Banking in the Persian Gulf

by Barclays Wealth International on May 12, 2010

Moving to the Persian Gulf

Expatriate banking services in the Persian Gulf

The Persian Gulf is in the Southwest Asia region, an area rich in natural resources, with the Gulf containing the largest resources of crude oil in the world. Consequently, the economies of many of the countries in the Gulf area have benefitted tremendously from oil revenues, and the economic activities are dominated by petro-chemical industries. Countries located around the coastline of this vast body of water include the United Arab Emirates, Saudi Arabia, Qatar, Bahrain and Oman.

The countries of the Gulf predominantly speak Arabic as a first language, with English being widely adopted as a second language, a consequence of both international business and significant expatriate communities throughout the Gulf.

Units of currency

  • Bahrain – the Bahraini dinar (BHD), divided into 1,000 fils. As of April 2010, the exchange rate was 1 BHD to £1.74 GBP (pound sterling)
  • Oman – the Omani rial (OMR), divided into 1,000 baizas. As of April 2010, the exchange rate was 1 OMR to £1.70 GBP (pound sterling)
  • Qatar – the Qatari riyal (QAR), divided into 100 dirhams. As of April 2010, the exchange rate was 1 QAR to £0.18 GBP (pound sterling)
  • Saudi Arabia – the Saudi Riyal (SAR) is divided into 100 halalat. As of April 2010, the exchange rate was 1 SAR to £0.17 GBP (pound sterling)
  • UAE – the UAE dirham (AED), divided into 100 fils. As of April 2010, the exchange rate was 1 AED to £0.18 GBP (pound sterling)

Bank opening times in the Gulf

Banks in the Gulf region are typically open from 7.30am to 1pm, from Sunday to Thursday, and closed on Fridays and Saturdays, which are the days of rest in Muslim countries. Bank opening hours may vary between countries, and city centre branches may offer extended opening hours.

Banking services in the Gulf

Banks in the Gulf region are extremely well financed, secure and well regulated, with strong support from the National authorities provided to domestic banks. Branches of both major national retail banks and international banks can be found throughout the Gulf, with provision for expatriate account holders.

The provision of services extends beyond branch services and include secure internet banking and telephone banking facilities, the majority of which offer multi-lingual services. The range of banking products and services is extensive, and reflects many of the financial services available in Western Europe. Many of the banks also offer a range of Islamic banking services, which operate according to the rules of Sharia Law.

Account holders in the Gulf enjoy wide access to ATM services, and electronic banking services and electronic payments are an integral part of the banking culture.

The main types of bank account in the Gulf

The main accounts offered by banks in the Gulf to expatriates include;

  • Current accounts – current accounts are typically used for everyday banking, and customers are generally able to operate an account with no monthly fees, providing a minimum account balance is maintained. Interest rates paid on current accounts are generally low, but these accounts may provide customers with facilities such as online banking, money transfers, standing orders and debit cards, in addition to easy access to funds. Account holders will generally have their salaries paid into these accounts.
  • Savings accounts – typically pay a higher rate of interest than current accounts, but account holders may have limited access to funds, and may allow only a fixed number of fee-free withdrawals. Savings accounts typically require a minimum account balance to be maintained, and should be considered as a medium to long-term account.
  • Fixed-deposit accounts – these are primarily for long-term saving, with interest rates offered typically higher than either current or savings accounts. These accounts may offer limited or no access to funds until the account matures, and minimum account balances are likely to be higher than savings accounts.

In addition to these broad account types, many banks will offer expatriates accounts that can be opened in a range of foreign currencies, including pound sterling and US dollars. Islamic accounts may also be available, should you wish to operate an account within the rules of Sharia law.

Banks in the Gulf may also offer a range of additional retail banking services to expatriates, but services available may vary between country and between banks.

Opening a bank account in the Gulf

Opening a bank account with a bank in the Gulf region is a relatively straightforward process, providing that you are able to supply the bank with the required official documentation. Typically, you will need to provide:

  • A reference letter from your employer that states your salary, and also gives their approval and authorisation for you to open an account. In some instances, opening an account with your employer’s bank can make the application process simpler, as your salary will be paid directly into the account.
  • Passport (plus copies)
  • Residency permit (if applicable)
  • A letter of reference from your existing bank, along with recent bank statements to show you are a responsible account holder, can help with your account application.

