The evolution of banking

My financial organization is complicated, funds flowing through a network of banks that takes a day each month to operate.  So I was intrigued by a recent  Economist report on International Banking that focused on retail institutions like mine.   Before you snooze off, consider the ways that you relate to your bank, as a business owner or as an expat.  Think about how your smartphone has changed, multiplied the ways that you manage and invest money.  Do you use alternatives, like Xoom for money transfers or PayPal for bills, instead of banks?  How will all this impact institutions whose business model (buy money cheaply from depositors, lend it at a higher rate to borrowers, pocket the difference) hasn’t changed in centuries?

So, touching on a few of the article’s points that resonated for me:

Branch banking:  I visit my branch bank for four reasons: to access a no-fee ATM, to deposit a check, to get documentation of account status, and to put papers into my safe deposit box. Everything else, payments, money transfers, investments, reconciliation, I do online.  Does a branch still matter, or will it wither away?

Interestingly, streetside branches have increased in number over the past decade, despite the growth in online banking.  So, as biologists say, they must have overall survival value for the organism.  They assure people that the bank is present and that their money is safe inside.  Banks with lots of branches attract more customers, increase revenues faster, are more profitable.  Branches provide opportunities to sell insurance, investments, and wealth management services.

But I struggle with bank branches.  ING no longer accepts deposits.  They don’t have printers or stamps for documents; can’t facilitate loans or international money transfers.  Barclays and ABN are only slightly better, but (and the article backs this up) banks are making a conscious choice to move away from transaction-based storefronts towards becoming advisory cafés.  ‘More coffee and iPads, but a cold shoulder to traditional requests.

Trust:  Queuing up for a flight from Denver, I was asked if I wanted to drop my bag with the curbside skycap.  No way, I replied, remembering apocryphal stories of luggage “accidently” sent to India because the tip was too small.  I just don’t trust curbside. But I have come to trust other changes, like not needing a paper ticket.  I know that the airlines (even RyanAir) have my reservation in their computer, waiting.

Similarly, in banking and investing I’ve grown comfortable with issuing digital instructions and expecting that they will (eventually) execute.  The process is clear and consistent, transparent, predictable.  I trust it like I do booking an airline ticket.

But there are limits.  I avoid Barclay Connect, where mere proximity to a cashier triggers automatic payment, in favor of Chip and Pin.  I only keep 20 euros on my ABN ChipKnip (mostly for paying parking). I pay cash instead of using a phone-based wallet.  I use credit cards in preference to PayPal; I haven’t switched to Xoom for international transfers.

The issue is trust, not technophobia.  Alternative transactions feel uncontrolled: I don’t know who’s behind them, can’t monitor what’s happening, and bear the risks if they go wrong.  Retail banks will still have my business until I feel confident with the alternatives.

Global banking:  One of the biggest surprises when I first became an expat was the territoriality of finance.  I wanted to open an account with US and European branches so that I could deposit and withdraw money from either side.  Not possible: Manual US-UK-EU interbank transfers remain a time consuming, costly necessity.  I wanted to open a brokerage account in Europe to manage excess business funds.  Not possible: a US citizen can only invest in bank and government bonds issued through banks.

Yet I can book flights, pay bills, and buy supplies internationally, paying with any card in any currency.   If there’s a mismatch, the clearing agency (eg: the bank behind my Visa card) charges a small fee. My Cirrus ATM Card similarly delivers local cash anywhere, I haven’t carried a travellers check in decades.

But truly international banking may be arriving.  It’s driven by legislation that prevents banks from becoming “too big to fail” domestically - international expansion is their remedy.  Santander (Spain), Standard Bank (South Africa), DBS (Singapore), HSBC (UK) are all spreading and, finally interconnecting in ways that will facilitate cross-border banking.

The article predicts that this will come at the expense of smaller community banks.  But I envision more of a two-tier system.  For international business services, I want a single, sprawling institution that can slosh money and investments worldwide.  But for personal banking, the cost and friction of dealing with large banks is punishing.  There’s been a run in the US from large national banks to local credit unions to avoid relentless fees and penalties (I do hate Bank of America and Barclays, who both slam $20 fines on 20p “overdrafts” caused by deposit/withdrawal mismatches).

