Document background
The Bank Letter of Comfort is commonly used in Saudi Arabia when a formal guarantee is either not required or not appropriate, but some form of assurance is needed regarding a company's banking relationship and financial standing. This document is particularly relevant in international trade, project finance, and corporate transactions where Saudi Arabian companies seek to establish credibility with foreign partners or financial institutions. The Letter of Comfort must be carefully drafted to comply with Saudi Arabian banking regulations, SAMA guidelines, and Islamic finance principles, making it distinct from similar documents in other jurisdictions. While not creating legally binding obligations like a guarantee, it carries significant moral and reputational weight in the Saudi business community. The document typically includes statements about the bank's relationship with the client, the client's financial standing, and any relevant banking history, all while maintaining compliance with Shariah principles.
