1) Letter of Guarantee Service
Tender Guarantee
Introduction
Tender Guarantee is a written document issued by Bank of Kunlun at the request of the tenderee for bids of construction and procurement of project, committing that the tenderer will not withdraw or amend its bid during the validity period of the bid, and will sign the contract or submit performance guarantee within the preset time once winning the bid. In case the beneficiary claims compensation within the validity period of the guarantee, the applicant should be notified and compensated in time. Guarantee amount is usually 1% to 5% of the total bidders offer.
Function
- Applies to all public tender, which require bidders to pay the bid fund;
- Reduce the financial pressure. As an alternative to cash margin, it can reduce tied up fund of the tenderer;
- By setting the terms of the guarantee, tenderer is conducive to safeguard the legitimate rights and interests;
- The tenderee can effectively protect its own interests to avoid the collection, returned margin cumbersome, improve work efficiency.
Additional service
- As tenderer, Bank of Kunlun can provide with subsequent performance guarantee;
- As tenderer, Bank of Kunlun can provide with foreign exchange business such as spot/forward foreign exchange, spot/forward foreign exchange trading to avoid exchange rate risk;
- As tenderer, Bank of Kunlun can provide with risk indication and suggestions related to credit risk, country risk and project risk of tenderee.
2) Performance Guarantee
a) Introduction
Performance Guarantee is a written document issued by Bank of Kunlun at the request of the customer to the owner of a contracted project or the buyer of a sales deal, guaranteeing the applicant will strictly perform the contracts. If these performance obligations cannot meet the provisions of the contract to make timely delivery of goods and the construction of the project which cause the failure of the performance contract, Kunlun Bank will accept the claims of the buyer or the employer in accordance with the guarantees agreed to the buyer or employer to pay the exceeding amount, as compensation for damage and the punishment of the supplier or contractor. Guarantee amount is usually 5% to 10% of the total contract amount
b) Function
- Can be used in a wide range, can apply to any transaction required the parties to fulfill contractual obligations, usually used in the engineering contracting and sales;
- As to supplier or contractor, can reduce long time fund used, optimize the allocation of funds, and can better protect their own interests;
- As to buyer or owners, can reasonably restrict supplier and contractor, safeguard their own interests, also can avoid the charge and return of the cumbersome procedures, and can improve efficiency;
c) Additional service
- As supplier, Bank of Kunlun can provide with foreign exchange business such as spot/forward foreign exchange, spot/forward foreign exchange trading to avoid exchange rate risk;
- As buyer, Bank of Kunlun can provide with risk indication and suggestions related to credit risk, country risk and project risk of buyers.
3) Advance Payment Guarantee
a) Introduction
Advance payment guarantee is a written document issued by Bank of Kunlun at the request of a customer to the owner of a contracted construction or the buyer of a sales deal, guaranteeing the applicant will fulfill the contractual obligations after the owner or the buyer makes advance payment. If supplier or contractor do not execute, or fully execute the contract after receiving the advance payment, the Bank will return prepayment equivalent amount to the supplier after receiving the claim of the buyer or the employer, (in some cases the interest of payments that occurred will be pulsed) to make the buyer or employer's prepayment amount recovered. Guarantee amount is usually the prepayment amount plus the corresponding interest.
b) Function
- Applies for all projects which need advance payment, such as in engineering contracting, sale of goods;
- As employer or buyer, strengthen the performance of the contract required by the contractor or supplier, assure smoothly recovery of advance payment in the case of non-compliance of the counterparty;
- As contractor or supplier, facilitate the advance payment to be in time, will help speed up the liquidity of the engineering construction or stocking links;
c) Additional service
- As supplier, Bank of Kunlun can provide with foreign exchange business such as spot/forward foreign exchange, spot/forward foreign exchange trading to avoid exchange rate risk;
- As buyer, Bank of Kunlun can provide with risk indication and suggestions related to credit risk, country risk and project risk of buyers.
