The changing face of offshore saving in Gibraltar

With the increasing popularity of the Isle of Man and the Channel Islands, the stereotype image of the offshore saver as wealthy retired expat has long been forgotten. That said, it is no secret that the sunny rock of Gibraltar just off the south coast of Spain is as popular with wealthy Brits as it ever has been – but its image is changing, and the island is more unique than one might expect.

Economic developments over the last year have caused much political focus on the on the operation of banks on the UK mainland and overseas. The G20 summit in April saw the decision made to enforce transparency and economic sustainability as a means to ensure that the world economy remains more stable in the future – and for the UK’s overseas territories (including Bermuda and Cayman) to comply, they had to sign 12 tax information exchange agreements (TIEAs).

Although certain territories have already met the target of 12, Gibraltar is well on its way and began signing their TIEAs on the 31st March 2009. Since then, it has signed agreements with another eight, including Ireland, New Zealand and the United Kingdom. Not bad for an island that many had thought unlikely to be able to shrug off its label as ‘tax haven’, for the more positive: Offshore Financial Centre.

However, entrepreneurs and those with a high income can still benefit from favourable taxes in Gibraltar, and its nearby location to the Costa del Sol is great for those who’d prefer to spend sterling than euros. Conditions of residency sets it apart from other territories though, if you are willing to pay more than £250,000 for property you need only spend one day on the island before you are considered one of its 30,000 residents. Though this is rumoured to change in 2010.

Additionally, despite its EU membership and ties to UK and Spain, Gibraltar’s own economy has proved considerably stronger with a reported 6.6 percent growth rate. With this in mind the island (and others) is set to be subject of an HM Treasury report into the challenges faced as it adheres to more stringent rules – and it will be interesting to see what the future holds.

Top Offshore Savings Rates - October 2009

Best rate at the time of writing for sterling balances in offshore banks comes from Halifax International, paying 3% for £2,500 or more deposited, with instant access.

If you have £10,000 to salt away for five years and make no withdrawals, Clydesdale Bank International offers 5.1% a year.

Anglo Irish Bank has the best rates for euros and dollars. 5,000 euros deposited pays 2.25%, with instant access; $5,000 on 90 days' notice pays 1.6%

The rates shown (c) are gross, i.e. with no tax deducted at source, and are ranked by the amount of notice of withdrawal (A) one has to give the bank without applying an interest penalty (or for the length of term, for fixed-rate accounts), and by the minimum ammount (B) left on deposit to qualify for that level of interest. Rates collated on 2 August are are subject to change. Rates on the no-notice and notice accounts are variable; those on fixed rate accoutns apply throughout the term shown.

Source: Moneyfacts

Bank	A	B	C
Sterling No Notice Accounts
Halifax International	None	£2,500	3.00%
Anglo Irish Bank Corp (Intl)	None	£5,000	2.80%
Alliance and Leicester (Intl)	None	£15,000	2.76%
Bradford and Bingley (Intl)	None	£1,000	2.50%
Sterling Notice Accounts
Alliance and Leicester (Intl)	50 Day	£25,000	3.00%
Alliance & Leicester (Intl)	60 Day	£25,000	2.97%
Anglo Irish Bank Corp (Intl)	30 Day	£5,000	2.75%
Bradford & Bingley (Intl)	60 Day	£5,000	2.75%
Sterling Fixed Rate Accounts
Clydesdale Bank International	5 Year	£10,000	5.10%
Clydesdale Bank International	3 Year	£10,000	4.25%
Halifax International	3 Year	£1,000	4.00%
Northern Rock (Guernsey)	01.08.12	£10,000	4.00%
Euro Accounts
Anglo Irish Bank Corp (Intl)	None	€5,000	2.25%
Irish Permanent (Intl)	30 Day	€10,000	2.25%
Anglo Irish Bank Corp (Intl)	90 Day	€5,000	2.00%
Skipton (Guernsey)	None	€25,000	1.75%
US Dollar Accounts
Anglo Irish Bank Corp (Intl)	90 Day	$5,000	1.60%
Investec Bank (Channel Islands)	90 Day	$50,000	1.60%
Anglo Irish Bank Corp (Intl)	None	$5,000	1.50%
Irish Permanent (Intl)	30 Day	$10,000	1.50%

Two new guaranteed bonds have benn issued by Britannia International. A six-year offer pays a fixed return of 5% for each year when FTSE 100 index of UK shares does not fall below 75% of its start value in October.

A three-year version pays 11% if the level of the FTSE index is equal or greater than the start value over the life of the bond. Intial captial, minimum £5,000, is guaranteed to be returned at the end of the term.

Economy Set to Grow While Offshore Interest Rates Look to Stay Low

As was predicted in a recent Reuters poll, after a meeting on the 6th August the European Central Bank (ECB) have announced they will be keeping interest rates on hold at 1 percent. Holding the rates for the foreseeable future is seen to be good news for the European economy in general, but is also great for those with a keen eye on offshore interest rates currently.

