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Documentary Operations

Do you want to feel confident that your interests in business transactions are safeguarded? Then use the services offered by the Bank.

Contract obligations (e.g. return of an advance payment, payment under a contract and its execution, etc.) as well as other client obligations to their contractors and government entities (including customs and tax authorities) can be secured by bank guarantee. Obligations to a non-resident of Russian Federation can also be secured by a standby letter of credit. Independently or in combination with a guarantee, you can use secure methods of settlements: documentary credits and collections.

Gazprombank handles all transactions involving guarantees, letters of credit and collections, including sophisticated and complex structured transactions, particularly by using letters of credit and collections as trade finance instruments. This allows us to finance our clients’ foreign trade deals at rates comparable to those available in international financial markets.

We offer clients our help in better structuring transactions, selecting the optimal method for settlement and security of contractual obligations, and drafting contract payment terms. Gazprombank’s legal support and professional advice are all complimentary.

For more detailed information, please contact our Documentary Business Department, tel.: (495) 718-64-90, 988-23-03 (guarantees) and (495) 913-74-27, 913-73-65 (letters of credit and collections).

A bank guarantee is a bank undertaking to pay to the beneficiary a sum of money upon his written demand made in accordance with the guarantee terms.

The purpose of a guarantee is to ensure proper fulfillment of contractual obligations to a beneficiary in accordance with the terms of the underlying transaction (contract/agreement, tender/bid, statutory requirements) by the Principal (the party by whose request the guarantee is issued). In some cases, demand for payment under a guarantee can be supported by documents confirming an event of default under the obligations to the beneficiary by the principal under the underlying contract.

Gazprombank issues any bank guarantees in accordance with the applicable RF legislation and international banking practices; as well as by agreement between the parties – in accordance with the ICC Uniform Rules for Demand Guarantees (URDG458) and/or foreign legislation.

Gazprombank also processes guarantees of other banks: advising guarantees issued by Russian and foreign banks in favor of Russian and foreign beneficiaries, claiming payments from guarantor banks upon beneficiary’s request and certifying the authenticity of a signature on guarantees issued by other banks upon request of a client and other Russian legal entities.

Gazprombank issues a wide range of guarantees, such as:

  • Performance guarantees;
  • Payment guarantees;
  • Advance payment guarantees;
  • Customs guarantees;
  • Tax guarantees;
  • Bid bonds (tender guarantees);
  • Loan Guarantees;
  • Share payment guarantees;
  • Guarantees issued as security in legal actions/claims;
  • Other types of guarantee obligations.

 Standby letter of credit is a special type of documentary credit similar to a bank guarantee by its nature. It is used to guarantee the fulfillment of obligations by the parties under commercial or other contracts. It is issued only in favor of nonresident beneficiaries.

The practice of standby letters of credit was developed by American banks due to U.S. legislation, which restricted their rights to issue guarantees. At present, standbys are rather widespread in the activities of foreign trade organizations, and a number of foreign partners of Russian companies offer the use of standby letters of credit along with bank guarantees.

Standby letters of credit are subject to ICC Uniform Rules and Practices for Documentary Credits (UCP600) or ICC International Standby Practices (ISP98).

An irrevocable documentary credit is a bank undertaking to pay to the recipient of proceeds (beneficiary) if the latter presents the documents specified in the letter of credit within a stipulated period of time and fulfils other conditions of the credit. The Bank issues letters of credit upon request of the client-payer (applicant) in favor of his counterparty (supplier/ seller/ contractor).

Gazprombank provides a full spectrum of services related to documentary credits and issues letters of credit of any form, type and structure in both foreign currency and Russian rubles, including:

  • credits available by sight, deferred or mixed payment;
  • credits available by acceptance of beneficiaries’ drafts;
  • “commercial” credits (to pay for purchased goods and/or services/works);
  • advance payment credits (“red” clause credits);
  • credits for complex (multiphase) settlements under contract;
  • transferable credits;
  • revolving credits and others.

Settlements with nonresidents under letters of credit are subject to ICC Uniform Rules and Practices for Documentary Credits (UCP600). Settlements between residents under letters of credit in the RF territory have a specific character compared to international practices and are regulated by Central Bank Provision 2-P “On non-cash payments in the Russian Federation,” effective October 3, 2002.

Under documentary credits Gazprombank:

  • issues letters of credit with or without cash collateral;
  • amends letters of credit;
  • advises to clients letters of credit and amendments thereto with or without adding confirmation;
  • executes letters of credit, including documents examination, effects payments under letters of credit issued and claims payment under letters of credit advised, collects proceeds from the foreign banks;
  • transfers letters of credit;
  • assigns proceeds under letters of credit;
  • provides other services, including drafting payment terms for clients contracts, preparing letter of credit drafts for negotiation with their counterparty.

Documentary collection is a settlement transaction in which the Bank, acting in accordance with the principal’s (supplier) instructions, handles commercial documents (that confirm shipment of goods and/or performance of services) in order to obtain payment and/or acceptance from the drawee (importer) or to deliver documents on other terms and conditions. Gazprombank handles its clients’ export and import collection transactions.

As method for settlement the collection serves the interests of importers to a great extent. If an exporter has any doubt about the buyer, they should use a letter of credit for settlements or request that the counterparty ensure its payment obligations by bank guarantee or standby letter of credit.

International collections are subject to ICC Uniform Rules for Collections (UCR522).

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