The bank name attached to foreign-exchange settlement risk is Herstatt.
The term comes from Bankhaus Herstatt, a privately owned bank in Cologne, Germany. On 26 June 1974, German regulators withdrew the bank’s license after it could not cover its liabilities. The failure exposed a dangerous timing gap in international currency payments.
Several counterparties had already delivered Deutsche marks to Herstatt in Frankfurt while expecting U.S. dollars later in New York. Because the German banking day ended before the U.S. market’s payment cycle was complete, Herstatt stopped operating before sending the dollar leg. The counterparties therefore paid out one currency without receiving the other.
This became known as Herstatt risk, also called foreign-exchange settlement risk or cross-currency settlement risk. It is not the same as ordinary exchange-rate risk: the central danger is that one side of a currency trade settles while the other side fails. The incident helped spur international supervisory cooperation and eventually supported payment-versus-payment systems such as CLS.