Subsidiary Bank


DEFINITION of 'Subsidiary Bank'

A type of foreign bank that is incorporated in the host country but is considered to be owned by a foreign parent bank. The subsidiary bank only needs to operate under the host country's regulations.

BREAKING DOWN 'Subsidiary Bank'

One of the drawbacks of operating a subsidiary bank is that the amount of loans that the bank can make is much less than what a foreign branch bank can make. However, one benefit that makes up for that drawback is a subsidiary bank's ability to underwrite securities.

That being said, the type of international banking office that a parent bank chooses to set up would depend on the role that the office holds. For example, if a U.S.-based bank wants to underwrite securities in Canada, the bank should set up a subsidiary bank, whereas if the U.S.-based bank wants to make loans to Canadian companies, the bank should set up a foreign branch bank.

  1. Branch Banking

    Engaging in banking activities such as accepting deposits or ...
  2. Schedule II Bank

    A bank which is a subsidiary of a foreign bank and authorized ...
  3. Foreign Branch Bank

    A type of foreign bank that is obligated to follow the regulations ...
  4. Commercial Bank

    A financial institution that provides services, such as accepting ...
  5. Bank

    A financial institution licensed as a receiver of deposits. There ...
  6. Underwriting

    1. The process by which investment bankers raise investment capital ...
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