Raiffeisen Bank 

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Retention money guarantee

A retention money guarantee is a non-payment guarantee and represents an irrevocable obligation on the part of the bank to pay a financial sum specified in advance to the customer (recipient) if the supplier (mandator), having received retained money, fails to meet its contractual obligations during the term of the guarantee.

Advantages

  • The guarantee represents a reliable security of the customer’s receivable (the guarantee recipient) in respect of the supplier (mandator), and ensures that the customer will receive a settlement from Raiffeisenbank under the guarantee if the supplier fails to meet its contractual obligations to the customer during the term of guarantee, and if the recipient (beneficiary) requests a settlement in accordance with the terms and conditions of the guarantee.
  • The guarantee reinforces the creditworthiness of the supplier (mandator) in relation to the customer (recipient/beneficiary).

The retention money guarantee allows a supplier (mandator) to dispose of the financial resources of the retained money which the customer released against submission of a bank guarantee prior to the expiry of the term of guarantee.

Drafting a money retention guarantee and the settlement from the guarantee

  • Upon being requested by the client (supplier) Raiffeisenbank draws up a retention money guarantee to the level and for the term specified in the conditions of the contract concluded between Raiffeisenbank and the client.
  • Together with the application for a guarantee to be drafted/provided the client submits documents containing the conditions and requirements under which the guarantee is to be drawn up.
  • In the contract on the provision of a guarantee, or the loan agreement, the client agrees that, if Raiffeisenbank is requested for payment in accordance with the terms and conditions of the guarantee, it will pay this sum irrevocably to the benefit of the guarantee recipient (the beneficiary).
  • Given that the guarantee represents an irrevocable obligation, Raiffeisenbank may not change the conditions of the guarantee to the detriment of the recipient (beneficiary) or cancel the guarantee without the consent of the recipient (beneficiary).
  • Raiffeisenbank will make a payment under the guarantee only if it receives a request for payment submitted by the guarantee recipient (beneficiary) in accordance with the terms and conditions of the guarantee.

Security

Raiffeisenbank will inform the client of the need to secure the guarantee depending on the results of its audit of the client’s creditworthiness.

Course of the guarantee


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