4) Loan Guarantee
a) Introduction
Loan guarantee is a written document issued by Bank of Kunlun at the request of the borrower to the lender, guaranteeing the borrower will fulfill obligation to repay the borrowed fund. The borrower for any reasons (such as bankruptcy, close down, cash flow difficulties, or financial deterioration, loss of corporate status, change the articles of association, etc.) is unable or refuse to repay the loan, Bank of Kunlun would accept the claims of the lender, in accordance with the guarantee agreed to fulfill the borrowed principal and interest repayment responsibilities. Guarantee amount is usually the loan amount plus the corresponding interest.
b) Function
- Applies to all kinds of loan financing;
- As the lender, greatly assure the loan payments of principal and interest on time and recovery, improve asset quality;
- Reduce financing costs for borrowers, make substantially credit enhancement;
c) Additional Service
- Bank of Kunlun can inquire with several banks to reduce financing costs;
- Bank of Kunlun can provide with foreign exchange business such as spot/forward foreign exchange, spot/forward foreign exchange trading to avoid exchange rate risk;
5) Account Overdraft Guarantee
a) Introduction
Account overdraft guarantee is a written document that Bank of Kunlun issued to another bank or financial institution by the request of the overdraft party to ensure that the overdraft side return in accordance with the expiration time specified in the overdraft agreement signed with the home account. When the overdraft party is unable or refuses to return the principal and interest of the overdraft, Bank of Kunlun is responsible to repay the guarantee amount, which is usually the overdraft amount plus the corresponding interest.
b) Function
- Applies not only to the overdraft of payment also to the overdraft bank to provide to overdraft parties with other financing needs, such as opening or confirming letters of credit to facilitate the under-generation advances of credit funds, discounted bills or certificated endorsement to facilitate the convenience of the bond trading.
- As overdraft side, can make up its own qualifications shallow and lack of defects, can also reduce its parent company or head office of its capital investment, can save cost and reduce risk;
- As account overdraft bank, can reduce credit risk, improve asset quality;
6) Payment Guarantee
a) Introduction
Payment guarantee is a written document issued by Bank of Kunlun at the request of the buyer to the seller under the contract, guaranteeing the buyer will fulfill the payment obligations under the contract to purchase goods, technology, patent or labor. Payment guarantee can be divided into the spot payment guarantee, deferred payment guarantees, installment guarantees according to the different payment types.
b) Function
- Applies to all payments in merchandise trade, technical trade in services, engineering projects, etc;
- As seller or contractor, the guarantee of recovering the funds for projects can facilitate its delivery, construction and the smooth conduct of the trade;
- As buyer or employer, to a certain extent the terms of payment can constrain the behavior of the seller, contractor, and to ensure to meet the quality requirements of the employer, and to protect the interests of the buyer and employer;
c) Related Product
Letter of credit
d) Service Features
- The function of payment guarantee is similar with letter of credit in trading, but it is easier to complete the formalities;
- Payment guarantee is more flexible in format compared to letter of credit, and can vary by projects to meet the different needs of customers;
- Scope of application is more extensive than letter of credit, both can be used in trading and constructional projects;
7) Bond to Pay Guarantee
a) Introduction
Bond to pay guarantee is a written document issued by Bank of Kunlun to the lawful bonds holder per bond issuer’s request to ensure the full and timely repayment of bond principal and interest when the bond matures. If the issuer is not able to repay the principal and interest fully and timely, bank of Kunlun will accept the claims of the bonds holder, repay the bond principal and interests in accordance with the guarantees agreed.
b) Function
- Applies to domestic and foreign institutions to issue foreign bonds, European bonds and other financing behavior;
- As bond issuer, the credit enhancement can reduce financing costs and facilitate the bond liquidity;
- As bond holder, can reduce investment risk, assure repayment of the bond.
