In relation to correspondent banking, it is an account that one bank holds on behalf of another bank (the customer bank), usually in another country (in a foreign currency). It is a current account maintained by a domestic bank for another domestic bank that acts as a third-party account (loro). In other words, it is a bank’s nostro account in any foreign country but is maintained on behalf of a domestic bank (the customer bank regards this account as its nostro account). The third party may be an individual, company or bank.

Loro account is taken from the Italian word “loro,” which means “their”- i.e., a third party account (an account held by others). In general, it is used to imply dealing with or through third parties. If two foreign banks have euro accounts at the same London bank, one of them might request the London bank to transfer an amount of money from its nostro account to the loro account of the other bank.

Simply, a loro account is an account maintained and serviced by a bank on behalf of an account owner bank. The term is used in international banking to denote a third party account in a domestic or foreign currency.

The term was standardized by the International Organization for Standardization (ISO) in 1993.