Key Takeaways
- Holding companies may struggle to obtain a standard business bank account due to their high-risk profile.
- Non-resident members with international ties may also encounter challenges.
- Cooperating with your bank or choosing an alternative payment service can make it easier to get the financial services you need.
If you run a holding company, you’ll need a business bank account or another payment service to handle your most important transactions.
This is true whether your holding company owns and manages subsidiaries or simply holds other assets. Unfortunately, banks can be selective due to their limited insight into holding companies, but there are ways to work with their requirements.
Here’s a straightforward guide to getting the bank account you need.
Why Banks Reject Holding Companies
Although the biggest holding companies have little difficulty obtaining a bank account, it can be difficult for smaller firms to do the same. Here’s why.
Restrictions on Non-Resident Company Bank Accounts
One complication is that many banks only serve local clients, which can be an issue if your holding company has substantial ties to multiple regions.
Even if your holding company is established in your preferred region, banks may determine that members and subsidiaries are located elsewhere. You may be rejected or face application procedures that are only possible if you can visit a branch in person.
Still, it is possible to get a non-resident company bank account by seeking out service providers that cooperate with international customers.
Heightened Risk Profiles
Risk is another issue. Banks may view holding companies as having higher risk profiles that come with greater demands in terms of compliance and monitoring.
Holding companies often have these high-risk qualities:
- Complex structures that bring together multiple subsidiaries, including subsidiaries spread across numerous industries and regions.
- Risk contagion among subsidiaries that are closely related.
- Management of a wide variety of assets. Banks may find it difficult to individually perform risk assessment on all of a holding company’s assets.
- High reliance on borrowed assets and debt, increasing the chance the firm will default on debt or fail to meet its financial obligations.
- Lack of transparent day-to-day business activity, making it difficult for the bank to conduct KYC/AML procedures and other compliance activities.
- Unclear governance and decision-making among subsidiary companies.
- Difficulty in providing comprehensive and up-to-date documentation.
- Frequent restructuring that banks may find challenging to monitor.
Even when a bank is willing to take you on as a client, its services may come with an extended review process, higher fees, and stricter terms. That means it’s important to find a service that you can rely on and access with minimal friction.
What Features Do Holding Companies Need?
Holding companies are distinct from most other companies in that they don’t usually engage in day-to-day transactions with clients and customers. But holding companies can still make transactions through standard business accounts.
That means you should look for features like:
- Standard transactions in local currencies and foreign currencies.
- Batch payments, or the ability to send multiple payments at once, including by transferring funds between members and other accounts.
- Access to foreign currency conversion, especially if you have global subsidiaries and foreign currencies to work with.
- Shared access to funds, such as account access for team members or joint accounts that require a certain combination of members to access funds.
- Dedicated account assistants who provide advanced support.
- Comprehensive access so your holding company can easily move funds among its members without relying on several banking institutions.
- But also segregated accounts for each of your subsidiaries.
- Investment management for company assets — not typically a feature in your business bank account, but often offered alongside it.
How to Ensure Approval
There are a few ways that you can improve your odds of a successful account application. Follow these tips.
Prepare Full Documentation:
If you provide documentation about your holding company (such as its structure, ownership, members, and corporate purpose), you can give your bank the confidence it needs to take you on as a customer. Be prepared to provide extra information.
Show Legitimate Business Activity
Demonstrate that your holding company is actively managing its assets with a clear plan in mind. For maximum success, show that your company has a well-defined governance model, strong financial health, and clear funding flows.
Demonstrate Regulatory Compliance
Engage with regulators and familiarize yourself with local reporting laws, tax laws, and other requirements before you apply for a bank account.
Maintain a Local Presence
When you open a non-resident company bank account, banks need to know that you’re operating internationally. But demonstrating that you’re engaged locally can help — be sure to maintain a local address, physical presence, and economic ties.
Hire Professional Advisors
Adding an experienced professional to your team can make it easier to prepare account applications and handle complex requirements.
Use Alternative Services
Instead of relying on banks with strict requirements, consider working with alternative financial services like Payset. These alternative services often serve international client bases and impose less stringent intake procedures than banks do.
Tips for Smooth Onboarding
There are several ways you can make account onboarding easier.
- Have all of your documents ready when you sign up.
- Check the bank’s website. Filter out non-viable options and avoid unexpected roadblocks by looking up information ahead of time.
- Be familiar with the bank’s service options, including rates, terms of service, and service tiers so that you know exactly what product to request.
- Open your company account online. Even if you need to engage with the bank directly, applying online will help you get a head start.
- Know the approval timeline and apply early. Even if a bank offers fast approvals, complex holding companies should expect delays.
- Ensure that the bank can contact your business easily. Provide an actively monitored phone number or email address in your application and make sure the bank can reach key members of your holding company.
- Watch for a response from your bank in case it has additional requests.
The bottom line: prepare your application thoroughly and remember that holding companies may face closer scrutiny than other companies. And rest assured that it is possible to get a business bank account for your holding company.
What Documents Do You Need?
When applying for a business bank account, you’ll need to provide documentation. This documentation may include, but is not limited to:
- Proof of address, demonstrating that your holding company is established in a region that is served by the bank or financial provider.
- Business incorporation documents particular to your region.
- Bank statements that prove your company has recent financial activity.
- Corporate governance documents that state which individuals are authorized to act on behalf of the company, such as articles of incorporation, corporate bylaws, operating agreements, and board resolutions.
- Identity documents, such as photo ID and proof of date of birth for beneficial owners, representatives, and other key members.
- Supporting documents for key members, including details about the percentage of shares and assets they own and related information.
- Business registration certificates and numbers.
This isn’t an exhaustive list of requirements. Once you’re in talks with a potential banking provider, offering additional information can improve your odds of success.
Note that, at Payset, we aim to minimize the amount of documentation you need to provide, and it’s rarely necessary for us to turn down clients. See our help pages to see exactly which documents we ask for.
How Payset Can Help
At Payset, we offer fast and simple payment accounts specifically tailored to holding companies.
Once approved, you can use your Payset IBAN account on its own or alongside another business bank account — and get your money where it needs to go.
You’ll enjoy affordable fees and fast transfer speeds, support for 34 currencies, and payments across 180 global countries. Plus, take advantage of our real-time FX exchange, bulk payments, team access tools, and other advanced features. Learn more about how we serve holding companies or request an account today.
