With mounting pressure on housing, cybersecurity, and talent retention, Luxembourg’s bankers are calling for a policy reset. Industry group ABBL considers its blueprint as essential to maintaining Luxembourg’s edge in an increasingly complex banking landscape.
The association, at its annual press conference last week, underlined its call for enhanced coordination of public policies, greater proportionality and regulatory efficiency, stronger support for innovation and competitiveness, and improved public-private collaboration. Its push is composed of five recommendations and forty specific proposals.
The specific proposals, “Proposals towards smarter regulation in Europe,” serve as ABBL’s key reference for its EU advocacy efforts. ABBL chairman Yves Stein said the paper reflects broad consultation with member banks and aims to “unlock the sector’s potential” by streamlining regulation and improving coordination.
Talent and housing challenges
One key priority for the ABBL is attracting talent. It has expanded collaboration with Luxembourg for Finance, including outreach to universities abroad. It launched a platform for internships and job opportunities and works with the University of Luxembourg and the House of Training. Plans are also underway for a wealth management academy through the ABBL’s private banking cluster.
Improving Luxembourg’s appeal also means addressing the housing shortage. “The management has a mandate from the board of directors to find new solutions for affordable housing for young professionals in our industry,” Stein said at ABBL’s annual press conference.
To address the housing challenge, ABBL supports the creation of Prolog Luxembourg S.A., a special-purpose vehicle (SPV) launched last year by five banks: Spuerkeess, BIL, Banque Raiffeisen, Société Nationale de Crédit et d’Investissement (SNCI) and Banque de Luxembourg. With 250 million euros in commitments, the SPV aims to deliver 800 to 1,300 housing units.
ABBL CEO Jerry Grbic added that the association supports the micro-housing proposal from the American Chamber of Commerce in Luxembourg. “We believe this could kickstart the idea to motivate others, even employers directly, to either buy or build housing solutions and to offer affordable rents to their employees,” he explained.
Cybersecurity and digitalisation
A survey conducted by the ABBL and KPMG at the end of 2023 revealed shortcomings in banks’ digitalisation efforts. “Digitalisation, the rise of AI, and an increasingly tense geopolitical environment are creating new risks,” said Ananda Kautz, ABBL head of innovation, payments, and sustainability. “Banks are facing a surge in attempted cyberattacks, while citizens and businesses are increasingly targeted by scams, phishing and ATM fraud.”
Kautz cited data from ENISA, the EU’s cybersecurity agency, showing that 46 percent of reported cyberattacks between January 2023 and June 2024 targeted banks. Denial-of-service attacks, often linked to the war in Ukraine, have notably increased. The rollout of the EU’s Digital Operational Resilience Act (DORA), which aims to enhance ICT risk management in finance, has been a key step. All ABBL members are preparing to raise their DORA-related budgets in 2025.
The ABBL also supports the expansion of the 491010 anti-financial fraud hotline, which allows users to block LuxTrust digital identity certificates and is now available 24/7. Together with its Foundation and the House of Cybersecurity, the ABBL has launched a working group to combat online fraud. Several institutions have joined the initiative, including the CSSF, BCL, BeeSecure and ILR. A first awareness campaign will launch in June, and a new website, cyberfraud.lu, will go live in the coming weeks.
Banking sector performance in 2024
Luxembourg’s banking sector remains stable despite geopolitical tensions, Stein said during the association’s annual press conference at the House of Finance. Just over 26,000 people are employed in the country’s 115 banks. Of these, 43 are active in private banking, making Luxembourg the eurozone leader in this segment with 628 billion euros in assets under management. Around 85 percent of private banking clients are domiciled in Europe.
The sector’s total balance sheet reached 937.4 billion euros in 2024, up from 920 billion euros the previous year. Net interest income grew 4 percent and net profits rose 10 percent year-on-year to 7.2 billion euros. The number of banks declined slightly from 118, which the ABBL attributed to “the broader trend of consolidation in the global banking industry.”
Comparing to Dutch, Belgian competitors
The ABBL’s annual report also features insights from banking leaders. Vice-chairman Guy Hoffmann noted that while Luxembourg offers a compelling value proposition, Belgian and Dutch financial institutions operate in robust domestic markets, reducing the urgency to expand.
“To further enhance its appeal, Luxembourg must refine its positioning,” Hoffmann wrote. ”The country should highlight its unique strengths in private banking, wealth management, and fund servicing, areas that naturally complement Belgian and Dutch financial models.”
The ABBL welcomed 25 new members in 2024, bringing its total to 266 full and associate companies.
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