5 Common Problems with Offshore Banking (And What to Do About Them)

Not all offshore banks are equal. If you're searching for a bank to diversify your wealth overseas, watch out for these red flags.

Offshore banking is increasingly popular as the world gets more connected. However, not all banks have moved with the times. While some organisations make offshore banking a seamless experience, others turn it into a bureaucratic nightmare of forms, letters, and back-and-forth phone calls.

So if you’re searching for a place to diversify your wealth overseas, keep an eye out for these red flags:

1. Too Many Bankers, Too Little Service

Some banks rely heavily on volume to make up their bottom line. They want to manage as many clients as possible, rather than focus on quality service with a few, select individuals.

It’s easy to spot these banks: when you make a call to them, you will rarely speak to the same Relationship Manager (RM) twice. Your call is directed to an office where there are as many as 20 different RMs, to whom you’re just another number on a database.

Because these RMs don’t know you personally, you will waste a lot of time repeating your needs over the phone. You are also less likely to get products suited to your financial needs - the RMs will be unfamiliar with each individual customer, and prescribe “one size fits all” financial solutions.

It’s best to avoid banks that deal with customers this way, as they don’t value the relationship with you. Instead, choose banks that have a dedicated RM, who service the same small group of customers. This way, you will be able to receive service that is responsive and tailored to your needs.

Today, the financial industry is changing. Large banks, such as Citibank International Personal Bank (IPB) Singapore, have dedicated RMs for high net worth individuals. In fact, foreign clients who invest with Citibank IPB Singapore provide foreign clients with RMs who speak their local language, thus allowing them to bank with ease.

2. Forex Complications

Foreign exchange (Forex) rates are one of the biggest concerns in offshore banking. Changing currencies can cause serious financial losses. For example, changing USD $10,000 to SGD in 2010 would have gotten you around S$12,830. Changing it today gets you around S$14,000.

If your offshore bank account only holds one currency, you could find yourself forced into unfavourable exchange rates. These days, it makes more sense to use a multi-currency account, which can hold many different currencies at once.

It’s possible to have an offshore account which holds Euros, Singapore dollars, US dollars, Japanese yen, etc. all at the same time. You can simply store the currency and wait for a favourable time to convert it.

Exchange rates may be unpredictable, but there are ways to safeguard your money. Find an offshore bank that lets you hold different currencies in their own savings account. This makes it easy for you to do investments and bank across the globe, without losing out because of unfavourable exchange rates.

3. Poor Accessibility

Simply checking your offshore bank account can be a convoluted process.

If the bank does not have a secure online platform, this can mean doing things the old fashioned way. You may find yourself filling out a barrage of forms and getting a legal representative, or having to travel down to the offshore bank yourself to complete the transaction. Some conservative banks still operate this way, so know what you’re getting into before leaving your assets with them.

Large banks tend to be more tech-savvy. Citibank IPB Singapore provides instant access via Citibank Online, so clients can have a global overview of their accounts online and make transactions on mobile devices at their convenience.

4. Passive Approach to Banking

Some offshore banks can be quite inactive toward foreign customers. For the most part, they’re happy if you leave your money in their accounts, and don’t make too much of a ruckus.

This does you a disservice, as one of the benefits of having an offshore bank is to have a non-local perspective. A good offshore bank can provide a macroeconomic view of the region, and can spot trends and assets that provide opportunities to grow your wealth. An active bank will keep you up to date on these, and a global bank will even provide a global outlook.

5. Political and Economic Instability

Political and economic stability of a country is crucial when choosing where to place your money.

Political unrest or war can disrupt the bank’s business. A change of government can mean policy changes in the given country’s financial sector - this could result in the confiscation of assets, changes in interest rates, or suspension of business licenses for some banks. Rampant corruption can lead to lost money in the form of “off the books” transactions, or unofficial “fees”.

A stable and healthy economic environment is crucial for offshore banking. For this reason, financial hubs such as Singapore are favoured locations for offshore bank accounts.

SingSaver.com.sg Recommends

For those with USD 200,000 or more to invest, Citibank International Personal Bank (IPB) Singapore offers unrivaled privileges and over 30 years of global banking experience.

With a Global Account residing in Singapore, you can benefit from the country’s stable economy and global outlook while accessing your funds from anywhere in the world. Save in multiple currencies, trade and invest with ease, and access financial products not available in your current location.

Start a relationship with Citibank today!