# Letter of comfort (guarantee, letter of intent)

- Canonical URL: https://www.gerhardmerk.de/letter-of-comfort-guarantee-letter-of-intent
- Post ID: 591273
- Modified: 2023-07-25T21:01:09+00:00
- Language: en

## Definition

Generally, a commitment - made by a company or public body - under which the company or public body undertakes - that a borrowing subsidiary will meet its obligations under a loan - by standing in for it if necessary (a letter of comfort signed by the mother-company of the borrower. In this letter the parent-company indicates that it is fully aware of its subsidiary's borrowing; and will do the necessary to procure that its subsidiary has the financial resources to reimburse the said borrowing). However, a letter of comfort does not constitute a legally-binding guarantee for the loan unless this is specifically stated. - In the language of the regulatory authorities, a declaration of intent by which someone undertakes to guarantee the fulfillment of the obligations of another. In Germany, such transactions fall under Section 1 of the German Banking Act (KWG) and therefore require a license. - See off-balance sheet transaction, accommodation, guarantee, bail-out, surety, guarantee transaction, accommodation obligation, loan commitment, irrevocable. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

- Generator: Merk Knowledge 2.0.0