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Correspondent Bank vs intermediary bank

Both 'correspondent bank' and 'intermediary bank' are correct terms used in the banking industry, but they have slightly different meanings. 'Correspondent bank' refers to a bank that provides services on behalf of another bank, often in a different country. On the other hand, 'intermediary bank' is a bank that acts as a third party in a financial transaction, facilitating the transfer of funds between the originating bank and the beneficiary bank.

Last updated: March 31, 2024 • 679 views

Correspondent Bank

This phrase is correct and commonly used in the banking industry.

A correspondent bank is a financial institution that provides services on behalf of another bank, often in a different country. It helps facilitate international transactions and manage foreign exchange.

Examples:

  • Our bank has a correspondent bank in the United States to handle USD transactions.
  • The correspondent bank relationship allows smaller banks to access global financial markets.
  • It may not always be easy for a credit institution to discover when a correspondent bank does so.
  • «(5) MT 202COV messages shall be used for making cover payments, i.e. payments made by correspondent banks to settle (cover) credit transfer messages which are submitted to a customer's bank by other, more direct means.
  • Assets deposited with a correspondent central bank can only be used to collateralise Eurosystem credit operations.
  • Central banks do not advance funds until they are certain that the counterparties' marketable assets have been received by the correspondent central bank.
  • Where necessary to meet settlement deadlines, counterparties may be able to pre-deposit assets with correspondent central banks for the account of their home NCB using the CCBM procedures.
  • NCBs do not advance funds until they are certain that the counterparties' marketable assets have been received by the correspondent central bank.
  • In a pooling system, the counterparty is able at any time to provide the correspondent central bank with marketable assets for the account of the home central bank.
  • Central banks do not advance funds until they are certain that the counterparties» securities have been received by the correspondent central bank.
  • Once the home NCB has been informed by the correspondent central bank that the collateral has been received, it transfers the funds to the counterparty.
  • In a pooling system, the counterparty is able at any time to provide the correspondent central bank with marketable assets for the account of the home NCB.
  • (9) central bank correspondent banking relations;
  • With this arrangement, counterparties obtain credit from their «home» central bank based on collateral transferred to another Eurosystem central bank (the «correspondent central bank ).
  • Where necessary to meet settlement deadlines, counterparties may be able to pre-deposit assets with correspondent central banks for the account of their home central bank using the CCBM procedures.
  • Once the home central bank has been informed by the correspondent central bank that the marketable assets have been received, it will add these marketable assets to the pool account of the counterparty.
  • Thirty minutes for the home central bank and thirty minutes for the correspondent central bank.
  • Once the home central bank has been informed by the correspondent central bank that the securities have been received, it will add these securities to the pool account of the counterparty.
  • Once the home central bank has been informed by the correspondent central bank that the collateral has been received, it transfers the funds to the counterparty.
  • Once the home central bank has been informed by the correspondent central bank that the collateral has been received, it transfers the funds to the counterparty.
  • Where necessary to meet settlement deadlines, counterparties may be able to pre-deposit assets with correspondent central banks for the account of their home central bank using the CCBM procedures.
  • In a pooling system, the counterparty is at any time able to provide the correspondent central bank with securities for the account of the home central bank.

Alternatives:

  • partner bank
  • agent bank
  • representative bank
  • respondent bank
  • counterparty bank

intermediary bank

This phrase is correct and commonly used in the banking industry.

An intermediary bank is a financial institution that acts as a third party in a financial transaction, helping to facilitate the transfer of funds between the originating bank and the beneficiary bank. It is often used in international wire transfers.

Examples:

  • The intermediary bank deducted a fee for processing the international transfer.
  • We need to provide the intermediary bank details for the funds to reach the recipient.
  • EIH has been noted acting as the advising bank and intermediary bank in transactions with designated Iranian entities.
  • according to the internal processes of the intermediary bank or other financial institution that the SME or small midcap applies to, using normal commercial criteria.
  • Intermediary banks should not be allowed to deduct fees.
  • Banks can be reachable directly, indirectly through intermediary banks, or indirectly through links between infrastructures.
  • While specific credit lines for ceramic companies are not available, it should be noted that the European Investment Bank provides loans to all SMEs through intermediary banks ().
  • One important priority of the EIB is the provision of loans to SMEs from intermediary banks in Member States, which are used by 150000 businesses.
  • RSFF will enable the European Investment Bank to expand, directly and indirectly (via its network of intermediary banks), its portfolio of loans to participants in such infrastructures.
  • In Member States where complete information cannot be transmitted for technical reasons, it will still be possible, acting jointly and with the consent of the bank of final destination, to hold intermediary banks accountable too.
  • The ICP promotes the abolishment of the possibility for intermediary banks, when used, to deduct fees from the transferred amount.
  • This practice will, for STP payments, also put an end to the «beneficiary deduct» principle, whereby in the past intermediary banks deducted their own charges from the principal amount.
  • Many financial transactions are intermediate, not like end sales, so the intermediaries - banks and the like - will bear the tax.
  • SMEs can obtain an EIB loan via national 'intermediary banks' which examine the request and decide whether or not by granting a loan they take a risk.
  • Is the Commission aware that some Member States, including the Netherlands, Belgium and Sweden, have no intermediary banks?
  • The fact that the intermediary banks will continue to be responsible for administering these loans makes it all the more urgently important to formalise the criteria for eligibility, and to organise a transparent discussion of the relevance of the choices made by those intermediaries.
  • I would add that similar work is under way on evaluating global loans, that is, the loans that we grant to intermediary banks for lending either to SMEs or to local authorities.
  • We would thus avoid situations in which loans that would have been granted by the private sector are now granted under better conditions for the intermediary banks thanks to the EIB's triple A classification.
  • This heterogeneity is also confirmed by the finding that 75% of the overall EUR 21 billion assigned for financial support was made fully available through the intermediary banks, which was drawn on by just 50000 out of the total of 23 million SMEs.
  • In order for existing retail payment infrastructures to become SEPA-compliant, they must be able to send or receive payments to and from all banks in the euro area, directly or indirectly through intermediary banks or through links between infrastructures.
  • Access by small and medium-sized enterprises to credit has also improved, due to an increase in the sum of credit lines granted by the European Investment Bank to the intermediary banks that are responsible for reallocating the sums to small and medium-sized enterprises in the form of loans.
  • Will the Commission, in cooperation with the EIB, take measures in the near future to bring about a situation in which intermediary banks also operate in these Member States?

Alternatives:

  • middleman bank
  • facilitator bank
  • transit bank
  • clearing bank
  • transfer bank

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