What is a Bank Confirmation Letter (BCL)?
A bank confirmation letter (BCL), sometimes called a comfort letter, is a written statement from a bank that confirms a borrower has access to a specified amount of credit or funds. It’s issued to reassure a third party—such as a seller, counterparty, or joint-venture partner—that the borrower can meet a particular payment or financing requirement. A BCL describes availability of funds or a credit facility; it is not the same as an unconditional payment guarantee.
Key points, in plain terms
– Purpose: Confirms the availability of a loan, mortgage approval, or line of credit for a named transaction or project.
– Not a payment guarantee: The bank is saying the customer has access to funds or credit, not that the bank will pay the counterparty on the customer’s behalf.
– Single-use and time-limited: A BCL is typically written for one specific transaction and expires after a stated period. If the borrower changes the deal, a new letter is normally required.
– Authorized signature: It must be signed by a bank representative who is authorized to issue such letters.
– Content requirements vary by jurisdiction: Some countries require the letter to state the purpose; others do not.
Common applications
– Real estate purchases: Sellers and realtors often request a BCL to confirm a buyer has mortgage approval up to a stated amount.
– Corporate transactions: Sellers shipping large quantities of goods or parties entering joint ventures request BCLs to reduce counterparty risk.
– Project financing and tenders: A BCL may be used to show credit capacity during bidding or contracting.
Related documents — definitions
– Bank certification letter / Bank verification letter: These terms usually refer to a letter confirming that a named person or company holds an account at the bank and the balances in that account. They verify existence and level of deposits rather than confirm access to a loan or credit line.
Checklist — what the issuing bank usually needs from the borrower
– Identification (personal or company IDs, authorized signatories).
– Account statements or evidence of collateral if required.
– Loan commitment letter or term sheet (if loan approval already exists).
– Clear description of the transaction and the beneficiary (seller/recipient).
– Exact amount to be confirmed and desired expiration date.
– Any required legal or notarization instructions for cross-border use.
Checklist — what you (as the recipient of a BCL) should verify
– Issuing bank name and contact details.
– Exact amount confirmed and currency.
– Beneficiary name (is it you or a different party?).
– Expiration date and any conditions or subject-to clauses.
– Clear statement that the letter does or does not constitute a payment guarantee.
– Authorized signature and the name and title of the signatory.
– Whether the letter is single-use (for that transaction only).
How to request a BCL — step-by-step
1. Determine the amount, currency, beneficiary, and expiration date you need.
2. Contact your bank relationship manager or visits a branch. Some banks accept requests by phone or via online banking.
3. Provide supporting documents: ID, account statements, loan approval/term sheet, and transaction details.
4. Ask the bank
4. Ask the bank to prepare the letter and confirm the timeline, fees, and delivery method. Specify whether you need an original signed paper letter, an emailed PDF, or a SWIFT message. Ask if the bank will produce a standalone BCL or combine it with other documents. Get a name and contact for the person who will sign or approve the BCL.
5. Provide any additional documentation the bank requires to support the requested amount: loan term sheets, proof of funds in the account, board resolutions (for corporate accounts), and IDs for signatories. Confirm whether the bank will perform internal approvals and how long those approvals typically take.
6. Review a draft before finalization. Check amounts, currency, beneficiary name, expiration date, and the exact wording about whether this constitutes a guarantee or only confirms available funds. Correct any inconsistencies in writing.
7. Receive the BCL and verify authenticity (see verification checklist below). Retain copies and record the delivery method, signatory, and contact details for future reference.
Sample wording (concise, original)
– Bank letterhead and address
– Date: [DD MMM YYYY]
– Re: Bank Confirmation Letter for [Customer Name / Account Number]
– We confirm that, as of [date], [Customer Name], account number [xxxx], maintains cleared funds or credit facilities available to the amount of [currency][amount]. These funds are available subject to the following conditions: [list conditions]. This letter is issued at the request of [Customer] and is valid until [expiration date]. This letter does not constitute a payment guarantee, standby letter of credit, or irrevocable undertaking by [Bank Name] unless expressly stated. Authorized signatory: [name, title, signature].
