Affiliated correspondent

Affiliated correspondent

An affiliate is a type of inter-company relationship in which one company owns less than a majority stake in affiliated correspondent other company’s stock. Affiliations can also describe a type of inter-company relationship in which at least two different companies are subsidiaries of a larger parent company. An affiliate is determined by the degree of ownership a parent company holds in another company.

An affiliate and associate are used to describe a parent company that possesses a minority share of ownership in a company. TINY Corporation, then MID Corporation and BIG Corporation have an affiliate relationship, and TINY Corporation is BIG Corp. A multinational company may set up affiliates to break into other countries’ markets while protecting the parent company’s name in case the affiliate fails or the parent company is not viewed favorably due to its foreign origin. Understanding the differences between affiliates and other company arrangements is important in covering debts and other legal obligations. For corporate securities and capital markets, an affiliate is a person or entity directly or indirectly controlling, being controlled by, or under common control with another person or entity. In finance, affiliation is defined in a loan agreement as an entity other than a subsidiary directly or indirectly controlling, being controlled by or under common control with an entity. For commerce, two parties are affiliated if either can control the other, or if a third party controls both.

For banking, affiliate banks are popular for underwriting securities and entering foreign markets. In electronic commerce, a firm selling other merchants’ products on its website is an affiliate of that company. Merchandise is ordered from the company’s website, but the sale is transacted at the principal’s site. The offers that appear in this table are from partnerships from which Investopedia receives compensation.

An associate company is a corporation whose parent company possesses only a minority stake in the ownership of the corporation. A conglomerate is a company that owns a controlling stake in smaller companies of separate or similar industries, and which conduct business separately. Millennial is the name given to the generation born between 1981 and 1996. A multinational corporation has its facilities and other assets in at least one country other than its home country. A subsidiary bank is a type of bank that is located and operated in a foreign country but majority owned by a parent corporation in a different nation. Capacity management is the management of the limits of an organization’s resources, such as labor force, manufacturing and office space, inventory, etc. What are the Differences Between Affiliate, Associate and Subsidiary Companies?

Investopedia is part of the Dotdash publishing family. What is the difference between a correspondent and an intermediary bank? Wire transfers — an electronic method of sending cash to another person or entity — are very common transactions with all banks, but international wire transfers are costlier and more difficult to execute. In certain parts of the world, such as Australia or EU member nations, banks that deal in international transfers are called intermediary banks.