Document background
A Bank Letter of Comfort is commonly used in New Zealand business transactions where a subsidiary company requires financial support or credibility enhancement, but the parent company prefers not to issue a full guarantee. This document, while governed by New Zealand law and banking regulations, typically outlines the parent company's awareness of the subsidiary's obligations and its intention to maintain its ownership and support of the subsidiary. The letter is particularly useful in situations involving international trade, project financing, or significant commercial transactions where the subsidiary's standalone creditworthiness may need enhancement. While less binding than a guarantee, the Bank Letter of Comfort must be carefully drafted to ensure compliance with New Zealand banking regulations while clearly defining the scope and nature of the comfort provided.
