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British expatriates in EU countries, who will have their UK bank accounts closed at the year-end because of Brexit, are switching to fast-growing fintech payment companies.

Thousands of Britons, out of the 1.3m living in the EU, were told by their banks this year that they could no longer access UK banking services after December 31.

The flexible “passporting” rights under which EU-based banks operate in different states will no longer apply to British lenders. As the impact varies between banks and countries, most expatriates can stay with their existing institutions, but thousands have been left scrambling to make alternative arrangements.

Fast-expanding challenger companies have been quick to step into the breach. Revolut, which has EU and UK licences, said: “Since the middle of last year we have seen an increase in the number of British expats living abroad signing up for a Revolut account.”

TransferWise, which has added around 1m new accounts between July and December, declined to go into the details behind its growth, but conceded that Brexit was “among a number of different factors”.

UK Finance, the trade body, said: “There are a number of alternatives available for customers who are impacted, including switching to a different UK-based bank, a digital account provider or a bank in the country you are resident in.” 

UK banks continuing to do business in the European Economic Area (EEA) — which includes Iceland, Liechtenstein and Norway — will normally need a national banking licence for each country of operation. As some banks have such licences and some do not, the effects vary.

Lloyds Bank wrote to 13,000 customers in August telling them that they would no longer be able to use their accounts in the Netherlands, Slovakia, Germany, Ireland and Portugal. 

Nationwide Building Society has contacted 5,000 mortgage customers. Barclays, which has not disclosed the numbers affected, is closing some bank and credit card accounts.

Across Europe, the people affected range from pensioners and students at EU universities to workers employed in the EU sending money home.

Britons living in the Netherlands appear to be the worst hit. The Dutch national bank has required that the UK accounts of resident Britons must close by December 31. UK banks are independently engaging with the Dutch national bank over market access.

Which countries and banks are affected?
People living in EEA countries are likely to be hit only if their bank does not have a licence to operate in their part of Europe.

Lloyds says retail customers in the Netherlands and Slovakia are affected, along with some business customers in the Netherlands, Germany, Ireland, Italy and Portugal.

Barclays says its UK products are designed for UK customers. “We continue to review the services we offer to retail customers within the EEA. Where we make the decision to no longer offer products and services, we are contacting impacted customers to give them advance notice of this decision and outline the next steps they need to take.”

Coutts says it has taken “the difficult decision” to withdraw services from EEA-resident clients and is writing to the “small number” affected.

By contrast, NatWest clients are largely unaffected, because the bank has the relevant national licences. It says it continues to offer accounts to NatWest and Royal Bank of Scotland customers.

HSBC too is maintaining its services. It says “a small number” of retail and corporate clients have had their accounts moved from other countries to HSBC in France, where it has a local licence. The HSBC says it reaches 34 markets in Europe and a physical presence in 19. 

What should customers do?
UK Finance has a guide, while individual banks have information on their websites.

Can British expats open an account with a local bank? UK Finance says: “European banks will consider applications from anyone legally resident in an EU country. Anyone legally resident in an EEA country is entitled to open ‘a basic payment account’.”

Is it easy to open a new account?
UK Finance says customers should check whether the new bank — British or EU — can accept applications from British customers with a non-UK address. Some banks can do this digitally, but others require an appointment at a branch. 

Is a fintech the answer?
Digital account providers such as Revolut, TransferWise, Monzo and Starling are licensed across the EEA. Most are expanding services, including loans.

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