A bankers’ bank is a US bank that provides financial services to community banks. It is owned by several community banks and provides services just to community banks (not to members of the public or companies).
Thanks to bankers’ banks, community banks receive many services that would otherwise be available only to large national or multinational institutions.
These services mean than community banks are able to offer them to their customers, i.e. the smaller independent financial institutions can compete more effectively with the bigger banks.
United Bankers’ Bank (UBB), formed in 1975 in Minnesota, is America’s largest bankers’ bank.
“(To) level the competitive playing field with systems banks by providing community banks with a full range of innovative correspondent services secure in the knowledge that nobody would ever come after their customers.”
Today, there are sixteen bankers’ banks in the United States, which provide services to over 48 states. TIB (The Independent BankersBank) in Texas is the country’s largest bankers’ bank.
The central bank is the bankers’ bank
The term may also refer to a country’s central bank. Commercial banks maintain a current account with the central bank, and have access to very short-term loans.
The central bank, such as the Federal Reserve System in the US or the Bank of England, provides services to commercial banks in much the same way our banks provide services to us.
According to Merriam-Webster, a bankers’ bank is:
“A bank that deals only with other banks,” or “a central bank (such as a U.S. Federal Reserve bank or the Bank of England).”