No Spain, no gain
Financial centres in Europe need to join forces in order to stand their ground against the growing markets in Asia. The European Roundtable of Financial Centres has been launched by a group of countries for whom it is not wishful thinking to believe that Europe can remain competitive. Luxembourg and Spain are two members of this initiative that are working actively on new strategies to position European financial centres in the world.
The objective of the Roundtable is to facilitate efficient collaboration between European financial centres. “The EU is one financial market by definition”, says Isabel Martin Castella, Director of Madrid Centro Financiero, the promotional agency of the Madrid financial centre. All European financial centres need the same regulatory standards in order to achieve the best results. “Europe should be the leading financial centre in the world”, Castella adds during a financial seminar organised by LFF and Madrid Centro Financiero in Madrid. Pulling together the skills of many different participants, the Roundtable is working on a position paper to develop and promote financial services “made in Europe”.
“We are competitors, we even all have competitors in our own markets, but competition makes us better”, says Fernand Grulms, CEO of Luxembourg for Finance. Besides which, all the financial centres share the same challenge: regaining the trust of customers. “We need transparent and understandable products, as well as strong banks”, remarks Ernst Wilhelm Contzen, Chairman of the Luxembourg Bankers’ Association (ABBL). “Politicians must realise that we need capital instead of special taxes in order to provide credit to our customers”. Grulms agrees: “European politicians are not yet ready to support the idea of financial services Made in Europe”. Without political support, it will not only be difficult to satisfy customers, but also to attract highly qualified staff from all over the world. Another disturbing factor is the global regulatory standards on bank capital adequacy and liquidity. The US has not yet implemented Basel II, while in Europe Basel III is a common standard.
It would be a waste of time to wait for decision makers at the European level to understand the importance of the European financial services sector. That is why the Luxembourg Government has launched the High Committee of the Financial Centre, a think tank where Luxembourg professionals meet to discuss the future of their industry.
99% of Luxembourg financial transactions are cross border business. This characteristic is a point “where Luxembourg and Spain can act as partners”, says Grulms. The two countries can benefit from their complementary experience in this area. In both countries, the financial sector plays a major role. According to Castella, the financial services sector generates the largest contribution to GDP in Spain. In contrast to Luxembourg, the main pillar is retail banking. With numerous offices all around the world, Spanish banks are closely connected with their customers. As the No.1 in Europe in consumer finance and a specialisation in project financing, the Spanish financial centre has made itself a name not only in Europe, but also in North Africa and South America. In these regions, Spain can be a port of entry for Luxembourg. Another link between the two financial centres is an exchange of knowledge in the area of mutual funds.
In June 2010, The Spanish Government removed Luxembourg from a grey list of countries providing unfair tax competition, thus removing an important barrier to the development of business between the two countries. In order to inform Spanish financial professionals about the potential opportunities for collaboration between the Spanish and the Luxembourg financial centres, Luxembourg for Finance, together with the Foro Económico Hispano-Luxemburgués, Madrid Centro Financiero and Cámara Madrid held a financial seminar in Madrid on April 5, 2011. EK