8) Lease Guarantee
a) Introduction
Lease guarantee is a written document issued by Bank of Kunlun at the request of the buyer to the seller under the contract, guaranteeing the buyer will fulfill the payment obligations under the contract to purchase goods, technology, patent or labor. It can be divided into finance lease guarantee and operating leases guarantee.
b) Function
- Applies to lease contract;
- As lessor, get the assurance of timely recovery of rent funds, facilitate the execution of the lease contract;
- As lessee, can obtain the equipment to use as soon as possible, and get financing, improve capital efficiency;
c) Service Features
The lessor usually leases guarantees a certain degree of transferability for its own financing needs, and also can be more lenient in terms of transfer.
9) Quality Guarantee
a) Introduction
Quality guarantee is a written document issued to the owner or the buyer from Bank of Kunlun to guarantee that applicant will fulfill contract obligation in the warranty period, at the request of construction contractor or supplier. If in the future quality of the goods does not meet the contract, bank of Kunlun would accept the claims of the contractor in accordance with the guarantees agreed; guarantee amount is usually 5 to 10 percent of the total contract price.
b) Function
- Applies to sale of goods, especially large-scale mechanical and electrical products, aircraft, ships and other large export and other import transactions;
- Can fully protect the interests of the buyer or employer, and also enhance the market competitiveness of the vendor or contractor;
10) Retention Money Guarantee
a) Introduction
Retention money guarantee is the written document issued to the owner or the buyer from Bank of Kunlun to guarantee that applicant will continue to fulfill contract obligation after withdrawing final payment of the contract price in advance, at the request of construction contractor or supplier. If goods or construction delivered does not comply with the contract after retention money is paid, bank of Kunlun will accept the claims of the buyer or the employer. Guarantee amount is usually 5 to 10 percent of the contract price.
b) Function
- Applies for the situation that buyer stranded balance while the seller wants to early withdraw the due balance;
- As buyer, get the assurance that the follow-up obligations will be fulfilled, achieve the same effect as the retention of due balance;
- As seller, recover the due balance in advance, ease the shortage of funds to accelerate cash flow;
11) Marine Guarantee
a) Introduction
Marine guarantee is a written document issued by Bank of Kunlun, at the request of a ship owner, shipping company, P&I club or insurance company, to a maritime court or maritime arbitration authority, guaranteeing that the payment listed on the court verdict or arbitration award will be made after the detained ship or property is released.
b) Function
- Applies to the situation that ships or properties are detained by a maritime court or maritime arbitration authority due to collision between ships or maritime dispute; and able to avoid various losses and expenses of the applicant arising from the detention.
- As applicant, can avoid opportunity cost of vessel or cargo to be long-term seizure and cannot be put into operations, and can avoid payment of the costs and losses arising from the ship or seized property;
- As arbitration body, can avoid the risk of a judgment or award cannot be implemented to protect the interests of the parties;
12) Customs Guarantee
a) Introduction
Customs guarantee is the written document issued by Bank of Kunlun to the customs authority at the request of the applicant to guarantee that the applicant will fulfill the obligation of paying customs duties. If in the future the importer fails to pay customs duties or cannot meet other requirements, Kunlun Bank will accept claims from customs or designated financial institutions, in accordance with the guarantees on behalf of the tariff to pay obligations.
b) Function
- Applies to customers who temporarily need to import and export equipment and machineries in the process of foreign engineering contract, exhibition and sales; Import and export commodities related to duty deduction or exemption policies on the state import and export commodities; Processing trade enterprises import materials and parts; And situations that the customs implement "tax payment after customs clearance" for some goods.
