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Expat Investor : November 2008
NEWS Nationwide in merger talks THE NATIONWIDE is in merger talks to take over two former rivals, The Derbyshire and The Cheshire. If agreed, the deals could result in thousands of members of the two smaller firms receiving windfall payments. The credit crunch has aided Nationwide, the UK’s biggest mutual lender with 14 million members, as more people looked for a ‘safe haven for their savings. In contrast, smaller building societies face growing financial challenges. Nationwide has confirmed that it’s in “advanced discussions” with the Derbyshire and Cheshire organisations about separate mergers. The Derbyshire is the larger of the two, with 500,000 When it comes to savings, trust is key members, 50 branches across the Midlands, the North East and Yorkshire and total assets worth more than £7bn.The Cheshire has about 400,000 members, operating 60 building society and estate agency branches. It has assets of just under £5bn. Both societies saw their profits fall last year, to £8.7m and £8.1m respectively, amid tough conditions in housing and credit markets. Like all UK lenders, building societies have cut the amount of loans on offer and raised rates in response to the credit squeeze, although both Derbyshire and Cheshire insist they have strong mortgage books. Fast Facts 99110 US$ and € accounts from Skipton Guernsey SKIPTON Guernsey has launched two new foreign currency accounts aimed at investors who wish to hold funds in either US dollars or euros offshore. The Bank says that these accounts coupled with its “popular low cost, fast currency exchange service”, will bring significant new savings options to global expatriates. For those who are either paid in US dollars or in a currency linked to the US dollars, as is the case in many Middle and Far Eastern countries, funds can be remitted in dollars to the Guernsey account. For clients with existing currency savings in a local bank, funds can be transferred easily to the new Guernsey accounts. With an opening deposit of $25,000 and a minimum transaction level of $1000, the US dollar account currently pays 2.25% gross/AER on all balances. Interest is credited annually on June 30. The euro account has an opening balance of €25,000 and a minimum transaction of €1,000. The account is currently paying 4.50% gross/AER on all balances, with interest credited annually on 30 June. Currency exchanges between Skipton Guernsey sterling , US dollar and euro accounts can be arranged over the phone up to 3.45 pm every day (UK time). Confirmation of instructions must be received by fax within one hour of a call. All currency exchanges will be subject to a settlement period of two working days. Commenting on the new launches, Jan Stuckey, Manager Investments says, “These two new accounts give both new and existing customer s around the world the flexibility to save in two of the world’s major currencies with their accounts based in a well regulated, reliable international finance centre. Clients can use our own low cost currency exchange facility to remit funds and so build up a nest egg in either sterling, US dollars or euros. We also know that currency exchange is often the Achilles heel of money transmission, as local rates can and do vary.We feel that our accessible currency service for both deposit and withdrawals sets us apart and helps our clients make the most of their savings.” For further information on SGL’s investment product range visit www.skiptonguernsey.com Banking on strength ZURICH Financial Services, the ultimate parent company of Zurich Bank International in the Isle of Man, has reported strong results across all business segments for the first six months of 2008 which confirmed Zurich has delivered its 22nd consecutive profitable quarter. The figures have been driven by a continued focus on the basics of financial discipline, operating efficiency and risk management, as well as the benefits of its diversified business, reports the Group. Graham Sheward, Managing Director, Zurich Bank International, says, “These excellent results continue to put us in a strong financial position, especially when compared to some other offshore banks. In light of recent market 2 EXPAT INVESTOR ? events, including the UK Government’s rescue of Northern Rock, customers are looking more and more at the financial strength and security of their bank. Being part of a large insurance-based financial services provider has its advantages, certainly Zurich Bank International is not facing the same issues as some other banks in raising funds in the money markets. Inability to readily raise funds is the driving force behind some of the exceptionally high savings rates we’ve seen in the market recently.We believe that prudent long term stability is starting to be a far more attractive proposition than increasingly desperate headline grabbing offers.” Fast Facts 99111 November 2008 AS BRITONS tighten their purse strings to cope with rising costs of living, money left over for savings is precious and new research by Chelsea, the UK’s fifth largest building society, shows that savers will only place their money with a provider they can trust. In a survey of almost 1,000 consumers, Chelsea Building Society found that during times of market uncertainty, online systems, telephone services and gimmicks are no longer of primary consideration for today’s savers. Instead, research suggests that, while 51% of savers still scour the market for