Yves Lecot participates in the IR Global Guide – A Jurisdictional Guide to Opening a Foreign Bank Account

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Foreward by Andrew Chilvers

For companies and individuals looking to move into new jurisdictions for business opportunities, setting up a bank account is a crucial part of the process. But this is never as straightforward as it seems.

In all countries, banks are obliged to crack down on fraud and any potential financial scullduggery. As a result, they tend to be very risk averse. Regardless of where a business establishes an office in the world, local banks will generally have the newly arrived expatriates jumping through various hoops, pulling their hair out in frustration.

The new arrival will need the relevant paperwork, including personal identity papers, a personal and business address, personal references and other numerous documents. And that’s just the beginning.

Every jurisdiction has its own banks and banking rules, which are often complex and bureaucratic. Consequently, seeking advice from local legal and financial experts before setting up a bank account is imperative if a company is it get the right account for its particular business objectives. This is why it’s so important to use local advisers who are experts in the jurisdiction to provide information about the local banking rules.

What is the general risk appetite of banks in your jurisdiction and how does that affect setting up a new business bank account?

Belgium, is a small country having a complex structure on all different levels of the society and where business is very quick confronted with expanding business abroad. Belgian citizens are used to deal with foreign entities and their structure abroad.

This is not different with banks. Being confronted to complex and different structures then those known in Belgium is not extravagant. Belgium is also a country where development, research and testing the market is general accepted by the banks. Does that mean that the banks accept very easily new businesses? No, not at all. Besides a good developed business plan and good structured financing combined with a good marketing plan is the start of the accepting cycle.

Therefore it is important that this business plan is good structured and presented by a Belgian Certified Accountant or by a Belgian Public Certified Accountant. This approach guarantees that the business language of the entrepreneur is correctly translated into the financial language of the banks taking into account the Belgian culture on financing.

The risk of the project must be covered and described into different scenario’s. But this is true for all new investment projects and not necessarily only for the banks. An investor, generally speaking is interested by its return on investment. The bank will not analyze a case where the investor doesn’t receive in a reasonable time a return on investment. The lack of a reasonable profit in a general accepted economic environment is the basis for acceptance and opening of a relationship with the entrepreneur.

Belgian banks, as everywhere in the world, have their focus on certain banking activities. Its up to the Belgian Certified Accountant to analyze its clients investment project and propose without any preference to certain banks, in all neutrality those banks who fits the needs of the client and his investment project.

It would be hypocrite to declare that the Certified Accountant has no preferences, as a good organized Accounting Firm, he must dispose of the necessary contacts (introductions) within certain banks. That doesn’t mean that he will not be independent. It is important that de Belgian Certified Accountant knows when certain interests of the banks are highlighted. He must know the strategy of the bank in a certain time.

You should compare the situation toward the mood of the banks compared to the waves on the sea. An example, taking into account, for strategy, the real estate investment activity. When this wave is high in a certain bank, it would be easier to introduce a query on credit lines in this bank for real estate rather than to go to another bank where the wave is low for this activity. Its like a sea surface. The waves are not on every place with the same height.

So opening a bank account is not only a question on compliance but also more a question of the interest of a bank at a certain moment related to a certain strategy of the bank. Compliance comes in a second stage and is, we do agree, in certain cases very annoying, but investors, if they are honest and trusty, should less be worried for this part. Their Lawyers and their Certified Accountants can definitely deal this matter. Starting up a business where in Belgium nobody is at home, where there is no office, only a letter box, and no physical “real” activity, just admit that you can just forget that kind of requests. That time is history.

In this philosophy you can easily understand why an identification in real, face to face, is absolutely necessary. A lot of people consider this obligation as absurd. The social contact between the banker and the foreign investor is the first social contact between two parties having the possibility to evaluate the professionality of the further client, but also the way around. The foreign investor must feel that the considered bank will be the partner in his company on which he financially wants to rely on. If the foreign investor doesn’t want to engage on the approach, the time is lost for both parties.

Some examples. “Argenta” is a Belgian bank who’s focus is on private individuals rather than industrial or commercial clients. “Bank van Breda” focusses on independent individuals and companies in the medical sector, architects, lawyers para-medical, translators, notary’s etc. and try always to combine the personal wealth of the individual against the business that has been proposed. “KBC”, “ING” and “Parisbas Fortis” are the top three banks in Belgium offering a very wide program of financial services. The approach to these banks is completely different.

How accommodating are banks in your jurisdiction for opening a business and personal bank account?

This is a question that has several answers. 85% of all banks are interested in doing private banking. They love it. You come to Belgium for this sector, you are welcome. In this case compliance is IMPORTANT. Of course, banks love your money, but is it legal, transparent, justified, etc.? Be aware that compliance is mainly driven by all the laws on money laundering. We will not enumerate all the obligations on money laundering, but be aware that Belgium is rather complete in this legislation. Where other countries, are not yet at this level, Belgium, is at the top on regulation!!!

The remaining 15% are definitely interested to have this foreign investor on board BEFORE COVID-19.

Effectively no banks are interested in having the foreign investor on board. They NOW refuse all new contacts. The banks wants to serve “their” clients now in the first priority. The banking “time”-volume went up with 2000% for business clients. The Government guarantees, for several billions euro’s, these new loans as the banks received the important task to decide themselves what business needs to be supported by the government and what businesses should be left alone. The banks wants to support as maximum these enterprises who have a benefit for the Belgian economy. This situation will continue, from our point of view, till the end of the year.

Should you join an internationally reputable or established bank rather than a local bank?

It is, generally speaking, known in our business that going to a bank in another country always is a big question mark. The easiest way, is having your international banker in your home country, who knows you, letting him introduce you to the same bank in the targeted country. Is that always the best way of doing so? The answer can be yes or no. In fact, it depends in what way your home bank is fully established in the target country, using the full possibilities as those who exists in the target country as local Banks does. Mostly those international banks are “big”, what that means is that your project is in a lot of cases too small to consider.

We remember a case where we wanted to start a business for our client in China. The Belgian Bank, originally from Holland, stated that they didn’t want to open an account in Shanghai as the minimum deposit should be 300 millions euro’s. The client project was 30 million euro’s. Via an introduction we opened a Chinese Account in a Chinese local bank in combination with The Belgian Bank through a subsidiary in Hong Kong. It was The Belgian Bank who opened the doors in China in the Chinese bank. This Chinese bank was of course a must for Chinese regulation.

For Belgium we believe that using a local Belgian bank is the best way in functioning in Belgium. The Certified Accountant is the best placed man in getting the job done.