Correspondent Bank

AAA

DEFINITION of 'Correspondent Bank'

A financial institution that provides services on behalf of another, equal or unequal, financial institution. A correspondent bank can conduct business transactions, accept deposits and gather documents on behalf of the other financial institution. Correspondent banks are more likely to be used to conduct business in foreign countries, and act as a domestic bank's agent abroad.

INVESTOPEDIA EXPLAINS 'Correspondent Bank'

Correspondent banks are used by domestic banks in order to service transactions originating in foreign countries, and act as a domestic bank's agent abroad. This is done because the domestic bank may have limited access to foreign financial markets, and cannot service its client accounts without opening up a branch in another country.

RELATED TERMS
  1. Consortium Bank

    A subsidiary bank created by numerous banks. A consortium bank ...
  2. Bank

    A financial institution licensed as a receiver of deposits. There ...
  3. Nostro Account

    A bank account held in a foreign country by a domestic bank, ...
  4. Foreign Branch Bank

    A type of foreign bank that is obligated to follow the regulations ...
  5. Subsidiary Bank

    A type of foreign bank that is incorporated in the host country ...
  6. Inherent Risk

    The risk posed by an error or omission in a financial statement ...
Related Articles
  1. The Rise Of The Modern Investment Bank ...
    Insurance

    The Rise Of The Modern Investment Bank ...

  2. The Evolution Of Banking
    Credit & Loans

    The Evolution Of Banking

  3. What Is International Trade?
    Personal Finance

    What Is International Trade?

  4. Globalization: Progress Or Profiteering?
    Economics

    Globalization: Progress Or Profiteering?

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center