|A picture of SCB in Hong Kong, I took while there.|
Of course Standard Chartered is making the claim that the bank is shifting toward the target markets of Africa, the middle east, and the Asia Pacific region. And that clients who are not a part of this demographic will no longer be welcomed at Standard Chartered. This of course is a lie. The real reason for this forced exile stems from The Foreign Account Tax Compliance Act (FATCA), which was passed in 2010 and set to take effect in 2013. FATCA has systematically turned US citizens into banking and investment pariahs the world over.
To refresh your memory, this little gem, FATCA, is a new tax law that will require overseas institutions (such as financial institutions, investment entities, and many other organizations that operate on a global basis) to report their American clients to the IRS. The cost of complying with FATCA carries a steep price tag which is estimated to be around $100 million for a large sized bank. Mind you, I am speaking of compliance cost only, what I am neglecting from this figure is the forced 30% withholding that must be levied from non-declared accounts of American citizens. This action would essentially turn a private banking institution into an arm of the IRS at the further expense of the banking institution.
Of course here is Standard Chartered's solution for this problem: show US clients the door and tell them "don't let it hit you on the ass on the way out!"
|The Standard Chartered treatment of US clients|
In the email written by Mr. X to his banker, he asks "I have had this account at your bank for over 20 years! May I ask why this is being done now?" In response, the director of the branch replied "As detailed in my letter of XX/XX/XXXX, In order for the Bank to continue to focus on delivering appropriate services and products to its clients, we periodically conduct reviews of our client base to ensure that our clients remain aligned to the Bank’s strategy of Asia, Africa & the Middle East. Given that you are based between Eastern Europe and the United States, these areas are not target market for Standard Chartered."
Let me translate what this director really means, "even though you are a good, high net worth client, because you have ties to the United States, you have become not only an undesirable but a liability to our bank. Don't go away mad, just go away!"
What bothers me the most about this situation is the fact that Standard Chartered knuckled under like a bunch of cowards needlessly. Standard Chartered Bank kicked loyal clients to the curb when they were one of the few banks in a good enough circumstance to fight such draconian measures being perpetrated by the United States government against its citizens at the expense of banks the world over. The outcome of fighting these draconian measures could be come quite profitable for the bank as well.
|FATCA: Making you bank in the US, whether you like it or not.|
Firstly, Standard Chartered has only a small token presence in the United States. Hell, there are only 6 Standard Chartered Banks in the whole entire country of America. Most of Standard Chartered's clients with ties to America use branches outside of the US. This is done in order to take advantage of outside investment opportunities not available in the US. Further, over 90% of its profits come from Africa, Asia and the Middle East.
Being in such a protected position against the penalties of the IRS and other American authorities, Standard Chartered Bank could have said "we will not comply as FATCA is in direct violation of the privacy policies of the respective countries we operate in. Also, our bank is not an arm of any government, thus we refuse to spend OUR MONEY to act as an arm on the behalf of any government." With this statement, Standard Chartered could have sold its US presence to another bank in America who would be happy for the market share.
The next move would have been for Standard Chartered to no longer offer US investments. The bank has been divesting in the US since 1987 anyway, so this move would be nothing new. Plus Standard Chartered has made it clear anyway that it's target is to stay "aligned to the bank’s target markets of Asia, Africa & the Middle East." So I am sure the hottest investments they offer are in these markets anyway.
|The IRS: punishing the successful since 1913|
However, there would always be the added benefit of a possible revalue of the Hong Kong Dollar in case the US wishes to further debase it's own currency so that other pegged currencies go down with the ship. This would be a bitch move on the part of the US but it has already started to some degree. By this I am referring to America's on going currency war being waged against China in order to force the Yuan to revalue as to make American goods look attractive once again, but this is another story for another time.
Lastly, think of all the high net worth clients with American ties who would flock to Standard Chartered under the current exile Americans are facing from other foreign banking institutions. In the ranks of those no longer serving American clients we have:
HSBC, Deutsche Bank, Bank of Singapore, DBS, Hang Seng, Julius Baer, Wegelin & Cie, Bank Sarasin, Pershing and Williams de Broë, Barclays Wealth, and even those Judases at UBS are no longer taking clients with American ties. What is even funnier is the European division of Morgan Stanley, which is an American company for fuck's sake, are also turning away American clients. Not to even mention many American financial institutions in Hong Kong, like JP Morgan, have not accepted US clients in YEARS!
|Yep, flies on shit! This could have been you SCB!|
Solution? A second citizenship or possible expatriation, perhaps. One could also form a company that of course is not majority own by American citizen... LOL Hang on tight, the next few years is going to be a bumpy ride... :-D