Banking in the Philippines for Expats

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Banking in the Philippines for expats.

First of all we apologize for America-centric parts of this account.  We realize that there are many European and Asian expats residing in the Philippines.  Hopefully much of what we recommend is helpful to all foreign expats in the Philippines.

Establishing bank accounts at Philippine banks can be a nuisance, but as long as you can provide your alien certificate of residence (ACR) and your foreign passport, you will be able to establish whatever accounts you wish.  Since service at Philippine banks can be notoriously slow, choosing a bank with good online services is a consideration.  The Bank of the Philippine Islands (BPI) is a good choice in that respect.  The proximity of the bank to your residence and the amount of parking available at the branch can also be considered.  BPI, MetroBank and Banco De Oro (BDO) are well-established Philippine banks, unlikely to fail.  Citibank and HSBC Philippines are also good options.

One thing to investigate is the bank’s charge for depositing a foreign currency check.  We bank at China Banking Corp. (ChinaBank).  We can write a check from our U.S. bank and deposit it into our ChinaBank USD account with no charge whatsoever. Of course we have to wait for the check to clear but this provides us with a fee free way to get funds from the U.S. to the Philippines. Some Philippine banks charge for depositing foreign currency checks.

Just because you have an account at one branch of a Philippine bank does not mean it’s going to be easy to do in-person business with another branch of the same bank.  Each branch seems like its own fiefdom.  On the other hand, Philippine ATM cards work well anywhere using the Megalink and other interbank services.  The fees for using your Philippine ATM card at another bank are usually low.  However the fees for using a foreign ATM card can really mount up.  The Philippine bank is going to charge you fees (usually 200 PhP) and your foreign bank will add more fees.  For that reason, we don’t recommend depending on foreign ATM withdrawals as your source of income.

If you receive U.S. government pensions, they can be automatically deposited to most Philippine banks.  Your Philippine bank will be happy to help you open a U.S. Dollar account and to sign you up for this service.  You will be charged a monthly fee.  You will also be flagged as an overseas recipient of your Social Security.  Thereafter will receive an annual letter from the Social Security Administration to check that you are still alive.  It is not unknown for foreign spouses to fail to notify the SSA of a foreign spouse’s death so that the checks will keep coming.

We also advise retirees of any nationality to keep enough funds in the Philippines to meet medical emergencies.  Medical services generally must be paid for in advance.  We suggest $10,000 as a minimum.

Other banking options depend on the financial resources and preference of the foreigner.  Some foreigners give up all home country banking services and live off of their directly deposited pensions in Philippine banks. However, we have maintained accounts in U.S. banks.  Such accounts can be essential. First of all they can receive direct deposits from Social Security, other government pensions and payments from investment accounts such as Fidelity and Vanguard.  Secondly, you can pay bills and make interbank transfers using the automated clearing house (ACH).  For example we have a CapitalOne credit card.  We love it because there are no foreign transaction fees.  We can pay for purchases and travel expenses anywhere in the world without paying any foreign transaction fee.  Of course we have to pay our credit card bill every month.  Having a U.S. checking account allows this to be done online.

There are increasing complexities with maintaining accounts at U.S. banks.  The provisions of the so-called Patriot Act and other regulations require banks to ensure that their clients have a valid residential address in the U.S.  Some Americans try to meet this requirement by maintaining a U.S. address through a mailing service such as usabox.com (a service we recommend) or using the address of a family member or friend in the U.S.  As we have found out, these workarounds can fail.  We lost our longtime accounts with Citibank because they were would not accept our mailing service address.  Also, remember that every time you log onto your U.S. bank from a non U.S. computer your I.P. address will show you are not in the U.S. If you write checks from your U.S. bank to a foreign account, that can be noted.  It all comes down to how determined your U.S. bank is about getting rid of customers living overseas.  The banks fear being found to be out of compliance with regulatory requirements intended to fight terrorism and money laundering.  From their perspective, it may be better to get rid of problematic customers.  See http://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M20121211

Be sure to open whatever U.S. bank accounts you want to have while you are still in your home country.  Opening them online is very difficult.

One defense against having your accounts frozen is to maintain accounts at two or more U.S. banks.  When Citibank froze our accounts we could not use them or access our funds in any manner.  We could not access Social Security payments, we could not pay bills, we could not use our ATM/debit cards, we could not write checks for deposit to our Philippine bank and we could not transfer money to another bank.

