Opening an international banking account is an astute way to stay a step ahead of ongoing currency uncertainty

With the rand’s roller-coaster ride far from over, an international banking account can help alleviate uncertainty and reduce currency conversion costs over time, says Standard Bank Wealth.

“We live in a global village and families and business executives are increasingly on the move, whether it is for international holidays, education, or a temporary work assignment in another African country. However, opening an offshore bank account to manage your affairs and ensure that money is available in a chosen currency wherever you are in the world no longer needs to be a headache,” says Standard Bank Head of International Personal Banking, Michael Nudbichler.

In the current climate, global citizens need to better preserve the value of their money by holding funds and having transactional ability in a preferred foreign currency. An offshore bank account within the ambit of an over-arching financial plan is the solution.

“If exchange control regulations are complied with, rands can be deposited and then converted without having to be physically in the offshore jurisdiction. Standard Bank’s international footprint also enables clients to have this money maintained offshore,” says Michael.

However, offshore banking entails careful planning and ensuring that the plan fits in with long-term goals.

“You need to know if you can afford to externalise funds and then consider when and how. After that you can embark on proper planning based on individual circumstances and goals,” says Michael.

The key is to start early to reap the rewards of an offshore strategy, notably when it comes to the high costs of converting currency every time you have to make an offshore transaction.

“For example, if you know when a child will graduate and that you may want to send them overseas, then it is important to map that out over the next number of years. You will want to ensure that you have sufficient funds in the offshore jurisdiction well before this event happens to avoid having to convert one large amount at a given time and placing yourself at the mercy of whatever the currency conversion rate may be on that day,” explains Nudbichler.

As an integrated financial services organisation Standard Bank harnesses its Wealth International license offshore. As Africa’s largest bank by assets, the bank has a footprint in over 20 countries, including Wealth International presence in South Africa, Kenya, Ghana, Nigeria, Uganda and Mauritius, and internationally in London and Jersey.

Standard Bank Isle of Man, for instance, allows clients to manage their money and personal banking needs across borders, whether they are investing their allowances abroad from a diversification perspective or travelling.

“You may want to make an urgent direct payment offshore, be on a 6-week locum overseas and want to have the salary paid into an offshore account; or be on a 6-month sabbatical. This account enables all those transactions to take place seamlessly. In other words, because it is an offshore transactional account, you can access your money anywhere in the world and move money between accounts through free internet banking,” says Michael.

Online payments to third parties would be subject to a standard charge of £20 a transaction and other details to keep in mind are that opening balances of £4 000, US$6 000 or €6 000 and AU$6000 are required. You can then deposit a salary, earnings or savings into your account from multiple sources.

“Keeping your money in one place allows you to make transfers and payments in several currencies from a stable and secure offshore jurisdiction. It is the perfect link between all of your banking arrangements, allowing you to be in complete control of your money, wherever you are in the world,” says Michael.

A comprehensive financial plan would see additional offshore investments added to the mix to enhance retirement savings, for instance. This could just start with a fixed monthly deposit that takes advantage of the annual single discretionary allowance of one million rand a person per calendar year without the need for a tax clearance certificate.

“You can avoid a lot of stress if it is not convenient for you to have all of your money exposed to one currency. It is also important to ensure you are well diversified and that your funds are preserved for a long time. The ability to transact offshore through an integrated account also means you can repatriate money whenever it suits you, avoiding unnecessary liquidity constraints and delays,” says Nudbichler.

“There is a growing need to make fast, low cost international payments and the convenience of making them online has changed the landscape totally. However, too many people procrastinate. It is better to start today by putting smaller amounts away offshore in a disciplined way to avoid headaches down the line, what better way than using the Standard Bank Offshore app to transfer from your local account to your offshore account in the comfort of your own home. ” he concludes.