Luxembourg rolls out plan to top Europe’s financial league

Key agency unveils bold, five-year ‘vision’ for development and growth that could end London’s dominance

One of the most significant financial agencies in Luxembourg has presented an ambitious, five-year ‘vision’ for placing the Grand Duchy at the very forefront of Europe’s money markets.

Unveiled on 3 December in a top-level report, LUXFIN2020 sets out evidence to show that Luxembourg has already established a strong track record as a leading, regional centre of finance – but outlines ways in which the government and industry could work together to make that centre even more compelling.

Drawn up by advocacy and development body Luxembourg for Finance (LFF) – a public-private partnership between the Duchy’s government and trade group Fédération des professionnels du secteur financier, Luxembourg – the plan notes that:

• In 2014, the Duchy was home to more than 13,800 investment funds, with net assets of €3.1 trillion;
• They comprised 25% of all funds located in the EU, a remarkable figure for one of the continent’s smallest sovereign states;
• Almost three-quarters (74%) of investors in Luxembourg funds are sourced from Europe; and
• Some €1,115bn of those assets are held in equities and debt securities issued by EU firms and governments.

In order for Luxembourg to assume the mantle of Europe’s foremost financial destination, LUXFIN2020 says that it must pursue a vision built around three, primary objectives:

1. To develop further as a centre of excellence in cross-border finance, consolidating and enhancing relevant expertise;
2. To be the EU onshore financial hub of reference, expanding its role as a location of choice for the sector’s institutions; and
3. To become a digital leader in Europe, fostering innovation and leading the way in electronic financial services.

Those objectives will be accompanied by improvements in bricks-and-mortar facilities and ‘soft’ infrastructure (for example, education and training), and supplemented by priority-based growth drivers for each of the hub’s main sub-sectors.

In one section that will be of great interest to corporate treasurers, the paper notes: “The Luxembourg fund industry will continue to expand its geographical reach, notably by strengthening its position in growth markets in Asia and Latin America.

“Institutional investors will continue to be an important driver for growth in the fund industry. Investment funds, and particularly Undertakings for Collective Investments in Transferable Securities funds, provide institutional investors such as pension funds with a substantial degree of liquidity, diversification and a high level of investor protection for their international investments.”

LUXFIN2020 has already been received in some quarters as a concerted attempt to topple the City of London from its dominant position in Europe’s financial landscape.

LFF CEO Nicolas Mackel said: “Luxembourg’s solid foundations, as well as the vision developed in LUXFIN2020, will enable us to remain a leading international financial centre for years to come.

“In particular,” he added, “Luxembourg is strategically positioned to become one of Europe’s fintech leaders and offers the physical, regulatory and investment environment for financial technology businesses to bring new products and services to market.”

Read a full PDF of the LUXFIN2020 plan here.