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Offshore tracker accounts
Offshore
tracker accounts offer a range of rates of interest paid on deposits,
both good and bad, but are nevertheless competitive when compared
to their onshore equivalents. Generally this is because offshore
clients are wealthier and can make bigger deposits, enabling the
banks to offer better deals. Another important determining factor
is whether the accounts have notice periods, and for how long, as
well as whether they pay interest on a monthly or annual basis.
Alliance & Leicester International, based in
the Isle of Man, offer an Offshore Base Rate Tracker Account (Issue
II). Interest is paid gross annually, at a rate of 3.50 per cent
for deposits of between £5,000 and £249,999, and 3.75
per cent on bigger deposits. Alliance & Leicester guarantees
that the interest rate on the account will not be more than 0.25%
below BoE base rate until December 31st 2004. Being based on the
Isle of Man, the account is covered by the Depositor’s Compensation
Scheme.
Simon Hull, managing director, Alliance & Leicester
International, says, “we have found that our Offshore Base
Rate Tracker products are popular with a wide cross-section of savers
due to the minimum opening balance of £5,000 and 5 penalty-free
withdrawals per year. This appeals to savers who only want occasional
access to their funds or who want an account to collect the interest
from another savings account.˜
He continues, “savings products that track
the base rate are always going to be popular with a certain type
of saver - those who want reassurance or a guarantee that their
interest rate is linked to the Bank of England, or perhaps those
who want to save for the long-term without chopping and changing
their accounts. When the base rate starts to move upwards as it
currently seems to be doing, these kind of accounts become more
popular still as there are also many savers who want to capitalise
on rising interest rates. For this reason we have recently extended
the guarantee to track the base rate for another year until December
31st 2004.”
Malcolm Corrigan, communications director of Abbey
National in Jersey, says offshore trackers are for “day-to-day
banking for British expatriates, or for those who are leaving the
UK and want to continue using ‘everyday’, rather than
the more exclusive ‘personal’ banking.” Likely
clients are possibly “already customers of Abbey National,
though some are referred. We ensure a seamless transfer of funds
from the UK and can turn around an application in 5-10 days, depending
on the documentation process required by the Know Your Customer
Rules.”
Corrigan was unable to provide an exact figure on
the popularity of Abbey National offshore trackers but says, “they
provide a very steady trend of growth, since when they were launched
last spring.” However, he was happy to state that Abbey National’s
flagship transactional bank account for expatriates, the Abbey National
Offshore Gold account, which is not a tracker account, “recorded
a 15 per cent increase in volume for Jan-December this year.”
At Alliance & Leicester, Hull says, “approximately 11.5%
of our Sterling customer balances are in the Offshore Base Rate
Tracker product.”
Abbey National Offshore has three base rate tracker
accounts. The Base Rate Tracker 180, with a minimum opening deposit
of £50,000 has a guaranteed interest link of 0.20 per cent
above the UK base rate for the annual interest rate option and 0.10
per cent for the quarterly option. The Base Rate Tracker 90, on
a minimum deposit of £50,000, offers 0.10 per cent for the
annual interest option, or the base rate equivalent for the quarterly
interest option. Another is the Base Rate Tracker Term account,
which has a minimum opening deposit of £25,000, and which
matures 4th May 2004.
Among the most recent additions to the available
tracker accounts is Nationwide International’s new Tracker
Plus Account, launched 1 December. The account, which has a two-year
term, pays a competitive 4.05 per cent, though customers choosing
the monthly interest rate option will receive 3.75 per cent, the
current BoE rate. The account offers instant access, subject to
30 days’ loss of interest, and has a minimum investment of
£5,000 and a maximum of £2m.
Carl Gandy, managing director of Nationwide International,
says the account’s main features are, “one of the best
rates currently available on any offshore savings account. Savers
know that their rate will always be 0.30 per cent above the BoE
rate. Should they need access to their money, they can, in an instant.”
Northern Rock (Guernsey) has launched a number of
offshore tracker accounts over the last six months, each with monthly
and annual versions. All are linked to the UK base rate, as set
by the Monetary Policy Committee. Withdrawals are penalty-free provided
that appropriate notice is given. Their latest annual interest Offshore
Tracker 120 (effective from 1st December) pays 3.45 per cent (gross
rate), while the monthly version pays 3.15 per cent, on a deposit
of £10,000 or more. The annual Offshore Tracker 120 guarantees
to be no lower than 0.50 per cent of the BoE rate until 1 April
2005, while the monthly version will always be 0.30 per cent. At
the end of October, Northern Rock also launched accounts with 90
days’ and 60 days’ notice.
High street banks mostly prefer straightforward
deposit accounts with tiered interest rates. The exceptions include
the Royal Bank of Scotland, which pays 2.25 per cent annual gross
on £10,000, or 2.75 including a discretionary bonus paid for
the first six months of the account being opened. Barclays’
International Tracker Savings Account pays interest quarterly, tracking
the official sterling, euro or US dollar base rates. Six free instant
withdrawals are allowed per calendar year. Further withdrawals are
available at a charge of 60 days’ loss of interest on the
amount withdrawn. This is subject to a minimum fee of £15,
€25 or US$25. The account pays a 1.95 per cent gross quarterly
rate on a deposit of £10,000, or 3.45 per cent for a deposit
of £250,000 or more.
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