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SOVEREIGN MAN

Banking in Austria

Yesterday I was on a mission in Vienna to buy and store gold; today I was on another mission that is honestly quite sensitive, but I’m going to share it with you anyways.

Banking.

For years, Austria has been one of Europe’s best destinations for ‘private banking’– professional wealth and asset management by conservative, responsible stewards who ensure that return on savings will beat the rate of inflation.

While Switzerland has closed itself off to many North American customers, particularly those who do not bring tens of millions of dollars to the table, several Austrian banks have remained open to working with Americans, in particular those who reside outside of the United States.

Of course, demonstrating that you reside outside of the United States is easy to do if you own property overseas, have a lease, or a residency permit. These are the sorts of things you should be doing anyways if you intend on taking control of your own freedom.

With Austrian banks, minimum deposits are often just a few thousand dollars for some of the larger banks, and $100,000 for the smaller, more personalized banks.

Austria is currently on the OECD’s ‘grey list,’ the list of countries that this completely worthless and irrelevant organization named several months ago for failing to hand over customer financial information to the international community.

In Austria, banking secrecy has been a long-standing tradition and is protected with the same legal status as the country’s constitution. Unfortunately, this has been coming under fire lately.

The OECD’s grey list has absolutely no force or economic effect whatsoever… notwithstanding, a small handful of politicians are terrified of having their country’s name on a list, any list, and amendments to the country’s banking laws have hit the parliament floor for vote.

The most recent legislative proposals from earlier this month did not pass, though I expect the executive branch to continue pushing the issue despite resistance from constituents.

Bear in mind, however, that loosening restrictions will not completely eliminate privacy… and in a world of such draconian government intervention, I still expect Austria to be an adequate banking jurisdiction in the future.

But there’s something else to watch out for in Austria— Some of the country’s larger banks have tremendous exposure to volatile Eastern European economies like Romania, Ukraine and Hungary where default rates are rising.

If Eastern Europe falls off the cliff, it will drag down many of Austria’s banks in the same way that a Latvian default will erode Sweden’s banks.

As such, I would stay away from Erste Bank and Raiffeisen in particular, but there are several smaller banks that are worthwhile and relatively unexposed to Eastern Europe.

I opened an account with a bank after cultivating a very personal relationship for more than a year. I am more than satisfied with the service that I receive, which includes this worldwide Maestro card, multiple currency accounts, online wire transfers, and very personalized service.

bank card Banking in Austria

The bank knows that I write this letter (among many other things) and begged me to not publish their name. I gave them my word as a condition for opening the account.

I am happy, however, to point you once again in the direction of Mark Nestmann, who lived in Austria for some time and has strong ties there has written a recently updated book about Austrian banks—he names names and provides contact details for many of the personal, smaller banks in Austria.

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Comments on this entry are closed.

  • christian

    there is private vault in fort lauderdale Florida that dont check id very secure
    i guess just doing on google private vault in fort lauderdale Florida will bring you there i dont use them but i know friend that use them and are 100 % satisfy they probly have that in every country dont you thing so
    traveling like that youre probaly exausted Simon
    good luck
    with youre new venture

  • Bob O Sr

    Simon Am enjoying your Notes. Going to PTY to see Bobby and family August 22nd. Maybe I’ll see you there. Bob O

  • Joel de Angelis

    Simon, You are the first person I look for now each day when I go to my email. Thanks for the info on Austria. Have Mark Nestmann’s book, the latest edition. Since you had to keep the name of your bank in Vienna confidential in your email to us, could you possibly – in confidence – just note the page in Mark’s book where that bank is named without mentioning its name? You might also mention what paperwork or information someone opening an account in Austria will have to be presented to open an account.

  • Mike

    Hi Simon,

    I’ve been banking off-shore for about 6 years now, and have some comments that may be helpful.

    I am in full agreement with your macro assessment of global politics, economics, central banking, etc. In fact, what drove me to open a Swiss account 6 years ago was fear of the failure of the U.S. banking system. Exactly what I feared would happen did – the thing I didn’t see or expect was the outright bailout and nationalization of our biggest banks.

    My point though, as you brought up in today’s missive, the institutional AND sovereign safety of your off-shore bank and its location is paramount. My private bank in Zurich has been rated highest in the world for institutional safety based on liquidity ratios and the balance sheet risks of the bank’s investment portfolio (no derivatives, no real estate, low exposure to equities and long dated bonds, etc). Then you have the sovereign safety of Switzerland backing that. There is an organization in Switzerland who conducts the bank safety ratings which I can provide if of interest.

    My offshore account has and always will be completely above board. I filed with the IRS when I opened it, and have paid taxes on gains every year since. My banking experience has been delightful. I receive much more attention from my Swiss private banker than I do from my U.S. broker where I hold all domestic funds. I have access to securities and other financial instruments that are not available here. My greatest success investing was by simply allocating 70% of my account to 4.5% Euro Treasury paper when it was at 1.05 to the dollar, then following key signals of an advisor who said to go back into US$ after the Euro had peaked at ~ 1.60 and come down to 1.54. The 30% balance I put in gold bullion safely stored in a Swiss vault. Purchasing bullion was as easy as a phone call with transaction fees of 0.5% on the buy plus 0.75% per annum.

