We’ll reviewHSBC Expatin this article. We will discuss its products and services, as well as the positives and negatives of the banking and investment service provider.
Because I have a large number of readers living abroad, I am occasionally asked to provide feedback on various service providers, such asHSBC expat/HSBC offshore.
Almost constantly, many ask me:
I will answer these questions in this article.
If you have any questions or want to invest as an expat or high-net-worth individual, you can email me (advice@adamfayed.com) or usethese contact options.
Table of Contents
What is HSBC Expat?
Jersey-basedHSBC Expatwas formerly known as HSBC International. It is a member of the HSBC Group, which is one of the biggestbanking and financial services organizations globally.
HSBC Expat is subject to the banking, general insurance intervention, investment, and fund services regulations enforced by the Jersey Financial Services Commission.
Where does HSBC operate? HSBC is global and operates in64 nations and territories. The majority of their customers are expatsresiding in Dubai,Hong Kong, Qatar,Shanghai, Singapore,and other cities that are home to sizable expat communities.
What are the costs? Thebanking service (current account) costis not low, but it is not prohibitively expensive either. The fees associated with currency exchange range from 2.5%to 3%. This iscostlier than using Wise, but it is comparable to the fees charged by other offshore banks from the Isle of Man, Guernsey, the Cayman Islands, and Jersey.
Even when completed online, the fees associated with international bank transfersare significantly higher.
The high costs of investments on the platform are the result of a number of factors, including the platform’s fund costs, direct costs, and a variety of hidden fees.
What about HSBC Expat’s investment options?
As is the case withmajority of private banks, HSBC Expat provides access to some extremely pricey fund ranges. Therefore, even if HSBC Expatis your primary banking institution, you should steer clear of the majority of their investment accounts designed for international customers.
There is a significant positive relationship between the amount of money paid in annual investment fund fees and the funds’ overall performance over the long term.
The initial charge for investing in a fund that is offered through the HSBC Expatplatform can be as high as 3%, and the fund may also request extradistribution fees, ongoing charges, and otherexpenses.
The FTSE250 tracker fund offered by HSBC to investors in the UK is one of the bank’s many excellent index fund options. The fund’s annual expenses are kept to a minimum at 0.1%.
On the other hand, these choices are rarely selected when making use of the platform that is made available to expats. They are typically employed on third-party platforms, working in tandem with BlackRock, iShares, and various other providers.
It shouldn’t come as a surprise since the largest institutions, particularly those with the most recognizable brand names, frequently have the ability to get away with charging higher prices.
How is the customer service? The inefficiency and lack of personalization that can result from large organizations is a common complaint. You are one of approximately 40 million customers that HSBC serves when you bank with them.
Even though HSBC extols the virtues of having a dedicated relationship manager assigned to each customer’s account, a large number of international customers maintain that the quality of service is subpar.
Has HSBC Expat’s performance been OK so far? As of January 18, 2023, the Dow Jones Industrial Average was 1.1% lower at 33,910, and the S&P 500 was 0.2% lower at 3,990, indicating that theperformance of the stock marketthus far in 2023 has been lackluster.
Your investments are rendered worthless whenever the Dow falls. The worth of your investments is likely going to go down until the stock market demonstrates a positive return. This is something you should prepare yourself for.
Although HSBC is not to blame for this, some of the funds have performed more poorly than the overall market in recent years.
What products and services does HSBC Expatprovide?
The products and services offered by HSBC Expat consist of things like an expat account, expat mortgages, expat savings, multi-currency bank accounts, fixed deposits, the discover FX app, market insights, and a variety of investment opportunities.
HSBC Expat Products
Global Money
HSBC Expat customerscan use Global Money to wire funds in 19 different currencies between theirHSBC accounts and other banks located all over the world. It can take anywhere from one to three days for money to be sent to accounts that are not held at HSBC.
The Australian Dollar, Canadian Dollar, Swiss Franc, Chinese Yuan, United Arab Emirates Dirham, Euro, British pounds, Hong Kong Dollar, Japanese Yen, and USDollar are among the currencies supported here.
