Luxembourg, an international financial centre Luxembourg, an

Luxembourg
an international financial centre
Luxembourg for Finance
Agency for the development of the Financial Centre
Luxembourg for Finance (LFF) is the Agency for the
Development of the Financial Centre. It is a public-private
partnership between the Luxembourg Government and
the Luxembourg Financial Industry Federation (PROFIL).
Founded in 2008, its objective is to promote the expertise
of the financial centre and the diversification of its services
abroad through different communication channels.
The agency continuously monitors global trends and
evolutions in finance in order to identify development
opportunities for the Luxembourg financial centre and
to adapt communicational measures to different target
markets and target groups. It is also the first port of call
for foreign journalists.
In cooperation with the various professional associations,
LFF develops documentation on products and services
available in Luxembourg and their relevant legal and
regulatory framework.
Furthermore, LFF organises seminars in international
business locations and takes part in selected world-class
trade fairs and congresses.
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Contents
4
Luxembourg in brief
6
A diversified economy
8
The financial sector
10
Private banking
12
Investment funds
16
Financial services for companies
18
Insurance services
20
An innovative mindset
22
An environment adapted to financial activities
LUXEMBOURG
IN BRIEF
Situated in the heart of Europe between
Belgium, Germany and France, Luxembourg
is one of the smallest members of the
European Union. Independent since 1839,
it is a constitutional monarchy governed
by Prime Minister Xavier Bettel.
The head of state is Grand Duke Henri.
With a territory of just 2,586 km2 and
a population of 563,000, the domestic
market is inevitably limited. In consequence,
Luxembourg has always sought to join
larger economic groups and trade zones
such as the German Zollverein, the BelgoLuxembourg economic union and later
Benelux.
The Luxembourg village of Schengen, intersection point between Luxembourg,
Germany and France, where the Schengen Agreement was signed on 14 June 1985.
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A founding member of the European Union,
Luxembourg is a member of all the major
international organisations.
Its strategic location and openness towards
the outside world, its political and social
stability based on a culture of consensus,
combined with a high quality of life, has
attracted investors from around the world.
These clients encounter responsive authorities and a highly qualified international
workforce (45.9% of residents and 78%
of the active population are foreigners).
In addition to the three official languages,
Luxembourgish, French and German, English
is spoken fluently throughout the business
sector.
The legal and regulatory framework is
stable enough to be reliable and flexible
enough to be adapted rapidly to an
ever-changing environment.
These factors, combined with an excellent
logistical and communications infrastructure, make Luxembourg an ideal gateway
to the European market and its 500 million
consumers.
© f.l.t.r.: EIB, Court of Justice of the European Union, European Court of Auditors
Luxembourg, seat of the European Investment Bank, the Court of Justice
of the European Union and the European Court of Auditors.
A DIVERSIFIED
ECONOMY
Luxembourg owes its economic
expansion to the steel industry
which dominated the economy of
the country from the beginning of
the 20th century until the 1970s.
Today, the capital hosts the global
headquarters of ArcelorMittal,
the number one steel producer
in the world.
After the Second World War,
international industrial groups such
as Goodyear and DuPont de Nemours
set up businesses in Luxembourg.
The American company Guardian Luxguard, the European
headquarters of which has been established in Luxembourg
since 1981, furnished 150,000 meters of double glazing for the
construction of the highest tower in the world, the Burj Khalifa
in Dubai.
Furthermore, the “One World Trade Center”
in New York City (the central tower of the
new World Trade Center complex) is being
constructed with steel beams produced at the
ArcelorMittal factory in Differdange located in
the south of Luxembourg.
Economic diversification spread rapidly to
the service sector. Today, Luxembourg is
an important media and communications
centre, hosting the seat of RTL Group, the
premier audiovisual group in Europe with
46 television channels, 29 radio stations in
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9 countries, and SES Global, which, with a
fleet of more than 40 satellites, is the largest
satellite operator in the world.
