Offshore investing and Private Banking

08 Nov
HSBC Private Bank building on St James's Street, London, England

HSBC Private Bank building on St James’s Street, London, England

The term ‘private banking’ is becoming so prolific that it’s close to losing the prestige that once connected to the intensely secret relations between a bank and its wealthy clients. Traditionally, international banks have required a minimum deposit of $100,000 to ear preferential treatment but over the past years this minimum has been reduced to amounts as low as $10,000. Banks have realized over time that cultivating relationships with the smaller investor is worth the effort in the hopes that he will have a larger excess of cash to invest in the future.

Most private banking is now seen as an entry into investment management versus the familial relationship with a banker you personally trust with your money. Those more personal relationships are reserved for the extremely wealthy with minimum $10M more often than for more moderate investors. While private banking does not necessarily mean offshore it is a very common offshore investment opportunity. When you are looking for a bank that is offering a customized relationship you need to understand what the bank is offering and how they hope to benefit through their service.

Private banking is more than just offshore investment it means fees for services rendered. You want to be clear that you will be investing a large enough sum to afford a profit once the banking fees have been covered. The bank can profit through offering bridge financing or providing transit for large funding amounts. The bank may continue to develop a relationship with you in hopes of a more substantial investment from you down the road. You need to always remember that your initial involvement will simply be that of a client with his financial advisor.

Ensuring that your investments are legal at home and in the country within which you will be banking. Some countries require that residency guidelines be met before an investment or deposit can be made through one of their banking establishments. You must remember that in most countries you must still report earnings from investments in offshore bank accounts and many countries require the reporting of these offshore accounts as financial assets. Because of this most offshore banks require that you sign documentation acknowledging that they will either withhold tax or exchange information with your country of residence. If a bank is not licensed in your home country it may not be allowed to offer you an account at all. You will be held responsible for abiding by the laws of the country where you reside.

Finding an offshore bank with an investment platform that you can believe in may pose a lengthy search. It is best to approach associates who have a history with different banking establishments for recommendations rather than to rely upon received advertisements. There are also many quality internet websites that offer reviews of services provided by offshore banks. It is important to ensure that they bank you choose has a well-established provider in the country where you want to invest.

Several jurisdictions offer a choice of banking establishments that could meet your needs. The Cook Islands, Bahamas, Luxembourg, the Cayman Islands, and Hong Kong are but a few of the countries that can meet your legal and banking needs. These countries offer well-established systems of international banking with a variety of banks to offer services to you.

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