In business you're often required to demonstrate your capability to meet various obligations with a bank guarantee.
A bank guarantee is a promise by a financial institution to pay on behalf of its customers if they are not able to meet their contractual obligations. Samba issues a wide range of guarantees that your business can benefit from.
Standby Letters of Credit
Standby letters of credit are often used in trade transactions as a secondary payment mechanism. It is issued by the bank on behalf of its customers to assure the beneficiary of the customer's ability to deliver under the terms of the contract. The beneficiary can cash a standby letter of credit if the customer fails to fulfill a contractual obligation. It can be canceled as soon as the terms of the contract have been met by the customer.
Letters of Guarantee
A letter of guarantee is issued by a bank on behalf of a customer promising to pay the beneficiary should the customer default on his payment for whatever reason. It gives the beneficiary the confidence that the payment due to them will be made while enabling the customer to take advantage of business opportunities that they will not be able to otherwise.
During a bid based selection process, a Bid Bond assures the project owner that the bidder will accept the contract if selected and will carry out their obligations. In the event of the bidder refusing to accept the contract, the bank issuing the bid bond will pay the agreed amount to the project owner.
A performance guarantee safeguards the beneficiary from monetary loss if the party to whom a contract is awarded fails to deliver on the contractual obligations. The bank issuing the performance guarantee will pay the beneficiary the agreed sum if the project is not completed.
Advance Payment Bond
Project owners will sometimes make payments to a contractor before commencement of a project to make certain preparations. An advance payment bond is a guarantee that allows the project owner to recover an advance payment extended to the contractor in the event of a default in meeting contractual obligations.
A payment guarantee protects the beneficiary when payments due are not made for goods delivered or services provided. They are also used to mitigate risk when businesses deal with foreign markets.
A retention bond safeguards the interests of the customer against deficiencies after a project is completed and prior to final acceptance. It guarantees that the contractor will rectify the defects.
Customs - Surety Bond
A customs surety bond is issued in favour of the Department of Customs as a security against non-payment of the importer's custom dues.
Zakat & Income Tax Bond
A Zakat & Income Tax bond is issued in favour of the Department of Zakat & Income Tax as a security against non-payment of outstanding income tax, penalty for delays and legal Zakat.
Special Text Guarantees
Special text guarantees are tailor-made guarantees structured in accordance with customers' specific requirements.
Based on a foreign bank's request, Samba can advise a beneficiary in Saudi Arabia that a guarantee is available. Samba's responsibility is limited to verifying the authenticity of the instrument and advising the beneficiary without delay.
Samba can issue bonds subject to the receipt of an acceptable counter-guarantee issued by another bank (domestic or foreign). The acceptability of the counter-guarantee is subject to the bank's internal policy and procedure.