I am sure that many expats will say that they have had no problems in X number of years at X bank in the U.S.  We banked with Citi for over ten years when were abruptly locked out of our accounts.  All banks have back office operations which review accounts to ensure that they are in compliance with laws and regulations.  The foreigner can usually deal with such problems, but husbands must consider how difficult this might be for the spouse after the foreign husband is no longer around to help.

Since our unpleasant experiences with Citibank, we have explored banking options which allow you to legitimately have a foreign address while providing the banking services an expat needs.  So far we have come up with three options, each of which requires substantial deposits.

Charles Schwab International.  This is a division the American brokerage and banking house intended to serve those outside of the U.S.  http://international.schwab.com One can open a brokerage account which will provide U.S.D checking, debit cards, credit cards and access to the American Automated Clearing House (ACH).  ACH allows paperless transfers between U.S. bank and investment accounts.  This means to can wirelessly pay bills and transfer money to virtually anyone in the U.S. for free.  You can receive Social Security, pension checks and investment income.  The Charles Schwab International brokerage account allows you to inexpensively invest in almost any stock, bond, ETF or mutual fund.  The catch is that the minimum balance is $25,000.  If you have an existing IRA or 401k, you can meet this requirement by transferring it to Schwab.

HSBC International Account.  HSBC bills itself as the world’s hometown bank.  It’s a huge international bank with branches around the world.  In 1957 it had two branches in the Philippines; Manila and Iloilo.  The 2008 financial crisis hit HSBC and Citibank (which also had an Iloilo branch) hard and they closed many less promising branches. A fascinating history of the Hong Kong and Shanghai Banking Corporation (HSBC) may be found at http://www.hsbc.com/about-hsbc/company-history.

HSBC International accounts may be opened at various HSBC branches.  HSBC Singapore will open an International Premier Account which has various helpful features.  See http://www.hsbc.com.sg/1/2/hsbcpremier/hsbc-premier-international Unfortunately, these HSBC accounts require that a balance of 200,000 SGD or about $130,000 U.S. be maintained Again, these minimum balances may be workable for those with substantial IRA or 401k account which can be transferred to HSBC to meet minimum balance requirement.  Once you are a Premier customer, you have Premier status at any HSBC branch worldwide.

Citibank offers an International Personal Banking package.  See http://www.citibank.com/ipb-global/homepage/newsite/content/english/bank_ This package is more bare-bones than HSBC’s Premier but requires one to maintain a balance of “only” $50,000 and has no monthly fees.  As with HSBC, retirement funds can be used to meet the minimum balance requirements.

So there are options which allow U.S. residents with overseas addresses to have legitimate and reliable banking services without fear of problems, but none are cheap.  For most expats, maintaining U.S. accounts using a friend’s or relative’s address is the only affordable solution.

Comments (18) Write a comment

  1. A little of topic, I am an Australian living here with my Philippine wife. I once lived in America for a while and had Wells Fargo account with 50k in it. They froze it for 3 months because I was a foreigner. They did eventually un-freeze it.
    Here I use BDO for convenience, Metro Bank for business and bank of Philippines for travel as they have no or little charges when using their ATM card overseas.
    Kind rEgards
    Mark

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  2. Theres too many scams by bank employees in PH, for example they monitor the ATM machines at night and pull the plug when the ATM start dispensing, this even happened inside malls(!). Been victim of this several times but when using a foreign card it has been minimum hassle to get the money refunded, just print and fill out a form, scan it and email it back to the bank, procedure varies but basically thats it. However when this happened with our local Philippine ATM card we got caught in the delightful Philippine red tape and the typical exhaustion technique Philippine companies love so much, we never got the stolen money back.

    I advice expats to look at how the Philippine bank treats their Filipino customers, lots of unauthorised withdrawals and the occasional interrupted ATM transactions as seen on the news also quite recently, this is what awaits also foreigners holding local accounts and ATM cards, consumer rights in PH is, to say it mildly, non existing. If you have a foreign card they dont bother as much to try atm scam, they know the stolen money will eventually be returned to the card holder and if the bank loses money they dont ignore the problem as easily.

    Lately i prefer to transfer the money to myself/wife/daughter from Western Union’s or Worldremit’s foreign/international webpages, saves us the ATM fee so it doesnt get that much more expensive. Paying with foreign cards is also safe in Philippines and no fees are added locally or internationally on any of my cards, by always paying with a foreign card in places like SM, Abenson/appliance stores, supermarkets, Watsons, Mercury and Shell gasoline stations, we save a substantial amount in fees with none of the usual risks and then usually dont need to withdraw more than 40-50k cash a month. Be aware that sometimes (like when paying big amounts) they can ask for a valid international ID when they see a foreign card, often dont mean its an absolute requirement though, after some consideration they usually accepted my PH drivers license.

