Bagging the Best Returns on Offshore Deposits
by Iain Yule

For the eighth year in a row the Nexus magazine Offshore Bank Best Buy charts have been trawled to find out who has been offering the top rates of interest most consistently. In a low-interest rate environment generally it is especially important that expats find the top rates delivered regularly without being reduced when banks’ targets are reached. Loyalty to a bank should be rewarded and if it is not then you should move your account, writes Iain Yule.

The results of this search of the last 12 months’ ratings as they appeared in 2011’s editions of Nexus are shown in the table. In each edition of Nexus we print a table of the best buys currently available in offshore banking. We do this to assist expats in determining where to place any money they want to save in a tax-free environment at the best rate of interest possible.

But these tables of top rates are not the only story. They give a good snapshot of the accounts paying the top rates there and then. But high headline rates and introductory special offers on accounts make choosing the right one difficult. How do you know if today’s top-paying account is going to continue with a high-rate policy?

Of greater significance to savers, especially those who are in it for the longer term, is consistency of high rates of interest, and that is much harder to identify.

So that is where our ‘Best Offshore Banks for Expats Awards’ can assist. We have examined the interest rates paid by offshoots of banks and building societies based in the ‘sterling offshore’ area, which includes the Isle of Man and the Channel Islands of Jersey and Guernsey.

We looked for consistency of approach, signified by the number of times each offshore bank appeared in the best buys list published in each edition of Nexus, derived from research by independent data supplier Moneyfacts.

Awards are made in the categories of sterling instant access, sterling notice, dollars and euros accounts. There is also an overall award to highlight those offshore banks which have most often featured as best buys in different categories.

With interest rates so low, it is all the more important for savers to look out for those savings account providers which consistently offer better rates than the norm.

Best Banks for Expats Awards

The banks are ranked by the number of times their savings accounts appeared in the ‘best buy’ tables printed in the 11 issues of Nexus Expatriate News magazine during 2011 and at www.expatnetwork.com. The banks appeared in the ‘best buy’ tables by virtue of having the best interest rate available at the time in the different categories of account (sterling notice, sterling instant access, dollar and euro) as judged by Moneyfacts. So we are showing which offshore banks offered the best interest rates most consistently during 2011. The ‘Overall’ award goes to the banks whose accounts have most often featured as best buys in different categories. Underlying interest rate comparisons by Moneyfacts (www.moneyfacts.co.uk).

Best Offshore Banks for Sterling Deposits: Instant Access

Top bank in this category is AIB International Savings in the Isle of Man, which was formerly known as Anglo Irish Bank Corp (International). The bank’s range of accounts has been among the best buys throughout 2011 and is still prominent. The Instant Saver account is currently paying 2.5% interest for holdings of £5,000 or more.

Highly commended in this category is Nationwide International, Isle of Man-based offshoot of the British building society. Its Base Rate Tracker Premium account presently pays 2.4% on deposits of £25,000 or more.

Best Offshore Banks for Sterling Deposits: Notice Accounts

Alliance & Leicester International, part of the Santander banking group, tops the poll in this category once again for its notice accounts. Its eSaver Notice 180 account currently pays 2.25% income on £5,000 or more held on 180 days’ notice of withdrawal.

Highly commended here is Isle of Man based Britannia International, part of the Cooperative banking group.

Commended is Skipton International, based in Guernsey, which presently tops the monthly best buy tables with 2.75% offered on deposits of £100,000 or more held on 180 days’ notice.

Best Offshore Banks for Dollar Deposits

Winner yet again in this award is AIB International Savings, with its range of dollar accounts consistently topping the tables in 2011. Its 60 Day Saver account is currently offering 1.9% on savings of $5,000 or more.

Investec Bank in Guernsey is highly commended, for its Horizon account, as is Lloyds TSB International. Both banks have appeared regularly in the best buy charts.

Best Offshore Banks for Euro Deposits

Yes, it is once again AIB International Savings which tops the euro award. The 60 Day Saver euro account is currently paying 2.6% for deposits of 5,000 or more, held on 60 days’ notice. Its instant access version pays 2.5%.

Highly commended Lloyds TSB International paid consistently good euro rates in 2011.

Best Offshore Banks for Expats Overall

It will come as no surprise from the foregoing that for the eighth year running our Best Offshore Bank for Expats Overall is AIB International Savings. The bank has shown amazing consistency over the years. The bank has come about after a rebranding (from Anglo Irish) in September last year, as the Irish banks consolidated.

Highly commended overall is Lloyds TSB International, rated highly in two individual categories – for US dollar and euro savings.

* All rates quoted as at 5 January 2012. Please check current rates with product providers.