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Sean O'Hare reports on the latest offshore finance news from the Crown (Other OTC: CWLDF.PK - news) Dependency

Top Manx ways for expats to save

Expat savers depositing in the Isle of Man (Other OTC: MAGOF.PK - news) are increasingly reassessing their options as low interest rates have many to move away from easy-access, no-notice accounts and towards longer, fixed-term banking in search of better returns.

Mark Waterhouse, president of the Isle of Man Bankers Association , also reports that there is also a move towards structured deposit accounts that require a three- to five-year investment with returns linked to the performance of a range of indexes, including the FTSE. They are seen as an alternative to the standard savings product, offering flexibility, high returns and the potential to outperform inflation while still providing capital protection.

The benefits of depositing offshore, on the Isle of Man, include interest on savings and investment accounts paid gross, without deduction at source.

Currently there are currently four “no-notice accounts” on the Isle of Man that offer interest rates of two per cent and above. The AIB International Savings Instant Saver account pays 2.5 per cent AER (SNP: ^AERY - news) on a yearly basis, with a minimum deposit requirement of £5,000.

Nationwide International ’s Bonus Access Account pays 2.4 per cent AER on a yearly basis, with a minimum deposit requirement of £25,000.

Lloyds TSB (LSE: LLOY.L - news) International ’s International Bonus Saver offers 2.01 per cent monthly AER on a £100,000 minimum deposit, while Britannia International ’s Access Plus offers 2 per cent yearly AER on £50,000 minimum deposit.

The best Isle of Man notice accounts, ranging from 95 days to 180 days include: Nationwide International’s Bonus 95-day Account, that offers 2.58 per cent monthly AER on a minimum £25,000 deposit; Nationwide International’s Bonus+1 Account, that offers 2.48 per cent AER monthly return on £25,000 minimum deposit with a 95-day notice period on withdrawals; and Alliance and Leicester International ’s Select Notice 180 Iss 1, that offers 2.25 per cent monthly interest on a £5,000 minimum deposit.

The best Isle of Man fixed rate products on offer start with Lloyds TSB International’s Fixed Term Deposit, paying 4.50 per cent on a five year bond and £10,000 minimum deposit.

Alliance and Leicester International’s Fixed Rate Bond Issue 12, pays 4 per cent and requires a £5,000 minimum deposit that matures on February 28 2017.

The top place for alternative growth

The Isle of Man is the number one location among non-UK AIM top 100 companies, hosting more than any other jurisdiction. It has retained its market share over the past two years, leading overall with 50 companies listed.

The businesses registered in the Crown Dependency had placements on AIM with a total market capital of £1.14 billion, according to research commissioned by the Isle of Man government and conducted by Hemscott .

Bermuda and the British Virgin Islands took second and third place respectively.

Commerical flexibility, its close links to the City of London (LSE: CIN.L - news) , cheap cost base, familiar corporate structures and a fiscal regime that includes a zero rate of corporation tax are considered to be the key factors that explain the Isle of Man’s domination of London’s Alternative Investment Market.

With more than 500 international companies now listed on AIM, it is widely regarded as the world’s number one market for growth.

Indian companies have been a key beneficiary of the island’s AIM infrastructure, with a total of £1.6 billion raised for them since 2006.

John Shimmin, minister for the department of economic developmen is pleased with the figures. He said: “This research shows the Isle of Man performing very well in the AIM market despite difficult market conditions and serves to illustrate that the island is the preferred gateway to London for international corporate capital raising requirements.

“This is another example of how the Isle of Man is a significant contributor to the City of London and why the Crown Dependencies are important to the UK economy as a whole.

“These findings are a great vote of confidence for the Isle of Man and represent an excellent return on the good work that the private sector and Government have invested into promoting our attractive proposition.”

Praise for help in creating UK jobs

In his first visit to the Isle of Man, the Lord Mayor of London, David Wootton, praised the island’s role in supporting the creation of jobs and growth in the British economy.

Alderman David Wootton explained how the Isle of Man, thanks to its popularity as an international finance centre and jurisdiction for expat depositors, played a pivotal role in providing liquidity to the wider British economy.

“That liquidity will make a major contribution in supporting business in the UK and abroad, and creating jobs and growth,” said the Lord Mayor when he delivered the Chief Minister’s international lecture at the Sefton Hotel in Douglas (Xetra: 609900 - news) .

Alderman Wootton told guests from the business community that the Isle of Man exemplified just how diverse and dynamic small economies could be, and what’s more, a diversity founded on the success of the financial and professional services sectors.

He said the Isle of Man and the City of London had a “longstanding and much-valued partnership that shared the same values and the same commitment to the very highest standards of corporate governance”, while reminding the audience of the fact that the UK and the Isle of Man were only two of eight on the OECD White List.

