An IBAN code is the unique account number that is assigned to any account number with any bank, anywhere in the world. The reason for its existence is fairly simple. There are a lot of banks in this world and there was a need for a banking standard that allocated bank numbers which are unique, irrespective of the bank, location and country.
If you believe that you will be doing a lot of financial transactions, then it may help you to know and understand IBAN codes. To be reasonable, in most cases, you may never need to know what an IBAN code means. This is so, since you will always be given the right code by your bank, when you ask for it. If you are about to initiate a wire transfer, you recipient would be careful enough to give you the right IBAN number. However, reading or looking up the validity of an IBAN code is simple enough and is a neat trick that might just come in handy under the right circumstances.
To illustrate reading of an IBAN, consider the following dummy code – IE29 AIBK 9311 5212 3456 78. This dummy IBAN code can be divided into three parts – Country, Bank + Branch code and the last part is the account number. In any IBAN number, the first two digits are always the country to which the account belongs to. In our case, the ‘IE’ stands for Ireland. Other examples for country codes are AL for Albania and CZ for the Czech Republic. Moving along, the remaining portion of the entire is referred to as the Basic Bank Account Number, or quite simply, the BBAN.
The BBAN, in turn is divided into two parts. The first part of the BBAN is the called the branch code. The second part is called the account number. In our example, the branch code is ‘AIBK931152’ and the account number is ‘12345678’. Unlike the first two letters of the country code, there is no strict limit as to how the branch code and the account number are realized across countries. Each country follows its own way of maintaining branch codes and account numbers.
It is quite possible that an account number is about eight digits in one country and ten in another. The same goes to branch codes as well. However, if you have a rough guess as to either the account number or the branch code, you could figure out the entire IBAN yourself.