We spoke to four captains of the Luxembourg financial industry to examine what effects the pandemic has had on business. for some a bear market, an achilles heel and an unexpected boost to problem-solving, are just another twist in the globalisation tale. Albeit perhaps still too early for true epiphanies, some are prudently optimistic about their resilience to address the challenges ahead.


We can do far more than we imagine - and necessity really is the mother of invention. When in contact with the event itself, it comes back to being a people-centric business. There's only so much planning you can do.




Noel Fessey, CEO European Fund Administration (EFA) takes stock of the dramatic exodus from office life as we knew it in March 2020: “ …if you’d have asked us to plan and perform an exercise in which 95% of the company left the building not to return for weeks or months, we would probably have consumed a whole year in the detailed response planning.

Following clear signals from governments and regulators to migrate to home offices: “It was done over a weekend. We can do far more than we imagine – and necessity really is the mother of invention. When in contact with the event itself, it comes back to being a people-centric business. There’s only so much planning you can do.” Fessey points to the positive effects of rising to such a challenge: “Our people have grown through this and that’s something to be celebrated. It has galvanised them to common goals to maintain EFA’s operations.” He notes that culturally this is supporting, and even accelerating, the company’s intellectual, emotional and managerial shift towards an ‘agency model’ away from the older, outdated mode of “we want you under our nose, where we can see you so we know that you are working.


We'd underestimated the amount of resilience and capacity in the business. We are very happy that our teams rose to the challenge and dealt with this crisis so well.


From a leadership perspective, he has been focussed on not letting “the dislocation that’s inherent in the event, dislocate the company” by  guiding with confidence and empathy to achieve that most British of all aphorisms “keep calm and carry on”. Regardless of glitches, it’s important to communicate a can-do, yet empathetic mindset: “for some people [the pandemic is] very worrying and for some families there have been some really sad moments in that.”

In the same vein, Keith O’Donnell, Managing Partner of ATOZ found himself caught off guard in a fascinating process: “Whether you call it a black swan moment, the pandemic came out of nowhere. As a business, it was a crash course in a lot of things. Suddenly we were all looking around asking, do you know what the hell just happened?” He points to the realisation that despite technology and being a well-organised firm: “we are [all] very vulnerable.” The upside was that “we’d underestimated the amount of resilience and capacity in the business. We are very happy that our teams rose to the challenge and dealt with this crisis so well.”

Aside from the well-documented implications of remote work, the future of business travel and commuting in general, working practices are benefiting from the extra productivity muscle being exercised into “unstructured yet creative problem-solving”, an upside that O’Donnell hopes will endure beyond the pandemic: “Although it’s still early to say, I think we’ll do more of that.” Has it impacted productivity? “From what we can see so far having closed in March and April, we don’t see much of a hit, if any, in productivity for us as a firm. We have learnt very fast that there’s a better way of working.”


Frank Krings, CEO of Deutsche Bank Luxembourg S.A., does not view the pandemic as a black swan event: “I think what we all now have learned collectively is that the scenarios we look at need to be even more extreme. It’s not that it was unheard of, it is the sheer scale of it. Most scenario planning did not necessarily account for it being that global and brutal when it comes to the real economy standstill. Yet, if you re-visit the history books, it’s nothing new that human beings are adaptable and ultimately solution oriented.” Krings highlights that the pandemic has brought the role of banks in general and the role of Deutsche Bank into focus, differentiating it from the last big crisis: “I think this time it is clearly understood and respected that banks are part of the solution and play a critical role.”

“It’s not over yet” cautions Julie Becker, Deputy CEO of Luxembourg Stock Exchange reflecting on the pandemic, “we don’t know what the end looks like, as we are only in May 2020. Perhaps there will be a second confinement period, or even a third one. The impact on exchange markets in particular is difficult to assess at this stage; despite high volatility in financial markets, impacts have been somehow limited in the fixed-income sphere because of the unconventional actions of central banks worldwide.” 

Becker is practical about the left-field nature of Covid-19: “You must always challenge your assumptions, and preparing for the unforeseen is clearly the main Achilles heel. Disasters rarely happen according to a plan, that’s for sure.”


2020 had been expected to be a year of transition for sustainable finance, but perhaps not as anticipated. The pandemic has now shifted  priorities from green to social, highlighting that sustainability is no longer just about climate or green concerns. Becker notes, “This is a fact which is neither positive nor negative. We have to consider the overall impact of our economy and the way we behave and the way we invest. A stronger focus on the ‘S’ is very important because the ‘E’, ‘S’ and ‘G’ in ESG are better when interconnected.” Green bond issuances were expected to continue on the very positive growth rate of 2019: “Perhaps green is on hold; it’s not that we won’t see any green issuances in the future. It’s just that maybe there are some more pressing socio-economic issues to address for the time being.”

