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UK Offshore Bank Accounts PDF Print E-mail
Friday, 05 December 2008 15:52

UK Offshore Bank Accounts

Over 1999 Clare O’Neill at Northern Rock (Guernsey) has seen the top performers adopting several strategies to keep customers on board. She says: “In the last two months there has been particular interest in tracker accounts. These are deposit accounts that track the base rate - they’ve shown good returns because of the recent rate increases. Our own product will be offering returns of 6.25 per cent from December.”

Unlike Malde, O’Neill believes the surge in popularity of fixed rate products may have tailed off in favour of equity linked products. She says: “Fixed rate bonds were certainly order of the day in the first six months of the year, but the rate rise means interest has fallen off slightly. If rates fall again, as they probably will in the long-term, then guaranteed bonds will be a better alternative to deposit accounts. These can protect either your income or your capital - there is a range of products already out in the market - and are index-linked. They do carry an element of risk but this is traded off against returns of 9 or 10 per cent.”

UK Offshore Bank Accounts & The Offshore Market

The offshore market has also turned in favour of income products over growth products in recognition of expatriate needs. HSBC Offshore introduced an income option for its Guaranteed Capital Bond for the first time this year. A four-year product linked to the FTSE 100, the GCIB offered 6.75 per cent on an annual basis. Compared with base rates and other deposit rates, this was an attractive alternative. So attractive, in fact, that it took £120 million in five weeks. The second issue of the bond, which is open for investment until January, is offering 7 per cent over a three year period.

Pressure on deposits this year has been so great that the best form of protection is to increase product ranges, says Philip Murray at Irish Permanent. “Interest rates are likely to go up on euro and sterling based accounts in the short term, but those on euro accounts probably won’t be significant enough to stop people looking elsewhere. We have seen many offshore clients moving from deposits into property. As a result, we are looking to introduce a lending service,” he says.

UK Offshore Bank Accounts - US Dollar

Meanwhile, the arrival of a brand new currency opened the doors for a huge range of euro-denominated accounts. US dollar accounts have also maintained their popularity and many are still offering very attractive rates, according to Northern Rock. The move towards other currencies has been regarded as inevitable as depositors have looked for better hedging prospects and more value.

Sun Bank International, as yet, is only offering sterling accounts. Malde comments: “Sterling accounts are still regarded as very strong, the UK economy is very stable and currently inflation is low. The interest in euro accounts has fallen off slightly as they are not producing good enough returns. However, we are looking at the possibility of US dollar accounts. Offshore clients in particular want a choice and there’s a chance we’ll lose out if we don’t provide this choice.”

UK Offshore Bank Accounts - Bradshaw

This view is confirmed by Bristol & West International’s Bradshaw who has seen interest in its dollar account increase throughout 1999. People are hedging their bets over a variety of currencies at the moment, he says, and until the UK government makes a decision on the euro, people will continue to sit on the fence.

While demand for dollar accounts continues to increase, euro accounts have received a mixed welcome. The novelty factor of euro accounts certainly brought out new depositors at the beginning of 1999 and several companies have since seen interest decline. However, although the underlying returns from euro accounts are still low, despite a 0.5 per cent rate increase, David Siddall says their own product is working well for transaction purposes.

 

   

 

Last Updated on Tuesday, 06 January 2009 13:20
 

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