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Luxembourgthe international hub_for_financial_services (1)

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Luxembourgthe international hub_for_financial_services (1)

  1. 1. Luxembourg, THE international hub for financial services By Fernand Grulms CEO Luxembourg for Finance
  2. 2. Financial services made in Luxembourg <ul><li>Leading investment fund centre in Europe </li></ul><ul><li>Leading wealth management centre in the Eurozone </li></ul>Source: EFAMA, Luxembourg Bankers’ Association
  3. 3. Financial services made in Luxembourg 45 % of GDP (= 16 BIO EUR) Law firms Audit, Tax Banks, Other financial Intermediaries, Insurance 44,000 ICT Other 27,000
  4. 4. Luxembourg is one of the most competitive economies in Europe…. and in the World !
  5. 5. International competitiveness indicators Name of Index Source Luxembourg ranking Number of participants Growth environment score Goldman Sachs 1 170 Global competitiveness Index IMD Lausanne 5 55 International Business costs KPMG 5 121 Index of Economic Freedom Heritage Foundation 8 157 Safest city in the world Mercer Human Resources Consulting 1 215
  6. 6. Luxembourg’s economy <ul><li>Above all service economy (81% of GDP income) </li></ul><ul><li>Good quality of life </li></ul><ul><li>High standard of living </li></ul>GDP growth Luxembourg versus EU (15)
  7. 7. Luxembourg, a solid base <ul><li>Large number of European institutions </li></ul><ul><li>Headquarter of Arcelor-Mittal ( world largest steel producer ) </li></ul><ul><li>Headquarter of SES ( world leader in global satellite communications ) </li></ul><ul><li>RTL Group World Headquarters ( Multimedia ) </li></ul><ul><li>Cargolux Headquarters ( Best All-Cargo Airline 2008 ) </li></ul><ul><li>European Headquarters Amazon, Apple </li></ul>
  8. 8. Luxembourg, an international platform
  9. 9. Luxembourg, an international platform
  10. 10. Luxembourg, an international platform Direct investment in flows OECD countries (2006)
  11. 11. Luxembourg, an international platform Direct investment out flows OECD countries (2006)
  12. 12. The institutional framework <ul><li>1) EU legislation (directives) </li></ul><ul><ul><li>European passport (Home country control) </li></ul></ul><ul><ul><ul><ul><li>Banks </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Insurance & reinsurance </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Investment service providers </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Investment funds </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Pension funds </li></ul></ul></ul></ul><ul><ul><li>Without european passport </li></ul></ul><ul><ul><ul><ul><li>Cross-border allowed but host country must approve </li></ul></ul></ul></ul><ul><ul><ul><ul><li>(if provided to retail customers) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Examples </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Venture capital & private equity </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Real estate </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Securitisation </li></ul></ul></ul></ul></ul>
  13. 13. The institutional framework <ul><li>2) BIS rules </li></ul><ul><li>3) IOSCO rules </li></ul><ul><li>4) IAIS principles </li></ul><ul><li>5) FATF recommandations </li></ul><ul><li>6) OECD recommandations </li></ul>
  14. 14. Institutional organisation Minister for the Treasury Commission for the supervision of the financial sector Insurance Commission Luxembourg central bank Macro supervision Systemic risk Liquidity Payment systems Banks Financial intermediaries Securities markets Investment funds Pension funds Other vehicles Life insurance P & C insurance Reinsurance Captives Pension funds
  15. 15. The financial centre today <ul><li>154 Banks </li></ul><ul><li>> 250 other professional intermediaries (asset managers, brokers, transfer agents…) </li></ul><ul><li>> 3,000 Investment funds </li></ul><ul><li>188 asset management companies for collective investments </li></ul><ul><li>54 Life insurance companies </li></ul><ul><li>37 P&C insurance companies </li></ul><ul><li>262 reinsurance captives </li></ul><ul><li>1 direct reinsurer (Swiss Re for EU business) </li></ul>
  16. 16. Other service providers today <ul><li>Professional service providers have great know-how on structuring international financial transactions </li></ul><ul><ul><li>Business & tax lawyers, notaries </li></ul></ul><ul><ul><li>Auditors, consultants, accounting firms </li></ul></ul><ul><ul><li>EDP providers (software & hardware) </li></ul></ul>
  17. 17. Origin of banks in Luxembourg
  18. 18. Free provision of services in the EU
  19. 19. Cross-border finance: insurance Life Crossborder 83.9% Life Luxembourg 4.4% Non life crossborder 6.3% Non Life Luxembourg 5.4% Source: Commissariat aux Assurances 2007 Total: € 12.44 billions
  20. 20. Life insurance: origin of premiums Source: Commissariat aux Assurances 2007
  21. 21. Luxembourg a sound financial centre S olvency ratio since 1990 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Weighted average 8.9 10.3 11.2 11.5 12.1 12.6 12.5 12.4 12.4 13.3 12 12.7 14.3 16.5 16.5 15.2 14.7 14.5
