Have you ever wondered “How much does it cost to buy a bank?” If so, it sounds like you’ve graduated from accessing basic banking services in foreign banking hubs and you’re ready to bank your own wealth.
In his article, we’re going to share all the costs and important considerations that you need to consider before deciding to buy (or incorporate) a bank in different countries.
Now, it should go without saying that buying a bank isn’t an alternative for most people looking to open an offshore bank account remotely, especially because offshore banks can also struggle to open accounts (more on this below).
But it can be an interesting option for certain individuals, depending on their objectives, how much they’re willing to invest, and the specific countries or territories where they want to bank.
Feel free to jump ahead to the areas most relevant to you by using the table of contents below.
Table of Contents
- Buying a Bank 101
- Important Considerations When Buying a Bank
- How Much Will it Cost Me to Buy a Bank?
- What Are the Ongoing Costs to Consider When Buying a Bank?
- Ready to Explore Your Options?
Buying a Bank 101
The most important decision that you’ll make when deciding to buy a bank is the jurisdiction that you end up choosing.
In fact, the jurisdiction you choose will ultimately determine the financial and regulatory requirements, the approval process, and wide-ranging operational considerations and challenges.
We’ll discuss some of these considerations and how they impact how much it costs to buy a bank below.
But before diving into popular jurisdictions (and their differences), let’s take a look at whether buying a bank makes sense for your situation.
Why Do People Purchase Banks?
There are many reasons why people decide to buy banks, here’s a look at some of the most common reasons that we see:
- They can offer a unique value proposition to the market
- Desire for status and reputation that come from owning a bank
- They have a captive audience in need of banking services
- Pursuing tax efficiencies that a bank can offer
- Seeking financing synergies with other business interests
There are plenty of other reasons why someone might want to buy a bank, but when it comes to banking in offshore or quasi-offshore jurisdictions, these tend to be the main drivers.
In the following sections, we’ll share the important considerations you’ll need to navigate and the major costs that you’ll need to cover when buying an existing bank or setting up a bank from scratch.
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Important Considerations When Buying a Bank
As mentioned, the most important consideration is deciding where you want to buy a bank. But there are many more important factors that you’ll need to consider as well.
With this in mind, this article is designed to help you start your search and is not intended as a step-by-step guide. Though, if that’s what you’re looking for, feel free to contact us to discuss further.
Also, it’s important to keep in mind that most lawyers and service providers that assist with buying and incorporating banks are often focused on a single jurisdiction. So, they’re not incentivized to present all of the available options to you, even if there are better options are available.
Choosing Where to Buy or Incorporate a Bank
The jurisdiction you choose will impact the purchase price, operating costs, staff and office expenses, and much more (detailed below).
But, it can also determine the ongoing challenges that your bank will face in different jurisdictions and serving different clients from around the world.
For example, if you choose to buy a bank in Panama, your bank will likely struggle to efficiently serve clients needing to send and receive transactions from the European Union. Additionally, obtaining euro banking facilities will be challenging or very expensive. The reason for these difficulties is that Panama is on the “EU list of non-cooperative jurisdictions for tax purposes” – more commonly referred to as the EU blacklist.
Of course, choosing to buy a bank in other EU-blacklisted jurisdictions like the US Virgin Islands, Vanuatu, Bahamas, Anguilla, etc., would likely have the same implications.
This is just one example of the many important considerations that should be assessed before deciding where to buy or incorporate a bank. With this in mind, here are a few popular jurisdictions that people often consider.
Popular Offshore Jurisdictions to Buy a Bank
- Dominica
- Saint Lucia
- Puerto Rico
- Panama
How Much Will It Cost Me to Buy a Bank?
Buying an existing bank is like buying any business, and requires a sophisticated approach to due diligence and valuation. As a result, it’s extremely difficult to say how much it will cost you to buy a bank without knowing which bank you’re considering.
That said, there are some rough guidelines that can be placed around buying a bank. But, it’s also important to keep in mind that there are many additional costs to consider as well (discussed below).
How Much Does it Cost to Buy a Bank?
An existing offshore bank with an international banking license can be purchased for as little as USD 2mm. However, this price would likely involve a lower-quality jurisdiction, and limited systems, and would require additional investment.
So, not surprisingly, it’s more common to see offshore banks being purchased for between USD 5mm and 10mm. Again, the price depends on many factors, not the least of which is the bank’s asset base, operations, and existing infrastructure.
What Are the Ongoing Costs to Consider When Buying a Bank?
The costs to keep a bank in good standing and operate it effectively are often overlooked when people begin the process of buying a bank. With this in mind, here are just a few of the costs that you should consider on an ongoing basis if you’re looking to buy your own bank.
- Staff and office
- Legal and Accounting
- Core banking software
- Compliance databases
- Correspondent banking
- Network access (e.g. Swift access)
- Licensing and regulation
- And many more…
Ready to Explore Your Options?
If so, you can access GlobalBanks Insider and start the process of applying for an offshore account in a few clicks.
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And “yes!” GlobalBanks Insider is designed to help foreign and non-resident individuals and companies open bank accounts.
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