PT GV - Choosing Custodian Bank for Fund Investment

Dear all:

I’m planning to apply for Portugal’s Golden Visa under the eur350,000 (soon to be eur500,000!) investment fund option.

One practical issue that I haven’t seen discussed concerns the choice of a custodian bank. As I understand things, a custodian bank is required to hold the investor’s participation units in a fund. Typically, the custodian will charge a fee for this service as a percentage of the face value of these participation units.

So far, only Bison Bank has confirmed that they can act as a custodian bank. I generally prefer to shop around, so can anyone suggest alternatives?

Assuming that you’re American, there are exactly two choices: Bison and BIG.

Thanks! Surprising that there are only two (if that’s correct). Why? Is it because many banks are signed up for FATCA for retail banking, but not custodial banking?

Also, do you know anything about BIG’s pricing?

For retail banking, it’s mostly free except that you have to pay a nominal one-time fee for your debit card.

I didn’t look into the depository banking fees. I think I have the contact information for their ARI-for-Americans specialist if you want to PM me for it, but it might take me a few days … gotta finish my taxes before I go hunting through my records for less-essential reasons.

Why are there two? I don’t know, small market with enormous compliance challenges and existential risk of total annihilation by the American authorities if they make the slightest error on the paperwork (based on totally indecipherable regulations).

Thanks a lot! Yes, I’m interested in the custodial fees. Your contact would be great! Unfortunately I couldn’t figure out how to send a PM here …

General contact info is on the same page; just let them know what you’re writing about and they should be able to direct you to the right person. I’ll dig out his contact info later if you get stumped somehow.

it’s 15 or 20 basis points for depository fees so about $400/yr if I recall. that’s top of my head. It comes out about the same price one way or the other, plus or minus a bit. BiG has retail services as well whereas Bison doesn’t but I’ve been told that BiG’s customer service leaves a lot to be desired and I’ve had multiple recommendations from others to use Bison over BiG. you can do retail banking with the likes of an activo or millenium for not-much and probably get net better overall services anyway.

FACTA compliance for a securities account is tons more complexity and it’s an even smaller market than there already is for retail banking, almost no one is going to want to bother and we should be thankful there are two choices at all.

bison’s contacts should be on the front page as well, or ask your fund manager or lawyer for it.

I was quoted something along these lines (actually slightly higher), but remember that 400 a year is 4000 over 10. Plus there’s a setup fee of about 1000. So in total over 5000 on a 350k investment. That’s a 1.5% custodian fee. Quite a lot (more than I am used to paying in the US). I guess this reflects the lack of competition.

shrug It is a small private bank therefore a higher cost base and these are actual shares not held in street name and yes there isn’t a lot of competition. That said, order of magnitude it’s not far off what I’d consider normal.

Think about it. How is the bank making any money off you in any other way? It doesn’t have your funds to do anything with. You are not trading so it gets nothing in commissions. Maybe it made a bit on converting your EUR to USD, if you let it and didn’t use wise or the like. Meanwhile the bank has to operate, to pay people to do the compliance and accounting and reporting it has to do simply to hold your shares - which are worse because you’re an American, so thank the IRS for at least some of that fee.

Even if you had 350k on deposit, remember that the bank is being charged negative interest by the ECB. They LOSE money by holding your deposits.

Schwab has all the same costs but it makes money on commissions, or the spread it charges for execution, or from payment for order flow (you only think you are trading for free - no, you are paying, the costs are simply buried), or from the management fee of the mutual funds you hold if you buy schwab funds, or myriad other ways, I could go on.

In a way this is fairer. You are being charged for services provided in a clear and transparent manner.

Not that wealth management services are not a profit center for the bank, of course. But the cost base they operate from is different so the fee structure is different.

Comparing anything in this realm with the normal US financial system experience that the normal US retail investor is used to simply does not work.

Thanks for your thoughts. I think it’s mainly about lack of competition, though, since marginal costs are pretty low (compliance costs are mainly fixed).

I acknowledge that, but it’s also size. we’re not talking huge entities and as you say there is a non-trivial fixed component (I’m in the industry so I have a pretty good idea), so there’s just not a lot of assets to spread the cost base out over either. Doesn’t really matter, it is what it is. At least you are supporting the Portuguese economy. :slight_smile:

I concur costodian fees charged by Bison and BiG are vey similar:

Subscription fee: 350k x 0.15% = 525 € + 23% VAT
Annual custodian fee: actual value x 0.1% = ~350 € + 23% VAT

Subscription fee: 350k x 0.2% = 700 € + 4% stamp duty = 728 €
Quarterly custodian fee: 350k x 0.02% = 70 € + 23% VAT = 86.1 €

Any ideas how long it takes to execute the full 350K Euro purchase of funds (IMGA in my case with Bison bank) and then give the relevant documentation back to my lawyer?

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Do u mind share step by step to invest IMGA?

I feel like this is the most “non-ripoff” investment for GV

My experience was that it took 5 business days from the date Bison received my funds to the date that the Nest Fund provided my lawyer with the “declaration” of the investment. And this included 1 day during which I was seeking clarification on a matter before I authorized the transfer from Bison to Nest, and also the day my funds were received at Bison was a holiday. So, it possibly could have been done in 3-4 days. This was back in October 2020.

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Thank you. One more question.

Have you been able to make the government fee payment to SEF for the initial application from the account at Bison ?
Curious because Bison is not a traditional bank.

You can pay the fee to SEF with Bison account. They do have that capability.

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Would you know where to look for the total value of the units in Bison account ?

I had Bison quote me .25%. Have others had different quotes from the, for the subscription fee?

That is what I got as well.