Foreign Currency Accounts - PowerPoint PPT Presentation

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Foreign Currency Accounts

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  1. Foreign Currency Accounts

  2. Foreign Currency Accounts • When should one be opened • Where should one be opened • Advantages /disadvantages of opening • Evaluate costs of maintenance

  3. 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?

  4. 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)

  5. 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

  6. 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

  7. FCY acscost/benefit • What costs or charges do we incur with a FCYac? • What costs or charges do we incur without a FCYac?

  8. 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

  9. FCYacs Costs • Lifting fees • Account maintenance fee • Cable or telex charges • Correspondent charges • Period end billing

  10. 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)