The Pros and Cons of Banking Offshore With Global Banks

Clients often ask me “Can you set up a Private Offshore Account for me with a global bank?”


In 14+ years of specializing in Offshore Company, Offshore Trust and Private Foundation formations, and having built up a sizeable list of banking contacts, (including with major players such as HSBC, UBS, Barclays Bank, Standard Chartered Bank etc) I’ve been happy to accommodate such requests.


But with the ever widening reach of globalisation it is really hard for me to continue to do so.


Allow me to explain why…


One of the key reasons people Bank Offshore is risk reduction through international diversification. Some people mistakenly believe that to protect themselves from their country going down the tubes, they ought to move ALL of their money to ONE other country.


That’s not how it works. No country is totally resistant to all shocks or the potential shocks of a government that decides to go rogue.


Having said that, it makes sense that to obtain diversification you have to escape the system you’re in back home. With the likes of HSBC & Barclays Bank etc, it’s hard to do that.


A number of influential Tax Lawyers suggest that the achievement of perfect internationalization (ie creating a lifestyle where you are no longer beholden to any one country) includes working with banks that have no connections in the country you live in or hold citizenship in. That rules out pretty much any multinational bank such as HSBC, Barclays Bank, Standard Chartered etc.


The reason is that these banks are just as closely tied to your home country as they are the more tax-friendly locations such as Hong Kong, Singapore etc.


Even though HSBC UK is a totally different bank from HSBC Hong Kong, and their local registrations do put up some barriers, more of those barriers work against you than for you.


For example, I can only deposit a paper cheque payable to my firm’s Business Account (which is with HSBC Hong Kong) at a branch of HSBC in Hong Kong. I can’t deposit the check at a branch of HSBC in the UK or any another country.


Likewise, when an account a friend opened at a Czech Republic bank was quickly opened and then closed with him never getting the account number, he couldn’t walk into that bank’s branch in Slovenia to get the number. He had to go to the Czech Republic.


Additionally, there is increasing evidence to suggest that your government could call up HSBC in another country and say “hey, this guy owes us taxes; please freeze his account”.


Domestic bank accounts you own are an easy target for your government. For example I know of an Associate who woke up one morning in California to find that a bank account for a non-California LLC had been levied by California… for taxes he’d already paid! All it took was some empowered bureaucrat in Sacramento to push a few buttons.


Sadly, banking with multinational banks can subject you to the same provisions. I’m not saying you should dodge the tax man or skirt the law knowing that some local bank in Andorra will protect you. I’m not suggesting you do anything illegal or even immoral.


What I am suggesting is that multinational banks like HSBC will throw you under the bus in two seconds if someone with a shiny badge comes and knocks on their door asking for money. Do you think HSBC is going to risk its good standing in the United States to keep you and your $100,000 happy? Of course not. Especially not after a money laundering dispute that cost the bank a ton of money to settle.


HSBC Premier accounts are worthwhile for expats and perpetual travelers who want access to their bank in multiple countries. Many travelers experience ATM and foreign transaction fees when traveling with their home bank debit and credit cards, and having an HSBC account can prevent that in some cases.


In addition, HSBC Premier does have several airport lounges for bank customers, and I am told they are building more as the high-end banking space becomes more competitive.


However, if you are planning to move money from a high-yield online savings account to HSBC, be advised that you’ll earn essentially zero interest. In Hong Kong, a current account is paying 0.01% – if that – these days.


While HSBC does offer cheaper accounts, Premier accounts are the easiest for frequent travelers or those banking from home, and requires at least US$100,000 be tied up at zero interest.


Having said that, there is little “premier” about HSBC Premier service. My experience with HSBC Premier branches in several countries has been that you can’t even get a fresh cup of coffee while you wait for your banker. Then there’s the fact that you have to wait for your banker…


Ask anyone at the branch what the benefits of being Premier are and they’ll hem and haw and give you no real answers. My experience with the one-on-one relationship managers in large banks in the UK, Seychelles and Hong Kong has also been rather poor.


As an entrepreneur, I know the value of slick marketing and used to joke with employees in past businesses that we’d make them a “Vice-President” if they’d take less money. That’s based what HSBC, Barclays etc does… hires a bunch of grunts in monkey suits and calls them “private bankers”.


If you want one bank that you can use without the need for privacy or diversification, but rather for simplicity, HSBC can work for some people. I don’t hate HSBC, but I am a stickler for service and there are better options if you have a six-figure sum to deposit.


Ditto if you are looking to protect your cash from sticky fingers.


Further to that I’ve/we’ve recently identified some 50+Offshore Banks in over 18 countries who, we’re reliably informed, offer better services than HSBC, Barclays etc, including banks that offer excellent debit cards for expats and travelers, as well as banks with Premier accounts where you’re offered fresh fruit and champagne while you wait for your banker! We have contacted, and are in the process of setting up introduction relationships with, each such bank. Watch this space for details…



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