The report is relevant to the everyday experiences of expats and entrepreneurs, and flags up some alternatives and trends that might be worth considering.  Just like the banks themselves, we all need to be on watch for new opportunities to improve how we buy services and what we pay for them.

Weekend miscellany

A bit of a windy start to the New Year here in Cambridge.  The weather is warm and wet, but very strong winds rattling the windows and whistling over the roof.  No damage, but an artistic layout of the trash cans in front of the apartment.  I righted them, but they were back in the same arrangement an hour later.  There’s no winning against Nature.

I have a lot of catching up to do in the coming week (I’ve been joking that I’m not even able to keep ahead of organizing my to-do list, much less shrinking it…

• Clean your apps:  mypermissions.org is a free website / utility suggested to me by a US-based friend.  It scans your add-ins for Facebook, twitter, Google, etc and brings the permission settings out into the open.  Most settings can be modified through the app, and I’s a great tool for getting some transparency and control over your social networking sites.
• Wire your money:  I’m paying my business invoices and hit an especially large one from a vendor in the Netherlands that needs to be paid with cash in the US.  I asked the bank to fill in all the wire details and track / verify the transaction, always a good practice since money that goes astray because instructions are mis-typed is not easy to recover.  I checked the exchange rate: the WSJ rate is $1.277 /euro: the bank quotes $1.322/ euro plus a $30 fee.  On a 10K transfer, that is a $450 excess charge.  It doesn’t depend on how fast the money is sent, only on the amount: more than 25K$ must go to get a better differential.
  • Western Union, World First,  and American Express offer somewhat better rates: their service are free, but involve filling in a lot of paperwork and getting interviewed.  I suppose that’s a sign of our political and economic times.
  • Frustratingly, after three days of emailed questions, AMEX rejected my application out of hand, despite a longstanding business card relationship.  Their condescending note refused to give a reason, but their interview questions centered on what a BV is and why my US  company address matched my home address.
  • Anyone have better ideas?
• Understand your British (or Americans):  It took me a long time to sort out that when you ask Brits whether they want something, “I don’t mind” means yes.  In the US, it’s sort of a grudging acceptance at best (“if you must”, unless you say the whole “Don’t mind if I do”, which means “Yes!”).  Reciprocally, it’s become obvious that their ear is not tuned to the difference between “That’s fine”, which means  ‘yes, I would, please’, and “I’m fine”, which is ‘no more, thank you’. 
  • Only the Dutch is more confusing, in which ‘yes’ sometimes means ‘yes, I don’t want any more’.  I’ve taken to just leaving the plate of cookies in the middle of the table.  I know, very un-Dutch.
• Catch up on your reading:  Growing up, I read a lot of science fiction.  Over the years, I fell away from it as the genre was overtaken, first by New Wave literature that was nonlinear and unreadable, then by fantasy, and finally by serializations of TV shows and movies.  Classically “Hard SF” is difficult to find,   I subscribe to author David Brin’s twitter stream (and I’m a big fan of Startide Rising and his writings on information privacy), and he recommended Best SF Books, a very nice compilation of SF authors, titles and reviews.  This will leaven my sparse diet of Dutch language, China analysis, and “how to fix the financial system” readings of recent months.

For some reason we’ve been getting some really spectacular sunrises and sunsets lately. With all of the wind and rain, the atmosphere should be pretty well scrubbed, so I’m not sure what’s causing it.  But I am enjoying it.

Disclaimer:  All opinions are my own; I have not been solicited nor compensated for these comments.

Banking across borders

First of the month means flooding liquidity through the system. With the business having a footprint in three countries, income can come from any direction.  Bills and taxes, however, must be paid in every jurisdiction, so funds received have to be redistributed across the whole.  And soon I needed to be an expert at cross-border exchanges.

These can’t be done lightly.  There are recent letters to the editor from distraught depositors, saying that account numbers were mis-entered, cash went astray, how do they reverse the transfers?  When the newspapers enquire, the banks maintain that they have faithfully carried out the instructions provided and are under no obligation to retrieve the wayward cash.  The editor silently tsk’s and advises the petitioner to take more care the next time.

Three business accounts (NL, UK, US), two personal (NL, US): here’s how I’ve set up the exchange paths.

