Trade Finance


UniCredit Bank, as a stable and globally recognised Guarantor, approves and issues guarantees both local and cross-border as a security in various types of business transactions – from construction and sale contracts to settlement of financial liabilities, such as loans and their repayment.

A bank guarantee at first demand is an irrevocable obligation of the bank-guarantor to pay to the Beneficiary when due and in accordance with other terms of the guarantee the relevant amount within a specified maximum amount, at his/her first written request and upon submission of other documents (if provided for) precisely specified in the guarantee, in the event that a third party failed to meet the commitment of the underlying contract.

According to international and local business practice, several types of guarantees have been developed (both nostro and loro), which are used most frequently.

Performance Guarantees
  • Bid Bond - the bank undertakes to pay a specified amount at the investor's first demand and in his/her favour, in case the Bidder fails to comply with the obligations undertaken in his/her Bid. The guarantee is issued in a specified amount, usually in a percentage of the planned future transaction (between 2 and 5%).
  • Advance Payment - the bank undertakes to refund to the Beneficiary the advance payment made in favour of the Applicant, in case the Applicant fails to meet his/her contractual obligations.
  • Performance Guarantee - the bank undertakes to make payment to the Beneficiary in case of a contract breach or inadequate performance or in case the contractor becomes financially incapable to implement the contract in full.
  • Warranty - the bank undertakes to make payment to the Beneficiary in case the Contractor fails to eliminate any and all shortcomings arising in the guarantee period.
  • Retention Money - when building large-scale objects, the Investor usually retains certain value of each interim certificate as an additional security for good performance. The Contractors will thus strive not to keep any cash as a security deposit, offering to the Investor a bank guarantee instead.

Payment Guarantees

Payment Guarantees provide security to their Beneficiaries that they will be financially settled for the delivered goods and/or provided services within the given deadline. The Payment Guarantee amount depends on the value of the agreement based on which it has been issued or a lower amount. The value of the payment guarantee depends on implementation of the underlying agreement and timely payment for delivered goods or provided services.

Payment guarantees are issued for the following purposes:

  • payment for delivered goods and/or provided services
  • repayment of commodity loans
  • repayment of financial and commodity loans
  • repayment of financial loans

Customs guarantees

Customs guarantees are a security applied for temporary import of goods. If imported goods are not exported within a given time limit (regardless of reexport or finishing purposes), while applicable customs duties have not been paid for such goods, customs authorities will collect these receivables from the guarantee.

Customs guarantees may have the following forms:

a)individual guarantees for:

  • customs procedure of releasing the goods for free trade, customs procedure with economic effect and temporary storage
  • transit-related customs procedure

b)comprehensive guarantees for:

  • customs procedure of releasing the goods for free trade, customs procedure with economic effect and temporary storage
  • transit-related customs procedure.


UniCredit Bank is a leading institution with internationally certified specialists, who will provide you with best quality service in LC-related business (both documentary and stand-by). In addition to LC processing in accordance with international rules, we provide expert assistance in completing an LC Opening Order, creating LC text, examination of documents under export and/or import LC, and we also organise presentations for clients and their partners.

Letter of Credit is a payment instrument, which represents a bank’s written obligation, undertaken at a request of the bank's client, to pay certain amount of a specified currency to the letter of credit beneficiary, provided the beneficiary submits to the bank precisely required documents showing that goods were delivered or services provided within a certain time period.

Letters of credit are subject to Rules of the International Trade Chamber, Paris.

Documentary LC guarantees protection of interests of both sides in particular:

  • The Seller is safe that after he/she presents documents requested by the LC terms and conditions, while meeting all other LC preconditions, he/she will collect the value of goods delivered and/or services provided, because honouring of the documents is guaranteed by the Issuing Bank.
  • The Buyer is safe that the bank will honour exclusively such documents which prove compliance with all LC conditions and which consequently entitle him/her to operate with the goods.

When to use a documentary letter of credit?
  • buyer and seller are not in personal contact during payment and delivery of goods because they are separated by natural and legal borders,
  • the time period necessary for transport of goods extends the sale transaction,
  • it is required to complete customs formalities,
  • potential risk of various types (political, currency, etc.).

Types of Documentary Letters of Credit
  • as per method of honouring - at sight, with deferred payment , acceptance, negotiation, with a "green" and "red" clause;
  • as per obligation level - irrevocable, confirmed/unconfirmed, stand-by letters of credit;
  • as per transferability - transferable, back to back, circular and direct, revolving);

LC Documents
  • Goods-related documents (commercial invoice, packing list);
  • Transport (carriage) documents (Sea Waybill, Non-negotiable Sea Waybill,
  • Multimodal Transport Document, CharterParty Bill of Lading, Air Waybill, Rail Waybill, Road Waybill);
  • Goods insurance documents (Insurance Policy);
  • Documentary bill of exchange/draft.
  • Other documents (EUR 1, Quality and Quantity Certificates, Phytosanitary Certificate, Factory Certificates, Attestation, Producer Warrantee, etc.).

Collection (Clean and Documentary) is a Seller's order by which he/she instructs the bank to deliver the submitted documents to his/her Buyer via a correspondent bank in the Buyer's country, provided the Buyer pays immediately or accepts the draft drawn to him/her.

Collection is negotiated as a payment method in case when the Seller and Buyer know each other and when the Seller (Exporter) is confident that the Buyer is a reliable person and that there is no doubt in Buyer's solvency and readiness to pay for the ordered goods.

 Benefits of Collection are as follows:

  • Simple and inexpensive way of handling documents
  • Payment takes place faster than the open payment
  • Protected ownership of the goods and the ability to dispose of it, which is much more favorable than for delivery of goods in the open

 There are three basic types of collection in business practice. When entering into a contract, the Buyer and Seller will specify the method of payment for the goods/services

Cash Against Documents – CAD

Cash Against Documents (CAD) - This arrangement means that Exporter's commercial and shipping documents will be sent to Importer's Bank and delivered to the Importer only after the funds are collected. This way the Importer is prevented to take the goods from the Carrier until the payment is made.

Documents Against Payment - D/P

Like with CAD transaction, the Exporter's commercial and shipping documents are sent via Importer's Bank for the purpose of funds collection. In addition to export documents, the exporter sends a draft payable at sight (it specifically contains the words "at sight").

Documents Against acceptance - D/A

A deferred payment is offered to Importers provided they are ready to accept a draft drawn to them by Exporters for a specified fixed time period. By accepting such draft, the Importer legally recognises his/her debt. Acceptance is made when the Importer puts his/her signature to the draft's face. The Bank delivers shipping documents to the Importer.

Submitting Documents for Collection

After shipping documents are collected, based on the underlying contract, serving as a proof of goods delivery, they will be used by the Exporter to collect the value of goods. As it is provided by the contract that goods will be paid via documentary collection, the Exporter will start the procedure. The overall procedure of documentary collection could be divided into three steps as follows:

  • Collection instruction by the Exporter,
  • Submitting instructions together with required documents to the Presenting/Collecting Bank.
  • Redemption of documents from the Remitting Bank.
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