If you are an expat banking on placing your savings offshore, then your financial options are reducing.
The stricken Co-operative Bank is shutting the doors to offshore account holders as part of a slimming exercise to cut costs.
This is in the wake of the Bank of Ireland announcing closure within the past few weeks – and other big name casualties over the past two years.
Expats now have six British offshore banks and building societies offering savings accounts – and one Irish bank.
Although the Co-op is closing, the ban says the decision does not affect The Britannia, a subsidiary and all current fixed rate accounts will be allowed to run to maturity.
Offshore savings rates
However, the Co-op will not take on new customers or deposits and is running down operations with a view to closing completely in 2014.
Permanent Bank now provides the market leading rates as the Co-op has pulled the plug on offshore deals.
The bank is offering:
- 2.15% on a 36 month fixed rate
- 2.08% on 24 months fixed
- 1.92% on 60 months fixed
Each package requires a minimum £20,000 deposit
Britannia is paying 1.85% on 12 month fixed rate calling for a £5,000 deposit.
Other main players in the offshore market include:
- Lloyds TSB International
- Nationwide International
- Skipton International
- Barclays Wealth
Offshore savings rates constantly change and offers may be withdrawn at any time, so if you have money you want to put on account, act quick as you may be disappointed.
The market has a trend of short-lived interest rates disappearing to be replaced by packages paying even less.
Banks ditch current account customers
Not only are offshore banks pulling back to the UK for savers, but current account holders are facing problems, too.
Due to a mix of tougher regulatory measures, including calls to ‘know your customer’, many expats are receiving letters asking them to relocate their accounts. Often the letter comes without an explanation.
Banks have several reasons for ditching customers, according to trade body the British Bankers Association (BBA).
- A difficult relationship with the customer
- Expats leaving the UK for other financial jurisdictions
- Suspected money laundering
For account holders suspected of money laundering, banks, advisers and other financial institutions are not allowed to tell the customer that they have tipped off tax authorities about any suspicious activities.
Another reason is customers not letting money sit in their accounts, as regular transfers in and out of accounts cost banks money.
Offshore current accounts are not so hard to find as savings accounts.
Banks offering offshore facilities include:
- Lloyds TSB International
- Royal Bank of Cana
- Standard Bank