– Bank contact for verification: [name, phone, email]
How recipients should verify a BCL — step-by-step checklist
1. Confirm the issuer bank’s identity using a trusted source (bank website or directory), not the contact details on the letter alone.
2. Call the bank’s main switchboard or relationship manager using the phone number on the bank’s official website and ask to be connected to the person who signed the BCL. Do not rely solely on numbers printed on the BCL.
3. Request an independent SWIFT copy or bank confirmation where feasible (e.g., MT799 for pre-advice or MT760 for guarantees) — note that use of specific SWIFT messages depends on the banks and the nature of the transaction.
4. Check the signatory name and title against the bank’s authorized signatory list when available.
5. Verify letterhead elements and formatting with known originals from the bank (logo, registration numbers, legal disclaimers).
6. For high-value transactions, ask for notarization, apostille, or a bank-attested copy and consider having the BCL reviewed by legal counsel.
Common pitfalls and red flags
– Vague wording that omits currency, exact amount, beneficiary, or expiry.
– Language that alternates between “available funds” and “guarantee” without clarity. A BCL usually confirms funds or credit availability; it rarely is a payment guarantee.
– Contact details that route through third parties or personal mobile numbers not verifiable on the bank’s official channels.
– Unusually short expiration windows that don’t match the transaction timeline.
– Requests to wire escrow or advance fees to offshore or unknown accounts before verification.
Difference between a BCL, a bank guarantee, and a letter of credit (brief)
– Bank Confirmation Letter (BCL): Confirms that a customer has funds or credit available; usually informational.
– Bank Guarantee: A bank’s legal commitment to pay a beneficiary if the bank’s customer fails to meet obligations; legally binding on the bank.
– Letter of Credit (LC): A conditional payment instrument where the bank pays the beneficiary upon presentation of specified documents meeting the LC terms (commonly used in trade).
Assumption: The precise legal enforceability of each instrument depends on jurisdiction, the letter wording, and the bank’s internal policies.
Worked numeric example
Scenario: An importer needs evidence that their counterparty has funds to pay a $250,000 shipment in USD and requests a BCL valid for 45 days.
Step 1 — Requester provides:
– Amount: USD 250,000
– Beneficiary: Importer ABC Ltd.
– Expiration: 45 days from issuance
– Purpose: Evidence of funds for a single import shipment
Step 2 — Bank process:
– Bank confirms account balance and internal approvals.
– Bank fees quoted: 0.15% flat on amount for issuance, minimum $150 (example only). For $250,000, fee = 0.0015 * 250,000 = $375.
Step 3 — Recipient verification:
– Importer calls bank main switchboard using number from bank website, requests confirmation of BCL issued on [date], quotes reference number, and confirms signatory.
Quick checklist for requesters (to bring to your bank)
– Exact amount and currency.
– Beneficiary full legal name and relationship.
– Desired expiry date and whether it’s single-use.
– Purpose of letter (informational vs. evidence for counterparty).
– Identification and account documentation.
– Accepted delivery method (original, encrypted PDF, SWIFT).
– Budget for fees and expected timeline.
Practical tips
– Plan ahead: Banks often need multiple business days for approvals and signatures.
– Use precise language in the request to avoid ambiguity.
– Keep a written audit trail (emails, drafts, bank contact names, reference numbers).
– For large or cross-border transactions, consider legal review and independent bank-to-bank confirmation.
Educational disclaimer
This information is educational only and not individualized investment, legal, or financial advice. Check with your bank and qualified legal counsel for guidance specific to your situation.
References
– Investopedia — Bank Confirmation Letter (BCL): https://www.investopedia.com/terms/b/bank_confirmation_letter.asp
– SWIFT — Official site and message standards: https://www.swift.com/
– International Chamber of Commerce (ICC): https://iccwbo.org/
– World Bank — procurement and guarantee guidance: https://
https://www.worldbank.org/en/projects-operations/products-and-services/guarantees
– Bank for International Settlements (BIS) — central clearing, payment systems, and market infrastructure research: https://www.bis.org/