Instruments such as Covid-19 bonds are by nature social or sustainability bonds because they support health, education, food security and affordable housing, but also basic infrastructure such as clean drinking water hence why they can be sustainable. “With the ‘S’ of ESG  emerging strongly, we are witnessing strong demand for social bonds issuances which is really exceptional. They were a niche but are now becoming an important asset class, and the appearance of specific Covid-19 response bonds issued to mitigate the massive social impact of the crisis.” By way of making a contribution of their own, the LGX decided to waive the entire listing fee for clearly earmarked Covid-19 response bonds which are eligible for display on LGX, until 30 September 2020. With strong and encouraging appetite from institutional investors, April figures revealed that social bonds were issued to the tune of 7 billion dollars. For context, 1.2 billion dollars on average were issued a month in 2018 and 2019. HSBC recently published a study suggesting that companies with a good ESG score, i.e. with at least 10% of their revenues coming from sustainable sources are weathering the current storm better than their counterparts. Becker sees this as strong evidence that “sustainable finance is a way to perform and you should not continue to divide financial from environmental performance”.

Julie Becker thinks back to when it seemed that “Past crises were limited to some continents or some countries. This is now a global phenomenon.” She believes that this is fundamentally a time to rethink and renovate, rather than rebuild: “such as the New Deal that was established after the Great Depression and the Marshall Plan that was launched in the wake of WW2. We are not in the same situation now, but we do have to rethink, to behave differently.”


When you talk about Luxembourg specifically there is a history and a tradition of advocacy. But on certain aspects, I would say with hindsight, we as an industry and maybe as banks, we could have been stronger in our constructive public challenge.


Starkly, she warns: “We have no choice, we knew that it was already on the agenda before the crisis. Perhaps not all of us were convinced, or had the willingness to achieve those objectives. But now we have a huge opportunity to think differently, to build differently. While extremely challenging, it is feasible. My conviction is that we will manage to make the renovation process green and social, in other words, sustainable. We clearly need a green recovery and a sustainable renovation.”


Noel Fessey remains quite cautious about the future: “People like to talk about furlough as a temporary thing. We are comforting ourselves
with the idea that some companies can come back. But for many of them, the destruction is permanent. The financial markets upon which companies and all of our pensions and savings, etc., depend are continuing rather serenely as if the solution has already been found; and that the recovery is almost baked in. We as an industry and individual companies must be poised for when that second shoe drops. What this means for the world economy and the financial services industry is unknown, but it’s likely to be profound and durable. That’s why we manage EFA for sustainability. No matter the depth and duration and uncertainty of this event, our clients are taking a long-term view, and so do we.”


In the medium-term, however, Fessey sees himself as cautious but hopeful, if a vaccine or a significant therapy comes to market quickly: “That’s a coil spring which will unload and catapult markets and economies upward again.” He also believes that even if particularly strong therapies or vaccines have not been identified in five years’ time, “we will have learned to live with this, and accommodate it.”
Keith O’Donnell is generally very optimistic: “When confronted with a problem, we can as humanity be tremendously creative at fixing problems. This whole crisis has taught me that although human beings are fundamentally very vulnerable, it has also brought out some of the best things in humanity. When the pressure was on, we saw how quickly businesses reoriented what they were doing: hand gels from high-end spirits, car factories producing ventilators, mask production from factories that never produced a mask in their lives… my optimistic message coming out of this is when we get beyond solving the specific problem of this pandemic, that we will hopefully move on and see that there are a lot of other problems to solve. We can apply the same ingenuity and flexibility to solve these.”

He also has hopes that on a human level the pandemic will have instilled a bit of humility, with the realisation that interdependence also relates to how we depend on other people. He cites the pay of healthcare workers as an example of some of the worst paid people in our societies, and paradoxically: “Suddenly we’re all looking to them and saying save us. Frankly, the salaries in the financial sector compared to the salaries of people working in the healthcare sector are very generous and is that right?”


Krings sees himself as a cautiously optimistic realist when looking at the current panorama: “It may still be too early to tell, we don’t yet know how deep the ‘V’ of a ‘V-shaped’ economic development will be, or if it is not a ‘V’ but more like a ‘U-shaped’ recovery… We don’t know how long the ‘U’ will be and even if it is a ‘U’ at all, or if it will turn into an ‘L’? We don’t know if we can avoid the ‘L’ in the trajectory. One would hope for the ‘V’, even if it’s a very deep one, as then the self-healing forces begin to kick in. If the ‘U’ gets longer, then of course there will be more industry and sector specific fallout. And if it turns to an ‘L’, we will certainly also have a debate about public finances.” Consolidation will be a big theme both in the financial and non-financial ‘real economies’ sectors, says Krings: “How much of that we will see may also depend on the question of the depth of the recession and the trajectory of the recovery. Although it’s likely to be something that comes with opportunities, there’s an inherent survival bias in consolidation, as we know. Yet, it would be naive to believe that there won’t be economic fallouts and in certain industries, certain geographies of a certain size”.

