The number of correspondent banking relationships are falling as the popularity of alternative payment systems grows and the level of regulatory scrutiny increases.
According to the European Central Bank’s (ECB) ninth biennial survey on correspondent banking, the biggest European lenders are severing links with their smaller peers, despite the fact that a large volume of payments are still made through correspondent banking channels. In 2014, the number of linkages between banks hit an all-time low of 12,207 (see chart 1), a drop of over 2,000 from 2012, going by loro accounts (accounts of the service-providing banks).
