HSBC expat, Interactive Brokers

[Asense]

I have accounts with all above, I already have the £50,000 in HSBC expat, anything over that is uninsured. Wise, has some private insurance, but I don't feel like if the company goes insolvent it means anything. Interactive Brokers has insurance but same risk I suppose. They have been longer than wise, so my intuition tells me they are better choice.

Basically I have little desire to leave large sum of money in wise. So my toss up is HSBC or IB, considering the current climate, I don't feel comfortable with any of it. Already have crypto and btc. Thoughts? Thanks.

 

[Sols]

In case of an institute collapsing, EMIs offer greater protection than banks.

Most bank deposits are limited to some amount. EMIs are required to hold at least 100% reserve, and this reserve is frequently checked and audited. If an EMI fails, you are more likely to get all your money back than if a bank fails.

 

[troubled soul]

In case of an institute collapsing, EMIs offer greater protection than banks.

Most bank deposits are limited to some amount. EMIs are required to hold at least 100% reserve, and this reserve is frequently checked and audited. If an EMI fails, you are more likely to get all your money back than if a bank fails.

Newer knew that....thanks for your answers

 

[Larin]

@Sols is absolutely correct.

IBKR is a broker, not a bank. Therefore, the risks with them are completely different than a bank. Furthermore, if you hold assets with them, it would be treated differently from cash in case of a bankruptcy.

On another note, how do you find HSBC expat? I am thinking of opening an account with them.

 

[fshore]

In case of an institute collapsing, EMIs offer greater protection than banks.

Most bank deposits are limited to some amount. EMIs are required to hold at least 100% reserve, and this reserve is frequently checked and audited. If an EMI fails, you are more likely to get all your money back than if a bank fails.

What if Wise etc hold their cash with SVB, what happens?

 

[thomasparra]

@Sols is absolutely correct.

IBKR is a broker, not a bank. Therefore, the risks with them are completely different than a bank. Furthermore, if you hold assets with them, it would be treated differently from cash in case of a bankruptcy.

On another note, how do you find HSBC expat? I am thinking of opening an account with them.

Banks have strong risk management and compliance regulations to abide by, unlike brokers in many juridictions. Of course as history shows banks can and do fail too, but I would feel most comfortable having my money in a top tier bank like HSBC or BNP versus a broker, even IB. Moreover the government protects bank failures up to 500k in the US, 80k in the UK, 100k in France etc. I am not aware of such governmental protection if your broker was to fail. The key is diversification and maxing out the government deposit protection by bank.

And I would never hold more than 20 000 with an EMI, and especially Wise, who is notorious to freeze/close accounts. You couldn't do anything about it even you flew to London and met them in person as they do not have any brick and mortar locations so good luck catching an employee down the business tower office they are in lol.

 

[Sols]

What if Wise etc hold their cash with SVB, what happens?

Banks that open client funds accounts for EMIs are required to keep that money segregated (ringfenced). This arrangement is also routinely checked and audited by the regulator. So if the bank fails but the EMI does not, the funds cannot be touched by creditors and the EMI can continue operating.

 

[algotrader]

An even better protection offer securities such as bonds of AAA rated countries or collaterized ETFs. In Nazi Germany only stock holders were able to preserve their wealth throughout the war and aftermath (with some volatility). Everyone else lost everything.

I am not aware of such governmental protection if your broker was to fail.

With a broker you hold your deposits typically not in cash but in securities and these are protected if they are held in custody for you by the broker (as opposed to OTC products such as CFDs) and depending on the jurisdiction under which the broker is licensed:
https://www.investopedia.com/articles/investing/050515/what-happens-when-stock-broker-goes-bust.aspBTW, my biggest fear is not brokerage or bank failure but governments printing money to bail out these and introducing capital controls and CBDC at the same time. The effect will be the same as writing off money with a failing bank/broker or haircut such as in Cyprus in 2013.

 

[Asense]

@Sols is absolutely correct.

IBKR is a broker, not a bank. Therefore, the risks with them are completely different than a bank. Furthermore, if you hold assets with them, it would be treated differently from cash in case of a bankruptcy.

On another note, how do you find HSBC expat? I am thinking of opening an account with them.

I don't have any issues with HSBC expat, I only ever opened the account and maintain at least the minimum they require , took about 2 weeks from applying to getting the account opened from what I recall.

Interesting points about the EMIs, but I think we don't really know what would happen if they started going tits up. We might find out later they didn't have all our money, and oops sorry and nothing we can do about it.

Yeah, Central banks printing is a fear as well.

 

[Sols]

Interesting points about the EMIs, but I think we don't really know what would happen if they started going tits up. We might find out later they didn't have all our money, and oops sorry and nothing we can do about it.

We have seen what happens when banks fail, and people lose money.

Have you seen any EMI fail and clients lost money? Several EMIs have gone out of business, and AFAIK in every single case customers have got their money out intact.

 

[nobel]

HSBC expat is not SEPA-compliant, so it is expensive for € incoming and outgoing money. SEPA is only possible with BARCLAYS, SEPA direct debit as well..

 

[Marie Manila]

I already have the £50,000 in HSBC expat, anything over that is uninsured.

HSBC expat is not SEPA-compliant, so it is expensive for € incoming and outgoing money. SEPA is only possible with BARCLAYS, SEPA direct debit as well..

Simply open another account with HSBC UK, if you are eligible.

This will give you an additional £85,000 of deposit protection for funds held with HSBC UK and give you SEPA access.
To my knowledge, transfers between HSBC UK and HSBC expat are free of charge.

Disadvantage: The savings account ah HSBC UK is only offered in £. However, the non-savings current accounts are offered in many different currencies.

 

[nobel]

All banks in the Channel Islands (except BARCLAYS) there is no SEPA!