There is no required minimum balance, and all of your transactions can be managed on your mobile device. Your Global Money Account can be opened completely free of charge, and there are also no ongoing fees associated with maintaining it. At the moment, there are no fees assessed for any international transactions completed with Global Money until March 31, 2023.
Multi-currency savings accounts
You are able to put money away in up to 19 different currencies, with a variety of instant access and fixed-term savings accounts designed specifically for expats.
Fixed Term Deposit
You have the option of saving in 19 different currencies for a fixed term ranging from one month to a year. There will be a fee assessed if you take your money out of the account before the specified time.
Saver Account
The Saver Account allows you to save in USdollars, euros, or British pounds, while also providing you with easy access to the money you have put away. When you absolutely need to get your hands on some cash, you won’t be charged any fees for making the withdrawal.
In order to keep using your Saver Account, you have to ensure that there is at least 5,000 pounds or US dollars in the account at all times.
When you save money in British pounds, you have the potential to earn an interest rate of up to 0.35%, and when you save money in US dollars, you have the potential to earn up to 0.60%. There may be some differences in these rates.
Your account will receive the interest that has been accrued on a monthly basis, which is computed daily. If the balance drops below the minimum required to open the account, you will not be paidany interest on the account.
Currency Savings
This is an account forsaving moneythat does not have a set term and is offered in 16 majorcurrencies. The currencies that can be held in this type of account are the same with thosein a fixed-term deposit account, except this one does not support US dollars, British pounds, and euros.
You won’t be charged any fees for makingwithdrawals when you want to. In order to keep using your Currency Savings account, you are required to keep a minimum balance of 10,000 pounds (or the currency equivalent).
Your interest is computed on a daily basis, and it will be deposited into your account twice a year, in April and October. If the balance is lower than the required minimum, no interest will be paidto the account.
Online Bonus Saver
This is a savings account that can only be accessed online and is offered inmajor currencies – euros, British pounds, and US dollars.
You must keep at all timesa minimum balance worth 5,000 pounds or US dollars, or 10,000 euros in your Online Bonus Saver account.
If you don’t take any money out of the account during a given calendar month, you’ll be eligible for bonus interest.
Quarterly Bonus Saver
This is an account that can only be accessed online and is denominated in either US dollars or British pounds. If you don’t withdraw any money from the account, you’ll receive bonus interest payments every three months.
Your Quarterly Bonus Saver account requires that you keep a minimum balance of 5,000 British Pounds or the same amount in US dollars.
Little Expat
This is a global savings account that enables you to put money away for your child’s education or other goals so long as they are below 18 years old.
It is available in four currencies, namelypounds, US dollars, Hong Kong dollars, or UAE dirhams. You will be eligible for a preferential interest rate on your first 2,500 pounds (or currency equivalent).
The account you open from this product category will be under your name. While the name of your child will be added to it, he/she will not have any legal rights to the account. It also will not change to your child’s name even when he/she turns 18 years old.
Preferential interest rates of 2.80% apply for up to 2,500 pounds, 3.50% for up to 3,200 US dollars, and 1% for up to 12,000 dirhams and 25,000 Hong Kong dollars.
Interest that applies for over 2,500 pounds is 0.30%, over 3,200 USD is 0.50%, and over 12,000 dirhams and 25,000 Hong Kong dollars are 0.10%.
US Dollar Accounts
HSBC Expat customers have access to a variety of current and savings accounts denominated in US dollars, including Global Money, Fixed Term Deposit, Quarterly Bonus Saver, Saver Account.
Global Private Banking
Personalized investment guidance, discretionary portfolio management, and a relationship manager are provided.
Clients who have assets totaling more than 1.5 million pounds(or the currency equivalent) are eligible for HSBC Private Banking services. Clients who already have assets held by HSBC in the Channel Islands and the Isle of Man are included.
Expat Bank Account
This is a multi-currency account, and you can choose to keep your money in US dollars, British pounds, or euros.
After you have registered for anExpat Bank Account, you will have access to HSBC Expat’s variety of specialized services, such as mortgages, investments, and savings accounts, among others.While you’re away from home, you’ll still have the ability to save, invest, and manage your money. A non-resident account, an international account, or an offshore account are some of the other names for it.
