The Brexit-battering suffered by the pound and a political swing to the left have spurred internationally-minded Brits to snap up the foreign-currency accounts.
Demand for HSBC Currency Accounts, which let customers hold cash in foreign currencies in the UK, spiked 23pc in June from the previous month, spokesman Ankit Patel said.
On June 8, the election UK Prime Minister Theresa May had been expected to win easily resulted in a minority Conservative government after a surprising surge by the Labour Party under Jeremy Corbyn, who has pledged more state intervention and vowed to tax higher earners more heavily. He has since overtaken May in opinion polls.
“Having seen the calamitous falls you saw immediately post-Brexit, people have woken up to the fact that they have currency risk,” said Rob Burgeman, an investment manager at Brewin Dolphin, which advises high-net-worth individuals. “As the election loomed, Britons thought, ‘We could have Prime Minister Corbyn here this time next month’. It just focused people’s minds on currency risk and political risk: ‘you’re not going to catch us like that again.”
HCAs are offered in 14 currencies, with the vast majority of customers choosing dollars or euro. Year-on-year, the number of new HCAs was 5pc higher in the first seven months of 2017, Patel said. The year-earlier period includes June 23, 2016: on that day, Britons shocked pollsters and financial markets by voting to leave the European Union, prompting the pound to plunge to multi-decade lows against the dollar.
Unlike the other big UK consumer banks, HSBC operates extensive retail networks abroad, and targets customers with international needs through the HCA and a “global view” product to manage accounts based in other countries. Barclays also offers foreign-currency accounts, but declined to provide figures on recent demand. UK-centric Lloyds Banking Group said the number of its new foreign-currency accounts is little changed.
Fifty-seven percent of the people who have HCAs are British, HSBC says.
More than 80pc of HCAs are in dollars or euro. Patel said there was a rush into dollar accounts between August and December 2016.
He said the proportion of dollar HCAs jumped to 41pc from 35pc during that period. The bank says there was a surge in demand for accounts around the US presidential election last fall. The Dollar Index, a measure of the greenback’s strength against other major currencies, rose 7pc in the last five months of 2016. (Bloomberg)