Definition of International Banking Facility (IBF)

separate banking center in a U.S. domestic bank or office of a foreign bank, authorized by the Federal Reserve Board in 1981 to participate in Eurocurrency lending through a separate set of accounts. Essentially, an IBF is an in-house shell branch (a separate book of assets and liabilities) that makes loans to foreign customers, other IBFs, and U.S offices and foreign offices of an IBF parent bank. IBF deposits, limited to non-U.S. residents, other IBFs, and banks owning an IBF, are free from reserve requirements, federal deposit insurance assessments, and some state income taxes.