Setting up a banking institution in Luxembourg
In addition, the European Commission has proposed a Single Supervisory Mechanism for banks led by the European Central Bank (ECB) in order to strengthen the Economic and Monetary Union. The move towards an integrated ‘banking union’ includes elements such as a single rulebook, common deposit protection and a single bank resolution mechanism.
This has had consequences for the Luxembourg market. Over the last year for instance, private banks have been busy adapting their business model in order to try to renew their client base and comply with the automatic exchange of information on EU residents’ savings income, which is due to be applied as of 2015.
In this more stringent regulatory context, it is expected that a number of banks may be forced to close their doors in the coming years. Nevertheless, within an environment of European Union harmonisation, Luxembourg is well placed to attract new banks to its territory. Indeed, it is still attractive for banks to establish themselves in Europe and Luxembourg remains a central place to capitalise on 500 million European customers.
However, the rationale for attracting banks is changing. While the country may attract fewer private banks, we will review the reasons why it is still interesting to set up in Europe, and particularly in Luxembourg. We will do this by exploring two case studies: Chinese banks aiming at the commercial banking market and Shari’ah-compliant banks targeting the retail and commercial banking market.
Inside magazine issue 5, June 2014
Inside is Deloitte’s quarterly magazine offering an exclusive insight into best practices, trends and opportunities faced by our clients across all industries.
Inside focuses on the main hot topics relevant for the market (Asset management, Banking, Insurance, Public sector, Healthcare, Private equity, Real estate, TMT, Manufacturing and consumer business, Transport and logistics).