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Expats in UAE shunning local banks for offshore accounts
| Published: | 18 Sep at 6 PM |
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A recent study has revealed that almost 50 per cent of expats working in the UAE prefer to put their savings in offshore bank accounts rather than in UAE banks.
The survey, undertaken annually by an emirate-based financial comparison website, showed that 48 per cent of respondents were happier saving their spare cash in home country or offshore banks than in UAE banks. As a result, according to the authors of the survey, UAE banks are missing out on new business aimed at keeping expat residents’ savings in the emirates.
Results of the survey indicate that at least 65 per cent of expat workers save between 10 and 50 per cent of their generous salaries, giving a huge potential for marketing savings plans in the UAE. Local banks working with the UAE Central Bank could offer secure plans covered by strict regulations to expat workers, making them safer in the long run than, for example, savings plans offered by offshore UK product providers in the less-well regulated Isle of Man.
Europe-based banks in the Gulf States are aware of the increasing demand by expat workers for flexible, easy-to-understand savings and banking products giving round-the-clock access to funds via internet services. Banks in the UAE are flush with liquidity due to the return of economic confidence worldwide and, in spite of the large amounts regularly sent overseas, have total bank deposits running at billions of dollars.
Proactive reforms in the local financial services industry should encourage foreign workers to store their savings in the UAE as well as using local banks for everyday transactions. Mechanisms including total transparency will protect depositors, increasing the number of savers and leading to overall cheaper credit as well as improving the resilience of the entire sector.
The survey, undertaken annually by an emirate-based financial comparison website, showed that 48 per cent of respondents were happier saving their spare cash in home country or offshore banks than in UAE banks. As a result, according to the authors of the survey, UAE banks are missing out on new business aimed at keeping expat residents’ savings in the emirates.
Results of the survey indicate that at least 65 per cent of expat workers save between 10 and 50 per cent of their generous salaries, giving a huge potential for marketing savings plans in the UAE. Local banks working with the UAE Central Bank could offer secure plans covered by strict regulations to expat workers, making them safer in the long run than, for example, savings plans offered by offshore UK product providers in the less-well regulated Isle of Man.
Europe-based banks in the Gulf States are aware of the increasing demand by expat workers for flexible, easy-to-understand savings and banking products giving round-the-clock access to funds via internet services. Banks in the UAE are flush with liquidity due to the return of economic confidence worldwide and, in spite of the large amounts regularly sent overseas, have total bank deposits running at billions of dollars.
Proactive reforms in the local financial services industry should encourage foreign workers to store their savings in the UAE as well as using local banks for everyday transactions. Mechanisms including total transparency will protect depositors, increasing the number of savers and leading to overall cheaper credit as well as improving the resilience of the entire sector.
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