What is an Offshore Banking Unit (OBU)?

An offshore banking unit is a bank branch in another country.

How Does an Offshore Banking Unit (OBU) Work?

For example, let's assume that Bank XYZ is an American bank with a branch in Bermuda. As on offshore banking unit, the Bermuda branch does not accept deposits from anyone except other foreign banks, and it will make Eurocurrency loans.

Why Does an Offshore Banking Unit (OBU) Matter?

OBUs are common in the Caribbean and Asia but are found all over the world. They are far less restricted in terms of their allowed activities because they usually are not subject to many of the financial regulations of the country in which they are located. For this reason, investors may be able to obtain better interest rates from OBUs and they may be able to avoid taxation or retain privacy by moving money to an OBU. Secrecy, however, is not guaranteed.

Ask an Expert about Offshore Banking Unit (OBU)

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Offshore Banking Unit (OBU).

Be the first to ask a question

If you have a question about Offshore Banking Unit (OBU), then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

Verified Content You Can Trust
verified   Certified Expertsverified   5,000+ Research Pagesverified   5+ Million Users