The Grand Duchy was also the first country
to define a clear legal framework for electronic commerce, a fact which led world leaders
such as Amazon, Paypal, eBay and Skype
to centralise their European business in
Luxembourg where they were able to take
advantage of state-of-the-art IT infrastructures.
Luxembourg has one of the HIGHEST
labour PRODUCTIVITY in the world
GDP per hour worked
USA = 100
Norway
140.7
Thanks to its integration in the transEuropean road and rail network and its
modern airport, Luxembourg is a strategic
centre for logistical services. Cargolux is
one of the largest air freight transporters
in the world and Luxembourg’s airport is one
of the 10 most busy cargo hub in Europe.
Luxembourg
129.5
Ireland
115.6
United States
100.0
Netherlands
97.7
France
96.6
The country has also set up a maritime flag
that since 1991 has attracted a diversified
fleet of merchant vessels.
Germany
94.6
Switzerland
89.4
Sweden
88.9
Finally, recent legislative initiatives were
designed to create an optimal, specialised
legal framework for the management of
intellectual property and the development
of research and development activities.
G7
88.1
Austria
87.2
Australia
86.1
Euro area
85.9
In this field, Luxembourg’s automotive
component sector is a prime example of how
major research-driven world companies can
use the Grand Duchy as a base in Europe,
providing them an excellent gateway to the
major European car manufacturers and
assembly plants. Global leaders such as
Tarkett, IEE, Delphi Automotive, to name but
a few, have chosen Luxembourg as their base
for their manufacturing and R&D activities.
Canada
84.2
United Kingdom
77.6
Italy
75.8
OECD countries
74.4
Source: OECD
THE FINANCIAL
SECTOR
The history of the Luxembourg
financial centre goes back to 1856,
year of the creation of the Banque
et Caisse d’Epargne de l’Etat and the
Banque Internationale à Luxembourg.
However, the evolution of
Luxembourg into an international
financial centre only began a century
later, when American, German and
Swiss banks began to develop
business in the Euromarket.
The activities of the financial centre spread
progressively wider, firstly to private banking
and asset management and later to investment funds. A series of niche activities were
added over the course of the last twenty
years and today the Luxembourg financial
centre is broadly diversified.
This success is based first and foremost on
a modern legal and regulatory framework
which is particularly business friendly. As a
Member State of the European Union, this
framework is largely predefined by European
Directives. However, since the national market is very limited, the legislator has used the
margin for manoeuvre left by these directives
to create an environment which supports
the setting up of tailor made products and
services for an international clientele.
At the same time there is a strong culture
of investor protection. Two supervisory
authorities – the Commission de surveillance
du secteur financier (CSSF) and the Commissariat aux assurances (CAA) – are in charge
of the prudential supervision of financial and
insurance activities respectively.
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Today the Luxembourg financial
centre is the largest investment
fund centre in Europe - and
second in the world after the
United States - the leading private
banking centre in the Eurozone
and the largest captive reinsurance
centre in Europe.
Origin of banks established
in Luxembourg
Germany
26
France
15
Switzerland
12
China
10
Italy
10
United Kingdom
8
Sweden
7
United States
144 banks, subsidiaries or branches of
major banking institutions from
28 different countries, are established
in Luxembourg and focus their activities
on the international markets.
In the financial services area, this multinational
character of Luxembourg plays a particularly
decisive role. Each bank, through its own market
specificities and related expertise, contributes to
the success of the financial centre.
6
Belgium
5
Brazil
5
Japan
5
Luxembourg
5
Other
countries
30
0
5
10
15
20
25
30
35
40
45
50
Source: CSSF, 30 June 2015
PRIVATE
BANKING
Private banking is a pillar of the
Luxembourg financial centre.
Services offered in this area vary
from an advisory service, where the
client takes his or her own investment decisions based on recommendations made by the relationship
manager, to discretionary management, where it is the relationship
manager who manages the assets of
the client in line with that client’s
risk profile and long term objectives.
Banks, independent wealth managers and
financial advisers can also develop tailor
made solutions for an increasingly demanding clientele that expects highly qualified
professional assistance, a personalised
service and privacy.
