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Definition: Bankers' Bank
Bankers’ Bank is a distinctive type of bank created by a group of banks that provides financial services to community banks. They serve the chartered banks who founded them. Bankers’ Banks do not serve the public directly. They help the community banks by providing innovative correspondent services to effectually compete with large banks.
The first such bank was formed in 1975 in Minnesota, the United Bankers’ Bank. Their vision is to level the competitive field with systems large banks. They provide capital to a large number of community banks by spreading and lowering the risk. This results in lower expense for the local banks.
There are 16 bankers’ bank serving 6000 local banks in 48 states of the USA.