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Options for expats having their Barclays or Lloyds UK bank accounts closed due to no-deal Brexit

What options are available for British expats living in the EU who have been told that their UK bank account will be closed in the event of no trade deal being agreed between the EU and the UK before January 1st 2021

Written by E4E Editor on 24 September 2020

As every British citizen living in the EU (and most worldwide) will be aware, the Brexit transition period comes to an end on December 31st 2020 which means that as of 1st January 2021, the UK will have formally left the EU.

The 2019 Withdrawal Agreement ensured that there would be time for negotiations for the UK’s organised exit and a trade deal between both the UK and the EU could be agreed.

Unfortunately, with the 31st December deadline looming and any trade agreement needing to be signed and ratified by that date, it is looking increasingly likely that there will be no trade agreement in place on 1st January 2021.

While the actual result of this “no deal” scenario is not fully understood, both Barclays and Lloyds have written to customers of theirs in countries where they have no branches and told them that they will be closing their accounts in December.

This means that expats with accounts with Barclays, Barclaycard, Lloyds, Halifax and Bank of Scotland (who are both part of the Lloyds Banking Group) will have to seek alternative accounts. Also affected are customers of Coutts who are owned by Natwest which could mean customers of other UK banks to receive a similar letter before too long.

The reason for these closures is that these banks will not have the required licenses to provide services to people living in all 27 EU member states while the UK has no trade agreement with the EU, which had previously agreed passporting rules enabling entities to trade under equivalent regulatory frameworks. Particularly affected are British expats living in Germany, Portugal, Ireland and Netherlands.

While it is possible for expats to open accounts with other banks, especially in their country of residence, some expats face significant issues, in particular those who require UK bank accounts for pension payments. Also affected will be people who receive income from UK based investments, employment and rental income and will automatically be exposed to fluctuating exchange rates and extortionate banking fees for currency conversions.

Some banks have circumvented this by gaining EU licensing rights by opening operations in Ireland or another member state, however as yet not all banks have formally made announcements.

Options available if you are affected by closure of bank accounts

The key for expats is not to panic. There are options available and you should not make snap decisions without doing the necessary research first, so be sure to do your own research into the best options available.

For people who have UK pensions that can only be paid into a UK bank account, firstly speak to your pension provider to find out what the provisions are and understand what is/isn’t allowed. For example, it might be possible to open a Moneycorp Personal Account* something similar with other currency transfer specialists who provide their customers with UK bank details to receive payments into. They can also provide you with a Debit or Prepay Credit card to use the funds more easily.

The additional benefit of using such a service, if permitted, is that the income remains in £GBP and can be transferred to your local currency at a time when the exchange rate is more favourable all while avoiding bank fees/charges.

If you are considering this route, please ensure that your pension provider, or whoever is paying you, is OK with you opening and using such an account to pay your money into.

The additional benefit of using such an account is that if you move country or relocate, you can take the account with you, safe in the knowledge that you don’t have to open a new bank account every time you move as you can use their local service to receive and make payments and keep your foreign currencies carefully managed.

Please note that if a link has an * beside it, it is an affiliated link and therefore it helps us to stay free from adverts. If you click the link and open an account with the company, it may result in a payment being made to us. However, no company has paid to appear in the article.