International Banking Facility (IBF)
What it is:
An international banking facility (IBF) is a segregated branch of a domestic bank or financial institution available to only foreign customers.
How it works (Example):
International banking facilities provide a range of lending and multicurrency depository services, but only to foreign residents and institutions.
IBFs are designed to compete with foreign banks, so their operations are not bound to the same regulations (such as reserve requirements) as domestic banks. As well, their accounts are considered separate from the parent bank.
Why it Matters:
IBFs allow U.S. institutions to compete with foreign banks and attract money from international companies and individuals that would otherwise flow to foreign banks.