A Nostro account is a reference used by Bank A to refer to “our” Bank B account. Nostro is a shorthand for “our money deposited with your bank”. With the advent of computerized accounting, Nostros and Vostros only have to have opposite signs in a bank`s accounting system; That is, if a nostro in the loan has a positive sign, then a vostro in the loan must have a negative sign. This allows reconciliation by adding all accounts to zero (a trial balance) – the basic requirement of double accounting. [1] Let`s take an example. GTBank, a Nigerian bank, receives a lot of money in the form of payments to its customers at home from the United States. Because GTBank does not have a physical presence in the United States, it enters into an agreement with Citibank in which it remotely opened an account for GTBank in US dollars. In this way, money received from the United States, customers and companies that send money to GTBank account holders in Nigeria can be deposited into the account that GTBank has with Citibank. Nostro accounts are most often used for currency settlement, which requires a bank or other financial institution to hold funds in a currency other than its original accounting unit. For Nostro and Vostro accounts, the national bank, i.e. the bank that manages the account, acts as the custodian of the account and is sometimes referred to as an “intermediary bank”.
A Nostro accountA Nostro account is a bank account that a bank holds with a foreign bank in the currency of the country where the funds are held. The term “nostro” is a bank account that holds funds in the currency of the foreign country that this corresponding company presides over. “Nostro” is Latin and translates to “our” and is used to facilitate international business transactions with different currencies and currencies. A Nostro account is used so that the client can track their funds held internationally in the respective currency of the country. From GTBank`s perspective, the US dollar account at Citibank is a nostro account. From Citibank`s perspective, it holds a Vostro account for GTBank in US dollars. Now, FNBA sells AUD 1,000,000 to C (a counterparty that has an AUD account with FNBA and a USD account with CMB) for a net consideration of $2,000,000. The FNBA will make the following entries in its own accounting system: Note that most transfers incur transaction fees that are deducted from the account at the end of the transaction.
A Vostro account is an account held by a national bank, often referred to as a correspondent bank, on behalf of a foreign bank. In a Vostro account, a local currency account can be managed and held by a national bank on behalf of a foreign correspondent bank. A Vostro account is used in the context of correspondent banks, another similar term is a Nostro account. Nostro and Vostro accounts are accounts held by a company on behalf of a corresponding company. As part of a Vostro account, a national bank holds the funds in the account and manages them for another bank, usually a foreign entity. European Central Bank. “Reporting at nostro/vostro-Accounts.” Retrieved 16 March 2020. The term vostro, translated from Latin, means “your” as in your account. From the point of view of the foreign correspondence bank, funds held on behalf of other banks are called Vostro accounts and are denominated in the national currency. Accounts benefit customers with global banking needs and allow them to open accounts in other countries through their own bank according to their needs. Most Vostro accounts have the same preferred services as a regular bank account, including foreign exchange transactions, deposits and withdrawals, and money or bank transfersWire transferBank transfer is the electronic money transfer between individuals or businesses. It allows people living in remote locations around the world to transfer safely.
The report shows, in a way, how much the Quds and other forces are present in Iraq at this point. We know that Vostro accounts are used in foreign banks as intermediaries for transactions where the correspondent bank acts as the manager or supervisor of the funds. In addition, the term “vostro” is Latin for “yours”, implying that the funds are exclusively the clients. The Nostro account is a way to keep track of how much money the bank holds by the other bank. This is similar to a person who keeps a detailed record of each payment to and from their bank account in order to know the balance at all times. “Nostro” and “Vostro” are two different terms used to describe the same bank account. The terms are used when one bank has withheld money from another bank, usually in connection with international trade or other financial transactions. Banks offer Vostro accounts for a variety of reasons. On the one hand, it is expensive (if not sometimes impossible) to open and operate a bank branch in another country. Therefore, in order to satisfy customers with international banking needs, many institutions will establish relationships with banks abroad so that they can easily offer Vostro accounts and related services to their customers. A client bank decides to open an account with another intermediary bank.
The intermediary bank helps the client bank make payments in the currency of its country, usually through its own access to primary clearing arrangements (usually with the central bank of the country where the currency is considered the local currency). .
