Sterling bank account

[frexpt]

In an effort to help both resident and non-resident British purchasers during the present exchange rate troubles, a number of Portuguese banks are offering sterling bank accounts.

The principle is that sterling is transferred directly from the UK and held on deposit in conjunction with a Euro mortgage. The deposit account can be converted to Euros and the mortgage redeemed whenever exchange rates move in sterling's favour,

Does anyone know of anything similar here in France?

[spectateur]

Sound like a nice little earner for the banks. Many observers are of the opinion that sterling will continue to fall against the euro, worst possible scenario being a euro worth around 1.20 pounds sterling.

[allanb]

[quote user="spectateur"]Sound like a nice little earner for the banks. [/quote]I would go further than that: I think it sounds like a piece of nonsense. 

If you have an asset in sterling (the deposit) and a liability in euros (the mortgage loan) you have exchange rate risk.  If sterling rises, you gain; if it falls, you lose.  It's a gamble.  If that's what you want to do, fine, but I don't think the banks are suggesting it in order to help you.

One thing to bear in mind is that if you have both a deposit and a loan, regardless of currency, you are losing the margin between the interest you receive and the interest you pay.  If you use the deposit to reduce the loan, you will avoid that loss and eliminate the currency risk as well.

 

[frexpt]

Thank you very much for the lesson in risk assessment.

Of course, the scheme has to be attractive to the banks, otherwise they wouldn't offer it in the first place.

Nevertheless, thie will also work very well for the customer in certain circumstances.

As with any investment, the arrangement must be approached with the correct amount of capital, for the correct reason and for the appropriate timescale (be that short, medium, long term or open-ended).

My question simply was whether anyone was aware of such a scheme in France. Given the few replies received, I must presume that there is none.

[andyh4]

Having re read the original post several times, I am not sure how it really diuffers from have TSB account in the UK and a mortage with CA as an example - except that it is done by one bank rather than 2.

[frexpt]

Fair comment. I didn't include too much detail, but I see two advantages to doing it this way. The £ -> € exchange rate offered by the Portuguese bank on the eventual conversion will be preferential and, of course, mortgage schemes and the associated interest rates on the Continent are far more equitable than those available in the UK at the moment.

As a fairly recently retired IFA and finance broker of many years standing and a successful property investor, I have a certain amount of experience in these areas. This is a really good scheme, but one, probably, for the more experienced investor. Pity it does not appear to be available in France!

[allanb]

[quote user="frexpt"]Thank you very much for the lesson in risk assessment.[/quote]Do I detect irritation here? 

I wasn't offering a lesson, only a friendly warning for anyone who may not be a "retired IFA and finance broker of many years standing".  Financial institutions do not always try very hard to point out the risks and disadvantages of the helpful schemes they are trying to sell.

[baypond]

[quote user="frexpt"] The £ -> € exchange rate offered by the Portuguese bank on the eventual conversion will be preferential [/quote]

Call me old fashioned, but how do you know? Does the eventual rate include commision or do they take a transfer fee?