    The problem I guess most subscribers will likely have is the minimum funding to open an account which is now 1 million Swiss Francs. It sounds like Austria opens much smaller accounts, but I would have serious concerns over the sovereign and institutional safety of Austrian banks. I am in agreement with you that we will see continued deleveraging of global economies resulting in Round Two of global financial crisis. Austria’s very heavy exposure to private and commercial real estate in Eastern Europe could make for alot of pain and suffering for holders of an Austrian bank account.

  • chris newman

    Hi Simon,
    Appreciate your missives and frank opinion, all very topical and relevant. Here in New Zealand, which has a very close relationship with neighbouring Australia (and the South Pacific Islands…) there may be some advantages for your readers’ interests. This part of the world is less sophisticated than Europe or the USA which has both advantages and disadvantages for those thinking of asset protection and long term survival. Should you have specific questions about the strategic benefits of involvement in this part of the world, I am happy to offer my assistance.
    Regards,
    Chris Newman
    Auckland
    New Zealand

    • mike dunham

      Dear Chris,

      I am an American citizen and have both a bank account and a financial account in New Zealand. Is the banking and financial secrecy good in New Zealand or not? Or do you see it deteriorating like the rest of the world?

      Thank you.

      Best regards,
      Mike

  • Me

    I like Middle Eastern and Asian centres for banking and especially precious metals storage. They are in large part creditor nations and the citizens have a strong cultural affinity with the metals. Taking away precious metals from the middle Easterns and Asians is like taking away Beer, footie and boobs from the Aussies. There would be national outrage.

    I think Austria is a viable place but have some concerns….possibly unfounded, hopefully not. The reason for my concerns lies in what I’ve seen happen in Switzerland, with them succumbing in part to International pressures. I’ve seen all sorts of articles about why they are afraid of OECD black lists and afraid to not cooperate blah blah blah.

    Thing is they have managed for 75 years to tell the rest of the world where to go with these sorts of pressures, so my take on it, rightly or wrongly is that the real reason is not that they wish to cooperate with any of these foreign aggressor governments that are trying to claw back some un-stolen wealth, the real reason is that they are in a bind financially. Swiss banks are the biggest player in offshore banking. UBS for example showed an $18b loss for 08, which included the $780m fine for assisting Americans dodge tax. The largest in Swiss history.

    Switzerland is stable and prosperous, but in relative terms their economy is pretty small. Based on a Purchasing Power Parity, estimates of Swiss GDP are around $309.9 billion for 2008. That’s less than what the U.S. Fed and Treasury have already pumped into Bank of America, AIG and Citibank.
    So, in that context, an $18 billion loss (UBS) is pretty shocking.

    I wonder what Switzerland’s central bankers thought about this. The Franc was dangerously strong relative to the euro. All the risk averse money had been pouring back into the CHF as part of the deleveraging of Emerging markets.

    In economic contractions exports become all the more important and anything that hurts them is akin to the devil. This is why I guess all current competitive devaluations are taking place. A strong currency makes it harder for exporters to compete and bring in revenue.

    By relaxing the bank secrecy laws this would have the effect of driving exports to try and stave off a version of what happened to Iceland, and secondarily to devalue the currency which would have the same effect. Two birds with one stone.

    My concern is that Austria has a similar risk with all the aggressive risk taking that many of the Austrian banks undertook posing a similar risk.

    Maybe it’s a wild speculation as to why the Swiss have relaxed as they have but the underlying financial facts worry me nevertheless.

  • victor

    Hi Simon:

    I’ve read you since Without Borders.

    Great work

    Do you have a paid newsletter for investment reccomendations?
    Rgds
    Victor.

  • Ron Michael

    Hi Simon
    What is the name of the austrian currency and how much interest do they pay long term?

    • Wendy

      They use the Euro, and the interest rates are always tied to the Euribor, which is low right now, but last year was very high. And, will likely move up because the currency is basically German controlled, and they don´t like inflation.

  • Annie

    How does an American citizen safely transport (without confiscation) one’s gold coins to Das Safe?

  • David

    Personally, I would not place my trust in any bank or any other form of storeage facility for gold. Austrian banks, as Mike has alerted, are extremely exposed to massive amounts of very low quality debt across eastern europe. Austrian banks leveraged to #’s beyond your wildest dreams and they will pay the consequences. It is hard to visualise how they can possibly survive and you only have to have a few go down initially for all sorts of change to be introduced. The mere fact they are all under extreme stress must surely make them inherantly untrustworthy.

    Europe has a massive banking crisis looming. The problem in Europe is far greater than that in the US if you can beleive that. They will be lucky if the currency manages to survive. Store your gold where no one knows about it and use your initiative for that. Forget about Swiss banks or any other banks or vaults. The whole point of insuring our future with gold against inflation, crashing currencies and government seizure of savings is to have some “insurance”. Its for the dog eat dog bottom line scenario.

    Another word of warning. I read gold bug commentators who talk about their own sizeable holdings of gold. In doing this they expose themselves to potential kidnap and who knows what unpleasant treatment to follow. Just don’t tell anyone you are storing gold. There is no point in putting your physical being at risk in this way.

