Is Your Salary Safe?

There is no hiding the fact that the worlds financial markets are in turmoil. There is little if any faith in the banking system with banks even unwilling to lend to each other! In this volatile environment banks have and will go under. In other circumstances some governments will step into to stop this happening. Unfortunately if you are paid via an offshore company this is where the weakness in the banking system can be revealed.

The trouble is that many of the offshore banks although subsidiaries of the larger brand are not actually the same bank as what would be saved by for example by the UK Government. The depositors guarantee scheme operated by the UK government does not stretch to the offshore jurisdictions such as the Isle of Man , Jersey and Guernsey. There is also the matter of what types of account are covered by any local scheme (if any) that may be in place. The whole subject has really come to the for in the last week with the collapse of 2 Icelandic offshore banks (Landsbanki Guernsey and Kaupthing Singer & Friedlander (Isle of Man) ) which have left thousands of depositors out of pocket with little or no chance of any recourse. Millions of pounds worth of deposits have gone. The fact is that offshore finance centres do not have the GDP or financial clout to save a bank that is going under. The scale of the deposits in the UK’s offshore centres is scary compared to just how little money the actual governments have. So whilst they offer great tax saving prospects when times are good economies of scale dictate that the risks are higher when things aren’t so good, like right now!

The state of the world economy is unsure at the moment and whilst banking shouldn’t be about a risk/reward balance the truth is that right now it is! If you’re being paid from offshore then isn’t it time you found out who your company is banking with and just how safe your salary is?

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