First, business and personal funds cannot be co-mingled: it’s easy to cross lines where personal checks are cashed in the business (money-laundering) or personal expenses are withdrawn from the business (embezzlement).  So I set up very limited and defined same-country paths between business and personal accounts that I use to pay salary and expenses.

Domestic transfers require different information, depending on the country involved.

In Europe, Netherlands transfers only require an account number, containing both bank identifier and individual information. The UK requires a six-digit Sort Code for the bank and an account code for the individual. 

In the US, domestic transfers are made using a Routing Transfer (ABA) Code. These were devised by the American Bankers Association in 1910 for moving federal funds, and are the first 9 digits on your checks; the remainder is your account number. Unfortunately, my bank still has to issue a paper payment check.

International transfers within the EU can best be done through the SEPA (Single Euro Payments Area) system.  This network, operating only in Euros, harmonizes payment structures and processors to increase competition and decrease costs. There will be ‘universal’ debit and credit cards tied to it next year that should similarly lower the fees associated with using a Dutch card in another EU country.  The only downside is that transfers take about three days to complete: the upside is that fees are less than half of what an urgent (same day) transfer would cost.

More generally, cross-border transfers are based on SWIFT codes (Society for Worldwide Interbank Financial Telecommunications, also known as a BIC or Business Identifier Code).  SWIFT is an 8- or 11-character code: the first 4 letters give the institution, the next two the country, and the last two a location code.  The final three are optional and designate a branch.

So, my East-West Bank code is EWBK US66, my Barclay's is BARC UK33.  In general, call the bank to get the right code, then check it by putting it into an online directory to see that your bank correctly comes back.  Both a SWIFT code and account number are needed to make a transfer.

Closely related is the IBAN (International Bank Account Number) that combine the national, SWIFT, and account information all in one country-specific formatted code.  For example, the Dutch IBAN format is: NLkk BBBB CCCC CCCC CC, where NL is the country, BBBB is the BIC code, C’s are the account number, and kk is the checksum generated from the rest of the characters.  I seldom find banks that offer this method of identification, although every bank seems to have a code for me when I ask.  As with SWIFT codes, there are online validators that you can use to check a code before you use it.

It’s also good to check the exchange rates so that you know how closely your bank is matching the fair trade value.  I like XE.com for spot rates.  I usually end up paying about 30 (dollars, pounds, euros) additional in fees on each transaction, adding charges imposed by both the sending and receiving banks.

Finally, I initially make only a small transaction to assure that I have a valid connection: that money leaving one account arrives in the other.  Then I can transfer larger amounts confidently using the stored information for the connection between the banks.

And, as banks fail and merge, all of this information changes, even if the bank name doesn’t.  ING, for example, changed all of it’s codes after the PostBank merger.  So be sure to update your information periodically.

Tossing salt over your shoulder

In medieval times, people would throw salt over their shoulder for luck.  The left shoulder is the correct one, in part because people are generally right handed, but in main because the devil always sneaks up on you from the sinistral side of the body.  Best to simply hit him with a handful in the eye to ward off evil.

A few old nemesis similarly need exorcism, so a friend and I opened a window and a bottle of prosecco, airing our 2010 demons out of our lives.

• ANWB:  This is a travel and road service agency, similar to AAA in the US.  For two years, I have been trying to end my membership with them, first because I didn’t have a car, and then because insurance was included with the lease.  Each Christmas, they send a notice saying that I was pre-renewed and asking 100 euro payment.  I refused, thinking they would drop the subscription: instead they referred it to a collection agency.  I have now pre-pre-quit for 2012.
• Residence Housing:  This makelaar completely messed up my move last spring, so I withheld 1/3 of their payment until we could meet and they could complete what they were supposed to do.  Instead, they deducted the rest of the fee from my rent payment as they processed it, brightly thanking me and saying it was now a problem between my landlord and I. All brokers are sharks, but these are the worst.
• ING:  I have my business bank accounts with ING, one of the larger banks sprawled across the Low Countries.  They went through a transformation from Old-ING to new-ING during the enforced Dutch bank reorganizations last fall.  In November, this resulted in my being cut off from Internet Banking for four weeks while we navigated the proper procedure to get new passwords sent and activation from the local office.  Now we are unable to make electronic payments for a month because the bank cannot send TAN-Codes, required for transfer approvals.  ING argues that procedures must be followed; I’ve been unable to make payments for two months.  One more week, then I close the accounts and start over elsewhere.

