliver the required performance.
  • Advance payment guarantee: Issued when the buyer/manufacturer pays the contract price or part thereof in advance and requires security for a refund if the merchandise is not delivered, or if the delivery is not in accordance with the contract.
  • Performance guarantee: Secures the seller's/performers contractual obligations.
  • Warranty guarantee: Covers the buyers after goods are delivered or work is completed during any agreed warranty period. 
  • Retention money guarantee: Ensures that the correct repayments are made if the applicant fails to meet its contractual obligations during the warranty period. 

Standard guarantees

The texts are provided for reference and guidance purposes only. Any individual guarantee to be issued by the bank shall be separately drafted for the relevant case. The bank assumes no responsibility for the use by visitor's to the website of these guarantee texts. The texts are subject to Nordea's General terms for use of website. 

 

Privacy notice

As a data controller Nordea Bank Abp processes personal data to deliver the products and services that are agreed between the parties and for other purposes, such as to help you with your request or comply with laws and other regulations. For detailed information on Nordea Bank Abp’s processing of personal data, please review Nordea’s privacy policy, which is available on Nordea’s website or by contacting Nordea Bank Abp. The privacy policy contains information about the rights in connection with the processing of personal data, such as the access to information, rectification, data portability, etc.​ 

The information provided by you will be processed in accordance with Nordea’s Privacy Policy. Please do not provide any sensitive or financial information in this form. Should you have a banking related question, kindly contact us through your Netbank or customer service. 

 

Privacy notice

As a data controller Nordea Bank Abp processes personal data to deliver the products and services that are agreed between the parties and for other purposes, such as to help you with your request or comply with laws and other regulations. For detailed information on Nordea Bank Abp's processing of personal data, please review Nordea’s privacy policy, which is available on Nordea’s website or by contacting Nordea Bank Abp. The privacy policy contains information about the rights in connection with the processing of personal data, such as the access to information, rectification, data portability, etc.​

The information provided by you will be processed in accordance with Nordea’s Privacy Policy. Please do not provide any sensitive or financial information in this form. Should you have a banking related question, kindly contact us through your Netbank or customer service. 

 

Privacy notice

As a data controller Nordea Bank Abp processes personal data to deliver the products and services that are agreed between the parties and for other purposes, such as to help you with your request or comply with laws and other regulations. For detailed information on Nordea Bank Abp's processing of personal data, please review Nordea’s privacy policy, which is available on Nordea’s website or by contacting Nordea Bank Abp. The privacy policy contains information about the rights in connection with the processing of personal data, such as the access to information, rectification, data portability, etc.​

The information provided by you will be processed in accordance with Nordea’s Privacy Policy. Please do not provide any sensitive or financial information in this form. Should you have a banking related question, kindly contact us through your Netbank or customer service. 

Domestic guarantees

Swedish guarantees (redirects to nordea.se)

Danish guarantees (redirects to nordea.dk)

Norwegian guarantees (redirects to nordea.no)

Finnish guarantees (redirects to nordea.fi)

FAQ

In case of disagreement between the parties regarding the underlying conditions, payment under an accessory guarantee may be postponed pending amicable agreement, arbitration or final judgement in court. When the beneficiary demands payment in accordance with the terms of a demand guarantee, the bank is obliged to effect payment whether or not the principal is in default under the underlying contract. Any disputes between the principal and the beneficiary must be solved between the parties subsequently without the bank's role. The bank's obligation to pay under the guarantee is based solely on the guarantee itself and is not dependent on the underlying contract.
The Uniform Rules for Demand Guarantees, developed by the ICC are used by banks and businesses across continents and industry sectors. A demand guarantee is an independent undertaking where guarantors are assured that their commitment is subject to its own terms.
A bank guarantee request has to be approved by the bank. Normally you get an offer letter for a specific guarantee or you will get an offer letter for a guarantee facility up to a certain limit. As a customer you must provide us with at least the following information: Name and address of debtor/principal, Name and address of beneficiary, Guarantee amount, Expiry date, What the guarantee is related to (e.g. the underlying contract) and Type of guarantee (e.g. performance, payment or advance payment).
The pricing of a guarantee depends on: The amount and length of the guarantee, the type of guarantee, what kind of security the bank receives, the general market situation and the specific situation for your line of business.
A demand is brought against the guarantor when the beneficiary believes the principal has defaulted with the underlying conditions covered by the guarantee. The demand must state: a reference to the guarantee in question, how the principal has defaulted on the underlying agreement covered by the stated guarantee, and if possible documentation: the amount demanded under the guarantee and to which account the money should be credited.
Payment will depend on if the guarantee is an accessory or demand guarantee. A demand under an accessory guarantee will be paid when one of the following conditions is true: amicable agreement (e.g. the principal accepts the demand), final judgement in court or arbitration award. Payment under a demand guarantee will depend on the wording of the guarantee, describing what must be presented and when payment should be made.
If the guarantee is open ended (i.e. no expiry date), we need either the original guarantee document returned to us or that the beneficiary in writing states that Nordea is released from our obligations.

Get in touch 

For more information about how we can support your business contact your Nordea adviser.