The best bank for a small business in the UK – with emphasis on the Eurozone

bank-logosI’ve been partner in a small Limited Liability Partnership in the UK since 2009, and since the start getting our banking right has been a bit of a headache. We have a low turnover, but issue between 50 and 70 invoices a year, and many of those are paid from Eurozone countries. Both Jan and I, the partners in the company, travel a lot and are hence heavily reliant on distance banking – we cannot get to branches.

What do we need
Two accounts – one for Sterling, one for Euro, and a simple way to transfer between the two accounts. Payments are predominantly into the Euro account. Transfers out of either account to the Eurozone are rare, but to other Sterling accounts are common. In addition we accept payments via PayPal, and may use TransferWise more intensely in future, but those are separate issues.

What we have
For ethical reasons we have so far had business banking with the Co-operative Bank. We need to leave Co-op not due to the scandals that have beset the bank, but because the distance banking they offer is awful – the Sterling online banking is as bad now as in 2009, and to check balances and make transfers from the Euro account I have to call them. 15 mins on the phone to them this week was the final straw.

What we can’t go for
Some UK banks – Nationwide (I bank with them personally), Halifax, First Direct and Smile (they are Co-op anyway) do not offer business banking. Handelsbanken is too reliant on branches.

Some larger banks – Santander, TSB and Metro Bank – and the ethical bank Triodos either do not offer simple, basic Euro accounts, or do not offer Euro accounts at all.

Reliant on the telephone
Three banks – Barclays, Lloyds and Bank of Scotland – fall into the same category as Co-op, in that they offer Euro accounts, and the websites about the accounts talk of ‘easy’ transfer between Euro and Sterling accounts, but careful reading of the Barclays website, and calls made to Lloyds and Bank of Scotland to confirm it, shows that all of these banks still require you to make a call to check a balance or make a transfer from a Euro account. Going for any of these would hence be no step forward in comparison to Co-op.

Which leads me to… RBS/NatWest, or HSBC
Each of these banks offers simple Euro accounts for businesses, and the ability to check the balance of this account in the online banking, and to transfer from Euro to Sterling accounts online. The services offered by RBS and NatWest are identical as far as I can tell, and the details are here. Details of HSBC’s offerings are here. The devil then is in the detail – to access RBS’s Euro account online you need to add the Bankline online banking service, at a cost of £11 / month, while HSBC has a charge of £5 / month to keep the Euro account open, and a £1 charge per incoming SEPA transfer. Also both RBS (with alleged efforts to close businesses) and HSBC (money laundering) are rather questionable from an ethical stand point. Of the two I am leaning towards HSBC at the moment.

Additional comments
Thanks to numerous people on Twitter for help with this blog entry, not least NatWest’s social media team, and @sirius7dk@siepert, @JamesWillby, and @MrChrisAdams who pointed me towards this amusing exposé by Phil Gyford of how hard it is to open an account with any of the above. @emrys_s asked me to write up my conclusions, so here you go Emrys!

Updates
Immediately after posting this entry, a friend has directed me towards the Cater Allen Reserve Account. This will be assessed along with the HSBC and RBS/NatWest options.

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21 comments

  1. Henrik Vendelbo

    I have only bad things to say about HSBC Banking. I never found a good bank in the U.K., I used to think that Danish Banks are pretty good, but the grapevine isn’t great there. I’ve had good experience with U.S. banks, but the IRS are a nightmare so I’d stay away from those.

    In the end I don’t want to work with any bank that I know of. Still looking.

  2. Richard

    Wow – an update on this would be grate. Having lost respect for the RBS, I have been searching for an alternative that gives me £ and € accounts with on-line access to both. Not easy.

    Tried HSBC some years ago, but gave up on that. Far to clumsy and complicated to operate and their website and on-line banking was awful.

  3. Joe

    We have banked with Natwest for some time and their Euro account is just acceptable and a joke compared to modern society today. It would be nice to have a list of business options in the EU

  4. Benedicte Philippon

    Hi,
    Have you made a decision yet. I have opened a business account with HSBC and my branch doesn’t know how to transfer euros from my euro account. i have lost one hour today and my patience.They told me i would need to pay £30 to transfer some money which i knew wasn’t right so i gave up. I am still looking for a good bank account with internet banking for euro accounts. Any advice would be welcome.
    Cheers.

  5. Bianca

    I cannot see the benefit of the Metro Bank Euro account. There us a €15 ‘maintenance’ fee (or €5 balance depending) but NO direct debit facility and an extra CHARGE for every transaction you make. Have just spoken to their business banking section who say that if I want to use the Euro account to pay utility bills etc on our house in France then it’s probably not the account for us.

  6. Alex

    I have a Citibank GBP and EURO account in the UK. It charges 5 GBP per month for a EURO account and I have my VISA debit linked to the EURO account. It has been easy to use but it is annoying to be charged 5 GBP per month!

