Singapore and Luxembourg: the secret of their success
Singapore was the first stop of the LFF mission to Asia, led by finance minister Luc Frieden. Ernst-Wilhelm Contzen, chairman of the Luxembourg Bankers' Association, made a keynote speech. Addressing 250 attendees in a packed auditorium, he said that because we live in uncertain times, ultra high net worth individuals need stable financial centres like Luxembourg or Singapore. In an interview with LFF, Mr Contzen speaks about mutual interests and the challenges both centres are facing.
Luxembourg and Singapore are complementary jurisdictions that offer first class wealth management solutions. What can we offer to each other?
I think the most important thing we can offer each other is our respective roles as international gateways. While Luxembourg is an attractive gateway to Europe for Singaporean professionals and their clients, Singapore has a significant role to play as our gateway to Asia.
One of Luxembourg’s strengths lies in its holistic approach to wealth management. Client advisors in Luxembourg can rely on dedicated teams of specialists to provide tailor made solutions for their clients. Singapore, on the other hand, is very strong in terms of brokerage, for example. This makes it an attractive location for international clients and their advisers.
Moreover, Singapore’s systematic approach to developing training structures for the financial sector is a model to be followed. As regional wealth management hubs, it is important that we learn from each other and leverage our complementary strengths.
Luxembourg and Singapore are specialising their services to attract Ultra High Net Worth Individuals. Are the two countries partners or competitors in this area?
I think that we are a bit of both. A globalised free market economy can only work efficiently if there is healthy competition and a level playing field among global players. But there also needs to be a certain degree of cooperation. We all have our particular strengths and the secret of success is to play to these complementary strengths.
This is of course also true in the wealth management industry. That both Luxembourg and Singapore are increasingly specialising in servicing UHNWIs is only natural. This type of clientele relies on professional wealth management services that can meet their multi-jurisdictional needs. Luxembourg and Singapore are international hubs in their respective regions.
Because we live in uncertain times, UHNWIs need stable financial centres like Luxembourg or Singapore, which can help them nurture and expand their international projects.
What Luxembourg services and solutions can be of interest to Asian clients in Singapore?
As I mentioned, we have an established know-how in providing integrated wealth management solutions for international clients, their companies, their families and their advisers. These solutions range from M&A support, real estate, structured products and philanthropy to more basic baking services such as credit cards and loans.
Our integrated solutions can be of interest both to Asian clients served in Singapore as well as Singapore professionals wishing to gain access to European markets. Our legal framework and the close relationship between the banking and fund industries is also an attractive feature. Luxembourg structures and vehicles, such as our SOPARFI holding companies or our Specialised Investment Funds (SIFs), thus provide sophisticated and flexible tools for meeting the international needs of clients.
How can Singapore gain access to European markets?
There are actually numerous ways that Singapore can gain access to European markets. Broadly speaking, it is about benefitting from Luxembourg’s role as a European financial hub. Making use of the European passport in terms of banking services and fund distribution is an obvious example. Luxembourg has suitable companies and structures that can help Singaporean professionals serve their clients’ international requirements.
What challenges are the two countries facing with regard to regulatory pressure?
The crisis has clearly accelerated a movement towards increased regulatory harmonisation. It has also intensified calls for greater transparency in the world of finance. One important challenge we face with the coming regulatory tsunami is the pressure it puts on our profit margins. In order to meet new regulations, we need to invest heavily in human resources and technology.
But it is not only about international regulatory frameworks, such as Basel III, or even our own national legislations, it is also about the regulatory specificities of the countries that we deal with professionally. As wealth managers, it is incredibly important that we familiarise ourselves with the regulatory and tax framework of our international clients’ home countries. This implies making strategic investments as well as adapting our business models.
How would you compare the role of the regulatory authorities in these two countries?
I think that both in Luxembourg and in Singapore we are lucky to have pro-active regulators that constantly strive to improve their regulatory frameworks with a view to enhancing and facilitating the business environment. Importantly, both regulators have managed to combine a high level of investor protection with a regulatory framework that encourages innovation and the development of new activities.