Despite its reputation for exclusivity, the offshore retail banking sector is accessible to just about everyone. You don't have to be wealthy to participate. Minimum deposit levels are sometimes as low as £100.
Offshore accounts are found in three main finance centres - Guernsey, Jersey and the Isle of Man. These are the locations from which hundreds of thousands of expats choose to manage their money. The islands' high streets house the subsidiaries of banks and building societies whose names are familiar to Brits and, of course, whose staff all speak English.
However, offshore banking's reputation recently took a battering when two Icelandic banks, whose offshore subsidiaries were based on the Isle of Man and Guernsey, collapsed, leaving their depositors severely out-of-pocket. This proved to be a somewhat overdue wake-up call to the financial services authorities on both islands, who have modified their depositor compensation schemes accordingly.
Now, as a depositor with a bank licensed on either island, you are guaranteed a compensation limit of £50,000 in the event of a bank's failure - per bank invested. Always read the small print of a bank's terms and conditions to make sure you don't inadvertently place a further deposit with a second bank which shares the same ultimate owner as your first deposit-taker. This would disqualify you from your compensation rights to all but the first bank's depositor protection scheme.
We’ve picked two current offshore bank accounts to give you an insight into who’s offering what.
HSBC Bank International offers its Offshore Bank Account. Day-to-day banking is effected by this Bank’s “flexible” international current account which is available in sterling, euro or US dollar. It’s backed up by a 24-hour phone and internet banking service. Account holders are offered an internationally accepted debit card denominated in sterling or US dollars, and a chequebook available in sterling or euro. This account offers international money transfers at what the Bank calls “reduced rates”. It also processes standing orders. The minimum balance is set at £5,000, €10,000 or US$10,000. No interest is payable if the balance falls below these minimum sums.
LloydsTSB Offshore’s International Account is also denominated in sterling, euro and US dollars. In sterling, both a debit card and chequebook are offered. Expats can run an account with a minimum balance of just £100. Whereas the first three months of banking is fee free, thereafter there’s a monthly charge of £7.50. Benefits and features offered with this account include 24 hour phone and internet banking, representative offices located around the world, competitive interest rates for savers and a global money transmission service. The account is also denominated in euro and US dollars.