- As importers, can reduce the overall national strength caused by the payment of customs duty deposit, improve the efficiency of liquidity. In the situation of “tax payment after customs clearance” can accelerate the speed of clearance of goods to avoid cargo stranded to increase the cost of temporary entry into the customs territory, can reduce the cumbersome refund procedures;
- As Customs, can avoid handling unnecessary clearance procedures, improve customs clearance efficiency, also can obtain the protection of tariff;
13) Guarantee for Compensation Trade
a) Introduction
Guarantee for compensation trade is a written document that under compensation trade agreement, per requirements from the equipment or technology side, Kunlun Bank provide to ensure in a certain period of time after the introduction of equipment or technology for its production of finished products or other products to compensate for the introduction of the value of equipment or technology, or finished products for export proceeds to offset the payment of the introduction of equipment and technology, if the introduction of the parties cannot make payment, Kunlun bank will accept equipment or technology provider's claim, pay the principle and interest according to the guarantee.
b) Function
- Applicable in compensation trade agreement;
- As equipment or technology import side, can avoid paying the deposit the funds, and put the advanced equipment or technology into operation as soon as possible to benefit;
- As equipment or technology provider, acquire assurance of recovering the funds so as to facilitate transactions;
14) Processing Trade Guarantee
a) Introduction
Processing trade guarantee is a written document issued by bank of Kunlun to the feeding side or the sender, to ensure that the feed side receives the raw materials in line with the contract after the finished product delivered to the feeding or the supply side. If the feed side cannot deliver finished products and cannot compensation, bank of Kunlun would accept the claim from the feeding side; pay to the senders the principle and the interest according to the guarantee.
b) Function
- Applicable in processing trade;
- As feed side, can avoid funds used to facilitate the deal and earn the processing income;
- As feeding side, can gain assurance of the recovery of raw materials or the original purchase price and interest.
15) Bank Guarantee
a) Introduction
Bank guarantee is a written document issued by bank of Kunlun in accordance with the text of the guarantee provided by the bank to fulfill a contractual obligation. If the debtor fails to fulfill a contractual obligation, the claim accepted by bank of Kunlun should be paid in accordance with the guarantee agreed.
b) Function
- Applicable to the case that domestic and foreign bank require bank of Kunlun to guarantee;
- As applicant, can deduct the credit limit in other financial institutions, save the credit limit in bank of Kunlun;
- As trusted bank, can avoid risk of that directly issue the guarantee and refuse by the beneficiary, will help bank of Kunlun increase reputation, enhance its service and develop its business;
- As beneficiary, get more assurance of claim;
16) Bank Accepted Bill
Bank accepted bill is a bank credit-based payment tool; it has a high degree of credit and is likely to be accepted by the seller. By using bank accepted bill, you do not need to pay in cash and can complete the purchase payment, it mean you get low cost funds from our bank, which is the financing function of bank accepted bills; on the seller side, you can also apply for discounted bill of bank acceptance before the expiration of the bank accepted bill to obtain funds.
Features of bank accepted bill business in bank of Kunlun:
a) Can be used locally or off-site;
b) Bank is the principle debtor;
c) Drawer should open a deposit account in acceptance bank;
d) Payment period is up to 6 months;
e) Bill can be discounted within the valid period;
f) Can be negotiable endorsement within the valid period;
Bank accepted bill business advantage in Bank of Kunlun: institutions throughout the country, experienced professional team can handle the business quickly.
Service Fee:
Commission fee: 0.05% of accepted amount.
Service Sources:
All levels of institutions approved by the Bank.
Business Process:
a) Issuance: client issues the bank accepted bills, chop bank seal;
b) Acceptance: holder of the bank accepted bills apply for acceptance in the bank;
c) Withdrawal: the applicant withdraws the bank accepted bills.
d) Usage:
1. The applicant settles the funds with receiver, give the bank accepted bills to receiver;
2. The receiver can give the bank accepted bill to other debtor through negotiable endorsement;
3. The receiver or the bill holder can apply for discount to get funds according to individual needs;
e) Payment Indication
The receiver or the bill holder can apply for withdrawal to the account opening bank or withdrawal bank within the payment period. If the payment period expires, account opening bank will not accept the bill, but the withdrawal bank can still accept the bill.