the highest interest rate and easiest access to their savings, 50% also make their final decision based upon the amount of trust they have in the provider. Digging deeper, Chelsea discovered that savers rated response rates most highly (62%), closely followed by well-trained staff (62%) and friendly service (61%) as key components for trustworthiness. Provider’s longevity in the savings arena however, scored less highly at 37%. Call centre staffing is also a bone of contention. Further findings showed that being able to speak directly to a member of staff in the UK rated highly for gaining savers trust. Not being able to speak with staff in the UK is of greater annoyance for women than men, with 68% ranking this as their top reason not to trust a provider compared to just 55% of men, who believed well trained staff (60%) was the most important ingredient for trust. Darren Stevens, Director of Customer Services, comments, “Despite the efforts providers put into promoting innovative online and telephone systems and the gimmicks they employ to entice savers, our recent research shows that these are having little effect upon today’s consumers. “As the market continues to tighten and costs increase, savers need to know that the money they can actually afford to save is with a trusted provider. “At Chelsea we understand consumers’ growing concerns and with knowledgeable staff members and call centres based in the UK, we are already offering savers the qualities they now require in a savings provider.” Fast Facts 99114 New savers account from Abbey International pays 12% REGULAR savers with Abbey International can now earn up to 12% gross/AER sterling, 10% gross/AER for euro and 6% gross/AER for US dollar, with a newly launched fixed rate Monthly Offshore Saver account. The interest rate is set when the account is opened and guaranteed at that point for the following 12 months. The new Monthly Offshore Saver account is linked to a Gold account, Abbey International’s multicurrency offshore current account with Visa deferred-debit card and ebanking facilities. To qualify for the new Monthly Offshore Saver, clients need to have their salary or another regular monthly income such as a pension paid into their Gold account and then simply agree how much they would like to transfer from their income each month. Any amount between £250 and £2,500 or euro or US dollar equivalent per month can be chosen, subject to a maximum of 20% of their mandated income. Jane Matthews, Head of Marketing and Business Development comments, “Our new Monthly Offshore Saver account is a must-have for those who want to lock into a competitive fixed rate of interest on their savings.With its monthly sweep function from our Gold bank account, saving becomes automatic and easy. Together, these two accounts represent a very attractive package for both working and retired expatriates all around the world.” As the Monthly Offshore Saver account is a fixed interest rate account, no access to the savings account is permitted during the 12 month term, but savers can still use their sterling, US dollar or euro denominated Gold account and Visa deferred-debit card for day to day transactions. Ms Matthews continues, “Our new Monthly Offshore Saver account has one of the lowest opening balances on the market at just £250. “This opens up regular savings to a whole new range of clients who can now bank with confidence and save with ease with our flexible high interest current account and guaranteed fixed rate savings account package.” Fast Facts 99113 Bespoke structured product service from Zurich Bank International ZURICH Bank International has launched a service providing bespoke structured products or Capital Guaranteed Equity Bonds (GEB’s) as they are sometimes known. These products, says the Bank, provide a versatile and secure savings option as they link interest earned on a standard bank account to the performance of any tradeable index. This means while the potential growth of an index can be accessed the investor does so without any potential risks. Zurich Bank International stresses that the capital is always 100% guaranteed at the end of the term. Graham Sheward, Managing Director, explains, “If customers expatinvestor.com have a particular savings goal we will work with them to use this bespoke service to help meet it, including allowing the customer to choose the index, commodity and term of the savings product.” “Individuals need to have the equivalent of £1 million to gain access to a bespoke GEB.We also offer the chance to save in other currencies with our Euro and US Dollar bespoke GEB products.We are willing to work with groups of like-minded private clients or institutions with significant pooled funds that need a safe home and real growth potential.” “We believe that every customer is unique and that structured products require a special focus.We have an excellent feel for the structured product market place as evidenced by our long experience and consistent sales; we work with customers to select a product that’s right for them,” adds Mr Sheward. “Through our dedicated Treasury Department we’re able to provide access to innovative structures as well as more traditional accounts. Our administration team is big enough to support this service and small enough for customers to get to know. Our Business Development Team will work with individual customers throughout to make sure the collaboration runs smoothly.” For more information visit www.zurichbankinternational. com