Bank Comfort Letter

A bank comfort letter is a letter of confirmation issued by the bank on behalf of their client assuring that he or she has sufficient funds to complete the business deal as pre-agreed. It is used mostly in huge commodity contracts when the seller would like to get assured of the financial capability of the buyer before proceeding further in the contract. However, this doesn’t imply any assurance of payment. The statement is based on facts and doesn’t make the bank obligated to any financial commitment.