A bank guarantee is a written undertaking by a bank, given in a guarantee instrument, to pay the landlord up to a stated sum if the tenant fails to meet its obligations under the lease. Under sections 313 to 322 of the Slovak Commercial Code it is abstract: unless the instrument says otherwise, the bank cannot raise the tenant’s defences and must pay when the landlord asks in writing. That single feature is what separates it from a parent company guarantee, and it is the reason landlords price the two differently.
What a bank guarantee is under Slovak law
The instrument is defined in section 313 of the Commercial Code, Act 513/1991 Zb. A bank guarantee arises when a bank declares in writing, in a document called the záručná listina or guarantee instrument, that it will satisfy the creditor up to a certain sum if a third party fails to perform a specified obligation. In a lease the creditor is the landlord, the third party is the tenant, and the obligation is usually the rent, the service charge and the reinstatement liability at the end of the term.
Two things follow from that definition and are easy to miss. The guarantee is a relationship between the bank and the landlord, not between the tenant and the landlord. And it exists only in the wording of the instrument: there is no statutory template, so every term that matters, from the trigger to the expiry date, has to be written into the document itself.
The bank does not take the risk for nothing. Section 321(2) gives it recourse against the tenant for whatever it has paid out, and in practice the tenant is asked to secure that recourse with cash cover, a credit line or a charge, which is why a guarantee consumes borrowing capacity even while nothing is drawn.
Abstract against accessory: the difference that decides everything
Section 317 is the operative provision and it is worth reading in full. In the original it says that unless the guarantee instrument provides otherwise, the bank may not raise the objections which the debtor would be entitled to raise against the creditor, and the bank is obliged to perform once the creditor has asked it to do so in writing. The guarantee is therefore abstract, or independent: the argument about whether the rent was really owed happens later, between the bank and the tenant, and not before the money moves.
A surety, the form a parent company guarantee normally takes under sections 303 to 312, is built the opposite way. Section 306(2) lets the surety raise against the creditor every objection the debtor could raise. If the tenant disputes the service charge reconciliation, the parent can dispute it too, and the landlord is in a dispute rather than in funds.
Section 322(1) applies the surety rules to a bank guarantee only subsidiarily, meaning they fill gaps rather than override the instrument. That ordering is the whole point: what the guarantee instrument says beats the general law, so the drafting of the instrument is not a formality.
First demand and what it actually means
The phrase first demand, na prvé požiadanie, describes a guarantee where the bank pays against a written statement from the landlord that the tenant has defaulted, without proof of the default and without the bank examining the underlying lease. Slovak law already leans that way in section 317, but the words in the instrument are what a bank will act on, so the trigger belongs there explicitly.
The alternative is a conditional or documentary trigger: the landlord must submit specified documents, for example a copy of the demand sent to the tenant and a statement of the arrears. That is a compromise most tenants prefer, because it stops a purely tactical call, and most landlords accept, because the documents are ones they would produce anyway.
An occupier negotiating the instrument should look at four things before the wording is agreed. The amount and whether it steps down as the term runs. The expiry date and whether it sits after the end of the lease, since a guarantee that lapses on the last day covers none of the handback risk. Whether partial calls are allowed and whether the guarantee reinstates afterwards. And which law and which forum govern the instrument, which can differ from the lease itself.
What it costs, and how that compares with a deposit
The bank charges an issuing commission for the period the guarantee is outstanding. Tatra banka’s published tariff for bank guarantees, valid from 31 May 2024, sets issuance at a minimum of 1.80 per cent per annum with a minimum of EUR 400, and charges 0.25 per cent when the guarantee is called. Prima banka’s tariff quotes a band of 1.20 to 4.00 per cent per annum. The realistic Slovak band is therefore roughly 1.2 to 4 per cent a year, above the 0.5 to 2 per cent that general European material tends to quote.
Put that on a real unit. At the prime industrial rent of EUR 5.30 per square metre per month reported for the second quarter of 2026, a 10,000 square metre hall costs EUR 53,000 a month. A guarantee covering six months of rent is EUR 318,000, and the annual commission on it runs from about EUR 5,700 at 1.8 per cent to about EUR 12,700 at 4 per cent. That is our own arithmetic on the published rent and the published tariffs, not a quoted case.
A rent deposit costs nothing in commission but ties up the same money in cash, so the honest comparison is the commission against the tenant’s own cost of capital. The two also behave differently under stress: a deposit becomes an argument about set-off if the tenant goes insolvent, while a guarantee is a claim against a bank and is untouched by the stay on individual enforcement in section 48 of the Slovak insolvency act.
Where it sits in the lease negotiation
Security is one of the commercial points that belongs in the heads of terms rather than in the lease draft, because the answer changes the deal. A landlord underwriting a long income stream will trade on it: a tenant that offers a bank guarantee instead of a parent company guarantee is handing over something a lender can actually rely on, and that is worth asking to be paid for in rent-free months or a fit-out contribution.
The level asked for varies with covenant rather than with any market convention. Slovak law does not regulate lease security at all, and the published guides for Slovakia name the instruments without stating a customary number of months, so any figure quoted as standard is a negotiating position rather than a rule. Three to six months of rent plus service charge is the range we see most often on industrial units, with newly incorporated or foreign tenants asked for more.
One practical habit avoids most of the trouble at the end. Diarise the expiry date of the instrument separately from the lease expiry, and agree in the lease who bears the cost of extending it if the term is extended. Guarantees that quietly lapse mid-term are the most common defect we see, and they are discovered at exactly the moment the landlord wanted to call on them.
Frequently Asked Questions
Is a bank guarantee better than a parent company guarantee?
For the landlord, usually yes, and the reason is legal rather than commercial. A bank guarantee under section 317 of the Commercial Code is abstract, so the bank pays on written request without raising the tenant’s defences. A parent company guarantee normally takes the form of a surety, and section 306(2) lets the parent raise every objection the tenant could raise. A weaker covenant on an abstract instrument can be worth more than a stronger covenant on an accessory one.
How much does a bank guarantee cost in Slovakia?
Roughly 1.2 to 4 per cent of the guaranteed amount per year, based on the published tariffs of Slovak banks, with minimum fees of a few hundred euro and a separate charge when the guarantee is called. The rate a given tenant is quoted depends on its own credit standing and on what cover the bank requires, so the published minimum is a floor rather than a forecast.
Can the landlord call the guarantee without proving the default?
Under a first demand guarantee, yes: the bank pays against the landlord’s written statement and the dispute about whether the money was owed follows afterwards between the bank and the tenant. Under a documentary guarantee the landlord must submit the documents listed in the instrument. Which of the two applies is decided by the wording, not by the statute.
What happens to a bank guarantee if the tenant becomes insolvent?
Nothing automatically. The guarantee is an obligation of the bank, not of the tenant, so it is not part of the tenant’s estate and is not caught by the stay on individual enforcement that applies from the declaration of bankruptcy. The bank then joins the insolvency as a creditor for its recourse claim, which is the bank’s problem rather than the landlord’s.
When should the guarantee expire?
After the lease, not with it. Rent arrears, the service charge reconciliation and the reinstatement liability are all quantified in the weeks or months following handback, so an instrument that lapses on the final day of the term leaves precisely the obligations most likely to be disputed uncovered. A period of three to six months beyond expiry is the usual request.