October 23, 2012,
SingaporeI never thought I’d see the day. Two years since the HIRE Act, FATCA, and Dodd-Frank became law and threw global finance into a tailspin, two foreign banks have finally stood up to Uncle Sam…
Bottom line, it’s more reporting, more registration, more paperwork, more hassle…
Yet just yesterday, DBS Bank in Singapore stood up to the US government, indicating that they would not be registering with US authorities for at least for one Dodd Frank provision pertaining to swaps. Nordea Bank in Sweden made a similar statement.
This is an interesting turn of events which could evidence a bigger trend.
We’ve already been seeing signs that US financial influence is waning. The dollar is being slowly displaced in international markets. Countries around the world are starting to increase their reserves of China’s renminbi, as well as accept renminbi in international trade settlements.
We’ve also seen foreign companies like McDonalds issuing debt denominated in renminbi, the launching of renminbi-denominated commodity futures contracts, and the trading of renminbi assets in foreign exchanges.
All of that used to be dominated by the dollar. But now the dollar’s share is gradually fading.
If more banks follow DBS and Nordea in standing up to the US government, it will be the clearest sign yet that this trend is taking hold… perhaps accelerating the dollar’s decline…
http://online.wsj.com/article/SB10001424052970203400604578072221988442386.html
Same in Wall Street Urinal
Two large banks in Asia and Europe said they won’t register with U.S. regulators to trade complex derivatives with U.S.-based financial companies, amid controversy over a proposed rule tied to the Dodd-Frank financial overhaul.
Non-U.S. banks have been complaining for months about regulations that would force banks to register with U.S. regulators if they trade a set amount of swaps, a type of privately negotiated derivative, with U.S. banks or for U.S. clients.
Singapore’s DBS Group Holdings Ltd. and Sweden’s Nordea Bank AB are apparently the first major banks to declare that they won’t register.
*yeah, also the part of the news you didnt post was that Bank of America scrambled to create an offsite/out of country division that would be able to handle the transactions for these banks
please elaborate Mr/Ms blow hard. Great handle, I hope someone else is called “bite me”
If we had an active news media in Canada, some editor somewhere would hand that story to a reporter and tell him/her to go ask some Canadian banks if they have any plans to do likewise. Not sure what kind of an answer they’d get — but the question should be asked. I bet no one does it.*
@Arrow, the major banks are mainstay advertisers for the news media in Canada. The banks have heavily invested their clients money in US stocks, ETFs, and mutual funds. The US citizen residents of Canada will be sacrificed at the altar of expediency, by both the newspapers and their major clients, the banks.
The typical Canadian investor continue merrily along his way thinking that there is safety in “diversifying” his holdings by investing in the US. Meanwhile, knowledgeable American investment advisers like Doug Casey are advising their clients to get out of Dodge. I cringe every time I see an article in either the Globe and Mail or the Financial Post saying that it is now the time to invest in US stocks. I’ve already lost 70K to US investments; I’m leaving my money here in Canada, thank you very much.
I would encourage the Brocker team to look at not just BANKS but companies who issue securities, bonds, IPO…
Bond issuances now have stipulations in their founding documentation that they MAY NOT BE HELD IN ANY WAY by US Persons.
Should any of these instruments be held by a mutual fund, that entire fund would also not be able to be held by US persons.
Here is an example from Belgium.
http://www.carnegie.se/PageFiles/40256/Sverige%20Räntekorridor_Final%20Terms_SGA.pdf
Not sure if it is a result of Dodd Frank or Fatca but anyway the market is filling with securities that may not be held by US persons, and these rules are embedded in the issuance prospectus – unlike bank rules they can’t be changed at a later date until the end of the life of the security!
