A couple of months ago, I started doing some business in the interesting – but risky – economy of Ukraine. I can go on and on about the ups and downs of doing business in this huge country with complex foreign relations, Kafkaesque Soviet-reminiscent bureaucracy, and volatile currency, but this post is about how to open a bank account in a country with antiquated and strong banking secrecy, which you, my dear readers might find interesting.
Non-Resident Banking in Ukraine
As per a previous post, “How to Choose an Offshore Bank“, I started by going through all available banks in Ukraine. I sent out many emails and made a lot of phone calls ahead of my visit to the Ukrainian capital of Kiev.
I compiled a list of documentations all banks asked for, to cover all bases. Some banks only asked for some of the documents, but I like to be prepared:
- Passport.
- Proof of residential address.
- Some sort of verification of stay in Ukraine, this can be something as basic as showing your entry stamp (and visa if required) or a copy of your hotel reservation.
- Proof of source of income. Different bank said different things; some said an ATM receipt would be enough for a cash deposit, whereas some required a bank statement, copy of payslip, and so on.
All in all, perfectly reasonable documentation required.
Reason for Choosing Ukraine
Normally, I would be hesitant about opening an account in a place like Ukraine, but since I was going to receive funds in the local currency (UAH) and make domestic wire transfers it made sense to open an account here.
Like many former Soviet republics, Ukraine has strong banking secrecy that can only be overridden by a court order. While corruption is a problem in Ukraine, it is unlikely to affect a low-profile non-resident.
Another attractive feature of Ukrainian banks is that anonymous debit cards or anonymous prepaid cards are prevalent. Generally referred to as deposit cards, most banks offer this to clients that cannot or do not want to get credit cards. These cards carry no name and can be topped up by cash or via internet banking.
Lastly, deposits at Ukrainian banks in the local currency often carry interest rates as high as 25%. While the currency has a turbulent history, I decided to accept the risk.
IBAN is not yet widespread in Ukraine but as of March 2013, work has begun to roll it out and get Ukraine integrated into SEPA. Read more (Ukrainian).
Fees are generally quite low, owing to the low average income.
Opening the Account
This process was quite simple after I had booked an appointment. I arrived at the bank shortly after the branch opened and left about an hour later. I picked up cards a few days later.
Some banks let you make an appointment in advance, which is helpful if you do not speak the language and can be sure that you will be meeting with someone who speaks English. The major banks tend to offer this service, although it varies between branches within the same bank even.
Very informative blog. Can you provide one information as you have already opened an account in Ukraine. Is there any account opening charge involved? My point is, during the opening, I want to give a check as initial deposit rather than cash for that account.
That hasn’t been my experience in Ukraine but it’s not entirely unusual for banks, especially in that region, to charge for non-resident account opening. It shouldn’t be more than the equivalent to around 100 EUR for personal accounts and 2 – 300 for corporate accounts.
What I have heard that they don’t have any opening fee, but they need an initial deposit of 1000 dollar for savings account or 1600 dollar for current account. My concern is I am trying to open a NR account from outside Ukraine and if I need to deposit money, I have to send them. I am confused …what will happen if they deny later.
What do you think? this is safe or I should cancel the idea of opening an account there?
Standard practice is to not accept deposits until the account is opened and the application approved. Some banks require a tiny deposit (under 10 USD) for verification but this sounds like the bank is just asking for an initial deposit. This should in most cases mean that once you wire in money, your account is already active and they won’t reject your application retroactively.
However, banking in Ukraine is risky. You have practically no legal recourse if the bank takes your money, unless you are able to go to Ukraine in person and hire a local lawyer to sue or litigate.
My personal philosophy to banking in places like Ukraine is to only deposit as much money as I would feel comfortable losing. It’s more of a novelty than a stable source of income. It’s fun to see the high interest rate payments but I accept that it comes with a higher risk than deposits in more stable banks and countries.
Looking back on this article now is interesting.
For a couple of days when the protests in Kyiv were at the peak, I simply could not get a hold of anyone at any of the banks I use or work with in Ukraine. Internet banking worked, though, but the offices were either abandoned or they just didn’t speak to customers.
Nowadays they are responding but I’m neither wiring funds in or out at this point.
Risky business, banking in countries like Ukraine.
Interesting blog, very useful information and fun reading. Also caught more interest in the Ukrainian experience you write about.
Can you elaborate on which bank you were able to open an account as described in your article?
I want to open account there to see if i can play both, USD, EUR and UAH currencies as Fixed deposits.
Best regards
Arpa
Thanks, glad you like the blog!
I’d be very hesitant to recommend any specific bank, since your needs likely differ from mine. That said, my short-list consisted of Privat Bank, Piraeus, UkrSibbank (owned by BNP Paribas), Prominvestbank, and Platinum Bank. They are the ones that gave the best impression upon initial contacts. All of them assured me that they open accounts for non-residents and had fairly similar products and procedures.
Tried all these banks, and they all say they do not open accounts for non-residents. Only prior to 2010 there were some loop holes someone could use, but no more. Just wonder if there were some additional information you could provide these banks as you tried and got acceptance to open an account.
Was it normal account, or investment accounts?
That is very surprising. The only thing I can think of is that maybe they considered you high-risk for some reason, such high-risk citizenship or residency — or just some misunderstanding.
I opened savings/investment accounts. Normal accounts might require a local address and fixed income.
I find this blog very interesting. I found it out through some long-tail google search and have been looking forward to every new blog post ever since – keep up the good work!
With regards to open an account in Ukraine, the high income stream sounds attractive, seen even in usd accounts one can get 11% return, paid monthly, through several banks according to banki.ua
Do you know many non-residents doing that, for this purpose? In this low interest world, that sounds good to my ears, no?
Glad you like the blog!
I have seen high-interest rates on foreign currencies. While tempting, I would personally not place any significant amounts in such accounts initially. The Ukrainian economy, albeit growing, is still fragile. Since it’s such a new territory to me, I am being extremely cautious.
I know more and more people are looking to the eastern parts of Europe to find (offshore) high-interest savings account, but I do not know of anyone in particular doing precisely what you describe. As long as the bank agrees to open the account and you consider the risks, I don’t see why it wouldn’t work.
I look forward to your article on HK and Macau!
I spent a day in Macau and was glad I only spent a day there…that place has too many people in too small an area. I wish I had looked into banking while I was there.
I think I’ll be giving Ukrainian banking a miss…for now!
Will you ever do an article on Macau banking for non-residents?
I have been thinking about writing an article on Hong Kong and have a small paragraph in each segment about Macau. There isn’t a whole lot to say about Macau, but it’s definitely an interesting, up-and-coming jurisdiction.