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Mizuho Bank has partnered with US-headquartered financial services company BNY to expand access to correspondent banking services for its client in the Asia Pacific region.

The partnership adds Mizuho to BNY’s digital trade platform, Trade Network Access Service (TNAS), allowing it to communicate with the 4,000 bank branches with which BNY maintains Swift communications.

In order for a bank to provide a letter of credit to a client for a cross-border transaction, it needs to be in communication with the counterparty’s bank, which normally takes the form of a Swift relationship management application (RMA).

However, a tightening regulatory environment has meant that correspondent banking relationships are harder and more expensive to maintain, with Baft (Bankers Association for Finance and Trade) highlighting a 29% decrease in these relationships between 2013 and 2023.

This partnership allows Mizuho to communicate with BNY’s correspondent banks in the case that it does not have its own RMA with them, expanding the countries in which it can facilitate trade. The transactions are routed through BNY, which serves as the first or second advising bank to the letters of credit, a spokesperson for BNY tells GTR.

BNY takes on the cost of maintaining the RMAs, including performing due diligence to comply with know-your-customer and anti-money-laundering regulations. In exchange, it receives fees from transactions completed between Mizuho and the correspondent banks through its position as an advising bank.

This “offers enhanced solutions to corporate clients in Asia without significant investments by either institution in trade infrastructure”, according to a BNY press release.

“As we continue to see dislocations of global supply chains, our clients continue to desire to expand cross-border trade opportunities,” says Tsutomu Yamamoto, managing executive officer and head of global transaction banking unit at Mizuho Bank. “This landmark collaboration with BNY will help our clients capture new trade opportunities while managing risks, contributing to global trade growth in the long run. This is a natural alliance between two leading financial institutions that brings together complementary strengths and client segments.”

A similar partnership took place in 2021 when Swedish lender Handelsbanken dismantled its own correspondent banking network to make use of UBS’ – though there is no evidence that Mizuho intends to phase out its own network.

In another new partnership, BNY this week announced a collaboration with fintech Kanexa to provide its clients with an open account automation solution. BNY says in a press release that the solution will allow businesses to “automate and digitise their entire workflow, thereby streamlining invoice approval processes and enhancing operational efficiencies”.