The ABBL Private Banking Group Luxembourg (PBGL) compiled the results of its 11th annual Private Banking Survey for 2018 performed, as in previous years, in close collaboration with the CSSF.
Luxembourg Private Banking Key facts
*FTE: Full Time Employee equivalent (Private Banking)
**HC: Head count
Evolution of Private Banking assets under management (AuM) in Luxembourg was somewhat flat, rising by 0.7% compared to the previous year, reaching a total sum of €363,4Bln. This evolution reflects the consolidation of the sector at a respectable level, with AuMs now standing at 35% above the level reached before the financial crisis in 2008 (€225Bln) .
Luxembourg private banks currently face the following main challenges:
• Strategic repositioning: In light of increasingly complex and continuously growing regulatory requirements as well as a difficult economic environment, many banks have (and to a certain extent still are) taking far-reaching but necessary strategic decisions impacting their operational (a.o. by increasing process efficiencies, reducing costs) and business models / service offering (a.o. by focusing on core individual markets, client segments and country specific products/services). As a result, we are witnessing, particularly since the beginning of 2018, a more sustained M&A activity in the Luxembourg private banking market and may expect some consolidation through acquisitions or exits in the years to come as financial institutions continue to adjust their strategies.
• Digital transformation, which inevitably goes together in the short and medium term with substantial investments both in (IT) systems as well as staff development, will continue to shape the future of the Luxembourg Private Banking industry in the years to come, in particular with respect to client interactions and servicing, i.e. the “client experience”. We expect to see:
- Efficiency gains and process optimization from the extensive integration of digital tools, notably in the areas of KYC / client onboarding, advisory services and portfolio management (robo-advice), and client interaction (increased recourse to electronic and video communication channels, e-signatures, biometric identification, etc.);
- Extended use and integration of “new” technologies such as robotics, AI and the blockchain technology;
- Enhanced focus on data management (client as well as bank), monitoring, reporting and data security, as a key component of building client and supervisor trust;
- Disruption from new entrants in the payments and robo-advice areas, but synergies will come from partnerships or other types of cooperation agreements with such actors.
The Private Banking sector may benefit from a number of Luxembourg specific opportunities:
• The Luxembourg Private Banking Hub: Over the years, Luxembourg has become a true European Hub for major financial institutions active in Private Banking. And we have seen this trend strengthening over time (e.g. among Swiss and French banking groups). More precisely:
- Banks licensed in Luxembourg operate across the EU, allowing them to leverage their Luxembourg platform either through their own branch network or taking advantage of the European Passport to provide cross-border financial services, and
- Some private bankers have further extended their offering by developing their Luxembourg hubs for servicing other group entities located either in Europe or even outside of Europe (e.g. Middle East).
• Brexit: The attraction of the Luxembourg financial centre for private banking activities was further confirmed by the recent announcements made by a number of U.K.-based institutions, among which larger U.S. financial groups. These moves aim to ensure that potential Brexit-related disruption to business is adequately mitigated, and that clients can benefit from seamless intra-EU servicing out of the Luxembourg booking centre.
Read the entire report HERE.
Publié le 24 septembre 2018