Other bogeymen, KPN, T-Mobile, and VGZ, have been very well behaved the past months, processing payments and delivering services with little fuss.  So, it’s a good start to the new year to let go of the old battles and start the new year fresh.

Along with exercise, diet, more sleep, less stress, and a clean agenda.  And a pinch of salt, tossed against the clear Dutch sky for luck.

Nailing down the US presence

I arrived back in Seattle with a day full of appointments to nail down the US connections to the new Dutch business.  The goal was to set up the tax and banking structures that would enable me to pay (minimal) taxes, partner with US talent, and simplify contracts with US clients, eliminating potential drawbacks of operating as a Dutch BV.

Clark Nuber is giving me organization, tax, and accounting support, and they’ve been knowledgeable and efficient.  I covered the agenda in an hour, coming away with a clear understanding of the company’s  legal structures and cash flows.  There shouldn’t be much spillover into US taxes after Dutch ones are paid, but I want to establish and coordinate the processes at the outset so that I (hopefully) won’t have to pay much attention to them during the rest of the year.

I want to establish a US bank account for the Dutch business to facilitate colleting and paying dollar-denominated invoices and bills.  HSBC said that they could handle it, but ran into significant issues familiar to me from years of trying to do expat banking.  I starting to believe that post 9/11 banking regulations were intended to prevent, not just monitor, cross-border cash flows.  In my case, the bank said that they were required to get third-party translation of my Dutch incorporation documents and to perform a site inspection of the company’s offices to verify that it existed, impossible for them to do.

As I left the meeting with the accountant, I spied a branch of United Commercial Bank (UCB), and decided to see if a face-to-face meeting might work better.  UCB turned out to be “the leading bank in the United States serving Chinese communities and American companies doing business in Greater China”.  No branches in Europe, but they had operations in major trading cities across the US and seemed willing to help.

Within two days, my business account was established and active.   They arranged conference calls with the bank’s decision-makers within hours; they arranged to get information directly from my accountant the same day.  They offered me green tea while information was entered and documents were compiled.  They called me twice a day to let me know how things were going.

Along the way, they noticed that I didn’t yet have a Certificate of Authority granting my foreign company the right to do business in the US, and helped me to complete that application.

Amazing.  Really: Two days, compared to ‘two months’ for ING and ‘never’ for HSBC.

I joined friends for a toast later in the evening to the new venture.  We started speculating about how much time had been sunk into setting up the transnational vehicle, and whether it had any independent value as a result. 

If the main business ever falls through, I suppose I can always start a career creating and trading global shell companies ?

Three thoughts on a Monday

The Fourth of July parties were lots of fun: as hoped, it was a good opportunity to get together with other expats and have a familiar (parochial) celebration.  We indulged traditional American pastimes of eating (hamburgers, chips, and beer), arguing about politics (Obama as socialist / Palin as genius, but I can hold my own amidst such barbarisms), and lying in the shade (my specialty since I arrived on crutches). 

Conversation was lively and engaging all evening. I’ve found that expatriates generally have T-shaped conversational ranges: superficially broad and narrowly deep in a pleasing way.  Their wide travel experiences make them great raconteurs: full of good stories, specific advice, and self-depreciating experiences.  At the same time, most have developed special interests in history or culture that run very deep, some write or lecture and are able to make arcane subjects fascinating.

Still, I was surprised at how out-of-touch many of them were with US political and cultural events.  They haven’t ‘gone native’; they’ve simply disengaged, whether through personal disinterest or perceived irrelevance.  I would think that this would create conversational gaps back home; maybe it’s what my US colleagues were referring to when they suggested that “people moving overseas get weird after they’ve been gone more a few years”.

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I got sucked into the BBC series “On Thin Ice”, documenting a 700 km overland race to the South Pole.  The series follows one team, James Cracknell and Ben Fogle, as they prepare for the endurance marathon, and their trials finding a third member and coming together as a functional unit in the months ahead of the race.

