A bank account that is held and maintained by one bank on behalf of another bank (a respondent bank), usually in a foreign currency. The account is held in a foreign country by a domestic bank, denominated in the currency of that country. In other words, a vostro account is held by domestic banks for foreign banks in the former’s domestic currency.
A vostro account allows respondent banks to extend services to their customers in foreign markets, adding wider reach to the respondent bank beyond the borders of the country where it operates.
A vostro account represents the perspective of a correspondent bank (the foreign bank), whereas a nostro account, expresses the point of view of a domestic bank.
The term “vostro” is Latin for “your,” as in your account. The funds held on behalf of other banks are held in a vostro account and are denominated in a local currency.
