Comfort letters

Comfort letters

This Overview is a guide to the Banking & Finance content within the Comfort letters subtopic, with links to the appropriate materials.

Comfort letters are generally issued by a parent or holding company giving 'comfort' to a lender about their support for a subsidiary in the context of a finance transaction. It is important for both lenders and comfort letter providers to understand the legal nature of a comfort letter and what rights it might create. Comfort letters are very different in nature to security or guarantees. They do not create rights over assets and, in most cases, they will not even be legally binding. If a comfort letter is legally binding, it will only create contractual rights.

When comfort letters are used

Comfort letters are often provided where the parent or holding company of the borrower is:

•
unable to give a guarantee due to prohibitions in its constitutional documents or negative pledges it has given to other lenders, or
•
unwilling to give a guarantee for commercial reasons or where company policy limits the amount of contingent liabilities that it can incur

Comfort letters should not be

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Banking & Finance News

Market Insights Trend Report—trends in sustainability disclosures in corporate reporting

Environment analysis: The Market Insights Trend Report provides analysis on the sustainability disclosures and climate transition plans of FTSE 100 companies during 2024 and provides commentary on the outlook for these issues during the 2025 season. To address the multipronged nature of sustainability reporting, the report aims to identify which sustainability areas are being disclosed by companies to subsequently ascertain why companies may be reporting on them. While this year’s report focuses primarily on environmental disclosure reflecting prevailing regulatory and market priorities, the report also acknowledges the growing importance of social and human rights issues

OFSI publishes threat assessment on cryptoasset sanctions compliance risks

The Office of Financial Sanctions Implementation (OFSI) has published a threat assessment examining sanctions compliance risks in the UK cryptoasset sector from January 2022 to May 2025. Key developments include the March 2025 disruption of designated Russian exchange Garantex, resulting in the seizure of US$26m in illicit assets, and the February 2025 North Korean cyber attack on Bybit exchange that resulted in the theft of US$1.5bn in cryptoassets. The assessment outlines compliance vulnerabilities and provides detailed guidance for UK cryptoasset firms on reporting obligations.

Banking and Finance weekly highlights—17 July 2025

This week's edition of Banking and Finance weekly highlights includes: (1) FCA publishes final stripped-back rules to help companies raise capital and boost growth; (2) analysis in the Vietjet Aviation Joint Stock Company case which examined the importance of ensuring that the security document clearly states whether the lender may exercise assigned rights prior to the security becoming enforceable; and (3) ISDA launches Notices Hub and protocol to streamline delivery and receipt of critical notices.

FCA issues Primary Market Bulletin 56

The Financial Conduct Authority (FCA) has issued Primary Market Bulletin 56. The bulletin outlines the FCA’s use of transaction and position data to monitor compliance with reporting obligations under the UK Market Abuse Regulation (UK MAR), including directors’ dealings. It highlights enforcement action taken against a former Person Discharging Managerial Responsibilities (PDMR) at Wizz Air Holdings Plc, who failed to notify 115 transactions, including trades during closed periods, resulting in a £123,500 fine. The bulletin also reminds issuers of the upcoming expiry on 29 July 2025 of transitional provisions under the UK Listing Rules (UKLR), including those for inflight applicants and shell companies and the need to ensure compliance with eligibility and operational requirements. Issuers are also reminded to provide up-to-date contact details as required. In addition, the FCA has announced plans to enhance the National Storage Mechanism and launched a user survey to support improvements to data accessibility.

View Banking & Finance by content type :

News