Correspondent Bank

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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.

BREAKING DOWN '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.

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RELATED FAQS
  1. What role does a correspondent bank play in an international transaction?

    A correspondent bank is most typically used in international buy, sell or money transfer transactions to facilitate foreign ... Read Full Answer >>
  2. What accounting and regulatory standards is a correspondent bank subject to?

    Correspondent banks are difficult to regulate. Correspondent banks with ties to the United States have to use a different ... Read Full Answer >>
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    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
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