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Expat Investor : July August 2007
6.06% gross for two years' term, the minimum opening balance is £10,000 and the maximum investment is £1m, even though UK base rate is still at 5.5% at the time of writing. These are fixed rate savings accounts available over two and three years. This means that if savers open an account today, they will receive these high rates in two or three years time, irrespective of what happens in the market. Bank of Scotland International is a specialist in the offshore savings market and their fixed rate savings accounts regularly feature in industry best buy tables. on interest rates for all G7 nations this year, with the possible exception of the US. For the medium to long term we are still expecting a relatively stable UK economy albeit with a greater volatility in interest rates, now expected to fluctuate in a range of 4.50% to 6.50% over the next few years. return compared with what has been available on standard deposit accounts over this time and will no doubt fuel more interest in the potential of these types of account. OFFSHORE SAVINGS expatinvestor.com 8 EXPAT INVESTOR July/August 2007 HSBC BANK INTERNATIONAL Based in Jersey, HSBC Bank International uses its extensive offshore banking expertise to remain at the forefront of a very competitive SKIPTON GUERNSEY Skipton Guernsey feels that the end of the current cycle of interest and savings rate rises may now be approaching. Following the latest rise in the Bank of England base rate in early May, the company feels savings rates may well be nearing their peak for the time being. As well as the easing of house price inflation, which is now evident all across the UK, with the notable exception of London, data released this month by the UK government on consumer inflation shows a significant drop from the 3.1% figure at the end of March to 2.8% at the end of April. With both consumer and house price inflation showing NATIONWIDE INTERNATIONAL The past few months have seen the upshot of some new premium rate products, which in itself is nothing new. The tactics involved, however, appear to be changing. For instance, some institutions are providing new accounts that are ostensibly the same as existing accounts but paying a much higher rate to the disadvantage of loyal customers. Too often we see new easy access accounts that allow almost identical access to existing call accounts but pay more than twice the interest rate. Whilst we've offered our popular Base Rate Tracker account to both new and existing customers since its launch in March 2005, some competitors have recently launched products for 'brand new money only'. For an expatriate looking for a great return, this restriction may not seem to cause any real problems initially, but of course, new rates and products Continued from page 7 BRADFORD & BINGLEY INTERNATIONAL Bradford & Bingley International is one of the largest offshore savings banks, with over £3.5bn assets and over 17,000 customers in 125 countries. The past year has seen a major reassessment by financial markets of the medium term outlook for UK interest rates. We now expect a further rise in base rates to 5.75% in Quarter 3 of 2007 as the economy continues to grow at or above trend. This is great news for savers, who have already enjoyed two 0.25% base rate increases this year, in January and May. At Bradford & Bingley International we have been particularly delighted to increase the interest rates on our award-winning eAccess account to 6.10% p.a. All interest options, whether annual, monthly or deferred interest, are the highest variable interest rates available in the offshore market. Not only are the interest rates extremely attractive, the eAccess account is a fully functioning online savings account, specifically designed for expatriates. You can enjoy the convenience of managing and operating your account at any time, day or night, from the comfort of your own home. There's no notice for withdrawals and, unlike many onshore internet accounts, transfers can be made to nominated accounts internationally via the SWIFT system as well as to nominated accounts within the UK clearing system. Regular savings can be easily set up and changed at any time; you can carry out your own 'bed-and- breakfasting' and change your interest instructions instantly -- for example, if you happen to be between assignments and want to draw a regular income from your savings account for a while. Looking forward, globally' the economy remains strong and we expect it to remain that way as a global reflation takes hold. We expect upward pressure to remain BRITANNIA INTERNATIONAL It's been good news for savers over the past few months with increased activity in the sterling deposit market after a fairly stable period throughout much of 2006. While the Bank of England's monthly interest rate decisions have been the subject of seemingly unending speculation, there has been little doubt that they would be moving in an upward direction. This has been borne out by four rises in the base rate since last August. Sterling deposit providers have generally moved broadly in line with the Bank of England's base rate increases in their efforts to give savers a good deal. The fixed rate market in particular has picked up and whereas a one year fixed deposit was only offering around 5% gross p.a./AER 12 months ago, current rates are well in excess of 6% gross p.a./AER. There have been few truly new products launched during this period, the majority being reissues of existing accounts, often with a link to base rate. Britannia International's Regular Saver has been one exception, targeting the saver who wants to commit to regular monthly saving in order to build up a lump sum. But where the variable rate market has seen few new ideas, more providers are now offering structured products --accounts where the return is linked to the performance of an index such as the FTSE 100. Britannia International has been offering award-winning structured products -- which all guarantee the return