Letter Of Guarantee

Secure Transactions with Letters of Guarantee at İktisatbank

A letter of guarantee is an unconditional payment guarantee issued by a bank in favour of its individual or corporate customers residing in the country or abroad, assuring the addressee that obligations such as the performance of work, payment of a debt or delivery of goods will be fulfilled. If the addressee determines that the obligation specified in the letter of guarantee has not been fulfilled, it may collect the stated amount directly from the bank upon first demand.

At Kıbrıs İktisat Bankası Ltd., letters of guarantee may be issued in TL, foreign currency or foreign currency-indexed form, either for a fixed term (valid until a specified maturity date) or without a time limit.

Types of Letters of Guarantee

Bid Bond (Tender Guarantee)
A bid bond is submitted by companies when bidding for a tender and guarantees the seriousness of their participation in the tender process. The bond automatically becomes void for unsuccessful bidders, while the successful bidder generally converts it into a performance bond.

Performance Bond (Final Guarantee)
A performance bond guarantees that the company awarded a tender or entering into a contract will complete the work in accordance with the contractual terms. It remains valid throughout the contract period and is returned after the work has been completed in accordance with the contract.

Labour Department Letter of Guarantee
In the TRNC, a bank letter of guarantee must be submitted to the Labour Department and the relevant ministry as part of the work permit process for foreign nationals (third-country nationals). Letters of guarantee requested by the Department provide security against potential expenses and legal liabilities that may arise during the employee's entry into the country and period of employment.
Letters of guarantee for the Labour Department are submitted digitally.

Advance Payment Guarantee
An advance payment guarantee assures an organisation that makes an advance payment to a customer at the beginning of a project that the advance will be used in accordance with the contractual terms. As the work progresses and the advance is offset, the guaranteed amount may be reduced accordingly.

Special-Purpose Letter of Guarantee
This is a special guarantee issued by Kıbrıs İktisat Bankası Ltd. outside the standard tender formats described above and addressed to institutions handling visa applications (visa guarantee letters), courts, tax offices or private organisations. It is tailored to the requirements of the addressee and may be used for guaranteed purchases of goods, agencies, dealerships and deposits.

Frequently Asked Questions About Letters of Guarantee