In this Section:
- Gibraltar Offshore Investing
- Gibraltar Investment Funds
- Gibraltar Real Estate
- Gibraltar Pension Investments
Gibraltar Bank Deposits
The banking sector is well established in Gibraltar
in both the offshore and local market with assets
of more than GIP9.3bn. The advantages of offshore
banking in Gibraltar include its favourable
tax status, the lack of exchange controls, excellent
communications, stable government, and EU membership.
NB: The EU's Savings Tax Directive, which came
into force on 1st July, 2005, means that for
all citizens of EU member states there is an
exchange of information between the Gibraltar
authorities and the individuals' home tax authorities
in regard to payments of interest and other
returns on savings. The Directive does not however
apply to payments to corporate bodies.
Much of the banking activity in Gibraltar is
directed to asset management for high-net-worth
individuals, not least because Gibraltar has
tried hard to attract such people with special
tax regimes. See Personal
Taxation for details of these schemes.
A number of Gibraltar-based banks offer Internet
banking services.
Banking in Gibraltar is regulated by the Financial
Services Commission under The Banking Ordinance
1992. A substantial amount of subsequent legislation
has kept Gibraltar up with current EU regulatory
standards.
As regards financial services regulations,
Gibraltar aims to match UK standards. An example
of this is the local money laundering legislation
which implemented the EU Directive and was extended
as in the UK to encompass all crimes. Accordingly,
all banking supervision regulations are the
same as those in the UK and procedures for opening
an account are much the same.
A deposit protection policy was brought into
effect by the Gibraltar Deposit Guarantee Board
in line with EU directives in this area (see
Law of Offshore),
and in October 2008, as the global financial
crisis escalated, the FSC sought to draw the
attention of savers to the scheme.
The FSC argued that whilst the Rock is well
placed to withstand most of the banking crisis
striking Europe and the United States, savers
should nevertheless be made aware of these deposit
protection arrangements.
From January 1, 2011, the Gibraltar Deposit
Protection Scheme covers 100% of a bank's total
liability to a depositor or EUR100,000, whichever
is the lesser. Prior to that, the scheme covered
90% of a bank's total liability to a depositor,
subject to a maximum payment to any one individual
of GBP18,000 (or EUR20,000, if greater). A bank's
total liability to a depositor is the aggregate
of all accounts in the name of that depositor,
including the depositor's share in a joint account
or a client account. Joint accounts are normally
divided equally between account holders.
However, the FSC went on to point out that
a number of deposit-takers operating in Gibraltar
do so as branches of UK banks or building societies.
In these cases, the deposits are covered by
the UK Financial Services Compensation Scheme,
which, from December 31, 2010 guarantees deposits
up to a limit of GBP85,000 ( GBP50,000 prior
to that). These branches include Leeds Building
Society, Newcastle Building Society, and Norwich
& Peterborough Building Society
Deposits with all other banks are covered by
the Gibraltar scheme.
In March, 2006, a team of International Monetary
Fund personel arrived in Gibraltar to conduct
an investigation into the workings of the jurisdiction's
financial system. The ten-strong IMF team focused
their investigation on the banking and insurance
sectors.
The object of the review was to measure Gibraltar's
laws against 49 principles designed to protect
financial centres against money laundering and
terrorist financing. The last such IMF investigation
in Gibraltar took place five years previous.
The conclusions of the IMF review were published
in May 2007, and endorsed Gibraltar’s
robust regulatory environment, according to
the jurisdiction's government.
The IMF team conducted an extensive review
of the Financial Services Commission’s
regulatory and supervisory practices in the
fields of Banking and Insurance, as well as
a jurisdiction-wide review of the Anti-Money
Laundering and Terrorist Financing Regime, which
also included the FSC, as well a large number
of enforcement agencies and Government Departments.
In all three areas Gibraltar was found to be
meeting international standards, and was found
to be ahead of many onshore - and much larger
- finance centres.
However, the report made a number of recommendations
for further improvements, which were accepted
by the government and the FSC. The government
said that most of these had already been identified
and were being actioned.
The identity of bank account holders in Gibraltar
is confidential and is only disclosed by the
bank if they are ordered to do so by the Courts
when investigating serious criminal activity.
See Offshore Tax
Regimes and Law
of Offshore for further details of the
regulatory regime and of the offshore taxation
regimes for banks.
Under EU 'common passport' legislation any
branch of an authorised EU bank may establish
itself in Gibraltar subject only to notification
procedures. Likewise a Gibraltar-licensed bank
may set up branches elsewhere in Europe. Most
of the banks established in Gibraltar are branches
of major UK, European or US banks.
Most Gibraltar banks offer special rates of
interest to wealthier private depositors under
the heading of private banking. Minimums have
fallen substantially in many cases, although
some firms still maintain more traditional entry
levels before offering special treatment to
their clients.
Some care is needed when approaching a 'private
banker' or a bank offering customised relationship
management (there are lots of expressions all
amounting to the same thing). What matters is
the structure of the bank. This is not to say
that one kind of bank is necessarily more reliable
than another, just to understand why the bank
is offering personal attention, and what it
hopes to gain from it.
Some banks are little more than front ends
for investment funds. They may be safe enough,
but are they objective? Perhaps it is best to
look for a bank that is trying to make money
out of private banking as an activity in itself,
rather than just using it as a scoop for customers
for its financial products. If you just want
a bank that will give you a good rate of interest
without deduction of withholding tax, then the
choice is simpler.
Private banking doesn't just mean investment:
banks like to lend money, and especially to
richer people. This raises the question of how
a private banker is going to get rewarded. Depositing
money with a bank is reward enough, of course,
whether into the bank or into one of its financial
products, but private banking when it has an
advisory nature and is not accompanied by lending
or borrowing may be fee-based. Provided the
sum involved is large enough to justify the
fee costs, an advisory private banking relationship
is probably a good way to go. The bank will
get the benefit from time to time of being able
to offer bridging finance, or of holding large
amounts in transit etc. It can hope for more
substantial involvement with you in future.
But the immediate relationship is between financial
adviser and client.
For a fuller treatment of offshore banking,
see www.investorsoffshore.com. |