You must be at least 18 years old and satisfy one of the following requirements to proceed:
It’s not privacy concerns that drive me or manyother expats to look into banking options in our new home countries. There alsois no connection between this choice andevading taxes.
The majority of modern-day investors view offshore banking and investing as a means to diversify their holdings, increase their level of convenience, and reduce the amount of political and social risk they are exposed to.
Does HSBC Expat offer mortgages? HSBC also offers mortgages for residential and buy-to-let properties in the UK and abroad.
Because you are only responsible for paying the interest on the loan rather than the principal balance each month, interest-only mortgages typically have more affordable payments per month. At the time of application, you will be required to demonstrate that you have the financial ability to repay the loan once the term has expired.
The monthly payments for a mortgage that requires capital repayment are typically higher than those for other types of mortgages because they include both interest and principal payments. If all of the payments have been settled, then the loan is considered paid off when the term comes to an end.
The interest that you pay is calculated by adding the tracker interest rate to the Bank of England base rate.
How long can you have the mortgage for?
The maximum loan term under HSBC Expat’s offer is 25 years for buy-to-let properties in the UK. They did not specify the loan terms for residential properties and those in other countries.
What are the fees associated with HSBC Expat’s mortgage?
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Does HSBC Expat offer Investments?
Portfolio Investment Funds
This investment offers a selection of pre-made portfolios, each with a unique level of risk. You have the option to pick from one of five different portfolios tailored to the level of risk you are personally comfortable with.
You can begin with just ahundred British pounds, but you are required to have aninvestment of at least25,000 poundsin either one product or a combination of products in order to receive advice.
After that, HSBC Expat’steam ofinvestment professionals will track your investments to make certain that they continue to maintain the level of risk that you have selected for them. You can achieve greater safety and security by spreading your investments across a variety of asset classes and financial systems.
This product can be purchased online, but there is no accompanying advice. If you choose to make your investment online, then it is not necessary for HSBC Expatto determine whether or not this particular product is suitable for you. Nonetheless, you also have the option to invest through the provider’sfinancial planning service.
The majority of the capital in HSBC Expat’s portfolios will be invested in fixed income securities, company shares, and alternative assets such as real estate, private equity, and commodities, or will be exposed to these types of investments.
You need to pay an entry fee of 1% for all portfolios under this type of investment. Additionally, HSBC Expat is entitled to a distribution fee that amounts to fifty percent of the annual management fee. The annual management fee has gross rates that range from 0.50% to 1.75%. Moreover, they have an ongoing charge, plus other expenses.
Single Asset Class Funds
You are able to create your personalinvestment portfolio,thanks to various funds thatcontains all asset types —stocks,bonds, andalternative investments.
The euro, the USdollar, and the British pound are the three different currencies that can be used to purchase HSBC Global Investment funds.
You have the option to make aninvestment of at least100 euros, pounds, or USDper month or a preliminary lump sum investment of1,000 in any of the three currencies.
There is also aninitial entry fee, which can be as high as 3% of the investment amount. Other fees and expenses are also charged (like for portfolio investment funds).
Discretionary Portfolio
Provides a range of investment options, including exchange traded funds (ETFs), low-cost funds, as well asfixed income and equities. You are required to have an aggregaterelationship balance of half a million pounds(or its equivalent in another currency) and are planning to invest at least250,000 pounds(or currency equivalent).
HSBC Private Banking is in charge of providing the discretionary investment management services.
Is the World Selection Portfolio a good alternative? You can invest in diversified multinational funds with the assistance of the world selection portfolio, which requires a minimum investment of $50,000.
It isn’t the worst choice available, however there are two major drawbacks associated with it: all of the funds that are offered are connected to HSBC, and there are a great deal of hidden costs that are connected to the portfolio.
It may appear that the fees are reasonable; however, the HSBC funds that form the basis of such portfolios typically incur charges ranging from 2% to 3%.
HSBC Expat Services The services offered by HSBC Expat include worldwide banking services – Global View and Global Transfers, international transactions, foreign exchange (FX) services, usage of card overseas, as well as international tax services.