of the original investment in full - since the early 1990s and has received further consumer and industry awards for its accounts during the first half of 2007. The most popular of all Britannia International's structured deposits is the Optimum Growth Bond which is now in its 20th issue. This account offers the best of both worlds by offering a return based on FTSE 100 growth over the full five or six year term (currently 160% of FTSE growth over six years on Issue 20) but also an early maturity feature if the FTSE grows strongly to a pre- determined point mid-term. As it happens, the very first issue of the Optimum Growth Bond is on track to mature early this June, rewarding investors with what is anticipated to be a 31% gross/8% AER return over just three-and-a- half years. This is a favourable DERBYSHIRE OFFSHORE Expat savers who have already realised their dream of moving to their very own place in the sun, but want to keep their hand in the UK property market could benefit from a new type of account from Derbyshire Offshore. Based in the Isle of Man, Derbyshire Offshore, the offshore savings subsidiary of Derbyshire Building Society, continues to provide both UK residents and expatriates around the world with competitive, secure options for their sterling savings. Over the past decade, the UK housing market has proved to be among the most buoyant in the world. An average UK property in April 1997 would have cost £66,956, a figure which now stands at £192,314 -- a massive 187% increase. Derbyshire Offshore's new Offshore Balanced Bond offers investors the combination of a market-leading fixed rate of interest on half of their investment, together with any potential returns from UK house price growth on the other half -- all without losing their deposit. This account has been designed for the medium-term saver looking for greater potential for capital growth without any risk to their capital. The initial deposit is split equally between two types of offshore deposit accounts. The first 50% of the initial deposit goes into a fixed rate account for a year paying 7% gross/AER and the rest is invested in a deposit account paying an uncapped return equivalent to 100% of the average rise, if any, in the Halifax House Price Index after 5 years. Our new Offshore Balanced Bond is an ideal product for UK expatriates who no longer own property in the UK but still want to benefit from the potential returns from investing in the UK housing market. offshore deposit marketplace. HSBC Bank International is experiencing a 50% higher growth rate than market average thanks to innovative products, customer service initiatives and an expert Independent Wealth Management team. The market for sterling deposit rates has been experiencing strong growth in the recent years with many financial institutions attempting to increase their share of this lucrative market by introducing a myriad of new deposit accounts. In recent years, growing competition and pressure on pricing levels for instant access accounts has resulted in ordinary savings accounts with long notice periods becoming obsolete. An abundance of long- term, high interest fixed deposit accounts and rate led 'easy' or 'instant access' accounts have been established within the market, as customers are particularly keen to take advantage of the high sterling interest rates.However, high rates do not necessarily mean a great deal, and often include hidden penalties or withdrawal limitations. Technological advances in the financial sector have also seen the emergence of online banking and the rise of a new generation of online savings accounts easily opened and managed via the internet. One of the great advantages of living and working abroad is the opportunity to maximise your income potential. HSBC Bank International has been simplifying its suite of savings accounts now for over 12 months, recently launching a new account. Serious Saver offers expats competitive interest rates, multicurrency capability and online simplicity, convenience and control. This is packaged with the peace of mind that derives from banking with a truly global provider. launch all the time. Customers can quickly find themselves on the other side of the fence, being classed as 'old money', only to find their savings ineligible for the latest accounts and rates. Clearly, this sort of policy puts brand new customers first and loyalty second. Nationwide International continues to deliver truly excellent service. As the subsidiary of the world's largest building society, we've no shareholders to worry about, so looking after our customers really is our number one priority. Why should customers be interested in Nationwide International's savings products? The answer's simple -- fairness and transparency. Our accounts are open to all, and from the outset we make it abundantly clear what customers can expect. Again, taking our Base Rate Tracker, it has an ongoing, guaranteed link to the Bank of England's base rate, which means that our customers know what their return will be in relation to base, one, two or even five years down the line. Another important aspect we emphasise to expatriates is that they should ensure they're comparing like with like. Of course, we all shop around, and the highest rate can, and does, woo many investors, but it's important that expatriates scratch beneath the surface of what's on offer. Digging down into product features may take a little time, but it's well worth the effort. There are numerous accounts that have started with a great headline rate, only to be discontinued or have their rates hacked down to 1% or 2% after the initial offer period has ended. Ultimately, expatriates want and need good, fair, long-term value. Naturally, this is what they should look for when evaluating savings providers and their offerings. Experience shows us that excellent security and superior service are two other critical elements expatriates consider when deciding on a home for their offshore savings. Nationwide International is best-placed to deliver on both these fronts.