Private Banks

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.

Total interest income at Luxembourg’s 120 credit institutions last year surged 39 percent as most banks were able to boost their margins from borrowing and lending activities on the back of higher central bank interest rates, according to data posted by financial supervisor CSSF. The supervisor also said, like last year, that 23 banks in the grand duchy were not profitable.

Luxembourg-headquartered Quintet Private Bank on Thursday posted its first net profit in four years as interest margins improved thanks to rising interest rates. Higher trading income and a one-time gain from the sale of its stake in EFA also underpinned its performance last year.

The head of the European Securities and Markets Authority, which oversees and coordinates the work of European supervisors in asset management, on Tuesday called on the industry to pay more attention to the management of increasing interest rate risks and to step up its efforts in terms of “prudent management” of the investment funds.

UBS is acquiring industry peer Credit Suisse for 3 billion Swiss francs. They will pay 0.76 Swiss francs in UBS shares. The opening offer was initially 0.25 Swiss francs per share. As recently as Friday, Credit Suisse closed at a closing price of 1.86 Swiss francs, representing a market capitalisation of 7.3 billion Swiss francs. The combined entity will become Europe’s largest Globally Systemically Important Bank, also known as a G-SIB.

Laurent Cooreman on Monday was appointed as chief executive officer at Belair House, the real-estate focused family office unit of Banque Internationale à Luxembourg, also known as BIL.

Less than a month after the European parliament adopted its updated regulation for Eltifs - the European long-term investment funds - the new framework may be showing its first cracks. The lack of liquidity remains problematic, and that makes it unsuitable for private investors. 

Hugo Lasat has been at the helm of Belgian private bank Degroof Petercam for almost a year and a half. The biggest challenge of a bank CEO is constantly being in decision mode, he said in an interview with Investment Officer. “Procrastination is not done.”