News

Proceeds from Luxembourg registration tax for investment funds remained flat at 1.3 billion euro last year as a small decline at Ucits funds was offset by a steep increase in proceeds from reserved alternative investment funds, or Raifs. The development reflects the growing importance of alternative investment for Luxembourg, although this market remains .

The European Central Bank on Thursday began to slow down its pace of rate hikes, announcing an increase of 25 basis points following seven back-to-back increases of 50 basis points. The ECB said that underlying price pressures in the 20 Eurozone countries remain strong.

Luxembourg is set to modernise its legislation for investment funds under a proposal that will first be discussed later this week in the grand duchy’s parliament. The bill seeks to improve the various structuring options for investment funds. 

The parliament budget and finance committee on Friday will discuss Bill 8183, which was submitted at the end of March. At the 5 May meeting the committee is due to appoint a rapporteur who will coordinate the legislation.

Grand Duchy banks are taking action to prepare for an economic downturn, according to bank sector association ABBL. 

At its annual general meeting on Thursday, the organisation noted that rising interest rates and geopolitical uncertainty have caused households and companies to become reluctant investors. Banks began setting aside more provisions last year in order to cover increased risk of credit defaults - a move already reflected in 2022 figures with an increase of over 400%. 

Luxembourg’s finance minister has tabled a proposal to the grand duchy’s parliament to encourage the uptake of European long-term investment funds known as Eltifs. If adopted, the proposal will exempt Eltifs from requiring to pay the quarterly registration tax levied on Luxembourg investment funds.

The European Central Bank and the EU’s top insurance body have warned that businesses and households are not sufficiently insured against climate-related disasters, raising the risk of financial instability and economic crises. A discussion paper issued this week argued that catastrophe bonds should play a bigger role in bridging the overall climate insurance gap, while national and European authorities need to encourage uptake of policies to prevent such crises from occurring. 

The Luxembourg stock exchange has announced a new move to expand its cooperation with Macao, one of China’s Special Administrative Regions. The bourse said it will offer trading in securities listed on the Chongwa (Macao) Financial Asset Exchange Co. Ltd., commonly known as MOX, on its self-regulated Euro MTF market.

The BCEE, one of Luxembourg’s main domestic banks and commonly known as the Spuerkees, credited rising interest rates as playing a key role in increasing its increased banking income portion of its overall annual report for the year ending in 2022 through over 20% increase to its interest margin. According to a bank press release, this was also due to an increase in lending activities. 

In a dawn raid on Friday, Luxembourg judicial authorities searched for documents of two holding companies controlled by US hedge fund Elliott Management in relation to last year’s 1.2 billion euro sale of Italian football club AC Milan. Although it has formally closed, the sale is still contested by a third Luxembourg holding company, Blue Skye Financial Partners, which owned a small minority stake in AC Milan and which claims it has fallen victim to fraud under Luxembourg law.

US Treasury Secretary Janet Yellen can no longer ignore the fact that the dollar is used as a weapon to quash unwanted behaviour by rivals. It comes with risks of national interest. Imposing financial sanctions linked to the dollar’s role could eventually undermine the dollar’s hegemony, she said.