LUXEMBOURG ATTRACTS MORE FUNDS AND BANKS and LUXEMBOURG LAW REPLACES ENGLISH LAW IN FINANCIAL CONTRACTS
Luxembourg’s role as a financial hub showed continuing growth last year in both funds and banking, including payment and e-money, the industry's lobbying group said Wednesday.
“It is clear that the Grand Duchy is a location of choice for a widening range of financial services, as well as an EU hub for firms considering their post-Brexit plans,” Luxembourg for Finance CEO Nicolas Mackel said in a statement.
Luxembourg financial regulator CSSF issued 111 new operating licences to a variety of global asset managers, private equity firms, banks and payment institutions in 2019. The Commissariat aux Assurances (CAA) granted eight licences to insurance companies.
The number of MiFID licences granted signals a trend of new functions in asset management being adopted in the country, the group said in its annual review. Over 500 fund promoters have set up around 3,800 funds in Luxembourg, which are being sold in 73 jurisdictions around the world. Five new banks set up activities in Luxembourg. Banking Circle, RBS International and Northern Trust received new banking licenses, whereas HSBC and Barclays opened new branches.
In e-commerce, 12 payment and 9 e-money institutions have chosen Luxembourg as their hub to serve European Union customers. Airbnb was granted its license in Luxembourg to process all EU payments, joining other leading firms like PayPal, Amazon Pay, Banking Circle, Rakuten, Satispay, PPRO, Six Payment Services, and Alipay.
More than 60 financial institutions selected the Grand-Duchy for their Brexit-related relocation, but the actual number is over 70 when including those that haven’t disclosed their plans publicly, the report said.
A side-effect of Brexit is that Luxembourg law is increasingly being chosen by international institutions active in financial markets as the judicial arena for underpinning contracts. The EU and EURATOM – the European Atomic Energy Community - have decided to switch the legal framework underpinning their debt issuance from English to Luxembourg law. The European Investment Bank is making the same switch for its lending activity and the European Stability Mechanism said it will exclusively use Luxembourg law.