“Hold on. Scandinavia isn’t offshore.”
That’s both right and wrong. The Scandinavian countries of Denmark, Norway, and Sweden are not offshore financial centers nor do they offer strict banking secrecy, though they all have banking secrecy by law. However, they are offshore from anywhere outside of Scandinavia.
Why Bank in Scandinavia?
Why would you consider banking in Scandinavia? A few reasons:
- Solid banks. Scandinavia has remained strong throughout the 2009—2013 financial crisis. Only a few, smaller banks have gone bankrupt; some mergers were made to save banks.
- Aside from Finland, not Eurozone countries. Largely unaffected by the Euro-crisis.
- Low fees compared to traditional offshore jurisdictions; in line with continental Europe (Netherlands, Germany, Switzerland, et al).
- Fairly good interest rates.
- Staff that speaks English very well.
- Deposit insurance.
- Private banking and wealth management services are available.
- Low corruption.
- Stable public finances and governments.
- Strong currencies.
- Reputable jurisdictions; some of the oldest democracies in the world.
The reason for this is neither privacy nor tax exemptions. While as a non-resident, you often pay significantly less in tax on capital gains, it is rarely tax free.
The reason to bank to bank in Scandinavia is the financial stability and independence with neither Denmark, Norway, nor Sweden being tied to USD or EUR. They certainly trade a lot with the Eurozone but the Danish, Norwegian, and Swedish kronas have remained strong throughout the recent financial crisis. Finland, despite being a Eurozone country, has also remained stable.
Sweden had a financial crisis of its own 1990—1994. One bank was socialized but later privatized and became Nordea.
No banks in Scandinavia has gone bankrupt and left customers stranded without money. The governments have traditionally left it to the banks to solve their own messes, but have stepped in when absolutely necessary.
Scandinavian banks have very little exposure to Greece, Spain, Portugal, Cyprus, Italy, France, and other problematic Eurozone countries. They are however exposed in the Baltics, whose finances took a tumble in the on-going financial crises.
How to Bank in Scandinavia?
In terms of day-to-day needs for banking, internet banking is extremely well developed in Scandinavia. Internet banking is reliable and highly functional.
However, a foreigner will face two major obstacles:
- Internet banking not always available in English.
- Banks are often reluctant to deal with non-residents.
There is not much of a solution to the first problem. You will either need to find a bank with English internet banking, use a translation tool, or figure it out. Finnish banks are required by law to be bi-lingual: Swedish and Finnish.
The second one is all about internal policies. There are no laws that forbid foreigners from banking in the Scandinavian countries, but they are very reluctant to do so. Banks in Denmark, Norway, and Sweden have a low risk profile and non-residents are considered risky customers. However – everything in this world has a price. To open a bank account in Scandinavia, it’s usually 1 million SEK/NOK/DKK (between 150,000 — 180,000 USD). Though, as I have mentioned in previous posts, minimum balances and initial deposits are almost always negotiable.
Below is a list of some of the major banks in Scandinavia.[ws_table id=”5″]
Norwegian legislation requires that all bank account holders have a Norwegian ID card number. Banks that are open to non-residents will usually handle the application process for you. The ID card has limited usage outside of Norway. It does not grant you residence. All non-resident accounts are reported to the tax authority.
Banking Secrecy in Scandinavia
In short, there is no secrecy which protects you from snooping authorities. Assume that the tax authorities know about every transfer you make.
Banking staff is however forbidden from disclosing any information unless compelled by law. Civil cases are not always enough to break the banking secrecy.
Banking in Scandinavia is an interesting option to those seeking refuge from currencies like EUR, USD, CHF, and GBP. It is not suitable for hiding money. It is an interesting option to diversify and secure your savings.
The banks and jurisdictions have excellent credit ratings, meaning your funds are unlikely to suddenly disappear.
However, no banking solution is perfect. Always be cautious and always exercise due diligence.
The Economist – “The Nordic countries: The next supermodel”
The Economist – “The secret of their success”
Reuters – “Fitch affirms Denmark at ‘AAA’; Outlook Stable”
Moody’s – “Norway’s banking system outlook changed to stable“
Thank for the great article.
I would like to open a personal USD current account somewhere in Europe. I don’t care about the privacy but I would like a bank that easily opens the account without much documents or questions, and has low fees.
Do you have any in mind?
Picking a bank isn’t an easy task. There are many factors to consider. However, if all you need is an account in USD, I don’t see why you can’t go to any bank and just ask. The only problem is that any card you get is likely to be in EUR or other local currency. I’m afraid I don’t know any banks in Europe that issue USD denominated cards, but more or less all of the bigger ones can open accounts denominated in USD.