FINANCING

ISSUANCE OF GUARANTEE LETTERS

This service is carried out when the counterpart demands that Banco Nacional de Cuba guarantees a contracted obligation by the client. The process generally starts in the moment the negotiation takes place or when a financial assessment of a financial operation and/or a bank credit is made or in the course of a commercial operation.

A Bank Guarantee is a commitment of payment of the issuing bank in favor of a beneficiary, is the instrument that accompanies international contracts and the supply of goods of all kind, the provision of services, the execution of labor and any other loan contracts. It is issued by the Bank guaranteeing the payment to Beneficiary in case the client does not execute the payment.

Credits through syndicate loan participation

BNC participates with some other bank institutions financing projects for the development of the national economy; so, it can grant credits to joint ventures, state entities of full Cuban capital. It is an operation through which the trustee gives the amount of money to the borrower by means of a contract. The borrower returns the principal of the loan together with the interests and commissions.

Line for opening Letters of Credit:

Banco Nacional de Cuba grants lines for opening Letters of Credit where the bank is the issuer. It consists on a contract through which the importer presents a request for issuing a letter of credit for an amount established and for a determined period avoiding fund immobilization. It can also be a revolving line.

Requirements for the issuance of a Letter of Guarantee

With the documents received from the Business Management Direction, the Emission Management prepares the file of the guarantee, composed of:

  • A client´s letter of requesting to issue a Letter of Guarantee.
  • An authorization letter for Account Debit and a Central Financing account support letter, in case needed.
  • An authorization letter from the Economy and Planning Ministry entitling the client to request the Letter of Guarantee, if required.
  • The guarantee form previously reviewed by the Legal Department, which is presented and done by the Business Management Direction.
  • An authorization by the President of Banco Nacional de Cuba to issue a Letter of Guarantee in the requesting document.
  • A letter of the Ministry of the correspondent entity, with the commitment to assign contracts to Banco Nacional de Cuba to cover the payments in case the Letter of Guarantee shall be executed, if necessary.
  • If requesting entities belong to the Self-financing Scheme, they must provide the bank with the sufficient guarantees supporting these operations.

 

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