  22. 22. <ul><li>The world’s most sound banking systems: </li></ul><ul><li>(7.0 = healthy, with sound balance sheets) </li></ul><ul><li>Canada – 6.8 </li></ul><ul><li>Sweden – 6.7 </li></ul><ul><li>Luxembourg – 6.7 </li></ul><ul><li>Australia – 6.7 </li></ul><ul><li>Denmark – 6.7 </li></ul><ul><li>« The financial system remains sound, resilient to potential adverse shocks and well supervised » </li></ul>Luxembourg a sound financial centre Latest IMF report
  23. 23. Luxembourg Stock Exchange Strong listing activity <ul><li>3,700 Issuers (100 countries, and 13 supranationals are represented on the exchange) </li></ul>Leading position for international bonds Quotation lines (as at 31 January 2009) Bonds 32,570 EUR 19,554 Others 13,016 Warrants 7,735 Shares 289 Domestic 38 Foreign 251 UCIs 8,182 Domestic 8,015 Foreign 167 Total 48,776 <ul><li>Leading exchange for listing GDRs in the world </li></ul><ul><li>In total 222 GDRs listed </li></ul><ul><li>Primarily issued by companies based in Asia, more particularly from India </li></ul>Leader for GDRs (Global Depositary Receipts)
  24. 24. Luxembourg Stock Exchange Strong listing activity Leading position for international bonds Quotation lines (as at 31 January 2009) Bonds 32,570 EUR 19,554 Others 13,016 Warrants 7,735 Shares 289 Domestic 38 Foreign 251 UCIs 8,182 Domestic 8,015 Foreign 167 Total 48,776 <ul><li>In second place behind the NYSE and ahead of London in the quotation of depositary receipts </li></ul><ul><li>In total 221 GDRs listed as at December 31, 2008 </li></ul><ul><li>Primarily issued by companies based in Asia, more particularly from India </li></ul>Leader for GDRs (Global Depositary Receipts) Dublin 25% Bourse de Luxembourg 46% Deutsche Börse 11% London 10% Euronext 5% Others 3%
  25. 25. Strategic re-positioning Year 2,000
  26. 26. Main areas of competence <ul><li>Investment funds </li></ul><ul><li>Private banking & wealth management </li></ul><ul><li>Insurance & reinsurance </li></ul><ul><li>Corporate finance </li></ul><ul><li>Pension funds </li></ul><ul><li>Securitisation vehicles </li></ul><ul><li>Venture capital & private equity vehicles </li></ul><ul><li>Real estate structures </li></ul>
  27. 27. The Luxembourg investment fund sector Net assets of Luxembourg domiciled UCIs Strong development after UCITS I
  28. 28. The Luxembourg investment fund sector <ul><li>… at a glance: </li></ul><ul><li>> 3 000 investment funds </li></ul><ul><li>> 11 000 fund units </li></ul><ul><li>almost 2 000 billion euros of assets under management </li></ul><ul><li>more than 32 000 distribution agreements for Luxembourg retail funds (“UCITS”) </li></ul>Figures as at May 2008 – Source: CSSF
  29. 29. The Luxembourg investment fund sector Figures as at May 2008 – Source: CSSF Market shares (%) of promoters of Luxembourg domiciled funds by country of origin in terms of assets under management
  30. 30. European fund industry Figures: March 2008 Source: EFAMA <ul><li>Data as at end February, 2008 </li></ul><ul><li>Data as at end 2007 </li></ul>UCITS & NON-UCITS Country Assets € millions Market Share Luxembourg 1 895 400 25.7 France 1 443 900 19.6 Germany 989 500 13.4 Ireland (1) 806 300 10.9 United Kingdom 645 400 8.7 Italy 323 300 4.4 Spain 260 200 3.5 Switzerland 161 200 2.2 Austria 153 200 2.1 Belgium (2) 126 500 1.7 Others 575 600 7.8 Total 7 380 500 100.0 UCITS Country Assets € millions Market Share Luxembourg 1 661 600 29.1 France 1 295 900 22.7 Ireland (1) 651 400 11.4 United Kingdom 554 800 9.7 Italy 254 900 4.5 Spain 250 400 4.4 Germany 235 600 4.1 Belgium (2) 120 400 2.1 Sweden 120 100 2.1 Switzerland 119 600 2.1 Others 439 500 7.7 Total 5 704 200 100.0
  31. 31. The top 16 countries of distribution outside the European Union
  32. 32. The Luxembourg investment fund sector Profile of Luxembourg investment funds KEY CRITERIA UCITS Non-UCITS SIF SICAR Investment restrictions (eligible assets) High Medium Low Medium - High Risk diversification High Medium Low None Ease of public distribution High Medium Low Low Degree of investor protector High High Low Medium Degree of supervisor High High Low Medium Time to establish Low - Medium Medium - High Very low Low Target investors All All Institutional / HNWI Institutional / HNWI
  33. 33. Largest private banking in the Eurozone Private Banking AuM au Luxembourg 300 BIO EUR Luxembourg 12% B, F, D 46% Other EU 16% Latin America US ASIA Middle East … 26%
  34. 34. Private equity & venture capital (SICAR) <ul><li>Those who have used it: </li></ul><ul><ul><li>AXA (largest insurance company in the world) </li></ul></ul><ul><ul><li>Credit Suisse (global infrastructure vehicle) </li></ul></ul><ul><ul><li>Deutsche Bank (Spanish real estate, Dubai projects) </li></ul></ul><ul><ul><li>KKR </li></ul></ul>
  35. 35. Captive reinsurance Industrial company Direct insurer Professional reinsurer Insurance premiums reinsurance premiums Captive reinsurance premiums Insurance premiums (« The excess » ) participation
  36. 36. Country of origin of mother-company Source: Commissariat aux Assurances 2007
  37. 37. Economic sector of mother company Source: Commissariat aux Assurances 2007
  38. 38. Origin of premiums 2007 Total amount = 3 BIO Euro Source: Commissariat aux Assurances 2007
  39. 39. Conclusion <ul><li>Luxembourg is international </li></ul><ul><li>Luxembourg is diversified </li></ul><ul><li>Luxembourg is well regulated </li></ul>
  40. 40. Thank-you www.luxembourgforfinance.lu

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