Ongoing financial problems at the struggling Co-Op Bank have knocked back expat savers with closure of offshore arm Britannia International.
The Isle of Man based bank is to wind down over the next 12 months and close for good early in 2015.
Many expats will have expected the news as the firm’s Channel Islands branch is also in the throes of closure.
Zachary Hocking, head of savings for Co-Op Bank, said: “Everyone is well aware of the problems besetting the Co-Op and that we have to streamline to make savings and put the bank back on course.
“We’ve had a look at the Britannia International business and the review concluded winding down on the Isle of Man during the next year is a decision we had to make.
Changing savings landscape
“Of course, we’re sorry for any inconvenience to customers and we’ll do our best to offer any assistance we can.”
The bank will write to customers about their options. Branches are expected to close in the summer and a customer services team will be available by telephone.
The good news is customers with fixed rate savings will not have to move, with the bank guaranteeing rates and terms until they mature.
The closure signals yet another loss for offshore savers.
However, the changing global tax regime forcing former tax shelters to become more transparent in their dealings and to report information about customer investments to mainland tax authorities is doing away with the need for offshore banking.
In the eyes of many HM Revenue & Customs (HMRC) tax inspectors, having an offshore bank account as a UK taxpayer is a red flag for a tax avoidance investigation.
Current offshore saving deals
Savers are also finding better homes for their money paying better returns as low interest rates paid by offshore banks are no longer attractive to investors.
Another issue for savers is the amount of cash that has to be tied up for a fixed term offshore to qualify for an account.
Santander is offering two fixed rate bonds with a minimum £500 deposit – 12 months at 1.4% and 24 months at 1.6%.
Skipton International has a five-year 2.75% fix with a £10,000 deposit.
Other current deals include a three year Nationwide International bond for a minimum £50,000 deposit at 1.8%; and a 12 month bond at 1.45% asking the same deposit.
Irish-based Permanent Bank has a range of fixed rate deals for between 12 months and five years, with a minimum £20,000 on account, offering rates of 1.85% to 2.15%.