Open a sterling bank account in Northern Ireland

You can find alot of information on opening a sterling account in Ulster bank by simply googling the topic. Since Northern Ireland is our closest non-euro jurisdiction, I’ll include what I have found out. I got this information by simply ringing 1800 303 004, the “Joining Ulsterbank” number from their Republic of Ireland website.

 Please see Nov 16/Nov 17 2011 update at end of this post.

Opening a Non-resident Account in Northern Ireland

There is no problem opening a non-resident sterling account with Ulster Bank that will be held in Newry or any other branch you choose.

You can open the account in either of two ways . The first is to go directly to Newry or some other Northern branch and open a savings or current account directly (done on the day). The second is to open a current account over the phone, fill out forms by correspondence, and then open a savings account over the phone once the current account it open (allow two to three weeks for this).

I was not surprised to hear that a few months ago, the lady who I spoke to was not particularly familiar with the process. However, there’ve been plenty of enquiries of late, so she was able to reel off the procedure no problem to me.

If you’re going to go in person, I was advised that you should make an appointment, and that there’s a three week waiting list in the Newry branch if you go Saturday. Going midweek you’ll be able to get an appointment in a bout a week. You’ll need a passport and utility bill for proof of address, but confirm with the bank prior to going in case they have other requirements. The Newry branch number is 00 44 28 3026 8217, address 86 Hill Street, Newry, BT34 1BT.

If you’re going with setting up over the phone, you receive a package in the post detailing what you need to send on once you’ve rung them and declared an interest. You’ll need a photocopy of your passport validated at your local Ulsterbank branch (just go in to the branch and get them to sign that the photocopy is the same as the original). You’ll also need to send an original, recent utility bill. Send the documents off, and you’ll be informed when the current account is open. Then you can ring up their online banking service and open a savings account.

Types of account

Assuming you want instant access to your savings, you can open a loyalty saver account. This offers 0.5% gross interest on deposits between £2000-£24999 for non-residents. Deposits between £25,000 up to £1,000,000 receive 1.25% gross or 1.25% AER (annualised equivalent rates). There is a 1% bonus if there are no more than four withdrawls per year, and a minimum balance is maintained. So the best you can do is 2.25% interest per year.

The other option is to lock your money in for a 1 year fixed term account – you’ll receive 2.8% Gross AER.

You’ll be able to do online banking once your accounts are set up.

Charges

The accounts mentioned above are transaction and maintenance free. You will have to pay a fee to the bank who converts your euro to sterling. I believe it’s quite small nowadays, but I wanted to check the exchange rate they give you versus the official market rate you see on the news. Incidentally, when I rang up Bank of Ireland to find out what the exchange rate and charges were, there was no-one available in foreign exchange. I left a message and waited in vain for a response all afternoon. Perhaps they’re very busy?

British Government Bank Guarantee

The British government bank guarantee is £85k per person per institution.

Tax implications

It’s up to you to declare earnings from interest earned in non-resident accounts. My understanding is that many ROI customers who have non-resident accounts have received letters from the taxman querying the accounts in recent times. They know - so pay up!

What about the Euro / Sterling Exchange rate?

On Jan 1, 2007, about 70p sterling would have got you one euro. However, sterling dropped in value over the following two years, and by Jan 1, 2009, you’d have to fork out 95p to get a euro. The pound has strengthened since then, and is trading on Oct 6th 2011 at around 87p per euro. So you need to be aware that as the exchange rate fluctuates, you can win or lose, often by quite hefty percentages. If you had converted €100,000 on Jan 1, 2009, then excluding charges for the exchange, you’d have gotten £95,000 Sterling. If you went back today, that £95,000 Stg is now worth about €109,000. Quite a sizeable gain.

On the other hand, if you had opened an account in 2007 instead, then you’d have only gotten £70,000 Stg initially, and your money would now be worth €80,459, so you’d have lost nearly 20% of the value. If you want to see historical charts for the last five years fluctuations between the main currencies, you can go to www.oanda.com.

I won’t speculate what will happen to sterling versus the euro over the next few months or years. If the punt comes back, and the currency was allowed to float independently, then it seems likely that it would devalue against the British pound. So putting your money in sterling likely offers a hedge against the returning punt, but you could also gain or lose on currency fluctuations. The Irish Independent yesterday (Oct 5th) carried a big warning about possible foreign exchange losses, but as far as I could see their entire personal finance section omitted the possibility of opening up non-resident accounts in person – the whole thing read like an advertisement for major investment firms in fact – the online version linked to investment firm websites on several articles.

I’ve sent off some queries on opening a Swedish bank account. Will write up a post on what I find out.

Update Nov 16 2011: Fiona has added a comment that when she rang the Newry branch, she was told the following.

  1. You must first open an account with Ulster Bank in the Republic
  2. You may only open an account in person
  3. The loyalty saver account is the only option available.

I will ring the freephone number again to see if the policy has changed. It may be that banks are tightening up on this.

 Update Nov 17th

Two people have posted that they have verified you can open an account in person without having an account first in the Republic. It may depend who you talk to in a branch. (see comments for further details)