I never liked watching people self-destruct in individual dramas like “Play Misty for Me”.  But I really enjoy watching a good group train-wreck, where the individual personalities have to mesh to enable everyone to succeed.

The stories are as varied as the creative struggles documented in the Metallica movie, “Some Kind of Monster”, the team dynamics under stress in The Amazing Race, or the struggles to balance personal and team endurance in the Amundsen Omega 2 South Pole Race. None are competitive situations among team members.  Rather, these are scenarios where everyone has to contribute and communicate, working together to achieve the common goal.

It’s probably the project leader in me, but these shows are great case studies.

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The new business planning continues to make gratifying progress towards launch on August 1. I’m learning as I go; there are so many aspects to consider in getting a transnational business going.  Legal, banking, and tax issues are still front and center, with parallel activity in the Netherlands and the US to make sure that everything goes smoothly and mates well.

The legal issues seem to be the simplest: everything is ready for the new residency / work application in the Netherlands, and I’ve got cross-border contract templates put together.  The notary has moved rapidly through the incorporation procedures, and I should be a full BV next week.

The tax issues are trickier but workable if good advice is available.  Finsens is doing a great job with all of the Dutch reporting, a local student is helping with bookkeeping, bills, and invoicing, and we are almost ready for our first quarterly report.  Clark Nuber is handling the US side, they have strong overseas expertise and have spotted good opportunities for savings.  Together, it’s going to run about $5000 per year, but the net tax savings and avoiding compliance penalties makes this a bargain.

The banking issues continue to be a pain.  ING finally established my business account yesterday, over five weeks from the start. I just can’t explain why this was handled so badly: I hope it’s not an omen.  HSBC will be the  US banking portal for the Dutch business: they can act interface with US clients and handle international transfers smoothly: I wish that they had branches in the Netherlands.

My former corporate parent continues to quickly and dispassionately sever my expatriate services.  Most of the changes were expected, and I have replacements ready; the transition should be complete for both of us by the end of this month. 

However, three major headaches have surfaced.

One is negotiating health insurance / COBRA benefits: it costs a lot to keep my current insurance, but there aren’t any good alternatives to replace it.  That insurance isn’t accepted in the Netherlands, so I’m going to have to buy  Dutch insurance, creating duplicate coverage.  I’m still testing alternatives.

Another is tax withholding.  Deloitte was responsible for tax equalization and reporting while I was an expat, but won’t advise beyond my separation.  Since I don’t know the amount that they’ve reported to the US and Dutch governments, I can’t determine how much to withhold and pay to whom from any future income that I might get this year.  Catching the lump-sum severance payment in a tax-advantaged way is also proving difficult, with several schemes on the table to consider.

Finally, I was given a non-negotiable two months to pack up and move back or my repatriation benefit would be withdrawn. In effect, I’ll be stranded here with future responsibility for my own goods and shipping.  It may prove cheaper to store or discard my archetypic 13-boxes-of-stuff; it does challenge the “we’re sendng you over; we’ll bring you back” assurances that the assignment started with.

Interlude with health care and banking

'Back in Maastricht since the weekend and busy gong through weeks of unread mail and unaddressed to-do lists. I‘m navigating the town on crutches which adds to the time to accomplish almost anything.  I think that if I can’t get twice the upper body strength, I‘m just going to have to accept that things will take twice as long.

The good consequence of having to slow down and restrict my scope is that I’m finding the time for reading, practicing Dutch, and organizing the business that was hard to find before.  I’m learning how to find the bus-stop and get on the right bus for Vrijthof Square. I might go to a movie at the Minerva Bioscoop around the corner.

Also good, my first walk-in appointment with my local Dutch physician today.  There were about eight people in the waiting room at 9 am, and they moved through quickly: I think I was done by 10.  Everything is still  looking good, and I had a nice conversation with the other folks waiting.

The only issue was in trying to get a handicapped parking card for the windshield. Europeans don’t give temporary cards: only the permanently disabled are eligible, effective for a minimum period of six months or a maximum period of five years.

