UK Banking Concerns could hit Expat Savers
The banking choices for UK expats are fairly limited as it is. But now data compiled by The Prudential Regulation Authority (PRA) has shown that the overseas options on offer could narrow even further.
Five major banks and building societies with offshore presences, including Nationwide, Lloyds Banking Group, the Royal Bank of Scotland, Barclays and the Co-operative Bank, have a shortfall of £27.1 billion in their capital requirements which must be plugged.
Although £13.7 billion of the shortfall will be filled by plans already in place there is another £13.4 billion to be funded – and one way for these banks to save money is pulling out of their offshore operations.
While no mention of this step has been made at present (although Lloyd’s TSB International is in the process of selling off offshore branches) in recent years several banks have abandoned their expat business in order to save money.
The Co-operative currently has a popular offshore subsidiary, Britannia International. This banking group has highlighted a £1.5 billion shortfall in its operations but has announced an intention to swap bonds for equity in order to fill it.
According to a Co-operative spokesman: ‘There are no changes to the high level of service our Britannia International customers receive today. The announcement [about the bank’s bonds] is our plan to meet future regulatory requirements on capital and we are now working on the detail behind this plan. A wider strategic update will be provided at the time of our interim results announcement in August.’
But even if the financial institutions under the spotlight maintain their overseas operations, the situation is still tricky for expat savers. Earlier this week iExpats reported on the dropping savings rates available for expatriates.
With interest rates being held at record lows in order to spur economic growth and central banks intervening in the exchange rate market as part of a so-called ‘currency war’ the top rates available are now very low.
In fact many expats are finding that they can find better savings rates for their cash if they switch their funds to local currencies.
If you’re concerned about your expat finances we recommend that you seek industry accredited, impartial financial advice.