(Quick note; this article originally appeared on adamfayed.com. For questions or queries my email is firstname.lastname@example.org. I am also available on a range of apps.).
I have many expat readers, and from time to time, I am asked to review certain providers. HSBC expat is no exception.
I get asked the following questions on countless occasions;
- Should I invest with a bank?
- Isn’t it more convenient to invest and bank with the same firm?
- Are banks expensive for investing compared to platforms and currency apps?
- Do banks tend to only sell their own products and funds?
- Aren’t bigger names safer?
I will answer these questions in this article.
Where do HSBC operate?
Globally. Most of their expat clients are in Hong Kong, Singapore, Shanghai, Dubai and other places with large expat numbers.
What is HSBC Expat and what services do they offer?
HSBC Expat used to be called HSBC International. They offer multi-currency bank accounts and investment opportunities.
What are the account minimums?
60,000GBP, which is about $80,000. This is a very substantial account minimum, considering that money could be better invested elsewhere.
HSBC do offer fixed deposit interest rates, but due to the global situation with interest rates, it is paltry.
What are the benefits of HSBC Expat?
Theoretically, they allow customers to move from country to country,and stay in the same banking family.
They also cooperate with the accountants EY, and their global tax guides, which can be useful for some with complex tax issues.
What are the costs?
The cost of the banking service (current account) isn’t cheap, but not extortionate. FX fees are 2.5%-3%. This is more expensive than Transferwise, but normal compared to other offshore banks operating from Isle of Man, Jersey etc.
Transfers cost 30–35GBP each time, even when done online, which is higher than normal.
Investment costs are high, due to a combination of fund costs and largely hidden fees.
Do HSBC Expat offer mortgages?
Yes. HSBC offers UK mortgages to expat investors. They no longer offer international mortgages.
Why bank offshore ?
For me, and most expats, the desire for expat banking isn’t about secrecy. Sometimes I feel like the media are in a time machine.
Offshore banking these days isn’t like the 1980s. It isn’t linked to tax evasion for most people.
It certainl isn’t about stuffing money in your trousers, before going on a wall, like in this scene from the Wolf of Wall Street!
For most investors in the 21st century, offshore banking and indeed investing is about diversification, convenience and lowering political and social risk.
For me, I want a number of things;
- To avoid emerging market banking, especially in unstable countries.
- To avoid black swan events, I want diversification in terms of banking options. Even though I come from the UK, which is a fairly stable country, I awant to have non-British banking options……just in case the UK goes into political turmoil and elects a radical government.
- I also want speed and convenience, and not to have to open and close bank accounts every 3–4 years.
I am not alone. Many expats, especially in unstable countries, feel the same way. Take oil and gas as an example.
Expats in this industry are often sent to unstable parts of the world. Why would an expat, moving from emerging market to emerging market, want to entertain a local banking solution?
So what are the negatives with HSBC Expat?
Based on the above reasons for offshore banking, how does HSBC rank? Firstly, for me, a bank which is so international means more risk in certain situations. HSBC, we have to remember, has some links to our governments back home.
The very fact that HSBC is so international means that they can come under political pressure at any moment.
A few years ago, HSBC reviewed accounts held by UK residents in Guernsey. These people aren’t expats.
Nevertheless, it shows that it can be easier to pressure a bank that is registered in the UK, but has an offshore arm, compared to a truly offshore platform or bank.
That doesn’t mean that platforms or banks operating in just one country are perfect, or without risk.
They still have to operate under various accounting reporting standards, moreover, such as FATCA for Americans and CRS.
How about conveniene? Surely HSBC is more convenient than some options, due to their international flavour?
Well not really. Even though HSBC UK is a different entity to HSBC Japan or HSBC USA, the local regulators can put up barriers, and these barriers can also work against you.
It often isn’t possible to deposit a HSBC cheque in country Y, if it has been produced in country X.
Very normal, you may be thinking, but this hardly makes HSBC the world’s local bank, which makes everything convenient!
Beyond that, like most private banks, HSBC offer some very expensive fund ranges. So even if you use HSBC for banking, most of their expat investing accounts are best avoided.
The largest institutions, with the biggest brand names, often get away with charging more money.
Largness, moreover, causes its own problems. With HSBC, you are one customer out of 37 million!
So many expats claim that service levels are poor.
What are some of the biggest mistakes investors make with big banks?
Given all these negatives about the big banks, why do many people still use them? Even though more and more people are becoming skepticalabout big business and big government, some people still pick big brands.
This is despite the extra cost, slowness, poor impersonal service and so on. This can be blamed partially onfamiliarity bias
Various studies have shown people are more likely to:
- Invest in Google stocks, if they use Google search more often.
- Invest in a company they drive by on the way to work.
- Invest in the company they work for, and therefore doubling their risk if the company goes bankrupt.
- Assuming that big name company stocks are safer than the broader market.
- Invest in stocks only in their home market
- Invest in stocks in the sector they work in
Applied to HSBC, many people assume that service levels and investment returns must be excellent, due to the familiar sounding name.
So in conclusion, should you bank and invest with HSBC Expat?
On the banking side, HSBC is OK. Better options exist, however. The costs, service and convenience could all be improved.
On the investment side, the vast majority of HSBC products on the platform are expensive and focused on HSBC products and funds.
Banking and investments should be kept separate as a generalization.
Do you offer banking services?
I offer banking services for existing clients, but not as a standalone product. I do not charge for banking services for existing clients.
My main focus is on investment-related services.