Before opening an account, you should clarify the conditions regarding closing or moving your account to another bank, as with some Gulf-based banks, this may require the approval of the bank with which you currently bank.

Opening a bank account before you arrive in the Gulf

Opening an international account prior to leaving for the Gulf is a convenient alternative to opening a local account. In addition to international banking facilities, you can access a comprehensive range of services, including online banking, international payments and money transfer services, along with accounts available in a range of major currencies.

Your international account can be used in the Gulf States, and is ideal for individuals travelling between international locations.

Currency exchange in the Gulf

You will generally find a number of bureau de change and money-transfer facilities at the major airports throughout the Gulf. Whilst these facilities are often open 24 hours a day, they typically offer low exchange rates compared with the banks. Many of the major hotels throughout the Gulf also provide foreign currency exchange services, but again, the convenience that these services provide comes at the expense of a competitive rate. To find the best exchange rates outside of the banks, you should look for city-centre bureau de change services.

ATMs in the Gulf

ATMs are widely available throughout the Gulf in the major towns and cities, and ATMs will generally accept a wide variety of both national and international cards. However, you should expect to pay a fee for using an ATM that is operated by a bank other than your own, and it pays to check in advance the charges that will be levied, as these can vary between Gulf countries.

Cash withdrawals using debit cards may be restricted to a daily limit set by your bank, and in order to make cash withdrawals with a debit card, you will need to have funds available in your account. Cash withdrawals using a credit card at an ATM will generally incur a service fee, so check in advance what the fee structures are.

Many of the ATMs in the Gulf provide Arabic or English instructions, and may provide you with facilities such as on screen balance displays and mini-statements.

Credit and charge cards

Throughout the Gulf, major credit cards, including Visa and MasterCard, are widely accepted by the major hotels and retail establishments. In the more rural areas, credit card payments may not be so widely accepted, so carrying an amount of cash for such eventualities is advisable. Where credit card payments are accepted, you should be aware that a surcharge may be applied.

Cheques in Gulf countries

As is Western Europe, the proliferation of chip-and-pin payments and general increase in the use of electronic banking has seen a significant decline in the use of personal cheques. In the Gulf, the use of post-dated personal cheques has been used widely by tenants in rented accommodation, as a means of paying rent to a landlord, with personal cheques being issued for the period of the tenancy.

As an example, from May 2010, the post-dating of cheques will no longer be accepted in Qatar, and the recipient of a personal cheque will be able to present the cheque, regardless of date, immediately to their bank for cashing. Potentially, this could lead to a number of cheques being presented to the bank simultaneously (e.g. 12 x 1 month payments for rent), and unless the account holder has sufficient funds to honour the payment, this may be viewed as fraud, something for which the Gulf States take extremely seriously.

Money transfers to and from Gulf countries

In addition to the money transfer services provided by the banks, there are a wide variety of specialist businesses operating in the international money transfer market, but as with many of the services available, it pays to research the marketplace in advance.

Currency regulations relating to the import and export of currencies are subject to change, and you should check with the national bank for the latest rules and regulations relating to the import and export of foreign currency.

For the most part, there are few restrictions on the movement of either local or foreign currency into or out of the Gulf region, although amounts of currency that exceed a defined limit will need to be declared to the relevant Customs department upon your arrival or departure.

Bank charges in the Gulf

Charges levied by banks for the range of services provided vary between countries and between banks. You should check, prior to opening account, what fees and charges apply to the account(s) and services that you are interested in.

Banking in the Gulf – other information

Banking Ombudsman

If you have a complaint against a bank contact the Central Bank of the country concerned for further advice;

Main Central Banks in the Gulf region

More information on banking with Barclays Wealth International

For further information about the benefits of opening an International Account before you move to the Persian Gulf, you can speak to a specialist adviser at Barclays Wealth International by calling +44 (0) 141 352 3902.

Alternatively, find out more about the overseas banking services and expat banking that are available from Barclays Wealth International.

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