The ECB lowered its interest rate to 1 percent (its lowest rate in 11 years) in May this year, after moving it to 2.00 percent in January, 1.50 percent in March and 1.25 percent in April. By comparison, its highest rate of 4.25 percent came into effect way back in June, 2000.

In a press conference following the announcements, ECB president Jean Claude Trichet said: "Economic activity over the remainder of this year is likely to remain weak, although the pace of contraction is clearly slowing down. While uncertainty is still high... and we have to be prepared for ongoing volatility in incoming data, there are increasing signs the global recession is bottoming out. Looking ahead into next year, after a phase of stabilisation, a gradual recovery with positive growth rates is expected,"

The ECB's decision to hold interest rates at 1 percent will also be of interest to those with or considering offshore bank accounts. In a recent Reuters poll of economists and experts, all 75 of those asked predicted that rates would be kept at one percent, with many estimating that they will not be set to rise again until the fourth quarter of 2010.

Of course, if the predictions of those in the Reuters poll turn out to be correct, offshore accounts will begin to look very tempting again especially if UK banks begin to push up rates despite the Bank of England's seemingly comfortable 0.5 percent. However, expats may also be more inclined to consider an offshore account after Sterling's fall when the Bank of England announced quantitative easing on the 6th August, as the Euro stood firm when the ECB said it was holding its rates.

Guernsey - Offshore Banking Centre 2009

Despite their reputation ten, maybe twenty years ago, stringent rules and the emergence of the Organisation for Economic Co-operation and Development means offshore banks are now considered an accessible and viable option for savers whether they are expats or not. For those looking for the best savings accounts in Europe, offshore finance has long been connected to areas such as the Isle of Man and Switzerland - but more recently, Guernsey has also established itself as a contender.

While the financial sector may not yet contribute to the Guernsey economy as much as it does in Switzerland and on the Isle of Man, banks have been beneficial to the development of the Channel Islands since the 60s. Today there are around 55 banks on the island, due as much to its desirable and convenient location, as its low taxes - a statistic that is all the more impressive when one considers its size of 25 square miles. That's an average of more than two banks per mile.

Expat Offshore Savings - Funds for Retirement

As an expat (expatriate) you are in a privileged savings and investing position. Make the most of the options available to you while you can, consider investing offshore for your retirement. While you reside overseas you are legally entitled to make use of any tax savings in the country in which you reside, furthermore you are most likely in a position to save and invest offshore to fund and fuel your retirement.

Not enough expatriates make use of their offshore advantage when living and working abroad. Don’t make the same mistake! Do you already have a domestic pension plan in place from your home country that you established prior to working abroad? Have you found that this policy is not as mobile as you are? Does it make sense to continue with the savings policy?
Have you been considering switching from retirement savings plan to savings plan as you change from country to country? Did you know that by doing this the income you end up with in later life will be fragmented and may be whittled away by foreign exchange costs, charges or even a cash-strapped government?

Short Guide to Offshore Banking in 2009

As we continue through recessionary times, 2009 seems a very unlikely year for many of us to consider depositing our savings into an offshore bank account. However, with speculations abound that a brighter financial future may already be in sight, offshore financial centres are earning a cleaner reputation than they ever have done - and deservedly so. With the continued work of the OECD and other developments in the sector, offshore banking could be argued to be more necessary today than it ever has been.

The OECD (or to give it its full title: The Organisation for Economic Co-operation and Development) is made up of a 30 country membership including the UK, the US and more recently South Korea and Slovakia. Amongst other things, the organisation seeks to maintain financial stability, to coordinate domestic and international policies, and to contribute to growth in world trade.

France - Expat destination for 2009

The phrase ‘expat destination’ tends to conjure up images of one way plane tickets to sub-equatorial paradise islands, or at the very least somewhere where the sun shines every day and an afternoon nap is obligatory. Yet, in the latest poll by halifax-international.com, the most popular destination for British expats is France (with 16 percent of Brits deciding to move there) – a destination that, without deeming it unexciting, is perhaps a little more predictable than I expected.

Yet, of course, this is precisely the reason it is so popular. Once the small matters of the language barrier and driving on the other side of the road are overcome, France is something of a home from home for the British. This is best realised when one visits Brittany, a region that is just a touch more than one hundred miles from the South Devon coast. You don’t even have to be aware of the Celtic heritage of the region to gaze with familiarity at the green rolling countryside and the market towns nestled therein.

Isle of Man Economy Set to Improve by the End of 2009

As around 700 students collect their A-Level results on the Isle of Man, many will be considering their next step - either to apply for university on the mainland or to remain on the island and look for a job. Although the recession is not drawing many youngsters to the prospect of looking for work in the UK, recent developments within the unique Manx economy is causing some commentators to speak quite optimistically about the coming year.

Of course much of the Isle of Man economy is centred around its financial sector, and its offshore interest rates and savings accounts are some of the best to be found in Europe. Its establishment as a major financial centre is due to the island's government proposed incentive to bring business to the island via lower taxes, a proposition that has continued from the mid-sixties to this day.