This example is why many Canadian residents (non-U.S. persons) will sell U.S.-based stocks and bonds:
“To illustrate the potential effect of FATCA, let’s take an example of a foreign investor who buys $100,000 worth of Facebook stock on a U.S. stock exchange for $20 per share. The shares increase to $25 per share and his investment is now worth $125,000. The investor sells his shares, but his broker is not FATCA compliant, so the IRS withholds 30% of his $125,000, or $37,500. The investor takes home $87,500, which is $12,500 less than his original investment and $37,500 less than what he was entitled to. The client must now file a US tax return.”
http://thebilzerianreport.com/fatca-the-death-of-the-american-economy-2/
@Canadian expat, I wrote an American Thinker article November 28, 2011, and used the following example,
*No, Arrow, the only thing the Canadian banks will do, is roll over and take it up the ***… You know…it’s the Canadian way ~sarcasm~ Frankly, what Canada should do is tell the United States and their IRS to “GO TO HELL!” and to stick their FATCA requirements where the sun don’t shine.
~pissed off Canadian husband of an American expat wife.
The word is spreading. In his recent novel, The Fear Index, British writer Robert Harris describes the conversation among hedge fund investors at a restaurant in Geneva.
“‘If you take your income as dividend …, then four fifths of your dividends are legally tax-free. So you only pay the forty-four on the one fifth. Hence a marginal top rate of eight-point-eight per cent…..’
“‘Eight-point-eight,’ repeated Mould. ‘Good for you.’
“Easterbrook called down the table, ‘I’m coming to live in Geneva!’
“‘Yeah, but try telling that to Uncle Sam,’ said Klein gloomily. ‘The IRS will hunt you down to the ends of the earth as long as you have a US passport. And have you ever tried getting rid of your American citizenship? You can’t do it. It’s like being a Soviet Jew trying to emigrate to Israeel in the seventies.'”
Breaking News:
Not sure where else to post this. Perhaps someone can feature it.
http://www.reuters.com/article/2012/10/24/usa-tax-fatca-idUSL1E8LOC4K20121024
There may be a way to stop this train wreck. Reichert has now been elevated to saint.
It just helps push the issue further off, so that they don’t have to deal with the business side, while still inflicting misery on private individuals. It’s actually a bad thing. It would be better if it would have imploded on Jan1, 2013.
@Mark
I take your point. Sometimes, the best approach is counter-intuitive. e.g. don’t get me started on the reasons why the FEIE loophole should be abolished… Same logic.
*zuludogm, I suspect that by delaying the deadline, the US government will have more time to pressure and convince banks and governments to follow through with FATCA. Yet, others argue that it bolsters the case for repeal:
http://freedomandprosperity.org/2012/press-releases/fatca-delay-bolsters-case-for-repeal/
Like Mark Twain, I would have preferred the Jan 2013 date, so it becomes obvious very quickly its rubbish,
Now we will be treated to more news for a year like, “Ghanian Ministry of Finance considers, what do we do about FATCA?” from that end, “XYZ Tax Lawyers/Accountants suggest, give up the goods now” from the fearmongering Accountants looking to cash in, and then from the IRS, “OVDI 2013 launched, yippee!” hahaha soon to be OVDI 2014, 2015, etc. or “IRS clarifies rule xyz on page abc, blah blah” meanwhile the money has moved on to cash and other assets not covered
*Kenneth Steengaard, managing director in currency, money markets and
commodities trading at Nordea Markets, said in an interview Monday that
the bank “does not intend to register as a swap dealer in the U.S. under
Dodd Frank.” He said the bank is now trading with units of U.S. swap
dealers outside the U.S., including their U.K. affiliates, taking
advantage of a U.S. Commodity Futures Trading Commission waiver granted
earlier this month.
http://online.wsj.com/article/SB10001424052970203400604578072221988442386.html
I live in Singapore — just renounced, and now waiting for my CLN.
DBS is the former state bank, and one of the big three locally. They didn’t do this on their own, this is a testing of the waters by the government. Singapore wants to be the Switzerland of Asia, and takes banking privacy VERY seriously. I would be surprised if there weren’t a number of these ‘baby step’ announcements over the next few years. If the US ever decides to actually write the rules, that is!
This post has aged, but thought I would add this from Singapore…
The following is the speech Lee delivered in parliament today during the debate on Income Tax (Amendment) Bill
http://yeejj.wordpress.com/2013/10/21/iga-fatca/