US Expat resources

Jenny Judd interviews Simon Gardiner about UK Banking for Americans

By Jenny Judd | 12 Feb, 2021

Jenny Judd speaks to Simon Gardiner, Senior Private Banker at Weatherbys, about the complexities of opening a UK bank account as an American and how his team at Weatherbys can help.

When working or living abroad for a prolonged period, a key aspect is having a reliable financial services partner. You will almost certainly need a bank account for wages and payment services. You may want to discuss savings, personal loans, or even options for arranging a mortgage, if a property purchase is on the cards.

Why is it so complicated?

As anyone who’s ever lived abroad for an extended period can attest, opening a bank account can be difficult when you have only a limited local address history and a pocketful of ID issued through foreign bureaucracy. It certainly can be tricky for US citizens – and all because of tax regulations.

The US is relatively unusual in that US citizens and those with dual nationality are taxed on their global earnings, regardless of where they live. A decade has now passed since President Obama signed the Foreign Account Tax Compliance Act into law in an effort to clamp down on tax evasion by US citizens with overseas earnings. Better known simply as FATCA, among other things, the Act, which came into force in 2014, places an obligation on overseas financial institutions to look out for US clients and to report their assets and identities to the US authorities.

As a result, taking on US clients has meant added compliance requirements, costs and potential risks for financial services companies in the UK. In turn, this has meant that many of them simply no longer provide these services to US citizens, regardless of how long they may have been resident in the UK. Others insist that they will only take on US clients who can provide them with a certain minimum level of business. The costs involved have been deemed too great, given the relatively small group of people affected.

It is not just US legislation that has caused a headache for US citizens living overseas. In 2015, the EU’s Mortgage Credit Directive made it harder for non-residents to apply for mortgages. While not aimed specifically at US citizens, the directive affects loans taken out in a foreign currency. In this case, even sterling mortgages are classified as being foreign currency mortgages if the holder is not paid in sterling. So, if you are a US citizen in the UK being paid in dollars, you have to jump through additional hoops to borrow money to buy a home.

In short, regulation changes over the past decade have made it more expensive and riskier for banks and financial institutions to take on US citizens as clients. Given that it’s a relatively niche market (estimates from the Office for National Statistics suggest that fewer than 200,000 US citizens live in the UK), many high street banks and larger financial providers don’t see the benefit in taking on the added costs.

How does this affect US people?

Many US citizens applying for a loan or mortgage in the UK have experienced difficulty because their US income is not always included in affordability calculations and their liquid assets are not included in the calculations either. They need a bank that understands that liquid assets, undrawn earnings and trust funds can often form part of a high net worth individual’s financial life – and these are always integral to a private bank when weighing up mortgage affordability.

The very mention of tax laws and FATCA sounds like a headache, and some people even suggest that giving up US citizenship would be the easy answer to avoid the legislation. But even if that’s something you are considering, surrendering citizenship is in itself an expensive and paperwork-heavy process – not to mention that it is an unnecessarily drastic step to have to take, simply in order to be able to open a bank account.

What would you say to an American moving abroad, thinking about whether they need to use a private bank?

Weatherbys’ approach to starting a new banking relationship and lending money is simple and begins with a conversation with a Private Banker about how we can help; be it day-to-day banking, cash management, savings, or FX services for example.

Instead of looking at the blue passport we focus on the individual and our facilities are tailored to each person. When assessing loan and mortgage proposals, we can consider both UK and international assets and income.

Our clients are not required to place a particular sum of money with us. Rather, we look to work with high net worth individuals who share our values for relationship-led private banking where exceptional service is at the heart of everything we do.

Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured against it. 

Written in conjunction with Simon Gardiner, Senior Private Banker at Weatherbys