What are bank codes and why do they matter?

 
A bank code is a numerical code assigned to each bank in order to identify a bank and branch during financial transactions. Each code is generated and assigned by the central bank of that jurisdiction or banking body. For example, regulation of UK-based banks is undertaken by three main regulators; Bank of England (BoE), Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).

BIC, CHAPS, IBAN, SWIFT and vIBANS are acronyms you probably encounter if you do business overseas and make payments internationally. So, for businesses with a global presence, it would be beneficial to know these ahead of time. We’ve broken down the codes and terminology with examples of what they look like.

BIC and SWIFT bank codes

BIC means Bank Identification Code or Bank Identifier Code. The code is used to identify a specific bank when conducting an international transfer or payment to ensure it’s sent to the correct place.

Further to this, BIC codes are managed by SWIFT (Society for Worldwide Interbank Financial Telecommunication) and can also be referred to as SWIFT, SWIFTBIC, SWIFT/BIC, BIC/SWIFT which can seem confusing, but they are the same thing.

All BIC and SWIFT codes consist of 8 to 11 characters long and follow the same format. There are a couple of things worth noting; 11 digit codes refer to specific branches of that company whereas 8 digit codes (or those ending in XXX) refer to the head office of the company.

BIC/SWIFT codes breakdown

  • First 4 characters – bank code (only letters)
  • Next 2 characters – ISO 3166-1 alpha-2 country code (only letters)
  • Next 2 characters – location code, the passive participant will have “1” in the second character (letters and digits)
  • Last 3 characters – branch code, optional – ‘XXX’ for head office (letters and digits)

Here are some real-world examples:

Barclays

  • SWIFT Code: BARCGB22XXX
  • Bank / Institution: BARCLAYS BANK PLC
  • Branch Name: (ALL U.K. OFFICES)
  • Address: 1 CHURCHILL PLACE
  • City: LONDON
  • Postcode: E14 5HP

HSBC

  • SWIFT Code: HBUKGB4106W
  • Bank / Institution: HSBC UK BANK PLC
  • Branch Name: (KINGS CROSS BRANCH)
  • Address: 31 EUSTON ROAD KING CROSS
  • City: LONDON
  • Postcode: NW1 2ST

Goldman Sachs

  • SWIFT Code: GOSGGB21
  • Bank / Institution: GOLDMAN SACHS GROUP UK LIMITED
  • Branch Name: N/A
  • Address: 133 FLEET STREET PETERBOROUGH COURT
  • City: LONDON
  • Postcode: EC4A 2BB

IBAN bank codes

An IBAN is an International Bank Account Number. The international system is used to identify and ensure that payments are made to the correct recipient account. The IBAN identifies; the country, bank, branch and account number.

An IBAN can contain up to 34 characters in both letters and digits. An IBAN is constructed as follows:

  • A two-letter code representing the country
  • Two numbers which are the check code/check number which controls if there are errors – this is unique per user.
  • Up to 30 letters and numbers that identify the specific bank and bank account
Country
Code
SEPA
Length
Account Check
Branch
IBAN Example
United Kingdom
GB
Yes
22
Yes
Yes
GB33BUKB20201555555555

Find out more information on IBAN codes.

Clearing and routing bank codes

For any account that doesn’t have an International Bank Account Number (IBAN), a clearing code (also known as a routing code) will be required.

If you have a SWIFT/BIC or IBAN code, then you won’t need a clearing code, as clearing codes are often used to make payments outside of the European Union (EU) to jurisdictions such as; Australia, New Zealand, South Africa and the United States.

Not all banks and financial institutions are part of networks such as SWIFT or have the infrastructure in place, however, this doesn’t mean that they can’t facilitate cross-border payments.

Specialist providers such as Freemarket can help businesses offer international banking services to their customers without needing to have the infrastructure. Find out how we do this.