london_to_ksa

Hi Guys

I am moving to Saudi soon and am trying to work out what the best method is to get access to my money which will be paid in Sterling..

1) use my UK bank account
2) open an offshore account and use that
3) open an account locally in Saudi

Any advice?

Thanks All!

GeorgeMartell

It is always best to keep the bank account in the country you are staying in such as Saudi because banks can be funny if you are outside of the country when transferring etc.

Not hugely up to date with the best Saudi banks for expats but HSBC is probably a good bet.

coffindodger

So your money will be paid in UK sterling.
If you are on a work visa then you WILL have to open a local bank account.
I used for more than 7 years the NCB and they were good. The HSBC and many more local banks are good no problem.

BUT
If you are on a Business visa then you will NOT be able to transfer money out of the country unless you have a friend that has a Iquama (Residence Permit) You need to show this in any of the agencies to send your money out of the kingdom.

london_to_ksa

Thanks for your reply..

I have the option of being paid in GBP/ Saudi Riyal or Emirati Dinar and into any account i give them..

I am trying to work out what the best combination would be for me as a UK citizen, as I will need to access my money out there and will need access to it in GBP finally when i come back to the UK..

All this bearing in mind that i should avoid too many currency conversions and charges for transfers and ATM's....

Its seems a bit complicated at the moment, I am interested in knowing how other people are operating their accounts?

Thanks

mikewot

Good luck with that!

GeorgeMartell

I think you have just answered your question.

Get paid in AED/SAR so you don't get conversion or transfer fees every time you take money out, then when you do leave, its only one conversion/transfer on the remaining amount into GBP..

FriendlyExpat

The best approach is clear. If you can, get paid outside Saudi in pounds directly to your British bank account and keep your savings in the UK. Only bring day-to-day spending money into Saudi because:

(i) whenever your saudi residence permit (iqama) expires, maybe once a year, saudi banks shut down access to your account entirely until the permit is renewed.

(ii) if you have to leave saudi in a hurry without completing the proper exit procedures (as many do) then your savings are locked down and you may lose them entirely. If your savings are in the UK, its no worry. Similarly, if you get in trouble with the Saudi authorities for whatever reason (hopefully not but you never know!) they cannot take your money away to punish you.

(iii) if you keep your money in riyals you are exposed to currency fluctuations vs the pound. You are also exposed to what I tactfully call "geopolitical risk" in Saudi in case the riyal loses value for whatever reason.

(iv) there are currency export restrictions in Saudi.

(v) you earn no interest on saudi bank accounts. UK interest will be subject to tax, of course, but still better than nothing. You can keep money in Jersey or another off-shore tax haven if UK tax bothers you.

(vi) life in saudi is cheap (except housing and maybe a car) so you don't need much money in kingdom.

(vii) you probably have little banking fraud protection in saudi - if you ask what protection is in place the bank will say "but there is no banking fraud in saudi! Why do you need protection?"...whereas in the UK if someone steals your money or the bank goes bankrupt you will get it back (up to £85k if the bank goes under).

My advice - get paid 100% outside saudi or (if your company allows) a split where you get paid most of your cash outside saudi and then whatever you need for day-to-day spending to a saudi bank account.

Being paid into the UK doesn't necessarily affect your non-resident tax position but get tax advice anyway in order to understand your position (tax free status is obviously why most people are here and its 100% worth investing in good reliable tax advice to make sure you do nothing which makes you liable for UK tax on overseas earnings).

Open a Halifax Clarity credit card in the UK (http://www.halifax.co.uk/creditcards/clarity-card/) which allows you to take money out from saudi cash machines for virtually zero cost (no withdraw fees, no conversion loading charge, no interest provided you pay off the card the same day as you withdraw, if you repay monthly you will pay about 1% in interest). You can also use the card for paying directly for things, which again incurs no costs at all provided you repay in full monthly.

There are other options for transferring UK-Saudi money - look here for more details:

Debit & credit card charges abroad: full breakdown - MSE

You need to get accounts open while you're still in the UK - they won't close if you move overseas but its much harder to handle opening accounts remotely.

