Offshore banking
A new look for a New Year
Offshore banks incorporated in various jurisdictions are often joint-stock companies, needing to have at least two founders being foreign legal or natural persons. The Bank's licence grants a wide subject of offshore activities and services provided they are rendered to non-resident clients in a foreign currency. Often no exchange control applies on the part of the Central Bank of the relevant jurisdiction.
A typical offshore bank conducts the following services via correspondent accounts:
- wire transfers
- corporate and individual current accounts
- notice accounts with a minimum balance
- checking and savings accounts
- fixed term, interest bonds or yield enhanced deposits
- mortgages
- loans
- credit lines
- financing of projects
- factoring
Offshore banks enjoy lower overheads than most other jurisdictions by virtue of favourable domestic tax arrangements, no requirement for a physical office (the operational facilities of the bank may be Internet based).
Offshore banks can be at the leading edge of competition and technology attracting external clients by
- competitive rates compared with onshore banks
- much greater extent of privacy
- minimum of bureaucracy
Another option is to use an offshore bank as a captive one, similar to a captive re-insurance company. In this case it serves a group of related companies (e.g. an international holding), providing all necessary bank facilities with much lower overheads compare to some external, especially onshore, bank facilities. The results are considerable savings on bank expenses and much higher privacy of internal and external financial operations of the group.