His views echoed those of Conservative MP Mark Field who last year felt the need to defend international finance centres against what he called “a one-sided debate that demonstrates a fundamental lack of understanding of the tax haven’s role in the global financial market”.

In defence of the regimes of the crown dependencies as a whole, the Westminster MP said: “Together the crown dependencies make a significant contribution to the liquidity of the UK market.

“These funds are largely accounted for by the 'up streaming’ to the UK head office of deposits collected by UK banks including Lloyds Banking Group and Royal Bank of Scotland (LSE: RBS.L - news) , as well as Barclays (LSE: BARC.L - news) , HSBC (LSE: HSBA.L - news) , Santander (Madrid: SAN.MC - news) and a number of building societies.”

The Lord Mayor believed the partnership between the Isle of Man and the City would be crucial in helping to create wealth and economic well-being.

For the UK and the City he shared Chief Minister Allan Bell’s vision for the Isle of Man of maintaining a prosperous and caring society based on fairness, opportunity for all, social cohesion and quality of life.

He summarised: “We are both small in size but punch well above our weight in the global economy. We can be justly be proud of the standards and governance we demand.

“And we are also well placed and well able to meet the challenges of the future and play our part in creating jobs and growth.”

This piece was originally published in the Telegraph Weekly World Edition.

Link:
Isle of Man: offshore saving news roundup

By Sally Bakewell - Tue Feb 21 12:28:02 GMT 2012

Bank of London and The Middle East Plc, the London-based Islamic bank, signed a 14 million-pound ($22 million) deal to help Global Marine Systems Ltd. buy a vessel to install subsea power cables at offshore wind farms.

The leasing transaction with the Essex, England-based marine technology and engineering company is the Shariah- compliant bank’s first in the renewable energy industry, according to a statement from the bank.

The deal “allows us to contribute indirectly to the U.K.’s attempts to diversify its sources of energy,” Jervis Rhodes, head of corporate banking at BLME, said in the statement sent by e-mail yesterday.

Nations from the U.K. to Germany are installing wind turbines offshore to curb fossil-fuel emissions and meet targets for renewable power. The U.K. plans to reach 18 gigawatts of capacity from offshore wind parks by 2020 while Germany is targeting 10 gigawatts by then. Parks will be built further from shore in deeper waters as developers seek to industrialize the technology to bring down costs.

The barge, called Cable Enterprise, will install subsea power links that help transport power generated by the turbines for use by consumers. As an Islamic bank, the transactions and contracts BLME undertakes are Shariah compliant, or follow principles of Islamic law.

To contact the reporter on this story: Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

View post:
BLME Signs Islamic Banking Deal With Global Marine for Wind

"There is no conspiracy between the major banks, smaller banks, building societies and the RBA" ... Steven Munchenberg. Photo: Justin McManus

The Australian banking sector has hit back after an offshore analyst cast doubts on the arguments used by the local sector for justifying lifting mortgage rates independently of the Reserve Bank this month.

The Australian Bankers' Association chief Steven Munchenberg disputed the basis of the analysis that concluded the big four banks enjoyed an oligopoly in the local market, saying there was "no conspiracy" between major banks and lenders in Australia to unfairly lift mortgage costs for Australians.

"There is no conspiracy between the major banks, smaller banks, building societies and the RBA, all of whom say the cost of funding has risen,’’ said Mr Munchenberg.

Advertisement: Story continues below

Mr Munchenberg's comments follow a scathing analysis from Tokyo-based Societe Generale Asia Pacific head of interest rate strategy Christian Carrillo, who yesterday said it was "almost mathematically impossible" that total funding costs for Australian banks were rising, giving the sector a motive to lift mortgage rates independently of a Reserve Bank this month.

"The claim that the recent increase in mortgage rates is due to higher funding costs is very dubious," said Mr Carillo in a research note. "The mortgage hikes seem aimed at protecting their high profit margins."

Mr Munchenberg also said that Mr Carrillo’s analysis also didn’t take into account moves by smaller banks to lift interest rates this month, despite the RBA keeping rates on hold.

‘‘This doesn't explain why Bendigo and Adelaide Bank, Suncorp and even Greater Heritage Building Society all raised rates independently, citing funding cost issues,’’ he said. Banks also had to offer more competitive rates to attract depositors,  he said.

Mr Munchenberg pointed to Commonwealth Bank’s decision last week to lift interest rates on mortgages by 10 basis points while increasing deposit rates by 20 basis points on six-month term deposits. "Pressure on deposits eased in the first half of last year then grew again as EU crisis deepened and the costs of overseas money went back to GFC levels," he said.

Bendigo and Adelaide Bank raised their standard variable mortgage rate by 15 basis points this month, while Suncorp increased their standard variable rate by 10 basis points.