Investors benefit from the fact that wealth
managers in Luxembourg are accustomed to
serving an international clientele and have
acquired extensive expertise in international
financial engineering.
For high net worth individuals, a number of
banks apply a global approach to structuring
a customer’s wealth over the longer term,
incorporating financial and professional
assets, life assurance and real estate, with
a view to optimal long term asset planning
and ultimate devolution.
Wealth protection and succession planning
are largely based on the creation of specific
wealth management vehicles and on fiduciary
operations.
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The family wealth management company
(société de gestion de patrimoine familial
or SPF) provides individuals with a structure
intended solely for the management of their
private wealth. The exclusive objective of an
SPF is the acquisition, holding, management
and sale of financial assets. It is not allowed
to undertake any commercial activity.
The law does not require a family link
between the various shareholders. The SPF
is also open to wealth management entities,
the exclusive purpose of which is to manage
the wealth of private individuals, as well as
to intermediaries holding shares in the SPF
on a fiduciary basis or in a similar capacity,
on behalf of investors who are themselves
eligible.
Designed as an investment company, the SPF
must take the form of a capital company. It is
a simple investment company, which is both
flexible and complies with EU regulations.
Since the activity of an SPF is not commercial
but is close to that of an investment fund,
it benefits from a subjective or personal tax
exemption regime.
Luxembourg is one of the first countries to
have implemented a specific legal and regulatory framework for family offices activities,
limiting the provision of these services to
certain categories of regulated professionals.
To complete its range of tools for the
management of private assets, Luxembourg
is working on the introduction of a private
foundation.
CONFIDENTIALITY AND THE FIGHT
AGAINST MONEY LAUNDERING
Professional secrecy in the banking sphere is
anchored in Luxembourg law in the same way as
that of the medical professions. Its purpose is to
protect the privacy of the client.
Banking secrecy is however far from being absolute.
Luxembourg will move, as from 1 January 2015,
to automatic exchange of information as regards
clients residing in other EU countries and has agreed
with the other EU members to an enlarged scope for
this directive.
Luxembourg is among the early adopters of the
application of automatic exchange at OECD level
from 2017.
As a member of the Financial Action Task Force
(FATF), Luxembourg also applies very strict rules
aimed at fighting money laundering and terrorist
financing. The law imposes on all financial sector
professionals the onus of verifying the identity of
the client and the beneficial owner before establishing a business relationship or executing a transaction and of informing the competent authorities
immediately of any suspect operation.
In addition to the legal and regulatory constraints
with which financial sector actors must comply, the
associations and professional organisation of the
financial centre have adopted ethical codes and
codes of practice in which they define the professional standards to be applied by their members.
INVESTMENT
FUNDS
Collective investment management
is the flagship activity of the
Luxembourg financial centre.
A sector that has been developing
since the mid 1980s, Luxembourg
is today by far the largest domicile
in the world for undertakings for
collective investment in transferable
securities (UCITS). The UCITS label,
which is granted to funds that
comply with rules laid down in
European directives on this subject,
is recognised well beyond the
frontiers of the European Community.
The “European passport” granted to UCITS
enables them to be sold cross-border into
any EU Member State. Since Luxembourg
was the first country to offer this passport,
most of the large asset management companies chose Luxembourg as the platform from
which to distribute their investment funds
worldwide.
All other funds that are non-UCITS and
notably hedge funds, fall under the scope of
the Alternative Investment Fund Managers
Directive (AIFMD). This means that they are
also granted a “European passport” that
enables them to be sold in all EU Member
States.
In Luxembourg, promoters can take advantage of a unique reservoir of product
development experts, lawyers, accountants
and service providers able to assist in the
development, launch and distribution of
their funds.
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The legal and regulatory framework offers
significant flexibility in the design of investment products. Under the roof of a single
legal entity, multiple compartment funds
(umbrella funds) are able to create subfunds that function like independent undertakings for collective investment, each with
its own specific investment policy, its own
units or shares and its own investor base.