  7. Ken

    Im looking at Metro Bank. Their phone support team have told me (although I won’t be surprised, just extremely annoyed, if it turns out to be different in practise*):

    I can open a Business Account (£60 pa) and upgrade to Business Internet Banking (+£60pa)
    I can open a Euro account (+180 euros pa)
    I can transfer/make payments via SEPA free of charge from the Euro account to Euro suppliers but it can take up to 5 days.
    I can do the same from my Sterling account.
    I can receive payments into both accounts.
    All of above online with Business Internet Banking, FOC except for account fees mentioned above.
    I get a debit card with a £300 daily (equiv) limit for UK and Eur zone
    No debit card on euro account
    BACS online £17.50

    So, apparently, I can receive funds and pay suppliers in GBP and EUR from the respective accounts with no individual charges. I would pay the bank’s conversion rates to move funds between the accounts and in using the debit card for payments in EUR

    Anyone had any experience of this?

  8. Sue Lynam

    HSBC is great if you do not need to spend in Euros, only Sterling, as the debit/credit card is attached to the sterling account. We spend in Euros and Sterling so although service and support is excellent with HSBC, and their internet service, Cater Allen seem to be the only UK bank providing a Debit card on the Euro account,

  9. Douglas Ferguson

    After another 25mins on the phone to HSBC they have now confirmed that 1GBP is what you pay per SEPA…they apologised for giving me the wrong info on their online chat and over the phone and said they would raise the matter internally to ensure they’re staff know as much as Jon does! HSBC here i come…

  10. Douglas Ferguson

    oh, and with Carter Allen you need an ‘introducer’ (financial advisor etc) they wouldn’t even discuss their charges with me directly…..this is insane! Anyway with an affordable euro business account success story?

  11. Douglas Ferguson

    Great article! just discovered ‘HSBC charges for foreign transactions above £100 (or equivalent) you would be charged £6, if the payment is in Sterling, or £8 if in another currency. Is this similar at RBS?

  12. Sue Lynam

    Actually on looking at the detail of the Cater Allen Reserve account, the main advantage over the HSBC is that you can have a Deferred debit VISA card on the Euro account, which is not possible with the HSBC, where you have to transfer funds from Euros into Sterling and use the GBP debit card. We spend nearly 2,000 GBP on currency conversions last year. Main disadvantage of the Cater Allen Reserve is that you have to maintain 5,000 GBP in there to avoid bank charges, but on todays interest rates, and considering the amount we spent last year, it is probably worth doing.

  13. david

    I’m still looking for an alternative to the Coop, both my nearest branches are closing down meaning every time I need to go to another branch it will take over an hour and cost me about £6 per trip. When I spoke to them they said use the Post Office but that has already closed meaning more time out when I should be working. Oh and they know the website is rubbish (needs updating they said) but have no plans to do it! With the scandals around HSBC they are off my alternative list so Santander is a possibility. At least they have a simpler charging system.

  14. Karl

    I’m curious, did you finally make a switch?

  15. Jon

    @jklgjslkjgal – legally I could indeed use a bank account somewhere in the Eurozone. I’d like to see how my accountants would deal with that though!

    @david – if I had an answer to your question I would not be with Co-op myself any longer!

    @Alistair – I actually have not moved yet, because some things have changed with my business to mean I might actually change the business structure completely. If I don’t I will be going with HSBC.

  16. Alistair

    Hi Jon, do you have any updates on this post – who did you choose in the end?

  17. david

    I too am with the Co op but don’t really like it. The website is rubbish and very difficult to use, my local branches know nothing about Business banking and telephone calls are long and expensive. I have not been trading long and am not yet making any money so object to paying so much and getting poor service in return. I live in Derbyshire and have few options for over the counter transactions. Are there any reputable banks with good service and low charges? Challenger banks have been recommended but all are online/phone only, not much choice really unfortunately.

  18. jklgjslkjgal

    Do you need to use only one bank, or could you use one ‘sterling bank’ in the UK and one ‘euro bank’ somewhere in the euro area? Transfers in euros is typically very cheap on the eurozone side of the transaction. I don’t know how much it costs on the British side, though.

  19. Michael

    Insanity. In Poland, I have PLN, GBP, EUR and USD personal accounts, all free of charge and with absolutely free online banking. Transfers between the accounts are instant, with the only caveat that it’s at the bank rate (roughly 2-3% loss) – or if I organise it in advance, it’s possible to withdraw in any one of those currencies, take it to the exchange place (with a spread as low as 0.4 Euro cent) and then redeposit it with the bank.

    Businesses have access to exactly the same accounts without fuss. My old business still has a EUR account in case some old clients bother to pay what is owed.

    I’ve always thought that British banks were absolutely useless when it comes to foreign currencies. Polish banks all offer such services without fuss.

  20. johnb78

    Citi only does personal banking in the UK, not SME banking.

    Just in case you weren’t clear, Cater Allen is the subsidiary that Santander uses for HNW UK/expat clients.

  21. Nick Burch

    Citibank offer accounts in multiple currencies, with OK (but not amazing) fees for shifting money between them. That can be done quickly and easily online. They recently updated their website, and it’s now pretty good, though could probably still use some more UX testing and updates. No idea if they offer accounts to UK LLPs or not though…