In dating terms, the UK banking system had a reputation for sleeping with international clients on the first date ie: they were easy. Not so long ago, any foreign entrepreneur could just rock up with £1 in their pocket and a vague idea of a business plan and most of the High Street banks would be lining up to get into bed with them. But not any more. Now the UK banks are playing hard to get with their global business customers.
So why the cold shoulder? Of all the countries in the European banking system, the UK was regarded as the friendly, open-arms type compared to say the stuffy bureaucracy of the French or the picky Austrians. But it seems that since the recession UK banks are a little more discerning about who they choose to liaise with.
Much like online dating, you need to have a bit more than just an out-of-date passport photo and a bucket list of aspirations to make that first date commitment. Now banks are picking through the applications with fine tooth-combs to see if these prospective businesses are not only legitimate but are capable of success. They don’t want to waste their time with any entrepreneurs unless they see signs of long-term commitment.
EU regulations against money laundering have also come into action which means UK banks have to comply with these laws. That means all banks are required to do due diligence on every applicant to check the company is reputable and run by business owners with impeccable reputations. It’s the banking equivalent of googling someone or trawling through Facebook to see how someone treated their ex-boyfriends or ex-girlfriends, except UK banks need to check up on how their prospective clients treated their previous business partners and clients.
The other reason UK banks are treading more warily are due to the banking scandals involving certain big banks that were caught playing around with the interest rates, or hanging out with dodgy characters in other countries. As that old romantic saying goes “once bitten, twice shy” and as the authorities and governments don’t want to get fooled again, the banks have had to demonstrate their worth and prove they’re clean by playing by the rules and imposing strict rules on new customers.
Those rules now include having to prove you are a UK resident to open a bank account and also proving that the business activity is actually based in the UK which includes British clients, owning business premises in the country such as shops, offices or factories or hiring British staff.
So after all that grilling, the other European countries suddenly don’t seem quite as unappealing. France for instance only requires a solid business plan and a face-to-face meeting with the bank manager together with the relevant company documents and details of directors and shareholders.
As any on-line dating expert would tell you – don’t jump in with your eyes closed. There’s no point in going through the hassle of going global if you can’t actually bank your earnings. So if you’re really in it for the long haul, you should check with a company formation agent or a tax consultant first before setting your sights on more exotic prospects abroad.
Katya Puyraud operates Euro Start Entreprises, a UK-based company formation agent with bank accounts. Euro Start Entreprises helps businesses and entrepreneurs open and expand their operations throughout the UK, Europe, the U.S., and the Emirates.