CROSS BORDER DISTRIBUTION OF UCIs
Market shares
As each fund and each sub-fund can itself
issue different classes of shares with, for
example, different commission structures,
it is possible to create investment products
that meet the requirements of different
markets or specific client groups.
This extraordinary flexibility, which enables
investment funds to be tailor made, has led
Luxembourg to become the world leader in
the cross-border distribution of investment
funds.
67% of investment funds distributed
internationally are domiciled in Luxembourg.
Luxembourg
67.0%
Ireland
20.0%
France
4.0%
United Kingdom
2.0%
Others
7.0%
Figures as at 31 December 2014
Source: PwC, Global Fund Distribution
Luxembourg has designed two specific
investment vehicles for professional and
qualified investors.
The investment company in risk capital
(société d’investissement en capital à risque
or SICAR), is a regime that is complementary
to the undertaking for collective investment.
It was designed specifically as a vehicle for
investment in private equity and venture capital.
Investment in “risk capital” means directly or
indirectly investing capital in companies with
a view to their creation, development or
floatation on the stock market.
In contrast to investment funds a SICAR is
not required to respect the principle of risk
diversification in its asset allocation. Investment in a SICAR is limited to “well informed”
investors.
Investment in the specialised investment
fund (SIF) is likewise limited to professional
and “well informed” investors. Created in
2007, these specialised funds may invest in
all types of assets and can therefore be used
both for traditional investment in securities
and money market instruments or for investment in real estate, venture capital and
the creation of hedge funds. The principle of
risk diversification is maintained, but the law
does not define any quantitative limitations.
By comparison with the regime for undertakings for collective investment, a SIF has
less strict publication requirements and is
operationally more flexible in its activities.
There is no need to appoint a promoter.
The SICAR and the SIF can both adopt
a multiple compartment structure.
A variety of structures can be used for
investment in real estate. These vehicles
may be constituted as regulated entities
(in the form of an undertaking for collective
investment or an investment company in
risk capital) or unregulated (in the form of
a commercial company or a securitisation
vehicle). The choice of structure will depend
on the tax regime applicable to the investor.
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In recent years, Luxembourg has developed its
activity in the area of microfinance and has
become a leading centre for the domiciliation of
microfinance investment vehicles (MIVs)
with 52% of all assets worldwide domiciled in
Luxembourg. Microfinance institutions, which
offer banking services to micro-entrepreneurs
in developing countries, are increasingly
turning to the capital markets to raise money
to increase their reach into the poor urban and
rural areas which they serve. Microfinance
investment vehicles have been created to
meet this demand for capital, at the same
time producing some return for socially aware
investors. These vehicles can make use of a
variety of regulated and unregulated structures
to meet their needs.
MAIN DISTRIBUTION MARKETS
Number of Luxembourg funds distributed
in each country
Peru
356
Chile
South America
Middle East
Asia
Europe
917
Bahrain
435
Taiwan
641
Hong Kong
862
Singapore
1878
United Kingdom
3258
France
3470
Austria
4067
Switzerland
Large European countries remain the principle
markets targeted by promoters who distribute
their investment funds from Luxembourg,
however Luxembourg products are also widely
marketed in Asia and South America.
4098
Germany
4704
0
1000
2000
3000
4000
Figures as at 31 December 2014
Source: PwC, Global Fund Distribution
FINANCIAL
SERVICES FOR
COMPANIES
Banks in the Luxembourg
financial centre offer a wide
range of financial services to large
and medium sized companies.
The solutions offered are often based on
structures and products specifically designed
in Luxembourg to optimise company
financial management.
In addition to services linked to the
launch, acquisition, transfer or sale
of a company, they propose treasury
management services (factoring,
trade finance and insurance, market
risk management) and financial
engineering (financial structuring,
asset and liability management, etc.).
is to optimise the management of holdings
in a group of enterprises, its field of potential
activity is much wider.
Furthermore, Luxembourg banks
have recognised expertise in
company administration under
different jurisdictions.