Finally, the Saudi banks are OK and generally safe with your money, but slow to get things done. SABB (Saudi HSBC) is OK but not well connected with UK HSBC and expensive to transfer money from pounds to riyals. I recommend using whichever bank has a branch close to your home or office

NewCaledonia

The Saudi Riyal and Emirati Dinar are pegged to the USD.

So when you are paid in SAR or AED in practice you are paid in USD. I think that is important to note for the OP.

1 USD is virtually 3.75 AED/SAR... so for every 3750 AED/SAR you are paid 1000 USD (i.e. 30000 AED/SAR = 8000 USD).

That might change one day, but if that happens... a lot will change before (the end of petrodollar).

So there is no currency risk "per se"... you are not talking about some banana-republic currency like in Africa or Latin America.

When I worked in AD I was paid in AED (I live in the Eurozone). So I put my money in an USD account in an Eurozone bank, and then exchanged to EUR when the currency exchange was better for the Euro. Some amateur currency arbitrage but it works.

I think it all depends on 2 things.

First, if you employer let's you be paid in GBP or USD (SAR), which currency rate exchange they are using (fixed? variable?)

Secondly, what you are using the money for. If you are paying a mortgage in GBP, you will probably be better off being paid in GBP so you have a fixed income. If you are just saving, doing it in USD (with a favorable currency rate - see above post -) might not be a bad idea.

For instance I was checking now USD/GBP currency exchange.

In July 2014, 1 USD = 0.58 GBP
In January 2015, 1 USD = 0.66 GBP

So if you had being paid in USD (SAR/AED) and had saved 100,000 USD during the years (again you can do that in an UK bank account, no need to keep it in the GCC), if you had exchanged that to GBP, that would be about 58,000 GBP. But if you had done so last month, that would be 66,000 GBP. So you are getting 8,000 GBP more by exchanging at the right moment. Of course you could have used those USD in the meantime to invest (for instance, stocks in the NYSE).

And the USD is very strong lately (compared to the EUR/GBP), so it might not be a bad time to be paid in Riyals or Dirhams instead of Pounds or Euros.

FriendlyExpat

The riyal is indeed (currently) pegged to the dollar but there is still currency risk as (i) the dollar can go up or down against the pound or (ii) the peg could fail (even if unlikely at moment)

mikewot

What is an Emirati Dinar? The UAE has never ever used dinars.
The United Arab Emirates dirham was introduced 19 May 1973. It replaced the Qatar and Dubai riyal at par. The Qatar and Dubai riyal had circulated since 1966 in all of the emirates except Abu Dhabi, where the dirham replaced the Bahraini dinar at 1 dirham = 0.1 dinar. Before 1966, all the emirates that were to form the UAE used the Gulf rupee. As in Qatar, the emirates briefly adopted the Saudi riyal during the transition from the Gulf rupee to the Qatar and Dubai riyal.

Sailortobe

Friendly expat gave the best advice. I worked in Saudi for 6 years, and had all my salary paid into my UK bank in sterling. Friendly's point about having to leave the Kingdom without going through the correct channels and losing access to monies in a Saudi bank ring very true. I was put in that situation by some insidious expats, and was forced to leave against my will. Enjoy your time there,

nonthaburi

One point: your account doesn't just get shut down without warning every time your Iqama expires. You get notices from the ATM for about 1 month before warning you about it and it's up to you to go into the bank and renew once you have your new Iqama. It doesn't just happen out of the blue. It does also say on your Iqama when it expires so it shouldn't really come as a shock.

NewCaledonia

Yeah of course, you are right about point I.

However the almighty US dollar is not a risky currency.

It is not like you are working in Venezuela in bolivares or in Argentina in pesos, if you see my point

My point is that for some people (specially if you are saving instead of paying something in other currency, like a mortgage in the UK), it might be more interesting to be paid in USD (AED/SAR) and then they can convert it to another currency (normally EUR or GBP). It all comes to the exchange rate your company uses if you are paid in a foreign currency and whether it is fixed or not. It doesn't entail a lot of risk or economic knowledge, you just gotta be smart on when to exchange your dollars to pounds or euros at the right time.

Ups, I had my head somewhere else.