What is a depository bank?

A depository bank is a bank that stores assets or securities for clients at its location and facilitates the exchange of securities. A depository bank can also serve as both a payor and collection bank.

All retail banks that hold money in accounts for their clients are considered depository banks under this definition. A depository bank also refers to a U.S. bank charged with holding the shares of corporations based outside the country. This type of depository bank sells American depository receipts for investors in the United States and is responsible for handling local tax payments and dividend issuance to investors.