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How to leverage your offshore capital - Image - all 14 formats
Managing your money 5 Oct 2021

How to leverage your international capital

One of the benefits of an international current bank account is that it opens many doors and opportunities you wouldn’t otherwise have available to you. These opportunities become ever more apparent once you’ve made the initial move to hold some of your capital and investments offshore.

Offshore loans, for instance, become very compelling because they tend to be structured rather differently from a conventional loan.

Take Standard Bank International’s asset-backed loans as an example. They offer a unique combination of affordability and a simpler lending structure that help you to leverage assets you already hold offshore.

Read on to find out more about four unique characteristics of offshore loans that you might want to consider.

Less fuss, more options

Unlike a traditional loan, asset-back loans simplify the approval process because vetting of the loan is less dependent on affordability and surety.

The reason for this is that your loan is secured against deposits you hold with us. Loans Secured against Cash Deposits, for example, offer you credit up to the full value of your cash deposits with us. Loans Secured against Term Deposits, on the other hand, offer loans valued at between 50% and 95% of deposits, depending on the type of deposit and period to expiry.

You can also apply for a guarantee, which offers 100% loan-to-value on funds held in Call or Instant Access Accounts.

It’s worth noting that the loan-to-value ratio is up to 20% lower if you’re applying for funds in a currency that differs from your deposit currency.

Interest rates can be in your favour

Borrowing in low-interest rate jurisdictions such as the EU can make a significant difference if your home country rates are considerably higher.

The low single-digit interest charged on our asset-backed loans certainly fall into this category. These loans illustrate the principle of leveraging offshore assets to further shore up your wealth plan.

You could, for instance, utilise the funds to develop home-grown projects with funding that is effectively cheaper than borrowing locally. 

Exchange controls

It’s important to bear in mind that you may be subject to exchange control implications if you return the funds back to your home country.

For instance, South African residents are allowed to borrow abroad as long as the transactions and proceeds remain abroad. If, however, money is borrowed abroad and then used and repaid from funds in South Africa, then this has to be reported to the SA Reserve Bank.

Due to technicalities and complications of this nature, it’s always best to speak to an authorised dealer to make sure you comply with all relevant laws.

Currency flexibility

Even though you sacrifice 10% to 20% on the loan-to-value ratio when making cross-currency loans, you gain far more from the flexibility of borrowing in the currency most appropriate for your needs.

Being able to transact in a local or major global currency without complex foreign exchange transactions adds a layer of convenience to your finances that you can only get from an international account.

Stability and credibility assured

Transactions like an offshore loan can be complex and tricky if you’re dealing with a financial institution not geared to handle complex matters.

It pays - both financially and for your piece of mind - to deal with a reputable institution in a well-regulated jurisdiction. This provides you with the peace of mind you need where your finances are involved.

Lenders in recognised International Finance Centres such as Standard Bank in the Isle of Man and Jersey are especially suited to help you protect and grow your assets.

The progression from simply holding assets offshore in an international current bank account to leveraging that to pursue your goals is therefore a natural and uncomplicated one.