Australia's major banks - ANZ Bank, Commonwealth Bank, NAB and Westpac - have lifted mortgage customers by between 6 and 10 basis point after the RBA shocked the market earlier this month by keeping the cash rate at 4.25 per cent. The banks have insisted that the cost of funds needed to keep lending into the economy were rising, driven in part by the volatility associated with the European debt crisis. The unpopular out-of-cycle rate rises followed announcements of job cuts by ANZ Bank and Westpac, further inflaming opinion about the banks.

In a speech delivered on February 14, RBA assistant governor Guy Debelle said the rising cost of covered bonds by Australian banks is "is broadly comparable to that of recent covered issuance by banks in other jurisdictions where there has been a similar step up in cost."

"In the past few days, there has been a sizeable narrowing of spreads in the secondary market on the domestically issued covered bonds, to around 140 points over swap." 

Despite the variations in funding costs, a number of credit unions have kept mortgage rates steady since the RBA’s decision this month, including Credit Union of Australia, which held the standard variable mortgage rate at 6.72 per cent this month.

The average standard variable mortgage rate by the major banks was 7.3 per cent last week, compared to 7.04 per cent for 56 credit unions analysed by Canstar Cannex.  

czappone@fairfax.com.au

See more here:
Banking sector hits back at critic

"There is no conspiracy between the major banks, smaller banks, building societies and the RBA" ... Steven Munchenberg. Photo: Justin McManus

The Australian banking sector has hit back after an offshore analyst cast doubts on the arguments used by the local sector for justifying lifting mortgage rates independently of the Reserve Bank this month.

The Australian Bankers' Association chief Steven Munchenberg disputed the basis of the analysis that concluded the big four banks enjoyed an oligopoly in the local market, saying there was "no conspiracy" between major banks and lenders in Australia to unfairly lift mortgage costs for Australians.

"There is no conspiracy between the major banks, smaller banks, building societies and the RBA, all of whom say the cost of funding has risen,’’ said Mr Munchenberg.

Advertisement: Story continues below

Mr Munchenberg's comments follow a scathing analysis from Tokyo-based Societe Generale Asia Pacific head of interest rate strategy Christian Carrillo, who yesterday said it was "almost mathematically impossible" that total funding costs for Australian banks were rising, giving the sector a motive to lift mortgage rates independently of a Reserve Bank this month.

"The claim that the recent increase in mortgage rates is due to higher funding costs is very dubious," said Mr Carillo in a research note. "The mortgage hikes seem aimed at protecting their high profit margins."

Mr Munchenberg also said that Mr Carrillo’s analysis also didn’t take into account moves by smaller banks to lift interest rates this month, despite the RBA keeping rates on hold.

‘‘This doesn't explain why Bendigo and Adelaide Bank, Suncorp and even Greater Heritage Building Society all raised rates independently, citing funding cost issues,’’ he said. Banks also had to offer more competitive rates to attract depositors,  he said.

Mr Munchenberg pointed to Commonwealth Bank’s decision last week to lift interest rates on mortgages by 10 basis points while increasing deposit rates by 20 basis points on six-month term deposits. "Pressure on deposits eased in the first half of last year then grew again as EU crisis deepened and the costs of overseas money went back to GFC levels," he said.

Bendigo and Adelaide Bank raised their standard variable mortgage rate by 15 basis points this month, while Suncorp increased their standard variable rate by 10 basis points.

Australia's major banks - ANZ Bank, Commonwealth Bank, NAB and Westpac - have lifted mortgage customers by between 6 and 10 basis point after the RBA shocked the market earlier this month by keeping the cash rate at 4.25 per cent. The banks have insisted that the cost of funds needed to keep lending into the economy were rising, driven in part by the volatility associated with the European debt crisis. The unpopular out-of-cycle rate rises followed announcements of job cuts by ANZ Bank and Westpac, further inflaming opinion about the banks.

In a speech delivered on February 14, RBA assistant governor Guy Debelle said the rising cost of covered bonds by Australian banks is "is broadly comparable to that of recent covered issuance by banks in other jurisdictions where there has been a similar step up in cost."

"In the past few days, there has been a sizeable narrowing of spreads in the secondary market on the domestically issued covered bonds, to around 140 points over swap." 

Despite the variations in funding costs, a number of credit unions have kept mortgage rates steady since the RBA’s decision this month, including Credit Union of Australia, which held the standard variable mortgage rate at 6.72 per cent this month.

The average standard variable mortgage rate by the major banks was 7.3 per cent last week, compared to 7.04 per cent for 56 credit unions analysed by Canstar Cannex.  

czappone@fairfax.com.au

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Banking sector hits back at critics

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