While the principal vocation of the société
de participations financières (SOPARFI)
In addition to owning and controlling shares,
a SOPARFI can perform activities related to
the management of its holdings (such as
financial advice or financing of activities),
as well as undertake any commercial activity
that is directly or indirectly connected to the
management of its holdings. These companies
benefit from double taxation treaties and fall
within the scope of the European ParentSubsidiary Directive, which enables them to
benefit, under certain conditions, from tax
exemption on share-related income.
In addition to the role they play for company
headquarters, SOPARFI are equally useful for
structuring a portfolio of real estate.
Luxembourg law also offers numerous
opportunities for the creation of regulated
and unregulated securitisation vehicles
and securitisation funds.
These vehicles benefit from a neutral tax
regime and can be used for the securitisation
of any type of risk or asset, opening up a
large field of application. Furthermore, a
securitisation vehicle can adopt an umbrella
structure enabling the same vehicle to
be used securely for multiple and separate
securitisation transactions.
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Multinational companies that wish to
offer harmonised pension plans and death
or invalidity benefits to their expatriate
workforce will find several Luxembourg
pension vehicles designed for this purpose.
• The société d’épargne-pension à capital
variable (SEPCAV), which is comparable to
an investment fund with variable capital,
is appropriate for defined contribution
pension plans.
• The association d’épargne-pension (ASSEP)
is suitable for defined contribution and
defined benefit plans and can accommodate both types of plans in a single legal
structure by adopting a multiple compartment structure.
• The CAA pension fund lies within the
framework of insurance legislation and is
under the supervision of the Commissariat
aux Assurances (CAA).
Alternative solutions are offered by the
group insurance contract and the pension
trust. For multinational companies interested in centralising the pension assets of
their European or non-European entities,
Luxembourg offers various vehicles for the
pooling of pension funds. Several large
international groups such as Electrabel
and Unilever have set up pooling vehicles
in Luxembourg.
COVERED BONDS
A covered bond (in French: lettre de gage and
German: Pfandbrief) is a debt security guaranteed by
a cover pool specifically allocated to these securities.
Four types of covered bond may be issued:
• the public covered bond, guaranteed by claims
against, or guaranteed by, public entities, the state
sector or public local entities;
• the mortgage bond, guaranteed by rights in or
security interest over real estate;
• the moveable asset covered bond, guaranteed by
real assets such as ships, aircraft, boats and trains.
• the mutual covered bond, guaranteed by claims
on other credit institutions that are member of a
cooperative banking system.
Luxembourg offers optimal protection to the holders
of covered bonds by granting them a priority claim
on the cover assets in the case of failure of the issuer.
Furthermore, due to the international dimension of
the law on risk coverage, Luxembourg banks issuing
covered bonds can achieve real international
diversification of their assets.
INSURANCE
SERVICES
The principal international
insurance groups are all present in
Luxembourg and make full use of
the freedom to offer cross border
services to distribute life assurance
products in the European Union.
Luxembourg insurance companies
are specialised in unit linked life
assurance, a product that enables
clients to combine insurance cover
with a return on investment,
notably in policies linked to
dedicated investment funds.
These products are increasingly
used in wealth management.
Thanks to the “super privilege” enshrined
in Luxembourg regulation, subscribers to
a Luxembourg life assurance contract
benefit from a level of legal protection that
is unique in Europe. This privilege, which
gives the subscriber priority over all other
creditors if the insurance company gets
into financial difficulty, has contributed to
making life assurance contracts a real wealth
management tool that provides access to
a wide range of financial products within a
particularly secure framework.
Luxembourg property and casualty
(non-life) insurance companies, notably
maritime mutual insurance companies and
other specialised insurance companies, also
principally target the international market.
In 1984, Luxembourg created a specific legal
framework for reinsurance activities. Since
then, the financial centre has attracted more
than 250 reinsurance companies, above all
captive reinsurance companies belonging to
industrial, commercial and financial groups,
making Luxembourg a European leader in
this field.
