Private Banks

The road to hell is paved with good intentions. This applies also for well-intended regulations on environmental, social and governance. Because of the growth of ESG-focused investments in recent years, a new problem pops up: the risk of greenwashing. 

Crédit Agricole, ABN Amro, and “one or two Swiss private banks” have been named as finalists in the bidding process for the acquisition of Belgian wealth management and investment bank group Degroof Petercam, French business daily Les Echos reported on Friday, citing multiple sources.

Swiss private bank Pictet has decided to move its European headquarters to Frankfurt, relocating the function from Luxembourg. The grand duchy has served as the main European hub of the Geneva-based private bank for about three decades.

The  bank said that its former Pictet & Cie (Europe) S.A. “transferred its registered office from Luxembourg” to Frankfurt per 26 May “by way of a cross border conversion from a Luxembourg Societé Anonyme into a German Aktiengesellschaft.”

Given the increasing complexity of financial markets, private banking clients in Luxembourg, especially younger groups, are more willing to seek out financial advice than clients elsewhere in Europe, according to the Luxembourg edition of EY’s Global Wealth Report released on Thursday.

Belgium’s largest independent private bank, Degroof Petercam, is considering a major reshuffle of its ownership structure that could potentially lead to a new majority shareholder. Some of the existing owners, mainly Belgian noble families but also undefined “financial partners”, have indicated they want to sell their shares.

A deal could be worth more than one billion euro. Belgian state-controlled financial group Belfius, Credit Agricole, ING Groep and Royal Bank of Canada are reported as being possible bidders.  

Referring to a “challenging year”, Belgian investment house Degroof Petercam on Saturday said that its operating income fell 16 per cent last year on the back of a decline in commission income. The drop was mitigated in part by higher interest margins.

The bank, which has a major presence in Luxembourg as asset manager, posted 106.7 million euro in operating income for 2022, down from 126.6 million a year earlier. The privately held company did not provide a breakdown of this income.

Banque Havilland, a Luxembourg private bank owned by British property developer David John Rowland, has sold its depository and custody business for an undisclosed amount to Spain’s Banco Inversis as part of a new strategy in which it fully focuses on private banking. 

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%. 

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. 

BTG Pactual, the largest investment bank in South America, said it acquired Luxembourg-based private bank FIS Privatbank in a move that should enable its Latin American clients to diversify their investment portfolios in developed countries while expanding its European client base beyond Portugal, Spain and the UK.