Why you should diversify your deposit with a local UK Bank

International banking services are becoming important and offered by most banks globally. Now even local banks are providing international solutions for clients' overseas needs such as investments, education, family/estate planning, etc. One key requirement enabling global transactions is foreign currency. For example, to convert money from a local currency to a foreign currency, you might want to hold some US Dollar (USD) for your US investment and British Pound (GBP) for your UK investment.

 In fact, most of the local authorities have their own deposit protection schemes for their local currency’s depositors. However, not all of them cover non-local currency deposits. For example, Singapore’s Deposit Insurance Scheme protects up to S$75,000 in aggregate per depositor per scheme member by law, but foreign currency deposit is not insured. On the other hand, the Hong Kong’s Deposit Protection Scheme protects up to a limit of HK$500,000 for both Hong Kong Dollar and foreign currencies deposits held with banks in Hong Kong which are members of the Scheme.

Hence, if you want to hold a foreign currency such as GBP, you will not have any deposit protection if you hold it with a bank in Singapore. Yet, you might have a protection of HK$500,000 (or equivalent) if you make a deposit with a bank in Hong Kong. The maximum protection is HK$500,000 (or equivalent) per account but not per currency. 

You may want to consider diversifying your deposits across different banks, locally and internationally, to potentially earn interest. Take GBP as an example, the Financial Services Compensation Scheme (FSCS) safeguards up to £85,000 per person, per authorised financial services provider in the UK. All UK banks regulated by the Financial Conduct Authority and the Prudential Regulation Authority are covered. This deposit protection applies to savings accounts. It means that if you deposit up to £85,000 per each of your regulated bank in the UK, you can have more than £85,000 of protected eligible deposits from your GBP deposit. As a result, the more bank accounts you have, the more aggregated protection you will have.

We understand that some people are considering adding a domestic account to their existing local bank account. While you may feel a firm failure is unlikely, it's always important to evaluate the risks involved and take precautions. We understand that it might be difficult for overseas clients to open a local bank account abroad. Customers across the world can open a bank account online conveniently with iFAST Global Bank. 

Your  eligible deposits at iFAST Global Bank are covered by the Financial Services Compensation Scheme (FSCS) up to a total sum of £85,000. Click here to know more.

 If you are looking to diversify your GBP deposits with up to £85,000 of protection, iFAST Global Bank could be a good option, offering interest on deposits.