I also read the latest Economist’s comparison of US and European health care while I waited.  The commentary is interesting: the contrast quality, coverage, and cost and the conclusions are close to my own experiences.  Quality is excellent, with a slight tendency towards less diagnostic tests and preventative care here.  Coverage doesn’t seem to be an issue, and, even without local insurance, the cost of my office visit today was 24 euro, approximately the cost of my US co-pay.  The political sentiment in the US seems to be drifting towards adopting elements of the Swiss / Dutch systems, although the article notes that the Netherlands has seen rapid consolidation of insurers and hospitals that is driving up costs faster than the decentralized Swiss model.

The negative aspects of the day were, as always, the banks.

ING, which had promised to have business accounts set up in ten business days, is stalled at twenty.  Normally, they say, it takes two days, but the forced merger with Postbank is messing up the computers.  In my case, the branch made an error in the paperwork that has forced the whole application to have to be resubmitted.  The fact that it is their error is not causing any remorse: they advise me to sit home and wait to hear from the central office next week.

A looming problem is my need to open a US account for my Dutch business.  Stateside clients would prefer to deal with dollars and local banks, and I’m trying to set up a business to business conduit, but it’s proving to be tricky.  I‘ll post the solution when I find it.

I’m still amazed that international bankers and traders were able to somehow play fast and loose with currencies, contracts, and derivatives across national boundaries.  In the wake of 9/11, a lot of direct transatlantic access was severed and transactions were forced into narrow, monitored transfer pipes.  They are very difficult and expensive for me to operate: how did the hedge funds do it?

Cross-border banking, taxes, investments (and learning to read)

'Clearing out a few notes of advice before the start of the new week...

Disclaimer: This essay describes my personal knowledge and experiences with cross-border finances. It is not intended to substitute for getting personal advice from a professional advisor. Getting started, I also recommend reading the US-Expatriate-Handbook, available on-line from the West Virginia University College of Business and Economics.

Banking: Some time back, I wrote of the perils of trying to get transfer accounts set up between US and Dutch banks. A change in our company's payroll system required me to set up a US-based direct-deposit system that could transfer monthly stipends out of the US each month. Washington Mutual and CitiBank could not reliably make regular transfers, and neither Fortis nor Barclay had the necessary US connections.

My solution was an HSBC Premier account, their globally linked accounts system. Once I set it up, it has worked work flawlessly with competitive exchange rates. The account requires a hefty minimum balance with HSBC or a monthly fee, but if your company or employer uses the bank, you can probably access the program for much less.

Taxes: The Economist reports that a new law, signed June 16, will require payment of asset penalties if a US expat renounces citizenship in order to avoid double taxation. This comes on top of earlier changes to the law, limiting US credit for foreign taxes paid.

The net effect is to make life more expensive for working expatriates. There are also much greater chances to make a mistake if you try to do your own taxes. My 2007 tax return is the size of a small novel: to the extent that you can negotiate the benefit, support for preparing and offsetting US taxes should be an essential part of an expatriate contract (or local work agreement).

Investments: US anti-terrorism and money-laundering laws have made it impossible to have European share accounts to invest in stocks, bonds, or mutual funds if you are a US citizen. US brokerages have closed offices, and local brokers screen out US expatriates. This makes it hard to make spare money work for you: European checking accounts pay virtually no interest.

Nonetheless, there is an alternative. Time deposit savings accounts, which pay an interest premium for limiting withdrawals, pay over 7% in the UK at the moment, and have very low minimums. (Barclay's Monthly Savings account is typical). And, as long as the dollar is falling, you get a boost by simply holding pounds and euros.

Learning to Read: Although I am still not able to think fast enough on my feet to keep up a conversational Dutch exchange, I am getting more confident by the month at reading and writing. Not surprisingly, children's books are a great source for getting started.

I have purchased used storybooks from the bookseller, either the "checkerboard" books or others of similar heft. Even better have been the WinklerPrins books sold at discount: the Kinder Woordenboek and Encyclopedie have been great. And I always have the Prisma Miniwoordenboek, available at Schiphol bookstores, close to hand.

Soured on Citi

A couple of days ago, I wrote glowing praise of Citibank's Access Account, which seemed to provide a simple means to do direct deposit and wire transfers without need for visiting the bank to open the account or to give transfer instructions.

I take it all back.