    David.

  • Mr. Henry

    I am interested in a corp. banking contact in Uruguay.

    Can I pay you for your services in a recommendation that is good and reliable?

    I suspect that mass referals via a newsletter may not be the most efficient.

    Regards,

    Mr. Henry

  • Göran Högberg

    Thank you for your verry interesting writing. I am on your mailing list and enjoying it.
    Just a question: As a Swedish person with Swedish Kronor, I of course wonder about the Baltics and the Swedish Banks and how this will effect the currency rate of EUR/SEK and USD/SEK.
    Do you think the risk in the Baltics has passed away enough not to have an influence on the Swdish Krona (particularly against the “overvalued?” Euro? Best Regards, Göran

  • Auditor

    I’ve designed and audited financial systems for multi-national firms for 30 years – banks, law firms, manufacturing, utilities, energy – the works. I always had an ‘inside’ view and only recently as I built a firm that is now multi-national, have I obtained a view of the ‘outside’ or how the world works. I had to hire a V.P. with IMF/World Bank experience and he explained the rules of the BoE, J.P., Goldmans, Zurich, Frankfurt and Hong Kong. As I learned this stuff it was like hearing “Aliens had landed from Mars” on the front page of a tabloid, but all of his economic predictions came true during 2007-present, often within a month or two and all in the sequence he laid out. So many web sites that sound like panic attacks are often laced with truth. This site appears to have some very practical info and informed visitors and is rather refreshing…thanks for the tips. Now I have one for those of you looking for something sweet to chew on with your liquidity: mortgages may be bottoming, but that’s a risky bet. Gold may be headed for a rise, and I do strongly suggest its certainly better than either holding U.S. dollars or (choke) treasuries, but playing gold and currency markets of any nation is a risk, which I am sure everyone here has learned with some fabulous wins and a few losses along the way. I’ve done it – once picked up $10K in 4 hours on a gold mining options trade (I was only 19) – and felt pretty good – but have also seen equal amounts lost when some broker made a mistake on a trade and I had little recourse except to eat losses and sue – who has time for that? There is a method for leveraging small amounts of capital through energy (renewable energy – typically called “the low ball” of energy returns) that yields 200% – 1000% ROI plus – and works in any nation – and returns all original investor capital within the first year, with a 10 – 15 year downstream revenue stream at the ROI rates above – and in the end you (and your group/associates) OWN THE BANK – which is a pretty good place to put your own money (my opinion). If I tell you the name of the firm that teaches this I’d be spamming (why I left my web site off) – so I will skip that – but I guess if interested, post here and I will reply – with the site admin’s permission of course. I won’t spam a site with info – no matter how good – without their inquiry and verification its real – it works – its one of the best ways in the biz to generate reliable, transparent, fully controlled (you own the bank) profits – and it works in any nation on Earth. We developed it last year, refined it with attorneys this year and developed the formula working with bank and credit union formation/charter specialists (real straight-laced gal and a gent who had chartered banks)), a compliance officer that had been laid off from J.P. (and who had worked at Prudential Securities before that) and a patent lawyer that reviewed it called it ‘brilliant’. We just received our first round from local S.F. investors (they will own their own bank) and I am about to leave the U.S. and teach it to a group overseas (at their request). Our 2nd round of U.S. investors just contacted us and want to start the process as well. Again – transparent is a good thing: no derivatives, hedge funds, trading platforms or GAMBLING on gold, oil (well as oil prices rise, safety for your bank does increase), stock markets or foreign banks – YOU own the bank and YOUR BOARD and YOUR TEAM controls YOUR FUNDS. While I agree (as an auditor with some insight) that working with foreign banks is certainly preferable to the huge risks in both the U.S. and European financial markets (and Asia ain’t no picnic – lemme tell ya), if I had my choice (I do), I’d hold my own gold, own my own bank and know my Board members intimately. From that position you can pretty much throw a dart at a map and pick the nation of choice to execute the process – the more interested in foreign investments – the better for you and for protecting your ass-ets. My two cents.

    • coni

      interested in receiving information on your investment idea – thank you

    • http://www.facebook.com/people/Robert-Oliver/100002366513766 Robert Oliver

      I am interested in receiving information on this program

    • VD

      I am interested too

    • Mo Ishaq

      I am interested in receiving further information on your investment program

    • http://pulse.yahoo.com/_XECV6OYERGNJKFKR372BMIARWQ JR

      I am interested in more info

    • Tacks952

      I would like additional information

    • True Disbeliever

      @87e36865bbcb11732a367343dfc6201e:disqus : I am interested

    • noboarders

      I would like additional information

  • http://www.thinktankjunk.org/ Thinktankjunk

    I am from Austria and also currently there. And i can tell you that unfortunately things will change now. After LUX is collapsing due to the big pressure of EU AUstria ist the last one with a real bank secrecy in Europe….To me its only a matter of a couple of months and thats it. Our Government is so much pro EU…so its really hard to say as an Austria: Get your money out of Austria asap or your data could be shared with authorities …

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