The number of offshore banks where savers can keep their money and receive good rates is dwindling.
People trying to save are having a tough time at the moment. It is very difficult to get a real return on savings because of low interest rates and relatively high inflation. And there’s still the question of safety: the banking crisis which left millions of savers worrying about the security of their banks was only a few years ago.
For expatriate savers, there’s another hurdle.
While onshore competition for savers’ money is still fairly robust, with some recent new entrants to the market, offshore the number of banks welcoming savers’ deposits with decent rates has dwindled.
The number actively competing on rates is scarcely in double figures.
With these considerations in mind, we have put the major players in offshore savings markets under the microscope.
Armed with details of their credentials, the strengths (and weaknesses) of their savings accounts and what their long-term commitment to the offshore savings market is, expat savers will be ready to find the best home for their money.
Alliance & Leicester International
Parent company: Santander UK, part of Spanish banking giant Santander.
Home: Has operated from a base in the Isle of Man for 21 years.
Anything apart from savings accounts? Foreign exchange service for payments into and out of savings accounts.
What’s their future? “We remain committed to our business on the Isle of Man and continue to offer a range of competitive products to meet the needs of our customers.”
How’s business? “We’ve experienced an increase in accounts being opened by new customers. Savings habits have become polarised between one and two year fixed rate bonds which provide the highest rates of interest and instant access accounts. With a low interest rate environment, interest rate remains the key factor for savers.”
We say: Good for variable-rate easy-access and notice accounts.
Parent company: Co-operative Banking Group.
Home: Co-operative Bank in Guernsey for 20 years; Britannia International in Isle of Man since 1988.
Anything apart from savings accounts? Britannia International concentrates on savings accounts, while Co-operative offers a full banking service plus savings and mortgages.
What’s their future? “The offshore market remains important to the Co-operative Banking Group, providing banking products underpinned by our strict ethical criteria.”
How’s business? A 10 per cent increase in savings balances at the Co-operative while savings balances at Britannia International are “steady”. It adds that expat customers are choosing to save in sterling “while uncertainty remains within the eurozone”.
We say: Good for shorter term fixed-rate deals.
Parent company: Clydesdale Bank, owned by National Australia Bank.
Home: Guernsey for seven years.
Anything apart from savings accounts? A migrant banking service for those considering moving to Australia or New Zealand.
What’s their future? “Clydesdale Bank International is focused on raising customer deposits via a variety of different savings accounts.”
How’s business? “We have seen increased appetite for fixed-rate returns in light of prolonged low base rate environment.”
We say: Best at longer-term fixed rates.
Lloyds TSB International
Parent company: Lloyds Banking Group.
Home: 20 offices worldwide with centres in Jersey, Guernsey, Isle of Man and Gibraltar
Anything apart from savings accounts? Multi-currency current account. Those with more than £50,000 have a relationship manager offering investment advice and wealth management services.
What’s their future? “Lloyds Banking Group has identified expats as an important part of its business and we are now serving more customers overseas than ever before,” says Richard Musty, expat banking director.
How’s business? “Over the last year we have seen an increase in savings. There is a definite shift with expats looking to put some money away for a rainy day and feedback from our customers show that they are looking for more flexibility with their money,” says Mr Musty.
We say: Good no-notice variable-rate account deals.
Parent company: Nationwide, the UK’s largest building society.
Home: Isle of Man for past 21 years.
Anything apart from savings accounts? Online banking, savings accounts in sterling, euros and US dollars and foreign exchange.
What’s their future? “Nationwide International has no plans to exit the offshore market.”
How’s business? “Our business is increasing as savers leave other providers and switch to Nationwide International. In particular, we are seeing an increase in dollar and euro accounts.”
We say: Top easy-access account, good euro and dollar variable rates and good short-term fixed deals.
NatWest International Personal Banking
Parent company: RBS/NatWest.
Home: Jersey, Guernsey, Isle of Man and Gibraltar for the local markets and expatriates.
Anything apart from savings accounts? Current accounts in sterling, multi-currency accounts, loans, mortgages and investment advice.
What’s their future? “NatWest IPB remains committed to the jurisdictions in which we operate.”
How’s business? “Our experience is customers are seeking shorter term deposits and products given the interest rate environment and uncertainty in other markets.”
We say: Wide range of banking services without need for high balances.
Permanent Bank International Ltd
Parent company: Permanent TSB, an Irish bank.
Home: Has been operating out of the Isle of Man since 1994.
Anything apart from savings accounts? Only savings accounts denominated in sterling or euros.
What’s their future? “Our group has confirmed that Permanent Bank International Ltd is, and will be, an intrinsic part of the group’s funding operations”.
How’s business? “We have seen an increase in deposit balances this year and a proportionately higher increase in euro deposits. Most clients have opted for fixed interest products”.
We say: Short-term fixed-rate deals tend to be good
Santander Private Banking
Parent company: Santander UK, owned by Spanish bank Santander.
Home: Jersey since 1996 (originally as Abbey National Offshore).
Anything apart from savings accounts? Current accounts, credit cards. Clients with more than £150,000 get a “relationship manager” and “access to enhanced products and services”.
What’s their future? “We remain committed to our business in Jersey.”
How’s business? “Savers are certainly more cautious and are looking to obtain a competitive rate while recognising the importance of the strength and security of the bank they are investing in. In a continued low interest rate environment, our 12-month fixed-rate deposit is proving the most popular.”
We say: Good fixed rates – for those with sizeable deposits.
Parent company: Skipton Building Society, the UK’s fourth largest building society.
Home: Based in Guernsey for 17 years.
Anything apart from savings accounts? It is Guernsey’s largest new mortgage lender and is also one of the largest home-loan lenders in Jersey. It also does foreign exchange, in that if savers remit funds in one of the 10 largest currencies, the money will convert into sterling before it goes into savings accounts.
What’s their future? “Skipton has operated in the Channel Islands for over 15 years now and has no plans to change this.”
How’s business? “Recently, we have seen a particularly strong demand for monthly interest allied to fixed rates, so products such as our one- and two-year bonds, where the monthly interest rate has been boosted to equal the annual rate, have sold very quickly.”
We say: Good value notice accounts
Photo credit: Pryce Warner