I tried a test transfer, moving $100 from my Washington Mutual account to the new Citi account.  Since the hour was late, I accidentally typed in the account number of a closed savings account rather than my active checking account at WaMu, a simple clerical error.  As expected, within a day, Citi notified me that they could not execute the transfer.

Unexpectedly, they placed a lock on my Citi account, preventing further wire transfers of any sort.  When I called to follow-up, explaining the error, I was told that this required an investigation.  Today, I was told that they required (no joke) a letter from Washington Mutual, on letterhead, explaining when the savings account had been established, who owned it, why and when it had been closed, and the account status on the date of the transfer.  Citi would then conclude an internal investigation to determine whether to unlock my Citi account for further wire transfers.

In the meantime, I was free to make deposits into the checking account, and could use the online service to view the money in my account.  Seriously: only to view it.

I went up two levels of supervisors, explaining that it was my 3-digit clerical mistake, only involving a $100 domestic interbank transfer, and that I would gladly re-enter the order with the correct number.  No-go.  I finally explained that I had no alternative but to close the account.  With Pleasure, they said, glad to be done with it.

Wire transfers can and do fail for all sorts of reasons.  It's no big deal.  When a Fortis transfer failed while being sent to the US, they simply backed it out, returned the money to my account (minus 50 euros handling fee), and we tried again. I'm baffled as to why this went so spectacularly wrong.

In any case, it's a good test: I never would have been able to unwind a failed international transfer.

...and I'm once again searching for a banking home.

(not) Accessing bank accounts and television shows

I'm approaching my May 1 deadline to establish a US bank account for my paychecks that I can access for living expenses in the Netherlands. I finally gave up trying to convince (Yoo Hoo !) WaMu that global banking should include currency exchanges and wire transfers. I went on to approach Schwab, HSBC, Bank of America, but in every case, the bank required a personal visit to open an account, and wire transfers required fax or written instructions. I can't believe that I'm starting to wish more banks were as good as Fortis.

In desperation, I called Citibank. I think of them as a high-flying business bank, fallen on hard times, and so I had low expectations for personal banking. The first hour on the phone with them reinforced the concerns:

1) I started in an overseas call center, who rattled through a script and directed me to a Personal Banker.

2) My Personal Banker was irritated that I wanted to ask questions before opening an account. After ten fruitless minutes, she hooked on the word "Dutch" and sent me to the International Personal Banking group.

3) My International Personal Banker danced around the options, telling me I didn't qualify for account types that were unavailabel anyway. I consulted their web site, asking about simple Regular Checking or Interest Checking. That got me routed to the Global Executive Banking program.

4) My Global Executive Banker told me that I needed to talk to his supervisor and hung up on me.

5) I called back into the Global Executive connection, and was told that I could only establish an account through my Company Relocation Office. I explained that my company expected me to do this myself, and they explained that I could, therefore, put $25,000 on account with them and they'd be happy to talk further.

6) I am sheepishly routed back to my Personal Banker.

Remarkably, at this point, I connected with someone who understood that I wanted to simply make direct payroll deposits and wire cash overseas using the Internet.

And Citi has that account.

A Citibank Access Account can be opened on-line, is instantly established, and carries no fee if you do monthly direct deposit ($3 otherwise). No minimum balance (I opened it with $0.00), and, while the account has an ATM card, there are no other checks or products attached. Instead, you get simple, free wire transfers domestically, and rapid, $30 international transfers with generous limits accessible over the Internet, denominated in the currency of your choice.

i was shocked: it's *exactly* what I've looked for during the past few years. It took an hour to set it up and do a test transfer from WaMu, get the Fortis link entered and stored, and figure out the SWIFT codes. I'll see how the first month goes, but I am very impressed with the simple minimalism (services and fees) of this account. (Warning: This account immediately went sour, and I am no longer a Citibank customer.)

I decided to celebrate by exploring Hulu, a new service that streams American television and movies over the Internet for free. I registered, and found an interesting selection of films and classic shows. But, any attempt to watch anything brought the message:

This continues a pattern: all of the networks in the US flash similar "We apologize, but this video isn't available at your location" messages. I've fiddled with anonymizers and such to try to spoof it, but without success. I'm not sure what motivates this restriction: many of the same shows appear on Dutch cable television (sans commercials).

So, back to reading and practicing Dutch language...probably better for me anyway. At least I'm batting to the sunny side of .500 today.

