Getting a bum deal from your bank on currency? Why a quick review could save you ￡14K p.a.....
Despite the fact our main competitors here in Wales are more often than not the high street banks; I’m never in the habit of lazily criticising them to prospective clients when discussing their currency dealings and I will always give them the benefit of the doubt at the outset. Ultimately we all rely upon and need our banks for various reasons, ranging from personal current accounts and mortgages through to business loans and finance. In fact the banks are pivotal in providing trade finance which is crucial to many of our own clients who trade internationally, so we certainly know and appreciate their value.
That said, unfortunately the fact still remains that when it comes to matters of currency exchange, many banks are still providing exchange rates that you would expect to receive when popping into your local supermarket for travel money. And that’s no exaggeration.
This point was once again reaffirmed for me last week. The timing was perfect really, I was putting together an article for a partner of ours, which included a number of worked examples highlighting the difference in the typical spread/margin provided by a bank when compared to a broker like ourselves (Spread/Margin being the % difference between the Mid-Market rate, and the rate being passed on by the bank/broker).
Despite the fact we have run countless currency audits and carried out numerous live comparisons over the years, I was still slightly reluctant to state a typical bank would charge upwards of 2% to 3%. Then low and behold we received two calls in quick succession from two prospective clients who wanted to compare our offering against their banks. The results of which, made the examples in that article a whole lot easier to sign off on.
I certainly won’t name and shame, but suffice to say the first bank in question is arguably up there as one of the best known worldwide, whilst the other is more domestic and a relative newcomer, having only been established in the last decade. The one thing they both had in common? Awful exchange rates.
Live Comparisons
It’s worth pointing out that in both of the below live comparisons we were asked to provide our exchange rate prior to finding out what the bank had quoted:
1. Prospect had US $100,000.00 that they wanted to exchange back into GBP immediately.
2. Prospect had €15,000.00 that they wanted to exchange back into GBP immediately.
Savings
Even if the above were treated purely as one-off transactions, the savings amount to ￡1,157.07 and ￡336.80 respectively, certainly nothing to be sniffed at.
Now let’s assume, like many of the businesses that we work with, that scenario1 occurs each and every month, all of sudden they stand to save just shy of ￡14,000.00 per annum. I’ve no doubt any business owners or directors reading this would know exactly how they could put such funds to good use if they had them at their disposal.
So in signing off, I just want to stress that this wasn’t meant as an exercise to bash the banks and I’ll always tell any prospective client that there are of course occasions in which the banks do provide reasonably competitive rates.
The trouble is those occasions are few and far between in our experience. So if you are reading this and your company, or you personally have foreign currency dealings, why not take 5 minutes to review the exchange rates you are currently receiving? Who knows, that 5 minutes could literally save you ￡14k over the next 12 months, not bad work if you can get it!
If you would like discuss or review your own currency requirements further please do give me a call on 01792 720873, more than happy to have an informal chat.