A captive reinsurance company offers these
groups numerous advantages such as the
cover of particular risks that are difficult to
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insure in the open market, reduction and/or
optimisation of risk financing costs, independence from insurance market cycles,
the retention of underwriting profits and
direct access to the wholesale professional
reinsurance market. The establishment of
significant technical provisions to cover
fluctuations in loss ratios, required by law,
also enables captive reinsurance companies
to postpone income tax over relatively long
periods.
CROSS-BORDER DISTRIBUTION
OF INSURANCE PRODUCTS
Breakdown of premium income
The attractiveness of Luxembourg as a
domicile for reinsurance companies has
further increased following the transposition
into national law of the European Reinsurance
Directive which introduced a European
passport. This permits qualifying companies
based in Luxembourg to offer their services
throughout the Europe Union.
The Luxembourg insurance sector is dominated
by life assurance, which accounted for some
67% of total insurance premium income of
more than 36 billion EUR in 2014.
91.25% of insurance premiums
are sold internationally.
Life cross-border
60.1%
Life Luxembourg
5.5%
Non-life cross-border
6.3%
Non-life Luxembourg
2.5%
Reinsurance cross-border
24.2%
Reinsurance Luxembourg
1.5%
Source: Commissariat aux Assurances
Annual report 2014-2015
An innovative
mindset
Alongside the traditional pillars of
the financial centre, Luxembourg has
developed other activities with a view
to maintaining its competitiveness in
an evolving business environment.
An innovative mindset has helped
it to achieve leading positions in
the fields of digitalisation, the
internationalisation of the renminbi,
Islamic finance and responsible
finance.
E-commerce, e-payments and FinTech
Luxembourg is already a leading e-payments
hub in Europe. Located in the centre of the
Golden Loop, it is connected to the major
European cities via its world-leading
infrastructure. In fact, according to the
World Economic Forum’s Global Information
Technology Report 2015, Luxembourg ranks
first for international bandwidth and
knowledge-intensive jobs. Moreover, 40% of
Europe’s Tier-IV data centers are located in
Luxembourg. Low latency networks connect
the Grand Duchy with the major European
cities Amsterdam, Brussels, Frankfurt, London
and Paris.
Due to its central location and its multilingual
workforce, Luxembourg hosts the European
headquarters of major e-commerce
companies such as Amazon and Rakuten,
which serve the European market out of
Luxembourg.
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Activities in Luxembourg in the field of
e-payments increased significantly following
the rapid implementation of the 2009
European E-Money Directive. Both payment
and e-money institutions can set up
business in Luxembourg and passport their
international services throughout the EU.
The Luxembourg regulator CSSF was also the
first European regulator to take position on
virtual currencies acknowledging them as
scriptural money. The CSSF invites players
in the field of virtual currencies to submit
a business plan and to benefit from a
regulated and secure status, which particularly
enhances the credibility vis-à-vis clients and
enables potential passporting.
It is thus natural, that Luxembourg is also expanding its activities in the FinTech area. With over 140
banks and more than 1700 ICT companies, and a
highly specialised cross-border ecosystem, Luxembourg offers ideal conditions for FinTech companies
to expand their business and reach a European
customer base. Startups are offered various funding
schemes for different stages of their development.
Thanks to the financial centre which provides a
significant local market and easy access to decision
makers, Luxembourg serves as the ideal platform for
launching a new product in a secure environment.
Amsterdam
London
Brussels
Frankfurt
Luxembourg
Paris
Renminbi business
In recent years, Luxembourg has become
the most important hub in the Eurozone for
cross-border renminbi investment products
and thus plays a significant role in the
internationalisation of the renminbi. Its
activities focus particularly on RMB
investment funds, Dim Sum bonds, RMB
clearing, loans and deposits in RMB and
RMB trade finance. In all these categories,
Luxembourg plays a leading role amongst
European financial centres.
The Luxembourg Stock Exchange (LuxSE) is
the largest renminbi bond listing center in
Europe, both by volume and number. The
first Dim Sum bond issued by a European
company was listed on the LuxSE in May
2011. In line with its position as the leading
exchange for international securities, the
Exchange ranks in third place globally, with
a market share of 50% of Dim Sum bond
Listings outside Asia, ranking third behind its
Asian peers from Hong Kong and Singapore.