We’ll highlight some of the services below.
Global View
Enables you to view all of your accounts with a single log on, as well as configure instant or recurring transfers. It also gives you round-the-clock access.
Global Transfers
You are able to move a maximum of200,000 US dollars(or the equivalent in another currency) daily between your global accounts located in 26 different nations and regions.
You can access them from various countries, such as Australia, Canada, China, France, Hong Kong, India, Malaysia, Philippines, Qatar, Singapore, UAE, UK, and the US.
The UAEdirhams, Canadian dollar, British pound, euro, Hong Kong dollar,Japanese yen, Singapore dollar,Thai baht, USdollar, and South African rand are amongthe currencies that are supported by Global View and Global Transfers.
Please take into consideration that different countries might not support money transfers in allcurrencies. For instance, if you are sending money from the US, you must do so in US dollars.
Global Money Transfers
You will have the ability to send money anywhere in the world through HSBC Expat’s mobile banking app. It can take anywhere from one to three days for money to be transferred to accounts that are not held at HSBC.
Up until March 31, 2023, Global Money users won’t be subject to any transaction fees for making international payments.
Through the use of Global Transfers, you will be able to move funds across your own accounts in HSBC. Meanwhile, through the use of Global Money Transfers, you are able to send fundsto the accounts of other people, even if those accounts are held at a different financial institution.
There are certain financial institutions that will not accept fundsin everycurrency. Before you send your payment, you will need to make sure that the recipient account can handle the currency that you’re paying in.
You can make payments in 21 currencies, such as Australian dollars, baht, Canadian dollars, euros, pounds, yen, Mexican pesos, Singapore dollars, UAE dirhams, rand, and US dollars.
The daily cap is set at 100,000 poundsor its equivalent in another currency. This rule applies to each and every payment that is processed through Global Money Transfers withina single day, irrespective of the account that the payment originates from.
International Transactions
You are able to usemobile, online,or phone banking to make payments and transfers in 22 different currencies from your HSBC Expat accountsto more than150 different nationsand regions. Itis possible for you to accept payments and transfers in these currencies directly to your accounts as well.
Let’s look at certain details for when you make payments into accounts outside HSBC.
The daily limits, fees, and available currencies are the same with Global Money Transfers. In terms of the time it takes to process transfers, majority of payments take one day.
The only exceptions to this rule are transactions conducted in New Zealand dollars or US dollars, both of which can take up to two days. The completion of payments made in euros to Spain will take place on the following business day.
The same limit of 100,000 pounds applies per day. Meanwhile, fees charged are 4 pounds for Premier accounts and 6 pounds for Advance accounts. Correspondent bank fees of up to 90 US dollars can sometimes be tacked on to the total of an international payment.
When it comes to the length of time it takes for funds to be transferred, international payments that are processed through online banking orHSBC Expat’sFX app typically arrive between two and five business days after they have been sent.
The currencies supported are UAE dirhams, Australian dollars, baht, Canadian dollars, Czech koruna, Danish krone, euros, Hong Kong dollars, Hungarian forint, Israeli new shekel, New Zealand dollars, Norwegian krone, Philippine peso, Polish zlotys, pounds, rand, Saudi riyal, Singapore dollar, Swedish krona, US dollar, yen, and yuan.
When you use this service, there are nolimits placed on the amount of money that can be transferred per day. Fees charged for international payments are 9 pounds and 14 pounds for Premier and Advance accounts, respectively. The same correspondentbank charges worthup to 90 US dollars may also be applied.
The transfer duration for international payments as well as currencies supported are the same with transferring via online banking or FX app.
International Tax Services
Although HSBC Expat does not offer tax advice, they are able to direct you to Ernst & Young (EY).
EY has tax specialists in over140 nationsand regions globally; as a result, the company is able to provide guidance on matters pertaining to international taxation, briefings on departure and arrival taxes in the event that you are moving to a new country, and assistance with filing tax returns.
Personal tax guidance is available from EY for HSBC Premier clients. Customers who have HSBC Premier status are eligible for a free consultation with EY that lasts for one hour,as EYreview their situation and potential areas of assistance.
shouldyou become a client, you will be entitled to tax guidancethat is specific to your unique situationsregarding issues liketax legislation, purchasing or offloadinga property, andwealth management.
