Nostro and vostro accounts
Nostro account is in banking the name of a bank account maintained by the bank A as a correspondent bank for bank B. From the perspective of bank A, it involves a vostro account of Bank B. The names comes from Italian ( nostro = " our", loro = " her ").
Account management
So, for the distinction of nostro and loro accounts, it depends on the account management. An account leads the bank that it opens in its own books through which they recognized themselves and debits and sends account statements. In their view, it is a vostro account. The other bank that can cause this account to be posted mirrored synchronously as part of the so-called Nostrokontrolle a nostro account, should control as " shadow account " ( order book ) whether the bookings and balances are traceable on the vostro account from my own point of view.
Balances
The bookings and balances are contrary to the loro and nostro account. Does the vostro account from a debit balance, there is corresponding with the nostro account a credit-side balance and vice versa. A debitorisches nostro account means that the corresponding vostro identifies a credit balance. According to the vendor nostro account a debit balance exists on the vostro.
Importance
Nostro and loro accounts are commonly used for the settlement of clearing entries in payment or for short-term investments ( in the interbank market ). They come only in the bilateral interbank trading and bilateral foreign payment transactions of credit institutions against each other and are increasingly being replaced by multilateral centralized clearing systems such as TARGET2, EBA Clearing, Continuous Linked Settlement or Central Counterparty.
In Switzerland, they are also called vostro.
- Banking