ABBL

Revenue from corporate banking activities in Luxembourg has risen nearly 60 percent since 2016 to approximately 3 billion euro, according to a new study conducted by consultancy firm PWC. The consultants also found a need for the government and regulators to join the banking sector on its innovation journey in order to address regulation challenges. 

Part of Luxembourg’s effort to tackle allegations that it enables questionable business and tax practices through a lack of transparency will be significantly upgraded through new rules, technical capacities, increased staff and administrative penalties by 2023.

Under a reform project involving a draft Grand-Ducal regulation announced last week, the Luxembourg government body that makes available business registration information – including a ultimate beneficial owner registry -  will be overhauled and have its staff doubled.

Understanding risks related to the climate and environment, also known as CRE risks, and managing them will be a key challenge for banks over coming decades. Luxembourg’s banking association ABBL has sought to provide a framework for this in a new publication which also features some guidance related to strategy and governance, integration of CRE concerns within risk management frameworks and disclosure.

Private banks in Luxembourg have seen their assets under management double since the 2007-8 financial crisis, according to a survey conducted by KPMG and the Luxembourg Bankers’ Association (ABBL). The report observed that growth at Luxembourg’s private banks in 2020 outpaced growth at their counterparts in Switzerland.

Private banks held 508 billion euro in assets at the end of 2020, up 9 percent from 466 billion euro a year earlier and more than double the 225 billion euro held at the end of 2008.

The Luxembourg financial sector has long-discussed the blockchain or as it’s also called “distributed ledger technology (DLT)” as way to strengthen the Luxembourg financial sector. As it was put by Ananda Kautz of Luxembourg’s banks and bankers association the ABBL: “Digital strategy, digital ledger technology, most commonly known as blockchain, has been a key strategic topic for ABBL since many years now.”

The cost of implementing banking sector regulations has risen by an annual average of 16% since 2015 says a recent study by the the Luxembourg Bankers Association (ABBL) and major accounting firm EY.

Leading European digital banks now have nearly 100m customers. This is according to research by Accenture presented at a ABBL online roundtable on 10 June entitled “Neobanks: An opportunity behind each threat”. Even if one-in-six of the continent’s population have an account, the concept of pure online banking has yet to go mainstream. But this could be about to change.

Personal data transfers in general, and in the financial sector in particular, are one of the many gaps in the Brexit trade and cooperation agreement (TCA). There is a transition period, but once it lapses later this year financial institutions may no longer be allowed to transfer client data between the UK and the EU. 

Arendt Services

Benjamin Collette has been appointed new CEO of the business, accountancy and tax services department of Luxembourg-based law firm Arendt & Medernach. He specialises in strategy, regulatory and corporate finance.

Despite a Brexit-inspired influx of banks to Luxembourg, the number of banks active in the country is dwindling. At the same time however, many of the remaining banks keep growing their revenue thanks to an increasing focus on ultra-high net worth individuals (UNHWI’s). But this success comes with a price.