The COVID-19 pandemic, stringent regulations, and challenges from Electronic Money Institutions are pushing the traditional commercial banks to cut expenses and roll back operations. HSBC is a good example. It looks like HSBC has stated to accelerate announced job cuts. HSBC is planning to lay off about 35,000 staff worldwide. The COVID-19 pandemic has forced the bank to set aside nearly USD $3.8b as the provision for bad debts. Out of the bad debt provision, USD $2.7b is relating to the UK credit loss provision. There is an expectation that HSBC might be hit with up to USD $13b losses in bank debts.
Opening and maintaining bank accounts for offshore companies is challenging for small and medium-sized businesses. The strict requirements on substance, where funds is coming from and where funds are going to, the sanction list, etc. are creating banking business challenges. One suggested approach is to move from the tax havens to the low tax jurisdictions like Hong Kong, Singapore, and Cyprus which banks are happily accepting in contrast to the tax haven jurisdictions. Interestingly, there are no substance requirements in Hong Kong, Singapore, and Cyprus.
The success of the opening of bank accounts for offshore companies stays with a proper description of the business to let the bankers to fully understand it and feel comfortable to take the business on board.