He does not see this necessarily as about future-proofing,  but instead how they as a bank look at their support to the different economic and industry sectors. Krings stresses that the financial centre can draw some positives out of the crisis, such as “proof that critical functions work in a resilient way. From a risk management perspective, things have been managed prudently. I don’t just mean during the crisis mode but continuously. This is on the back of important previous transformation work yielding a well-defined, focussed strategy. The longevity of such strategy and staying the course has proved extremely valuable in particular in times of stress and of crisis.”


He cites liquidity, advice and risk management as the three main drivers of the client dimension: “thereby given our business model, obviously the provision of financing. That was one dimension and that came very early in the crisis. I think in parallel, the second dimension, i.e. actual advice and orientation then meaning the client seeking guidance, analysis, advice, ultimately advice from us as bank as we see a cross-section of industries. Then once the liquidity heart attack is avoided, clients really want to better understand what this all really means i.e. deeper analysis, actual trusted advice, also cross-sectoral and crossgeographic perspectives because again the pandemic moves around the globe in waves. The third interaction is to then talk about the importance of and instruments for potential risk mitigation without underestimating its inherent imperfection.”

Of the winners and losers in the business world, Keith O’Donnell notes that overconfidence in the ability of capitalism to solve problems, is part of the problem: “This is a huge wake up call to reassess its efficiency. When stuff really hits the fan, we all go running towards the state bail-out. Some of the potential losers are businesses that become more and more state oriented. And, if you’re sitting there as a shareholder in one of those  businesses, you’ve also got to accept at some point, that you will get diluted down to zero. As an equity holder, this business has virtually no value left in it (e.g. as with some of the airlines).

As a tax firm we get asked the question who’s going to pay for all of this? A lot of equity is going to get wiped out by this and then afterwards we’ve all got to accept, that a reckoning is coming down the line for when we have to pay for this. The financial industry will be realistic about that.” He goes on to highlight that valuation models were built on a very predictable world with the progress of humans and societies being driven for growth: “We were getting really good at tightening the screws here and there but now we are confronted with this very big risk. The question is, what’s the ultimate repricing of that as people realise the  vulnerability. Monetary policy will be interesting and governments are throwing money at this. Will that bring the risk-free rate down even further?”


Krings believes that the competitiveness of our financial centre has and will always prevail if one can find ways to increase efficiency: “With hindsight, of course, we are all collectively smarter than we were before the pandemic.” He cautions on the importance of being sufficiently articulate in the constructive public challenge of the status quo of the financial centre and wider industry: “When you talk about Luxembourg specifically there is a history and a tradition of advocacy. But on certain aspects, I would say with hindsight, we as an industry and maybe as banks, we could have been stronger in our constructive public challenge.”


We have a huge opportunity to think differently, to build differently. While extremely challenging, it is feasible. My conviction is that we will manage to make the renovation process green and social, in other words, and sustainable.


Fessey is equally vocal about not getting entrenched: “In a highly regulated financial services world, we tend to make a mistake of focussing on process to the point of rigidity yet – if I was speaking with our regulators I would be saying a similar thing – it’s not necessarily process-led [bureaucracy] that keeps us safe, it is understanding what good business conduct actually is, not simply what rules and regulations we must mechanistically respect. How do you do that whilst coping with the fact that most of our assumptions about how we work have been completely thrown out the window? We’ve got to connect effectively with our clients despite the physical distance between us and have better transversal interaction within our firm than we did, even when we were in the building.”

Despite the uncertainty, Becker is clear about the role of the financial centre and capital markets in fighting the pandemic: “From a business point of view, we will need a huge amount of financing to assist recovery, not just to re-boot the economy, but society as a whole.” But how?

Her perception is that the overall economy is likely to suffer more than the exchanges themselves, pinpointing entrepreneurship as a “synonym” of dynamic business development and innovation: “As two key drivers behind the success of modern economies, which is why we need to safeguard continued and reactive access to funding and support. We should continue to reward risk takers with access to capital, but in the current context, it’s quite difficult to do so. And I hope these actors won’t be discouraged too quickly, because if funding and access to capital becomes another stumbling block, then we are at risk, at serious risk of weakening a substantial part of our economy…”
Historically people were not receptive to the word ‘sustainability’; it was seen as just being environmentally-friendly or a tick-box exercise. But now Julie Becker is wondering whether semantics might help to shift attention: “We should also talk about ‘business resilience’ instead of sustainability.” It is her hope that this crisis will help a more recalcitrant audience to realise they are faced with no other choices, compounded by an unpredictable event.