What Is an Agent Bank?
An agent bank is a bank that performs services in some capacity for an entity. An agent bank, otherwise called agency bank, can offer a wide assortment of services for businesses hoping to globally extend. These banks generally act for the benefit of one more bank or group of banks, yet they can act for a person or business.
Understanding Agent Banks
Agent banks can serve the necessities of the two individuals and businesses through a broad scope of services. They can incorporate different forms and will partner on a wide range of offerings. The specific jobs of the agent bank will rely upon the arrangement made with the client.
An agent bank can likewise be syndicate, where the resource for a borrower's taking loans from several banks. In this case, it is the lead bank in a syndicated loan and it keeps different banks appraised of improvements while sending them interest payments.
Benefits of Agent Banks
Individuals and businesses partner with banks to support the management of their financial and cash transaction needs. These substances depend on an agent bank for overseeing funds in a deposit account. These banks can likewise support customers and different banks by facilitating letters of credit or extensions of new credit.
The benefits of an agent bank incorporate the fact that it can operate universally. These banks permit businesses to grow their geographic presence, as having a bank that knows how to operate in different countries is beneficial. These types of banks make accessing funds while abroad simpler.
Agency banks likewise permit businesses to designate administrative tasks, where the agency bank can handle the finances of a business.
Types of Agent Banks
Foreign Agent Banks
A foreign bank carrying on with work in the U.S. for its parent bank might be known as a foreign agent bank. Large numbers of these banks are subject to Federal Reserve regulations and are reviewed by the Federal Reserve every year. They may likewise be given check-going through rights and access to the Federal Reserve's discount window.
Investment banks frequently act as agent banks on institutional investment deals like syndicated loans. An agent bank filling in as a syndicate manager will contract with an issuer to organize a syndicated loan.
The agent bank in a loan syndicate attempts to work with the terms of the loan transaction with the numerous gatherings associated with lending funds to the issuer. The agent bank is paid a fee for its deal management services. When the deal has closed, it might likewise be responsible for dealing with the oversight of syndicated loan payments and terms all through the loans engaged with the deal.
Third-Party Agent Banks
In many cases a business might require the support of an agent bank to send off new services. Partnership with a third-party agent bank is common for credit businesses who need a bank's support in offering credit cards or loan programs.
An agent bank can partner with a business to support the issuance of credit cards in another credit card program. Numerous agent banks have additionally partnered with private lenders to support the growth of new online lending businesses. Lending Club is one illustration of a private lender needing the help of an agent bank for its services. Lending Club works with WebBank to work with the origination of its loans to its online borrowers.
- There are different banks that can be viewed as an agent bank, including investment banks.
- An agent bank operates as a go-between for an individual or business hoping to carry on with work in different countries.
- An agent bank can address a group of banks, which is the case on the off chance that it is the lead bank in a syndicated loan.