International renminbi fund promoters
include many of the most prestigious names
in the industry such as BlackRock, Fidelity,
HSBC and Franklin Templeton. These and
other institutions are eager to develop the
scope of their renminbi business. Five of the
six Chinese asset managers who opted to
launch funds in Europe via their Hong Kong
subsidiaries have selected Luxembourg as a
domicile for their funds.
Due to Luxembourg’s status as a preferred
platform for international financial
institutions to branch out into Europe and
its expertise in cross-border finance, six
Chinese banks have set up their continental
European hubs in Luxembourg: Bank of
China, ICBC, China Construction Bank,
Agricultural Bank of China, China Merchants
Bank and Bank of Communications.
Recently, Luxembourg’s position as a leading
hub for the internationalisation of the
renminbi was reinforced by the granting of
an RQFII quota by the Chinese authorities.
Prior to that, ICBC was designated RMB
clearing bank in Luxembourg.
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Islamic finance
Luxembourg has also positioned itself as
an Islamic finance centre, a role that has
grown out of pioneering Shariah compliant
services in Europe. Luxembourg was the first
European country to establish an Islamic
financial institution in 1978 and the first to
authorise an Islamic insurance company in
1983. Today, Luxembourg takaful contracts
are sold cross-border into several European
markets.
In 2002, the Luxembourg Stock Exchange
was the first European stock market to list a
sukuk (Islamic bond). In 2014, Luxembourg
was the first country to issue a sovereign
sukuk in euros. In the intervening period,
a considerable number of sovereign and
corporate issuers have chosen to list
sukuk on the Luxembourg stock exchange
including, in 2014, high-profile sukuks of
the state of Pakistan, the Republic of South
Africa and Goldman Sachs.
As one of the leading investment fund
centres of the world and the undisputed
leader in cross border fund distribution,
Luxembourg has attracted a large number of
Shariah compliant investment funds. Today
Luxembourg ranks third worldwide, after
Malaysia and Saudi Arabia, for the number
of Islamic investment funds.
High net worth individuals and Gulf
based institutional investors have likewise
identified Luxembourg as an efficient
domicile from which to manage complex
international portfolios, especially in the real
estate domain. The ability of Luxembourg
regulated and unregulated investment
vehicles to accomodate different types
of Islamic structure, and the presence of a
large number of experienced professionals,
is central to this success.
In 2010, the Luxembourg Central Bank (BCL)
became the first European central bank to be a
member of the Islamic Financial Services Board,
motivated by the need to gain experience of
supervisory practice in this area. The BCL is also
the only European shareholder of the International
Islamic Liquidity Management Corporation (IILM).
Luxembourg looks forward to the establishment of
a first Islamic bank in Luxembourg, confident that
this will once again serve as a pioneering example
in bringing cross border products and services to
20 million Muslims in Europe.
Responsible Finance
Luxembourg is eager to deploy the expertise
it has acquired in the financial sector to
create a social impact. Already being a major
hub for microfinance (see chapter on
investment funds), Luxembourg has actively
supported the foundation of the European
Microfinance Platform (e-MFP), the
federating body for European microfinance
industry, of which it hosts its secretariat. In
2014, the Inclusive Finance Network
Luxembourg (InFiNe.lu) was founded. InFiNe.
lu links a group of stakeholders around the
common objective of promoting financial
inclusion through the development of
knowledge and collaboration among its
members.
Luxembourg is the top ranked domicile for
promoters of responsible investment funds:
30% of all European RI vehicles (and 35% of
RI assets) are managed out of Luxembourg.
By granting a label to responsible investment
funds, Luxembourg gives confidence to
investors and helps raise capital for responsible
investment. The LuxFLAG agency grants
three recognised labels to funds following
responsible investment strategies.
In the field of impact investing, Luxembourg
is particularly interesting for project
promoters due to the presence of a large
community of wealth managers, family
offices and foundations. Moreover, the EIIL
(European Impact Investing Luxembourg)
association contributes to international
research.
