Bank Facilities Letter for the United Kingdom

Bank Facilities Letter Template for England and Wales

A Bank Facilities Letter is a formal document issued under English and Welsh law that sets out the terms and conditions under which a bank or financial institution agrees to provide financial facilities to a borrower. The document details the type and amount of facility, interest rates, fees, repayment terms, security requirements, and conditions precedent. It forms a legally binding agreement between the parties and is governed by UK banking regulations and financial services legislation.

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What is a Bank Facilities Letter?

The Bank Facilities Letter serves as the primary documentation for establishing banking facilities between a financial institution and a borrower under English and Welsh law. This document is typically used when a bank agrees to provide various types of financial facilities such as term loans, overdrafts, or revolving credit facilities. The letter includes essential details about the facility amount, purpose, interest rates, fees, security requirements, and various conditions that must be met. As a key contractual document in banking relationships, the Bank Facilities Letter must comply with UK financial services regulations and banking laws, while also addressing specific commercial requirements of the parties involved.

What sections should be included in a Bank Facilities Letter?

1. Facility Details: Specification of the type, amount, and purpose of the facility being offered

2. Interest and Fees: Details of interest rates, arrangement fees, commitment fees, and other charges

3. Conditions Precedent: List of requirements that must be met before the facility becomes available

4. Repayment Terms: Schedule and methods of repayment, including any early repayment provisions

5. Security Requirements: Details of any required security, guarantees, or collateral

6. Representations and Warranties: Statements of fact and assurances provided by the borrower

7. Undertakings: Ongoing obligations of the borrower throughout the facility period

8. Events of Default: Circumstances that would trigger default and remedies available to the bank

What sections are optional to include in a Bank Facilities Letter?

1. Multiple Currency Provisions: Terms governing the use of multiple currencies in the facility, including exchange rates and currency switching mechanisms

2. Accordion Feature: Provisions allowing for potential increase in facility amount under specified conditions

3. Market Disruption: Provisions dealing with circumstances where interest rate benchmarks become unavailable or market conditions significantly change

4. Regulatory Compliance: Additional provisions required for specific regulatory frameworks, such as Basel III compliance or ring-fencing requirements

What schedules should be included in a Bank Facilities Letter?

1. Schedule 1 - Conditions Precedent Documents: Comprehensive list of required documentation and conditions to be satisfied

2. Schedule 2 - Form of Drawdown Notice: Template for requesting utilization of the facility

3. Schedule 3 - Pricing Schedule: Detailed breakdown of all fees, margins, and interest calculations

4. Schedule 4 - Financial Covenants: Specific financial ratios, thresholds, and reporting requirements

5. Schedule 5 - Form of Compliance Certificate: Template for periodic confirmation of covenant compliance

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Letter of Credit

Cost

Free to use

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