    Our Philippine accounts remain empty and unused and the ATM cards has been returned to their respective issuing banks, definitely not worth the risks and hassle.

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    • I can only reply that I have been banking for years at ChinaBank and not have a single instance of anything fishy. We have also banked at BPI Family and various savings and rural banks. Again, thankfully, none of the problems you describe. I have had more heartache from HSBC and Citibank (US) than any at a Philippine bank.

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  3. This is an important post. Thank you. From my experience helping older expats in Chiang Mai and Singapore you also need to consider:

    1. Forgetting PIN numbers and passwords as you get older is a real problem for some folk and some accounts cannot be reset without a personal visit. I would recommend an online vault / password service may be the answer if you trust your SO. Alternatively at least have dual ATM cards with your surviving SO aware of them and the PIN.

    2. FATCA is a pain in the butt. We have worked around this keeping most of our fund in the none US parties accounts so we don’t have to report.

    3. Consider insurance companies – I’ve been talking recently to an independent broker out here who is offering banking style services via an insurance company. They seem to be filling in the space that the banks are vacating. I have yet to fully investigate this and there does seem to be some costs involved but if you can’t use a bank – what else is there?

    4. Australian banks will open an account for US citizens no questions asked in Australia with 100 points of ID (passport). This may be an option for those touring Australia.

    5. Singapore banks will no longer open accounts for non residents. If you have a Singapore account don’t close it; you’ll not be able to reopen it once you give up your WP etc.

    6. Maybank is an interesting Malaysian bank – they will open AUD and USD current accounts and offer fee less ATM services in Singapore, Brunei, Cambodia, Indonesia, Malaysia and The Philippines!

    7. Probate. We all die. The worse part about dying is leaving things in a mess. Speaking to people here in Singapore with experience in this probate of international affairs is a nightmare. Even joint accounts can be locked up by the death of one party. What my current adviser recommends is using other mechanism to avoid probate (as a simple example some property titles provide survivorship title, insurance policies can be structured to pay out regardless of the will, you should also give away as much as legally possible when the time is near).

    The bottom line is this mess with the banks is not going away. The penalties for non compliance are extreme and banks simply don’t want non compliant customers – they’ll throw out 100 customers to avoid 1 none compliant customer. There’s no point complaining about it.

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    • Thanks for your excellent and informative post. Just as an aside, I was invited to open a HSBC Premier account in Singapore so it is possible if you have and want to have $130K (US) in a Singapore bank. The account can be SND or USD. Schwab offers accounts with joint tenancy. If the money is in Schwab, FATCHA is a non-issue. What you say about PIN numbers (and passwords) is very true. I am embarrassed to say that I can forget my six digit ATM PIN. I use a password manager. It’s essential. I also try to use two-factor authentication where available.

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  4. As a permanent resident the main hassle I experience is caused by the U.S. Treasury Dept which wants an ON-LINE report submitted under the Foreign Account Tax Compliance Act (FATCA) from any expat who has over $10K (or Peso equivalent) on deposit in the Philippines. Its a tedious, time consuming thing I must do every year, under threat of having my account seized or frozen for non-compliance. I’m used to it. But I pity my non-technical wife after I’m gone. Local banks also require U.S. depositors to update a long form with loads of personal information and photo every two years. For me, BPI is the most flexible bank because you can use any branch and they don’t make you wait while they record all the withdrawn $100 bill serial numbers.

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    • Mike, thank you for your extremely helpful comment. I have worked to get our finances arranged so that my wife will have minimal problems when I am no longer around. Of course I do my FATCHA every year, but I hate to add it to my wife’s burdens or add the possibility that she will be subject to penalties if she has problems filing.

      The work-around that jumps into my mind is keep less than $10,000 in Philippine (or other foreign banks). That way, she would not be subject to FATCHA. This suggests keeping one’s money in joint accounts with rights of survivorship in U.S. banks or brokerages which allow Americans overseas to have accounts. I know Schwab International does. Another poster mentions Wells Fargo. Actually, even foreigners are allowed to have accounts at U.S. banks. It’s just that they have to apply in the U.S. and supply account opening documentation. Many banks just don’t want to bother with either foreigners of U.S. citizens living abroad.

      My wife could have USD and Php accounts in the Philippines, but just keep an eye on them to be sure they don’t exceed $10,000 in total. To get the money she needs she can write checks to the Philippine USD account as needed and/our use a debit card linked to the U.S. account.

      I am curious. Does BPI charge you for depositing checks from your U.S. bank?

