luxembourgthe international hub_for_financial_services (1)
TRANSCRIPT
Luxembourg, THE international hub for financial services
By Fernand Grulms
CEOLuxembourg for Finance
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Financial services made in Luxembourg
• Leading investment fund centre in Europe
• Leading wealth management centre in the Eurozone
2Source: EFAMA, Luxembourg Bankers’ Association
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Financial services made in Luxembourg
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Law firms
Audit,Tax
Banks,Other financial Intermediaries,
Insurance
44,000
ICT
Other
27,00045 % of GDP(= 16 BIO EUR)
Luxembourg is one of the mostcompetitive economies in Europe….
and in the World !
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International competitiveness indicators
Name of Index SourceLuxembourg
rankingNumber of
participants
Growth
environment scoreGoldman Sachs 1 170
Global competitiveness
IndexIMD 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
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Luxembourg’s economy
• Above all service economy (81% of GDP income)
• Good quality of life
• High standard of living
GDP growth Luxembourg versus EU (15)
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Luxembourg, a solid base
• Large number of European institutions
• Headquarter of Arcelor-Mittal (world largest steel producer)
• Headquarter of SES (world leader in global satellite
communications)
• RTL Group World Headquarters (Multimedia)
• Cargolux Headquarters (Best All-Cargo Airline 2008)
• European Headquarters Amazon, Apple
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Luxembourg, an international platform
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Luxembourg, an international platform
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Luxembourg, an international platform
Direct investment inflows OECD countries (2006)
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Luxembourg, an international platform
Direct investment outflows OECD countries (2006)
The institutional framework
1) EU legislation (directives)– European passport (Home country control)
• Banks• Insurance & reinsurance• Investment service providers• Investment funds• Pension funds
– Without european passport• Cross-border allowed but host country must approve
(if provided to retail customers)• Examples
o Venture capital & private equityo Real estateo Securitisation
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The institutional framework
2) BIS rules
3) IOSCO rules
4) IAIS principles
5) FATF recommandations
6) OECD recommandations
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Institutional organisation
Minister for the Treasury
Commission for the supervision of the financial sector
InsuranceCommission
Luxembourg central bank
Macro supervisionSystemic risk
LiquidityPayment systems
BanksFinancial intermediaries
Securities markets
Investment fundsPension fundsOther vehicles
Life insuranceP & C insurance
ReinsuranceCaptives
Pension funds
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The financial centre today
• 154 Banks
• > 250 other professional intermediaries (asset managers, brokers, transfer agents…)
• > 3,000 Investment funds
• 188 asset management companies for collective investments
• 54 Life insurance companies
• 37 P&C insurance companies
• 262 reinsurance captives
• 1 direct reinsurer (Swiss Re for EU business)
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Other service providers today
Professional service providers have great know-how on structuring international financial transactions
– Business & tax lawyers, notaries – Auditors, consultants, accounting firms– EDP providers (software & hardware)
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Origin of banks in Luxembourg
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Free provision of services in the EU
Germany 55Austria 29Belgium 55Bulgaria 5Cyprus 10Denmark 33Spain 45Estonia 11Finland 28France 57Gibraltar 2Greece 29Hungary 12Ireland 28Iceland 5Italy 45Latvia 11Liechtenstein 2Lithuania 11Malta 9Norway 13Netherlands 44Poland 15Portugal 30Czech Republic 12Romania 5United Kingdom 45Slovakia 12Slovenia 11Sweden 27Total notifications 696Banks concerned 75
Luxembourg banks providing services
in the EUCountry
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Cross-border finance: insurance
Life Crossborder
83.9%
LifeLuxembourg
4.4%
Non lifecrossborder
6.3%
Non LifeLuxembourg
5.4%
Source: Commissariat aux Assurances 2007
Total: € 12.44 billions
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Life insurance: origin of premiums
Source: Commissariat aux Assurances 2007
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Luxembourg a sound financial centreSolvency ratio since 1990
0
5
10
15
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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
The world’s most sound banking systems:(7.0 = healthy, with sound balance sheets)
1.Canada – 6.8
2.Sweden – 6.7
3.Luxembourg – 6.7
4.Australia – 6.7
5.Denmark – 6.7
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« The financial system remains sound, resilient to potential adverse shocks and well supervised »
Latest IMF report
Luxembourg a sound financial centre
Luxembourg Stock ExchangeStrong listing activity
