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Bank guarantee

A bank guarantee is a commitment issued by OP on your company's (the guaranteed party’s) behalf, in favour of your contractual partner: as the guarantor, the bank agrees to compensate your partner for you, if necessary. Bank guarantees generally serve as collateral, covering the fulfilment of contractual obligations in Finnish or foreign transactions. If breach of contract occurs, your contractual partner (the beneficiary) can demand payment from OP in accordance with the terms and conditions of the bank guarantee.

  • A bank guarantee may be given as collateral for advance payment, performance, payment of the price of goods or services, a guarantee period or fulfilment of another contractual obligation. Bank guarantees of this kind are known as commercial guarantees.
  • You can also use a bank guarantee to fulfil a collateral obligation required by regulations or law. Examples include guarantees given to Customs, guarantees referred to in the Package Travel Act or Land Extraction Act, and transport licence guarantees.
  • A bank guarantee includes a brief description of the commercial obligations between your company and its contractual partner, which form the substance of the guarantee. It also states the maximum amount guaranteed, the guarantee’s expiry date and the terms on which the bank will pay the sum demanded by the beneficiary. 
  • You can also apply for a bank guarantee via our online service. This is an easy and secure way of ordering a bank guarantee and viewing the latest information about your company’s guarantee portfolio. To use our online services, your company must have an agreement with OP. See below for further details on our bank guarantee online service.

Absolute guarantee

If payment is demanded, the guarantor bank’s payment decision will depend on whether the guaranteed party is in breach of contract. 

First demand bank guarantee

If payment is demanded, the payment decision will only depend on whether the beneficiary’s demand is covered by the formal terms of the guarantee obligation — i.e. not on possible breach of contract by the guaranteed party. That is why this kind of bank guarantee is known as a first demand guarantee.

First demand bank guarantees are the main type of guarantee used in international commerce. The International Chamber of Commerce (ICC) has drawn up Demand Guarantee Rules (URDG 758), which cover first demand guarantees. The ICC’s rules apply if they are mentioned in the text of the guarantee. 

A counterobligation sets the terms of the bank guarantee between your company and OP: your company commits to compensating the bank for all payments that it may have to make based on the bank guarantee. Counterobligations also set a fee payable for the bank guarantee and agree on other terms between your company and OP.

A bank guarantee limit is a flexible solution for companies with a frequent need for guarantees. Your company can apply for guarantees with generally set limits and counterobligations, without individually defined counterobligations.

Your company can use our online bank guarantee service to apply for bank guarantees and manage its current guarantee portfolio. 

The bank guarantee application process is easy and safe. Your company can attach electronic documents, such as a copy of the purchase agreement, to the application. You can also access a register to monitor and manage guarantee applications via our online service. Our online service can include an approval function for guarantee applications and guarantee commitment texts, in support of your company’s internal processes.

Use our online service to stay up to date at all times: via this service, we will maintain the guarantee ledger and guarantee commitment texts needed by your company.