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      • Yep…just started charging five bucks. I deposit almost all my monthly income at once so its only every other month or so I get charged.

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        • That’s good to know. Chinabank is still $0 for foreign check deposits. I shopped around and found Chinabank to be the most reasonable in its fees. That was a few years ago.

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      • Great column thanks! Retired US Marine, married to a Filipina who also holds US citizenship, residing permanently in the Philippines since 2011. Navy Federal and USAA (military only though) have been tremendous regarding banking here. Originally established an account at PNB where you had a $2000 limit on deposits every month that took 2 weeks to clear but it was free. About 2 years ago, noticed that PNB started charging first 50 PHP and now 2000 (@ $4) per deposit. Looked around and found BPI to be very convenient in all aspects so we opened a $$ account with them. Well, as of March, 2017, BPI started charging $4 per deposit! Nothing you can do! But thanks much for the tip on Charles Schwab, I wll check that out going forward.

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        • So far our experiences with Schwab International have been outstanding. They called me at home on my cellphone from San Francisco to make sure everything was going well with our ACH transfers. They even have staff on a schedule so that their Chinese and other Asian customers can call them at times convenient to those customers.

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  5. Wells Fargo allows US customers to transfer significant monthly sums to RP. One will need to start the process in US, however. For myself, there were many issues to overcome before I got a secure link to an account(my wife’s) in RP. Fees are very reasonable. If you use WF, talk to a ‘banker’ and see what they can offer you.
    I am NOT affiliated with WF, just a retired doc in PH. WF has been a reasonable banker for me for many years. YMMV. IANAL.

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    • Thank you very much for your mention of Wells Fargo. We will check it out and add it to the list of options for expats.

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  6. Just read your “Banking in the Philippines for Expats.” I learned a couple things from it, mostly how fast my US bank can ruin my day.
    Very informative, thank you.

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  7. Bob & Carol,
    These are some serious and helpful financial stuff. Very good pointers – so a big thank you for sharing them. Sorry to hear about the Citibank lockout experience. That’s no fun and I don’t wish that happening again on anyone. What you said about about spousal designation in case of a husband dying and 401-K rollovers are really good.
    Though each couple and each situation is unique, if I could add a couple of tips. I’m not a pro on this and far from being a financial guru. We both travel to the Philippines generally during the winter months and we maintain an apartment in the USA. In the summer months when the humidity in islands becomes impossible we “move back” to the good ole USA.
    So we’re not immune to these offshore banking and financing issues. BTW, I was glued to your MyPhilippineLife site as we’re also building a vacation house in the islands. So we can relate to how to best finance that endeavor from 8,000 miles away.
    We used to own a house in the USA but decided to sell that when the property taxes where we used to live became financially unsustainable. Financing expensive pension plans for others really suck.
    Right now we’re just happy to rent an apartment while in the USA living on a part time basis. Our goal is to live overseas half of the time, God willing.
    In the island province, where we’re building a small 1 floor, 3 bed/4 bath house I established two checking accounts for the main purpose financing the construction of our house. On the first bank account my nephew’s wife co-signed whilst on the second one, my sister’s husband co-signed for it, both are island-based signatories. I am the primary signor on both accounts. I fully trust them to handle my finances whilst we’re in the USA.
    We have a U.S. based check book there (in the province) that I utilize (some are pre-resigned by me when I’m not in the islands). I use a revolving type “withdraw and deposit” routine done on the same day. That way we always have money to be used for labor and material costs. I instructed them to do that on a regular basis, in other words every 20 business days.
    This way, I don’t incur any service fees from the banks (sometimes over $40 fee for any dollar amount over than $2K limit, a $40 hit for every check written, who needs that?).
    These are small dollar amount deposits (but big in pesos when exchanged in the local currency). Rule of thumb when living overseas…try not to stick out and do everything in moderation.
    These monthly transactions are small in US standards, but these are just enough to pay for labor cost (30%) and for the materials (70%). In essence since materials are higher in cost than the labor cost in the Philippines, I can control the material purchases remotely, as BPI and PNB banks have online presence. I instructed them to have the bank run the interest earned first, then withdraw and deposit the money for the same amount and to be done at the same time. One trip to the bank does it all. Next, just wait for 20-days then repeat the same bank transaction on a monthly basis.

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  8. Thanks for sharing your experience.
    Not withstanding your initial caveat it may be appropriate NOT to use the phrase IRA. To many that acronym Is IRISH REPUBLICAN ARMY who have acknowledged carrying out atrocites against Royalty (Lord Mountbatten) and Prime Ministers (Margaret Thatchet).
    Thanks.

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