Bank note photo credit Commercebank

International banking on a small scale

  "Due to global compliance payroll reporting we have made the decision to deliver all assignee remuneration shown on your balance sheet via your home country payroll.  However, we are pleased to introduce Reimbursement for Exchange Rate Loss.  This will be effective May 2008. We understand this is a big change and a member of the Global Assignments Team will be scheduling a meeting with you over the next few weeks to discuss the new process."

This is the sort of email that is guaranteed to take hours off my days and weeks off my life.

On the one hand, I serve at the pleasure of the corporation, so there's no sense in stressing over it. On the other, anything involving global banks and international money transfers these days is full or problems and procedures.

Prior to this note, my wages were divided and deposited into a US account for my family and a Dutch account for my living expenses.  With this announcement, it will all go to the US. So, the only way that I will have cash for living expenses is to wire a sizeable chunk of money over here every month, and then to apply for reimbursement of fees and exchange rate differentials, every month.

Welcome to the big leagues, as we say in the US...

I've got Dutch -> US transfers down to an art: the money arrives in a week and only one transmission has been lost in the past year.  In that case, the deposit was re-credited, but the merchant bank took off a $75 fee for it's trouble in returning my money to me.  Still, it's become a routine, five-keystroke operation (thank you Fortis).

On the US side, I use Washington Mutual, as in "Whoo hoo: WaMu".  That should be a hint: WaMu is a large bank ("$15 billion market cap; 2225 branches") but not a global one ("our friendly employees, our innovative approach to banking, or our work in our communities makes us unique").  This has big implications, as I found out in two hours of phone conversations last night.

First, they don't do currency exchanges.  They tell me that there are airport vendors and travel agencies for that sort of thing.

Second, despite their assurance that my account features ! Free * Unlimited * WorldWide * Wire * Transfers !, these cannot be done on-line.  Or by telephone.  The two options are (and I am not making this up):

   1-- Go in-person to the bank manager of my home branch and fill out a longhand paper form each time I want to make a transfer, or

   2-- Withdraw the cash and take it up the street to Western Union, please.

So everything must be dollar-denominated, and handled at the local-branch level as a personal transaction.  I tried getting in touch with my branch manager to explain that I live in The Netherlands (no, sorry: Holland), and to see if I could deposit a letter of authorization between us, agreeing to set up a recurring transfer.  However, the conversation faltered when the +31 part of my phone number led to a long discussion of how to make direct-dial international calls.  I haven't heard from him since.

This doesn't inspire confidence.

I'm not sure what my solution will be: options include parking a large chunk of cash here (at 0.01% Dutch interest rates), working with a different bank (and re-doing my direct deposit arrangements), transferring through a brokerage like Schwab (who will accept instructions by fax, but not on-line or by phone), or to make monthly flights to the US to withdraw a bag of money (but under the $5000 limit at Customs).

As a regular reader of the Economist, I am well aware of the ceaseless flows of billions of dollars chasing opportunities around the globe, and of the wave of government monitoring and regulation that is trying to catch up with it.  Maybe.  But, at the local level of transferring a thousand dollars over international boundaries, the US system (and my home accounts) still has a long way to go.

End of the month account settlement

Each month, around the 25th, the banking cycle comes to a frenzied and unpredictable end.

Through the days credit card charges accumulate, wages are earned, utilities are consumed.  Unlike the US, all of this is invisible.  Credit cards cannot be accessed online, wages are paid once a month sometime in the last week, utilities fluctuate according to the weather.

During the last week of the month, they all collide in a maelstrom of debits and credits in my banks' cash account.

In the US, home of the hedge, I get a bill for each service, and  decide how much to pay or carry on each charge.  This allows for dynamic management of cash flow and interest month to month ("stress" for most Americans).

In the Netherlands, a cash economy, everything is suddenly extracted in full.

I've learned to transfer a few extra hundred euros into the account around the 22nd, and then to cross my fingers.  The dust usually settles by the 29th and I can transfer any excess back into the linked savings account, where it earns equally unpredictable interest (something over 2%, paid quarterly, on the minimum monthly balance above a threshold).

It would be nice to at least get airline miles for charges as compensation for all the excitement...