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 (5) Write a comment

  1. 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.

    Reply

    • 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?

      Reply

  2. 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.

    Reply

    • 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.

      Reply

  3. 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.

    Reply

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