Guarantees
enabling trust.
We can bridge the trust gap
in business transactions.
Terms and Conditions apply.
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INTRODUCTION Products that meet your needs
BENEFITS
Our solutions are designed to help your business grow while still mitigating the risks associated with many
kinds of business transactions with 3rd parties.
THE STEPS
In every transaction there are varying levels of trust which exists between the transacting parties. In certain
instances, transactions are not able to proceed due to lack of trust. The lack of trust can range from the
TYPES OF GUARANTEES concern of not getting paid by the purchaser or of the other party not performing as required according the
agreement underpinning the transaction. A guarantee from FNB can facilitate trust in the transaction and
enable it to proceed.
COLLATERAL AND EXPIRY
CRITERIA AND FEES Facilitating trust in a transaction
• A guarantee is an efficient solution for you to use to enable trust between the two parties in a transaction.
HOW TO APPLY
• With FNB as the trusted 3rd Party, the beneficiary of the guarantee can rely on the guarantee and the
transaction can proceed.
• The beneficiary trusts in the fact that they will be paid if they claim against the guarantee.
FNB
Client Trust in
Relationship Brand
Client
Trust Deficit
Commerical Transaction
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INTRODUCTION
Benefits of a guarantee
BENEFITS
Form of security
THE STEPS
It replaces the need to provide other forms of security (such as a cash deposit), as the
beneficiary knows that they will be paid.
TYPES OF GUARANTEES
Investment growth
The security (such as a cash deposit) can be invested in an interest bearing account.
COLLATERAL AND EXPIRY
CRITERIA AND FEES Business growth
As the beneficiary relies on the guarantee, the transaction can proceed.
HOW TO APPLY
Business intent
Indicates the business standing of the applicant as FNB is willing to underwrite the
applicant’s obligations.
Minimal admin
It removes the admin of getting the beneficiary to return security that has been provided.
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INTRODUCTION
The steps involved in a guarantee
BENEFITS
A guarantee works in 4 easy steps:
THE STEPS
1.
FNB issues a guarantee to the beneficiary (your contracting party),
based on an instruction from you, the applicant.
TYPES OF GUARANTEES
COLLATERAL AND EXPIRY 2.
The beneficiary relies on the guarantee and concludes the transaction
with the applicant.
CRITERIA AND FEES
3.
HOW TO APPLY If required, the beneficiary will claim the payment from FNB.
4.
After validating the claim instruction, FNB will make a payment
to the beneficiary.
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INTRODUCTION
Types of guarantees
BENEFITS
A guarantee can be issued for various transactions and for different industries.
THE STEPS
Advance payment Tender/Bid bond Construction
TYPES OF GUARANTEES Compensates the beneficiary for Compensates the beneficiary for the Compensates the beneficiary should the
advance payments already made, tender costs should the applicant not applicant not fulfill their contractual obligations
if the applicant defaults. take up the contract. in terms of the construction contract.
COLLATERAL AND EXPIRY
Dept. of mineral resources Eskom Facility
CRITERIA AND FEES Compensates the DMR if the applicant Provides Eskom with security for the Provides security to another bank
does not fulfill its obligations related to payment obligations of the applicant. to advance money to an individual
environmental rehabilitation. or company.
HOW TO APPLY
Fuel Lease/Rental Property/Letter of undertaking
Provides a fuel company with Serves as a rental deposit on behalf of Serves as a payment instrument to pay for
security for the payment obligations the applicant, instead of paying a deposit a property purchase by the applicant.
of the applicant. to a landlord.
Payment Performance Retention money
Serves as security for the payment Compensates the beneficiary should the Compensates the beneficiary for
obligations of the applicant, called applicant not fulfill contractual obligations. retention money released, if the
upon if the applicant defaults. applicant defaults.
SARS Shipping with liability
Compensates SARS, if the applicant Enables the release of goods from the
fails to pay their customs on transporter, even if the bill of lading is
delayed or lost.
imported goods and/ or excise
duties on other goods.
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INTRODUCTION
The collateral supporting a guarantee
BENEFITS
Depending on the credit profile of a client, a guarantee can be issued against:
THE STEPS
1. Cash collateral – a pledge is placed on the applicant’s investment account(s).
TYPES OF GUARANTEES
2. Credit facility – will be considered against the non-cash collateral supporting the credit facility.
COLLATERAL AND EXPIRY
CRITERIA AND FEES
The expiry date of a guarantee
HOW TO APPLY
A guarantee generally contains a specified expiry date, and this is the date after which the beneficiary will no
longer be able to claim against the guarantee.
This date can be extended after agreement has been reached between the applicant and the beneficiary.
A guarantee can be cancelled before the specified expiry date, but the beneficiary will have to consent to
this and return the original guarantee to FNB.
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INTRODUCTION
The qualifying criteria and fees for a guarantee
BENEFITS
The following qualifying criteria must be met:
THE STEPS
1. Existing FNB current account.
TYPES OF GUARANTEES
2. Credit approval of proposed supporting collateral.
COLLATERAL AND EXPIRY
FNB Online Banking.
CRITERIA AND FEES
HOW TO APPLY The following fees are charged for a guarantee:
Commission is charged in advance every 6 months for the life of the guarantee.
1.
The fee is based on the value of the guarantee, the credit profile and the collateral provided.
2. Amendment, drafting and cancellation fees are also charged.
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INTRODUCTION
How to apply for a guarantee
BENEFITS
Through your relationship banker or branch.
THE STEPS
The following needs to be provided:
TYPES OF GUARANTEES
1. The guarantee application.
COLLATERAL AND EXPIRY The sales contract/ supporting documentation will assist in ensuring that the correct
2. guarantee is issued.
CRITERIA AND FEES
HOW TO APPLY
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fnb.co.za
Terms and Conditions apply. For Internal use only.
