“Quds Bank  A'amal” issues both local and foreign letters of guarantee of all types for all purposes; inter alia, Bid Bonds, Performance Bonds, Maintenance Bonds…etc., in addition to commercial guarantees.


Letters of Guarantees (LGs)


An unconditional, unrestricted undertaking made by a bank, at the request of client (Applicant), to pay the amount of guarantee or a part of which to a third party (beneficiary), if so requested during the period set out in the LG. The LG specifies the purpose for which it is issued.


Parties of LGs

LG is based on a tripartite relationship engaging the contracting parties. We outline as follows the role and duty of each party.


First Party: Client (Ordered By)

Second Party: Bank (Guarantor)

Third Party: LG beneficiary



  • First Party:

It is the entity or person which applies to a bank for issuing a letter of guarantee. The First Party is engaged in a contractual relationship with the beneficiary governed by the contract executed between them for the completion, execution, or supply of a particular work, commodity or service. The client-beneficiary relationship is wholly independent from the relationship of any party of which with the Bank under the LG, and this relationship is the basis on which the LG is based. The First Party is under obligation to:


  • Pay the LG amount to the Bank if the beneficiary forfeits its value.
  • Provide the cover required by the Bank in consideration of issuance of LG, whether the whole or partial cover.
  • Pay the bank’s commissions and expenses incurred as a result of the issuance of LG.
  • Not to object to the Bank’s payment of LG amount to the beneficiary or extension of its validity period, so long as the bank has made the same in accordance with applicable terms and conditions.



  • Second Party:

It is the party which issues the LG at the client’s request and as per its instruction. In this case, it is the Bank.


  • Third Party

It is the party for the benefit of which the LG is issued, and, as such, it is entitled to benefit from the LG.







Types of LG


  • Tender Guarantee

The primary purpose of this letter is to ensure the bidder’s serious desire and commitment to sign the execution contract where the tender is awarded to it. This type is the most prevalent one, and its validity period expires as soon as the tender is awarded to a bidder.


  • Performance Guarantee

The client substitutes the Tender Guarantee by the Performance Guarantee letter when the tender or bid is awarded to it and execution contract is signed. Validity of this guarantee continues for the term agreed in the contract until the beneficiary ensures good performance and execution. Forfeiture of performance guarantee is necessary where the client fails to perform its obligations in respect of execution of the project or performance of contract.


  • Maintenance Guarantee

After the project is executed, machinery and equipment are delivered, and as agreed between the parties, the beneficiary may request that the maintenance guarantee be submitted by the client for a specified period, in consideration of the return of performance guarantee. If the concerned party fails to submit this guarantee, the beneficiary may instruct the bank to forfeit the performance guarantee for its benefit.


  • Advance Payment Guarantee

The project to be executed is sometimes in need for large financial capabilities which the client cannot secure, so an agreement is made between the client and project owner for the latter to finance the project through making advance payments to the client as a part of the project cost, in order to provide liquidity for the client to commence the work and be able to execute the tender awarded to it. It is also serves as a security for the project owner to have the advance payment returned in case of execution failure, so the owner seeks a bank letter of guarantee. This guarantee is reduced by a percentage equal to the project execution phases.      



In some cases, the project needed to be executed is in need for huge financial capabilities which are not available for the client. Thus, the client shall make agreement with the project owner on financing the project by making advance payments on account to the client in order to provide the necessary and expedient cash liquidity to commence the work and to be able to execute the awarded tender while such party will ensure the client’s obligation to repay the advance payment in case of having no execution. Therefore, such party will ask the client to provide banking letter of guarantee for this purpose and such guarantee will be decreased by a ratio equals to the project executed phases.



Guarantee Service Benefits

  • Competitive commission amount;
  • Easy processing of transactions;
  • The possibility to renew guarantees easily and rapid progress of the financed project