Offshore financial institutions inflict more misery on expat savers

Published:  8 Oct at 6 PM
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Cynical offshore building societies and banks, once seen by expat savers as a safe haven with fair returns, are now leaving their customers high and dry.

Expat savers, especially those living outside the EU, have already seen their currency exchange rates fall and bank charges increase, and are now seeing their offshore savings rates drop to an all-time low. Many banks are simply closing savers’ offshore accounts with little notice, and others are paying interest at less than onshore rates.

The best, if that’s the word, rate offshore at present is Permanent Bank’s 1.92 per cent, only available to those who can afford to lock their money up for five years. Norwich and Peterborough’s Gibraltar account pays 1.9 per cent, with the headline deal from HSBC at 2.4 per cent gross dependent on the opening of a current account with a minimum amount of £25,000.

Critics believe the offshore banks only want to deal with expats whose significant wealth stashed elsewhere will take care of personal emergencies, allowing their offshore bank to play casino games with the remainder. For the rest of the expat sector, rates have fallen over the last two years by at least 50 per cent.

In 2011, Clydesdale International offered 4.15 per cent to offshore expat savers, and promptly left the market, with financial experts suggesting the wind of change started with the UK government’s Funding for Lending scheme. The scheme took away the necessity for building societies and banks to underwrite funds lent with deposits raised, obviating the need for attractive offshore savings accounts.

Even three-year terms are now rare, with Permanent Bank’s 2.15 per cent ahead of the pack and Nationwide’s 1.8 per cent almost an insult. Savers wishing to transfer this month are in a cleft stick, as October is prime maturing time for savings terms, with many expats looking to find a scarce new home for their cash.
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