Nostro /Vostro
Correspondent accounts
- What it is
- Banks’ correspondent accounts with one another
- Nostro
- Your bank’s account with a foreign bank (“our account with them”)
- Vostro
- A foreign bank’s account with yours (“your account with us”)
- Why they are needed
- Money physically moves through them in international transfers
- Why it matters
- Whether a payment arrives, and how quickly, depends on correspondent accounts
In plain words
Nostro and vostro are the names of the correspondent accounts banks open with one another. Nostro (from “ours”) is your bank’s account with a foreign bank. Vostro (from “yours”) is a foreign bank’s account with yours. It is one and the same account, simply named from different sides.
Why it is needed: money does not “fly” between countries. When you send an international transfer, SWIFT passes the message, while the sum itself moves through correspondent accounts. If your bank has no direct correspondent account in the currency required, the payment goes through intermediary banks — the chain lengthens, and timing and fees increase.
For the client this explains two things. First: why a dollar transfer almost always goes through a US correspondent bank’s compliance, even if neither sender nor recipient has anything to do with the US. Second: why on some routes payments take weeks or do not go through at all — the bank has simply lost its correspondent on that route.
When this matters in practice
What you need to know about correspondent accounts
- Our bank’s account abroad
- In a foreign currency
- Money goes out through it
- A foreign bank’s account with us
- The same account from the other side
- Money comes in through it
- Length of the chain
- Intermediaries’ fees
- Crediting time
- The correspondent’s compliance
- A bank losing a correspondent account
- Closed routes
How money moves through correspondent accounts
- 01The bank debits the sum from you
- 02The message goes via SWIFT
- 03Movement through correspondent accounts
- 04A check at the correspondent
- 05Credit to the beneficiary
What you need to know
- Nostro and vostro are one account seen from different sides
- Money moves through correspondent accounts, not “via SWIFT”
- With no direct correspondent account, the payment goes through intermediaries
- Each intermediary may deduct a fee
- Dollar payments go through US compliance
Common mistakes
- Choosing a bank without asking about correspondent accounts in the currency you need
- Assuming the transfer time depends only on your bank
- Not allowing for intermediary banks’ fees
- Ignoring that the bank has lost a correspondent
- Planning a deal without a margin on timing
What this means for a BRIDGES client
We choose a bank not only by name and tariffs but by its real payment routes: whether it has correspondents in your currency and on your routes. For deals with tight deadlines this matters more than the size of the fee.
Frequently asked questions
01 /How does nostro differ from vostro?
It is one and the same account, named from different sides. Nostro is “our account with them”, vostro “your account with us”. The difference is only the bank’s point of view.
02 /Why do banks need correspondent accounts?
Money physically moves through them in international transfers. SWIFT passes only the message; settlement takes place through correspondent accounts.
03 /Why does a transfer go through a third bank?
Because your bank has no direct correspondent account in the currency or on the route required. The payment goes through an intermediary, which lengthens the time and adds a fee.
04 /Why is a dollar payment checked in the US?
Dollar settlements go through US correspondent banks, and they apply their own compliance rules — regardless of where the parties are.
05 /Can a bank lose a correspondent?
Yes, this happens when risks are reviewed (de-risking). Then some of the bank’s routes stop working, or payments on them slow down sharply.
06 /How do you choose a bank for international settlements?
Look not only at tariffs but at correspondent accounts in the currencies and on the routes you need, at crediting times and at how the bank handles large sums.
See also
Read next
This material has undergone editorial review by BRIDGES.
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