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Foreign Currency Accounts Foreign Currency Accounts When should one be opened Where should one be opened Advantages /disadvantages of opening Evaluate costs of maintenance Foreign Currency Accounts (FCYacs) When Short answer is….. When the volume or value of business warrants it.

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Foreign Currency Accounts

  • When should one be opened

  • Where should one be opened

  • Advantages /disadvantages of opening

  • Evaluate costs of maintenance


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Foreign Currency Accounts (FCYacs)When

  • Short answer is….. When the volume or value of business warrants it.

    - company exporting goods to Thailand, 20 sales a year of GBP equivalent 20,000 each, local sales office and also imports raw materials from Thailand.

    Would you open an account?


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FCY acswhere to hold accounts

Three choices

- in your domestic locality, staying at

home

- in the country of the currency, going

native

- in a third location (Treasury Centre)


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FCY acsWhere

  • Banking relations

  • Transfers between local currency and foreign currency

  • Cut-off times

  • Cheque deposits

  • Receipt of credit transfers from customers in country of currency


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FCY acsWhere

  • Balance reporting and statements

  • Interest on credit balances

  • Problem resolution

  • Language

  • Tax and permanent establishment

  • Delivering payment instructions to bank

  • Commissions and fees


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FCY acscost/benefit

  • What costs or charges do we incur with a FCYac?

  • What costs or charges do we incur without a FCYac?


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FCY acsCosts

  • Value dating

  • Commission charges

  • Transaction charges

    - per item

    - based on value i.e. 2 per mille with a

    max and min

  • Turnover charges


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FCYacs Costs

  • Lifting fees

  • Account maintenance fee

  • Cable or telex charges

  • Correspondent charges

  • Period end billing


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FCY acsOther Issues

  • Multicurrency accounts

  • Interest on bank accounts

  • Withholding taxes

  • Stamp duties on loans

  • Notional pooling and concentration

  • Thin capitalisation

  • Central bank reporting (x border flows)


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