Updated
GL-N-05
Glossary · Banks and finance
Nostro and vostro - the correspondent accounts your money actually moves through
01 / In 30 seconds
The short answer
- 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
02 / In plain words
What Nostro / Vostro means
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.
A case from practice
A payment for a deal went in dollars through two intermediary banks and got stuck in a check at the correspondent. For the next settlements we chose a bank with a direct correspondent account in the required currency — the timing shortened, and fees stopped eating into the sum.
When this matters in practice
- Choosing a bank for international settlements
- A transfer in dollars or an exotic currency
- A payment to a country with limited banking
- Explaining long crediting times
- Investigating a delayed transfer
- Changing bank after de-risking
03 / What it covers
What you need to know about correspondent accounts
Nostro
- Our bank’s account abroad
- In a foreign currency
- Money goes out through it
Vostro
- A foreign bank’s account with us
- The same account from the other side
- Money comes in through it
Effect on the payment
- Length of the chain
- Intermediaries’ fees
- Crediting time
Risks
- The correspondent’s compliance
- A bank losing a correspondent account
- Closed routes
04 / How it works
How money moves through correspondent accounts
The bank debits the sum from you
The amount is debited from your account.
The message goes via SWIFT
The bank sends the instruction over the network.
Movement through correspondent accounts
The money moves through correspondent accounts.
A check at the correspondent
The correspondent checks the purpose and the parties.
Credit to the beneficiary
The recipient's bank credits the money.
05 / Key facts
What you need to know
01What they are
Banks' accounts with each other
Nostro is "our account with you", vostro "your account with us". It is one account seen from two sides.
02How money moves
Through correspondent accounts, not SWIFT
SWIFT carries the message; the money moves through correspondent accounts.
03Without a direct account
A chain of intermediaries
The payment goes through intermediary banks: slower, costlier, more checks.
04Dollars
US compliance
A dollar transfer passes through a US correspondent even if neither party has US ties.
Common mistakes
Choosing a bank without asking about correspondents
Check whether the bank has a direct correspondent account in the currency you need.
Not allowing for intermediary fees
Remember that each bank in the chain may deduct a fee.
Planning a deal with no time margin
Allow days for checks at the correspondent.
06 / Expert advice
How to prepare in advance
Before a large deal, ask the bank whether it has a direct correspondent in the payment currency and on the route required. If the chain is long, build in a margin for timing and fees, and sometimes choose another bank or another settlement currency. That is cheaper than missing deadlines under the contract.
What we do for you. 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.
Dmitry NagyTax consultant, international taxation and compliance (ex-Big4)
07 / Questions
Frequently asked questions
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.
Money physically moves through them in international transfers. SWIFT passes only the message; settlement takes place through correspondent accounts.
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.
Dollar settlements go through US correspondent banks, and they apply their own compliance rules — regardless of where the parties are.
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.
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.
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