Foreign Perspectives

Archive for the ‘Finance’ Category

International banking raises issues that rarely arise when you confine your transactions to one country.

If you are moving to France to live, you might think that you may as well either close or at least tidy up your finances at home before you leave. Resist this temptation! It can be much more difficult to open accounts when you are living in France and if you have closed everything you may find it virtually impossible to open any account in the UK.

The banking scene in France is completely different from that in the UK. Whereas there are the “big four” in the UK, France doesn’t really have any truly big banks and the majority of French “banks” are what would be considered relatively small regional building societies in the UK. As with small building societies, the range of products is quite limited.

I’ll be going through the various financial aspects of buying a house over the next few posts.

Many of the B&B and particularly gite owners accept payments by bank transfer to their account. What amazes me is that they never consider that it’s something of a risk to give your bank account details to a complete stranger and even more so when it’s a series of complete strangers.

If you think about this for a while you’ll realise that your bank account details are printed on your cheques but that’s not quite the same as you give cheques to people or organisations that you know. There is a safe way to do this though. Just quote a savings account number and, if you’re really paranoid about it, open a savings account in a bank that you don’t normally deal with.

Every time that I raise this issue, someone quotes their bank manager as having said that it’s perfectly safe to hand out your details in this way and that it’s impossible to take money out using only those details. Haven’t these people even heard of direct debits? After all, a direct debit uses exactly the same information as you quote to receive money.

Now, I’m not suggesting that a fraudster is going to set up a direct debit and then withdraw money from your account using it (although that has been done in some cases) but there are a number of very similar ways to do that. For example, if you care to give me your bank details, I could set up a one-off transfer by simply looking up the address of your bank and faxing them the instructions to do that. You might think that wouldn’t work as they check the signatures, but actually they only check a small percentage of the signatures so it almost certainly would work.

Then people say that it must be safe because the electicity company quotes their details for payments so how come someone hasn’t cleaned them out by now? They haven’t because they quote the number of their collection account and collection accounts reject electronic withdrawals.

Since a small business doesn’t have the option of a collection account the safest thing to do is to quote a savings account number as you can’t withdraw money electronically from a savings account.

There’s a couple of the banks here that have offers of FREE MONEY when you open accounts for your kids. Red rag to a bull, of course…. Sadly, Societe Generale operates on a nationwide basis here so there’s only EUR 16 going on their EuroKid account.

However, Banque Populaire are one of the regional banks here with something like a dozen separate banks over France and the local bank is offering EUR 15 per child. Soooo,… nah, ’twas too good to be true: only the local bank seems to have that offer at the moment.

Just about everyone that moves here either has or opens very quickly an account with Credit Agricole. It’s certainly the simplest choice as they’re in every village of any size in France and they also have an English speaking branch in Normandy (you can use their accounts in the other Credit Agricoles without any real bother). It’s also an expensive choice: since they “improved” their computer system a few months back they now charge over EUR 5 per month just for the priviledge of having an account with them. Oh, plus the EUR 40 or so for their debit card. Anyway, you’re looking at EUR 100 a year just to have a very basic account.

Once people are here for a while, they tend to say “WHAT?” to the bank charges and change banks. I’m told that “the” one to go for is currently Banque Populaire where you can actually get a fully operational account for all of €20 per year.

Anyway, we’re doing a little more checking to confirm things then closing all of our personal accounts with Credit Agricole and moving to Banque Populaire (who, in these parts, seem to have branches just about everywhere that CA do).

The actions that the American, British and European central banks have taken have all affected their respective exchange rates of course.

We’ve seen the pound move from a typical $1.50 to more like $2 these days and that’s obviously had quite a considerable effect on international trade between the two countries which has always been substantial. Although it’s clearly an advantage to tourists from the UK going to America clearly the move in the other direction has gone down substantially.

Within Europe the pound has gone from around 60p to the euro to more like 80p for a euro these days which, combined with the dramatic price increases in discount airline flights, has pretty much killed off British tourism in Europe this year.

But the impact on tourism is just one aspect (and a minor one at that) of the impact on the European economy. It might be great for the European tourists to have really cheap holidays this year but if the exchange rate continues at anything like the current level they’ll soon find themselves out of a job as their products are priced out of the range of export markets.

If you’re like most people I’m sure you’ve hardly gotten beyond thinking that you’ll either get a few hundred from the travel agent or perhaps just use a card when you get there.

In the first case, you’ll end up spending a small fortune un-necessarily and in the second you could be stuck without any money. In both cases, it’s worth putting a little thought into it and to help you make the best choices I’m putting together a little series on it over the next week or so.