LG 177

Banque & finance
Why international banking
groups choose Luxembourg
Mr Maas is the Chairman of the Luxembourg Bankers’ Association (ABBL) and a Board
Member of the European Banking Federation (EFB).
As Chair of ABBL, the professional organisation representing the majority of banks and
other financial intermediaries established in Luxembourg, he acts as the voice of the
whole sector on various matters in both national and international organisations.
Between 2013 and 2014, 10 new banks
were established in Luxembourg, both from
the “Old Continent” as well as from non-EU
countries. The Grand Duchy today counts
143 banks from 27 different countries.
While certain doomsayers predicted that the
introduction of the automatic exchange of
information would spell the end of
Luxembourg as a banking centre, reality has
proven them wrong. There are several reasons
why such a decline did not take place.
First of all, and contrary to popular believe,
Luxembourg’s success in private banking is
not built on banking secrecy, but on the quality
of its services and the high level of crossborder
expertise on offer. Moreover, the
Luxembourg private banking industry was
well prepared for the introduction of automatic
exchange of information. Over the
past 4 years, assets under management have
remained stable thanks to the inflow of new
UNHWIS and internationally mobile clients.
Tax transparency has been an opportunity
for Luxembourg private banks and wealth
managers to expand into new markets and
attract new clients, some of whom may have
previously shied away because of the stigma
of banking secrecy. This new clientele requires
expert wealth and succession planning
services for their businesses and their family,
more often than not on a multijurisdictional
scale. This is what they find in Luxembourg.
An increasing number of international banks
establish their Luxembourg entity as a
wealth management competence centre for
international clients. Luxembourg’s eurozone
location and EU membership offer a high
degree of complementarity, as well as a
number of competitive advantages, vis-à-vis
other major European private banking centres
such as London or Switzerland. And
Luxembourg’s AAA status and political, fiscal
and financial stability is not only a key argument
for banks themselves, but also for their
clients and their investors.
Importantly, however, there is much more to
Luxembourg as a banking centre than
wealth management, even if the latter
remains an important and dynamic pillar of
activity. Indeed, the diversity of
Luxembourg’s banking sector contributes
significantly to its stability and attractiveness
for international groups.
The vast majority of banks in Luxembourg
have a universal banking license. While some
banks have specialised in one particular activity,
many make full use of their universal
license to offer a broad range of services to
private and corporate clients.
More than half of the banks present on the
financial centre play a central role in
Luxembourg’sthriving fund industry. Leveraging
on the country’s position as the world’s leading
cross-border investment fund platform, banks in
Luxembourg have specialised in global custody,
fund administration and offer a full range of
fund services from product creation, management
companies services to custody.
Beyond the universal banking license,
Luxembourg regulation also foresees a special
license for banks issuing covered bonds. The
Luxembourg covered bond regime offers the
highest levels of investor protection, a broad
scope of eligible countries (all OECD countries
are included) as well as the possibility to use
movable assets such as ships or planes.
Luxembourg has become a key location for
corporate finance services. Many banks in
Luxembourg have specialised in organising and
structuring syndicated loans to finance international,
cross-border projects. Luxembourg’s
expertise in the international credit business
already dates back to the 1960s, when the
country played a central role in the
Euromarkets. Moreover, Luxembourg is generally
regarded as having one of the world’s best
laws on financial collateral due to full protection
against insolvency risk as well as an efficient
and safe enforcement process.
Non-EU banks, in particular, are using
Luxembourg as their hub to support the Euro
liquidity needs of their corporate clients in the
Eurozone. Having such a hub allows banks to
provide loans in Euro to their corporate banks
14
LG - Juin 2015