Correspondent banking

From ACT Wiki
Jump to navigationJump to search

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