Amongst friends – LFF in Brussels
Today, Luxembourg for Finance took part at the “Doing Business in the Benelux” conference in Brussels. The event was organised by the Luxembourg Chamber of Commerce, in collaboration with LFF. In his speech at the economic seminar, the LFF representative Christian Welter pointed out the development of the financial centre after the crisis, as well as what Luxembourg can offer for European entrepreneurs.
"The world of finance was in a terrible turmoil and is now in a reshuffling process. We all suffered and will continue to suffer from the financial crisis. Taxes and social security contributions are not likely to decrease in the years to come. We still see large macroeconomic imbalances, some countries running huge trade deficits while others are accumulating piles of money and do not really know how and where to invest them.
How does that affect finance made in Luxembourg? The Luxembourg financial centre represents roughly 15 billion euro added value generated by 80’000 professionals. 50’000 of these professionals are university graduates, many of them being educated in Belgium’s universities and high schools. Only a quarter out of the 80’000 people are Luxembourgers. This underlines the fact that we have become a cosmopolitan and international hub.
The Luxembourg financial centre is obviously not living in an ivory tower, disconnected from the rest of the world. The severe downturn of the stock markets was felt by the banking sector and the fund industry. At the bottom of the crash, assets under management were down more than 25 %, affecting revenues accordingly. Assets under management have increased again since and – in the fund industry - we are once again beyond the psychological mark of two thousand billion Euros and have hit new all time records.
We are ready to build on our strengths. Acting as a platform for cross-border distribution of financial services, Luxembourg has gained expertise in cross-border distribution of financial products in banking, insurance and particularly in investment funds.
The private banking industry has developed over the last 50 years. From a regional centre, we became a European centre and many firms also cover Latin America or the Middle East from Luxembourg. A quarter of assets under management originate outside Europe. And this is to the benefit of all customers because private bankers learn from their customers. This experience enables them, for instance, to make available investment opportunities in Brazil to a customer in Germany.
But there is also a big opportunity here in Europe: Approximately one third of EU business leaders, representing 690,000 companies and 2.8 million jobs each year, will retire in the coming years. A lot of entrepreneurs are looking to sell their companies. And as you are aware, not only large multinationals, but also small and medium-sized enterprises are becoming more and more international.
As a result, more and more questions arise about different legislations, tax regimes, inheritance planning and so on. Luxembourg private bankers have the advantage of being multi-lingual, multi-cultural and familiar with international business, tax and regulatory environments. They also have access to a wealth of financial services competencies in Luxembourg, including asset management, insurance and more.
Entrepreneurs, in particular, need to seek new opportunities, innovate and manage risks. After the crisis, financial advisors need to regain the trust of their clients. Entrepreneurs as well as investors and international clients know that Luxembourg has a solid reputation to defend and that our financial centre was one of those that suffered the least from the crisis, simply because we are not exposed to proprietary trading and similar businesses that causing much of the volatility.
We are more down to earth when it comes to our products and services. Luxembourg banks offer a wide range of services including notably private banking and corporate finance. Banks specialising in covered bonds benefit from a specific regulatory regime that enables them to offer securities with a high level of investor protection and strong credit ratings.
I will give you one figure to illustrate that helping entrepreneurs is not a fairy tale.According to the Luxembourg Central Bank, the level of loans granted by Luxembourg credit institutions was, at roughly 195 billion Euros in June 2010, 11% higher than in June 2007. So that means that there was no credit crunch from the lenders’ side during the financial crisis, quite an astonishing fact you will admit. In June 2010, 65% of the loans were for international projects. Among these international loans, 60% were injected into the European economy.
44% of European small and medium companies are internationally active. The rate decreases to less than a third for French small and medium companies, which positions the country at the bottom of the list, just ahead of Germany. In the case of Luxembourg, the rate leaps to 75%, which is logical given the small size of our domestic market.
Due to its small size and the short communication lines between professionals and public authorities, Luxembourg has always been able to adapt to the latest business and regulatory realities."
(Abstract of the speech by Christian Welter, Luxembourg for Finance)