Bank Guarantees

Eximbank provides partial security for the repayment of loans granted by commercial banks for the purpose of financing domestic investments and working capital to improve the international competitiveness of companies domiciled in Hungary.

BENEFICIARY:

The commercial bank granting credit to the customers, which is also the party that requests the guarantee from Eximbank.

COMMERCIAL BANK’S CUSTOMER:

Hungarian-domiciled companies typically in the medium-sized to large corporation category, financed by the commercial bank, that are (i) implementing an investment or capital project and/or (ii) require extra working capital , and which feature as the applicant in the contract for issuance of the guarantee.

EXTENT OF THE GUARANTEE:

Depending on the commercial bank’s requirement and the risk of the financed transaction, usually 50% for Large Enterprices and maximum  80% of the principal amount of the guaranteed loan for the SME sector.

CURRENCY OF GUARANTEE:

HUF,  EUR.

EXPIRY OF THE GUARANTEE:

The final maturity of the loan secured with the guarantee + 15 days.

LOAN GUARANTEE:

Individual loan guarantee provided with a state payment guarantee.

CLIENTS EXCLUDED FROM FINANCING:

As specified in Annex 1/A of the Eximbank Business Regulations (“CLIENTS EXCLUDED FROM FINANCING”).

TRANSACTIONS EXCLUDED FROM FINANCING:

As specified in Annex 2 and 3 of the Eximbank Business Regulations (“TRANSACTIONS EXCLUDED FROM FINANCING”).

SECURITIES:

The securities for the guarantee are determined on the basis of an individual assessment, on the understanding that typically the securities stipulated by the beneficiary commercial bank are shared. Securities may include, for example, a pledge on receivables, mortgage on property, pledge on current assets, collateral deposit, corporate guarantee, payment guarantee, pledge on shares, etc.

For the detailed terms of the loan guarantees, please enquire at the commercial banks.

Eximbank offers the following bank guarantees to domestic small and medium sized- enterprises and large corporations for the fulfilment of export transactions or transactions to boost international competitiveness, in accordance with Govt. Decree 435/2012 (XII. 29.):

• Bid (tender) guarantee: a commercial guarantee serving as payment security in respect of the amount of bid security requested, by the issuer of a call for bids, as a prerequisite for bidding. Such guarantees are issued to the benefit of the issuer of the call for bids, as beneficiary.
• Advance-repayment guarantee: a commercial guarantee that secures repayment of an advance payment made on the basis of a trade transaction, in the event that the client, as obligor, fails to deliver or to do so in accordance with the terms of contract.
• Performance guarantee: a commercial guarantee that guarantees the client’s contractual performance until the time of fulfilment and acceptance of the supply and/or service provision obligation outstanding on the basis of the contract.
• Warranty guarantee: a commercial guarantee that guarantees the fulfilment of the client’s payment obligations resulting from warranty and guarantee obligations following the delivery, in compliance with the applicable rules, of the object of the agreement, or acceptance of the provided service.

EXTENT OF THE GUARANTEE

The extent of the guarantee is determined in keeping with the given transaction in every case, ensuring that the combined extent of commercial guarantees undertaken by Eximbank in relation to the transaction does not exceed 80% of the value of the contract.The following rates are typically applied:

• tender guarantee: 2-5% of the bid price;
• advance-repayment guarantee: 15-30% of the export contract;
• performance/warranty guarantee: 5-10% of the export contract.

MINIMUM AMOUNT OF GUARANTEE:

HUF 50 million / EUR 150,000 / USD 150,000

CURRENCY

HUF, EUR of USD

TERM

Determined individually in line with the transaction, but the following terms are usually applied:

• tender guarantee: 3-6 months;
• advance-repayment guarantee: 1-2 years;
• performance/warranty guarantee: 1-2 years.

TRANSACTIONS EXCLUDED FROM FINANCING

As specified in Annex 1/A of the Eximbank Business Regulations (“CLIENTS EXCLUDED FROM FINANCING”).

CLIENTS EXCLUDED FROM FINANCING

As specified in Annex 2 of the Eximbank Business Regulations (“TRANSACTIONS EXCLUDED FROM FINANCING”). Furthermore, clients excluded from guarantee provision in accordance with Section 3 (1) a) of Chapter 2 (“Common rules on guarantees that may be provided by Eximbank) of the Guarantee Decree:

• Clients that have outstanding debts towards the state or Eximbank, resulting from the exercising of a previous state suretyship, state guarantee or counter-guarantee, at the time of concluding the guarantee contract,

A further condition for exclusion is if the client is in financial difficulty as defined in Section 6 of Govt. Decree 37/2011 (III. 22.).

SECURITIES

Determined based on a case-by-case assessment. Securities may include, for example, a pledge on the receivables originating from the financed export, mortgage on property, pledge on current assets, collateral deposit, payment guarantee, credit protection bank guarantee, pledge on shares, assignment of insurance, etc.