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28 August, 2020

UK: the residence permit programme has shown a historical minimum, banks can stop servicing EU citizens

2 news from the UK. Firstly, the results of the residence permit programme for investment in the 2nd quarter of 2020 reached a historic low for the last 9 years. Secondly, British banks may stop servicing EU citizens from 2021. We are telling you in detail.

UK : Residence permit programme indicators for investments, banks
Photo: Adobe Stock

Demand for a UK gold visa reached a historic low in 9 years

According to the Programme Department for the 2nd quarter of 2020, only 23 investors and 40 family members received the UK Golden Visa. However, between April and June the Home Office did not reject any candidates. There are 4 investors from Russia among the main applicants.

UK income from the investment programme for the 2nd quarter was around £46 million. This is the lowest figure since 2011 and 50% less than the profit for январь一март 2020.

Dynamics of profit from the programme

PeriodProfit, £Dynamics as compared to the same period in 2019
1st quarter 202090 000 000-65,6%
2nd quarter 202046 000 000-81,5%
1 Half year 2020136 000 000-73,3%
PeriodProfit £Dynamics as compared to the same period in 2019
1st quarter 202090 000 000-65,6%
2nd quarter 202046 000 000-81,5%
1 Half year 2020136 000 000-73,3%

The UK government attributes the decline in demand to the closure of borders and the financial crisis caused by the pandemic.

It is noteworthy that Russians retain second place in the number of participants in the UK residence permit programme for investment. During the programme 899 Russian citizens received a gold visa.

Banks in the UK may stop providing services to EU citizens

Such fears were shared with French customers by a private bank in the UK. They are related to the fact that the new rules for financial cooperation between the EU and the UK after Braxit have not yet been adopted.

On 31 December 2020 the UK will officially withdraw from the EU. If by then the government does not reach agreement on the rules for banking services, British institutions will not be able to work with EU citizens under the same rules.

The EU has a uniform standard for banking services. UK banks now continue to operate under this standard. When leaving the EU, a special agreement is required that will regulate the process after the completion of the Braxit.

If no such agreement is concluded, banks in the UK will have to obtain licences to open a branch in each EU Member State. However, the licence will only apply in the particular country of receipt.

Each bank will need to open 27 new branches in order to continue providing a full range of services throughout the EU. Expansion of the branch network will not be feasible for many UK financial institutions. EU customers may therefore be left without the services of UK banks.

Difficulties will affect EU citizenship holders who have bank accounts in the UK. In particular, foreign customers will lose access to a number of services, such as the purchase and storage of bonds, foreign exchange transactions and the issuance of credit cards.

It is expected that UK citizens who reside in the EU will still be able to have regular accounts for day-to-day operations. For example, for money transfers between the UK and an EU country. This will be possible if the UK remains part of the single European payment space.

Until 31 December 2020, UK financial institutions provide services to EU citizens on a standard basis.

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UK: the residence permit programme has shown a historical minimum, banks can stop servicing EU citizens