Insurance of bank guarantees

The bank guarantee is bank's obligation to satisfy the beneficiary (entitled entity) up to a certain financial amount depending on the contents and conditions of guarantee. The beneficiary may be the importer or importer's bank. The bank guarantee shall be issued by the bank based on exporter's (mandator's) request in view of the conditions of concluded export contract or announced tender. Most frequently, the banks issue guarantees for Czech exporter's bid (Bid Bond), for returning the advance payment by importer (Advance Payment Bond) and for the proper performance of export contract (Performance Bond). Also other types of guarantees may be issued in connection with conditions of acquiring or performing export contracts.