Leading position for international bonds
Quotation lines(as at 31 January 2009)
Bonds 32,570EUR 19,554Others 13,016
Warrants 7,735
Shares 289Domestic 38Foreign 251
UCIs 8,182Domestic 8,015Foreign 167
Total 48,776
Quotation lines(as at 31 January 2009)
Bonds 32,570EUR 19,554Others 13,016
Warrants 7,735
Shares 289Domestic 38Foreign 251
UCIs 8,182Domestic 8,015Foreign 167
Total 48,776
3,700 Issuers (100 countries, and 13 supranationals are represented on the exchange)
• Leading exchange for listing GDRs in the world
• In total 222 GDRs listed
• Primarily issued by companies based in Asia, more particularly from India
Leader for GDRs (Global Depositary Receipts)
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Luxembourg Stock ExchangeStrong listing activity
Leading position for international bonds
Quotation lines(as at 31 January 2009)
Bonds 32,570EUR 19,554Others 13,016
Warrants 7,735
Shares 289Domestic 38Foreign 251
UCIs 8,182Domestic 8,015Foreign 167
Total 48,776
Quotation lines(as at 31 January 2009)
Bonds 32,570EUR 19,554Others 13,016
Warrants 7,735
Shares 289Domestic 38Foreign 251
UCIs 8,182Domestic 8,015Foreign 167
Total 48,776• In second place behind the NYSE and ahead of
London in the quotation of depositary receipts
• In total 221 GDRs listed as at December 31, 2008
• Primarily issued by companies based in Asia, more particularly from India
Leader for GDRs (Global Depositary Receipts)
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Dublin25%
Bourse deLuxembourg
46%DeutscheBörse 11%
London10%
Euronext5%
Others 3%
Strategic re-positioning
Year2,000Year2,000
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Main areas of competence
• Investment funds• Private banking & wealth management• Insurance & reinsurance• Corporate finance • Pension funds• Securitisation vehicles• Venture capital & private equity vehicles• Real estate structures
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Net assets of Luxembourg domiciled UCIs
The Luxembourg investment fund sector
Strong development after UCITS I
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2 200
2 400
1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
€ billions
August 081 917.993
Growth rate12 months: -5.76%
YTD: -6.87%
Figures as at August 31, 2008 Source: CSSF
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The Luxembourg investment fund sector
… at a glance:
• > 3 000 investment funds
• > 11 000 fund units
• almost 2 000 billion euros of assets under management
• more than 32 000 distribution agreements for Luxembourg retail funds (“UCITS”)
Figures as at May 2008 – Source: CSSF
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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
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European fund industry
UCITS & NON-UCITS
CountryAssets
€ millionsMarketShare
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 7.8Total 7 380 500 100.0
UCITS
CountryAssets
€ millionsMarketShare
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 7.7Total 5 704 200 100.0
Figures: March 2008Source: EFAMA
(1) Data as at end February, 2008(2) Data as at end 2007
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The top 16 countries of distribution outside the European Union
Target countryLuxembourg fund
registrationsSwitzerland 2 390
Norway 1 022
Singapore 874
Hong Kong 802
Bahrain 641
Liechtenstein 504
Taiwan 463
Macao 398
Chile 344
Jersey 303
South Korea 300
Iceland 206
Guernsey 185
Gibraltar 143
Lebanon 94
Trinidad & Tobago 74
Others 402
Total registrations 9 145
Sources : Lipper Hindsight 31/12/2006, PWC Global Fund Distribution 2007
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The Luxembourg investment fund sector
Profile of Luxembourg investment funds
KEY CRITERIA UCITS Non-UCITS SIF SICARInvestment restrictions
(eligible assets)High Medium Low Medium - High
Risk diversification High Medium Low None
Ease of public
distributionHigh 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 AllInstitutional /
HNWIInstitutional /
HNWI
Luxembourg12%
B, F, D46%
Other EU16%
Latin AmericaUSASIAMiddle East…
26%
Largest private banking in the Eurozone
Private Banking AuM au Luxembourg300 BIO EUR
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Private equity & venture capital (SICAR)
• Those who have used it:– AXA (largest insurance company in the world)– Credit Suisse (global infrastructure vehicle)– Deutsche Bank (Spanish real estate, Dubai projects)– KKR
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Captive reinsurance
Industrial company
Direct insurer
Professional reinsurer
Insurance premiums
reinsurance premiums
Captive
reinsurance premiums
Insurance premiums
(« The excess » )
participation
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Country of origin of mother-company
Source: Commissariat aux Assurances 2007
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Economic sector of mother company
Source: Commissariat aux Assurances 2007
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Origin of premiums 2007Total amount = 3 BIO Euro
Source: Commissariat aux Assurances 2007
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Conclusion
• Luxembourg is international
• Luxembourg is diversified
• Luxembourg is well regulated
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Thank-you
www.luxembourgforfinance.lu