Because moving to a new country can have a significant impact on your tax situation, EY could brief you on yourdeparture over the phone, prior toyourtransferto a new nation. If not, EY can guide youif you are already living in another nation.
Clients of HSBC Premier and HSBC Advance can take advantage of this service, which will cover a variety of subjects, including residency requirements, double taxation pacts, capital gains tax, as well asinheritance tax laws.
Clients of HSBC Premier and HSBC Advance who have tax interests in multiple nations and regions can take advantage of EY’s ability to help organize everything on their behalf in those territories. This includes providing you with a single point of contact for the preparation and filing of your tax returns,the calculation of any taxes due or overpayments, as well asadvice on payment dates.
What are the pros and cons of HSBC Expat?
First, the Upsides
Ideally, they make it possible for customers to change their location within a country but continue to bank with the same financial institution.
Additionally, they have a working relationship with the accounting firm EY and their international tax guides, both of which have the potential to be helpful resources for individuals dealing with complicated tax issues.
Even though the mortgage service isn’t terrible, you should always look around for more favorablerates and deals.
Also, while they do not compare favorably to the more boutique banks that are geared toward expats, their overall service levels are still superior to those offered by somelocal banks.
Now let’s look at the downsides;
The Expat Bank account in particular has a very high account minimum, which is surprising given that the funds could be invested in other ways that would yield higher returns.
In addition, I believe that there is an increased level of risk involved in certain circ*mstances when dealing with a bank that operates on such a global scale.
If any of us are from the UK, the US, or any of a great number of other countries, we need to keep in mind that HSBC maintains some connections to the governments of those countries.
Simply due to the fact that HSBC operates on such a global scale, the company is always susceptible to being subjected to political pressure.
Someyears back, HSBC conducted an investigation into the accounts that were held in Guernsey by citizens of the UK. These individuals were not foreigners living in another country.
Nevertheless, this demonstrates that it may be simpler to exert pressure on a UK-registeredbank but also has an offshore unit, in comparison to exerting such pressure on a platform or bank that is located entirely offshore.
This does not imply that exchanges or banks that are confined to a single nation are risk-free or error-free, however.
Won’t the international scope of HSBC’s operations likely to make it more user-friendly than other available choices?
Actually, that’s not the case at all. Even though HSBC UK is a separate entity than HSBC Japan or HSBC USA, the local regulatory bodies can restrict access, and these hurdles can also affect you.
If the check was issued by HSBC in country A, it is not always possible to deposit it in country B.
You might be thinking that this is very typical, but the fact that this is the case does not exactly make HSBC the world’s local bank, which would make everything more convenient.
In addition, a large number of other financial institutions offer international services, despite the fact that they do not have physical branches located in a number of different nations.
What are some of the most common blunders that investors make when dealing with major financial institutions? Why do so many people continue to use large banks, given all the problems associated with those institutions? Even though an increasing number of people are developing skepticism toward large corporations and large governments, there are still some people who choose to purchase products from large brands.
This is the case regardless of the additional cost, sluggishness, poor quality, and impersonal nature of the service, etc. This can be attributed, at least in part, to the familiarity bias.
According to certainstudies:
In most situations, this will not be the case.
Do you offer services similar to a bank? Banking services are not available as an independentproduct, but I do provide them for my existing customers. It would take too much time to offer it as an independentproduct or service to customers.
WhileI do not askmy existing customers a fee for banking services, my primary area of expertise is in providing services related to investments.
HSBC Expat Review: Bottom Line To summarize, HSBC Expatis a good option in terms of banking. Even so,there are other choices that are superior. The prices, the service, and the overallconvenience could all use some work.
When it comes to investments, mosttheproducts of HSBC Expatthat can be purchased through the platform are expensive and primarily concentrated on HSBC-owned funds andproducts.
The majority of such funds are not in the most affordablerange, which typically outperforms their peers over the long term. For all of these factors, banking and investments must be held distinct from one another as a general rule.
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Contact me.
Originally published on adamfayed.com
