IF you have a current account in Gibraltar, you may have been notified by your bank or building society that they are closing down. You will need a new current account.
I have been contacted by a number of people in this position – with more than one organisation – so it may be a growing problem. For tax residents in Spain in this situation, it can be difficult to find an alternative.
The Spanish banking experience is ‘mixed’ at best. The most common complaints I hear are that bank charges are unreasonably high (and levied on most transactions) and that transferring currency from Sterling to Euros can be slow, with poor rates.
Ironically, competition between current accounts in the UK is hotting up, with a number of new accounts promising competitive rates of interest on small balances – 4% in one case.
However, if you are planning to open a UK account to resolve the problem in Gibraltar, you may find this door is closed to you, unless you still have a UK address. Even then it may not be the ideal solution.
There is not an easy answer to this problem but I would be interested to hear from any readers who have a good experience in this respect, that we can share with others. Emails to Richard@ra-fp.com please.
In the meantime, review the options available and identify what you need to achieve with your banking. Perhaps you just need access to a cash machine, but if you are regularly transferring money from the UK – your pension or annuity – and this is paid in Sterling, you could consider opening an account with a Foreign Exchange specialist. They will give you an excellent rate of exchange and may also be able to introduce you to a local bank on preferential terms.
Even if you don’t have the current account problem at the moment but you are regularly exchanging money, you could do well to open this type of account, as the rate of exchange will be stronger than your bank can offer.
Take, for example, sending your pension of £750 per-month through the bank. At current rates of exchange, you should be getting something like €925, but via your bank this could be cut down to €890. You may say that €35 is a small amount, but over time, it adds up.
That’s more than €400 each year you could be wasting – food for thought at the very least.