Sector

A fresh flash estimate for inflation in the 20 eurozone countries and the latest ECB bank lending data shows that higher interest rates are slowing down economic growth in Europe, fuelling expectations among fixed income analysts and economists of a smaller rate increase of 25 basis points - following six consecutive hikes of 50 basis points - when the ECB’s monetary policy decides is next step on Thursday.

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 is leading the way in Europe when it comes to crypto and blockchain technology. With MiCA, a new set of regulations from the European Parliament, Luxembourg’s early bet on cryptocurrency has been validated. We spoke with Nasir Zubairi, CEO of LHoFT - Luxembourg House of Financial Technology, who sees this as an opportunity for cryptocurrencies and crypto assets to enter mainstream markets within EU countries, and heard from banking association ABBL.

The 30 countries in the European economic area account for less than one out of every five credit ratings issued by credit rating agencies across the world, according to a new report published on Tuesday by the European Securities and Markets Authority, Esma.

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.

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.

The focus on sustainable investing has faded somewhat, with the drumbeat of crisis after crisis recently, and now problems with banks in Switzerland and the United States grabbing the headlines. But listen to anyone focussed on the climate for long and you’ll realise that however bad things are now, it will get much worse. Large investment firms are developing impact investing projects and reaching for the next level in ESG – maintaining biodiversity.

As Investment Officer knowledge partner, Universal-Investment’s Luxembourg country head Sofia Harrschar argues that reforming the EU regulation on social security would be in the interest of Luxembourg’s financial services sector and the many thousands that it employs. The industry meanwhile, needs to adapt quickly, look across the border and develop new ways of working.

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’s top supervisor for investment funds on Wednesday assured the country’s fund management community, describing the sector as “very robust” and speaking about “quite normal” levels of volatility, even though it is not fully immune to the liquidity issues that have rocked global financial markets in recent weeks.