24
25
In 1999, the Luxembourg government set up
a public-private partnership, the Financial
Technology Transfer Agency (ATTF) to
conduct all financial training programmes
delivered in emerging and in transition
economies. Cooperating with more than
40 partner countries around the world, the
aim of ATTF is to strengthen the financial
structure by building capacity, thereby
supporting sustainable development. The
overriding objective is to provide technical
assistance in financial matters by the
transfer of knowledge.
By providing an umbrella structure, donors benefit
from a simplified structure that relieves them of
the day-to-day administration of the foundation.
At the same time they can influence and control
their project through board meetings and the
provision of detailed impact reports.
The Fondation de Luxembourg is a publicprivate partnership that combines finance
and philanthropy. Established in 2008 by
the State of Luxembourg and the Oeuvre
National de Secours Grand-Duchesse
Charlotte, the Foundation seeks to guide and
assist donors who wish to make a long-term
commitment to a significant philanthropic
project. The Foundation acts as a consultant
and service provider. It is a gateway to
associations and NGOs around the world
and can assist donors in the selection of
their ideal charitable project.
Microfinance
Climat
Responsible
Respect
Human
Carbon free
AN ENVIRONMENT
ADAPTED TO
FINANCIAL ACTIVITIES
In addition to the traditional
financial sector support services
such as accountants, auditors, legal
and tax advisers, numerous other
financial sector professionals
carrying on activities related or
supplementary to a financial sector
activity have developed alongside
the financial centre itself:
domiciliary agents, professionals
providing company formation and
management services, client communication agents, administrative
agents, IT system operators, etc.
Any individual or company exercising such an
activity is subject to authorisation and supervision by the Luxembourg supervisory authority,
the Commission de surveillance du secteur
financier - CSSF. By encouraging the outsourcing
of non-core activities, this policy has reinforced
the competitiveness of financial sector companies while at the same time guaranteeing
the high quality of support services and the
confidentiality required in the sector.
The Luxembourg Stock Exchange specialises in the listing of international securities.
It currently lists around 40,000 securities,
including some 29,000 bonds, issued by
3,000 issuers based in 105 countries. The
second segment in order of importance is
that of undertakings for collective investment, with more than 6,620 different instruments. This is followed by Global Depositary
Receipts issued by companies based in
developing countries.
The Luxembourg Stock Exchange offers two
markets to issuers: a market regulated by
European rules and the Euro MTF market
which enables non-European issuers who
do not require a European passport nevertheless to obtain a listing in a recognised
financial centre in Europe.
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27
In terms of professional training and higher
education, Luxembourg is well equipped. With
a view to promoting continuous training, the
Luxembourg School of Finance at the
University of Luxembourg and the Institute
for Training in Banking (IFBL – L’Institut)
institutions offering provide specific training in
banking and finance.
The Institut de Formation Bancaire,
Luxembourg (IFBL) offers modular training
programmes that cover all the professional
activities of the financial centre.
At the undergraduate and postgraduate
level, the Luxembourg School of Finance
and several other foreign institutions and
organisations enrich the centre with their
multilingual educational programmes and
research work.
Opened in September 2014, the Luxembourg
Freeport offers a sophisticated, highly secured
logistics hub for managing and storing valuable
goods in optimal preservation conditions and with
no time limit under a regime of suspension of VAT
and customs duties.
The ideal location of the Freeport, at the Luxembourg
airport, enables valuable goods to be shipped easily
from anywhere to anywhere by road or by air.
In addition to storage, a whole range of value adding
services is offered, such as photography for catalogues,
show rooms for display, restoration, expert opinions,
framing, shipping and customs formalities.
www.luxembourgforfinance.com
Agency for the Development of the Financial Centre
•
P.O. Box 904, L-2019 Luxembourg
•
Tel. (+352) 27 20 21 1
•
Fax (+352) 27 20 21 399
•
E-mail lff@lff.lu
© LFF August 2015
12, rue Erasme