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Monday, May 26, 2008

The Perils of International Banking

Lots of people would believe that in this age of globalization, it would be easy for capital to move around. After all, with wire transfers, international networks, IBANs and SWIFT codes, one should be able to get access to his or her monies anywhere in the world, right?

If I had any illusions about that, they have all been shattered now. Over a month ago, I set up a bank account with Deutsche Bank. Now my co-workers had warned me that this was like asking for a permit to transfer nuclear weapons, and just as difficult. The process itself however, went smoothly for me, so I thought I'd skirted that particular bomb. At that time, I wanted to fund my bank account by writing a check. Oh no, said the bank representative. You don't want to do that. It's slow and would take forever. Better to use a wire transfer.

OK, my status with Vanguard was such that wire transfers were free anyway. So I worked through the details, including writing a paper letter, signing it, and getting it air-couriered to Vanguard. (Yes, there's a lot of safeguards in the process, so I wasn't worried about security) A few days later, the money was deducted from my Vanguard account.

2 weeks later, the money still had not showed up, so I asked Vanguard for a wire trace. Just 2 days ago, I got e-mail from Vanguard saying the Deutsche Bank had told them that my account did not exist. And get this --- at the same time I'd communicated with my Deutsche Bank representative, and they never got back to me. Not once! I went to the bank today in person to write a check to fund it. Again, I got that warning about speed. I told the representative: if I had written a check a month ago, I would have the money NOW.

And for all this lack of service, Deutsche Bank, like almost all other banks in Germany, charges 5 Euros a month, for an account that pays no interest. There's no consumer bank in the US that could survive doing business like that. (The bank that charges no fees is the Post Bank, but they don't have an English web-site, and when dealing with money, I want to be able to read every freaking word on the web page)

Now, in case you think I'm being an idiot, and am an out-lier, I checked with the office --- every prior transfer has had massive difficulties with the German financial system. 100%. No exceptions.

All this has taught me one thing: the USA still has the best financial infrastructure on the planet. It's no wonder the Chinese desperately want to give us their money, and it's no wonder everywhere else in the world wants to invest in the US. I take it for granted too often, but thank you Vanguard, Capital One, Wells Fargo, etc., etc. You guys work hard for my business, and I didn't know how good I had it until I had to deal with your foreign counter-parts.


DWallach said...

So then why get a German bank account at all? With the right sort of credit union, you could get fee-reimbursed use of international ATMs. Are you going to all this trouble just to pay your rent?

Piaw Na said...

Yes, you pretty much need a bank account to deal with any recurring payments around here. Rent, internet, etc. Even some of the train ticketing machines take only cash or German style debit cards and not credit card. Credit cards as a form of payment never took off here.

Peter said...

"USA has the best financial structure on the planet"? Then German banks must be truly awful.

When I moved from Canada to the USA, it was like stepping into a 20-year time-warp, the American banks were that terrible -- they wouldn't cash an out-of-state cheque from IBM although they would accept a bank draft from a Canadian bank in US dollars (they won't even do that nowadays, probably due to "homeland security"). And getting credit, even with a letter from my bank manager? No chance.

Best wishes, Piaw ...

Piaw Na said...

Try getting an indexed fund out of any bank in Canada. Or Germany. It's damned near impossible.

md said...

Just for another point of view, years ago when I lived in NL I had none of the problems you experienced. I set up an account with ABN-AMRO, wired money from my American credit union account into it, no hitches. No fees either.

Maybe it's a German thing :-)

Unknown said...

American banks are terrible. Try making an incoming wire transfer to a US bank (say, capital one).
No ABAN number. America is too good for ABANs. So you use a SWIFT code instead - it's some old thing from a bank they swallowed (HIBERNIA), but OK. Now, what routing number. It's never the one one your actual account. That would be too easy. Go to the web site. Well, it has a number for wire transfers. But that doesn't work. It's for American banks. The rest of the world doesn't exist. And the address. Not your bank, some special bank in New Orleans.
And this isn't all in one place on their web site.
And it's still wrong. And they don't answer their phone. And their "secure messaging system" is full of bugs.

and you know what. Ameriprise bank was even worse.

I've resorted to transferring money to New Zealand, just to have it go to a bank that works.

American banks are terrible.

Jack Payne said...

With what has broken this past week, I would think these questions would be moot. I believe A.I.G. had to be bailed out by the U.S. government because of its high derivative exposure throughout the world--threatening to bring down a host of hedge funds along with it. Such a catastrophe would have thrown international banking into such a snarl it would be dizzying for all of us to even begin to understand.

Piaw Na said...

I don't think it's a big deal for those of us who are Vanguard users. Vanguard still by far provides the best customer service of any banking entity I have ever dealt with.