Correspondent banking

An arrangement under which one bank provides payment and other services to another bank.

Payments through correspondents are often executed through reciprocal accounts - nostro and loro (or vostro) accounts - to which standing credit lines may be attached.

Correspondent banking services are primarily provided across international boundaries but are also known as agency relationships in some domestic contexts.

A loro account is the term used by a correspondent to describe an account held on behalf of a foreign bank. The foreign bank would in turn regard this account as its nostro account.

See also

• Agency
• Deduct from beneficiary
• Documentary collection
• Nostro account
• Payments and payment systems