The financial sector in Luxembourg - Statistics & Facts

Financial activities in Luxembourg rank as the most international-minded of all countries in the Benelux region (an abbreviation of Belgium, the Netherlands and Luxembourg). Take for instance, the number of banks in the country. At the end of 2019, only eight of the 129 banks located in the Grand Duchy were from Luxembourg itself. (ID 683409) In the most recent Global Financial Centers Index, Luxembourg was ranked as having the sixth most competitive financial center in Europe after London, Zürich, Frankfurt, Paris and Geneva. In recent years, the Grand Duchy made efforts to diversify its financial activities in certain niches such as Chinese and Islamic finance. Luxembourg's three traditional strengths, however, involve its activities in investment funds, banking and insurance.

The investment fund industry of Luxembourg ranks among the biggest of the world. The total number of investment funds maintained its stability of the last years and reached a total of 3,908 in 2018. These funds reached a value of net assets under management of approximately 4,064 billion euros. The reason for Luxembourg's success comes from the country's combination of strict consumer protection along with its flexibility in fund types. At the end of 2016, the distribution of total net assets in the UCI sector (undertakings for collective investment, a term used for investment funds) shows that bonds represented approximately 30 percent. Alongside this, for example, the number of microfinance funds in the country changed between 2007 and 2018, reaching three in 2007 and increasing to 32 in 2018.

In 2018, approximately 68 percent of clients in private banking in Luxembourg came from other EU countries or neighboring ones such as Belgium, France and Germany. The country is an attractive place for both foreign investments and private clients. In the years following the financial crisis, however, Luxembourgish banking witnessed a decrease in the total number of banks. Some banks left the country for economic reasons, while others disappeared through consolidation. Despite that, the assets of foreign controlled banks showed an increase in recent years. Indeed, it was announced in August 2017 that China Everbright Bank (CEB) would establish their European headquarters in Luxembourg, making it the seventh bank from China in the country. With so many foreign assets, however, Luxembourg was for several years the country with the highest risk index score of money laundering and terrorist financing in the Benelux.

An appealing legal and economic framework helped Luxembourg establish itself as a hub for European insurance, most notably reinsurance. In 2019, the largest revenue of reinsurance companies in Luxembourg came from premiums out of Switzerland: nearly seven billion euros worth of premiums originate from this country. France and Germany are both responsible for roughly one billion euros worth of gross written premiums of reinsurance companies in Luxembourg. Unlike neighboring countries in Europe and much like Switzerland, Luxembourg has a strong international orientation when it comes to insurance. The Grand Duchy therefore has two insurance markets: one domestic and one international. Company data on either market is unavailable, however. According to data from 2016, Lombard International Assurance, originally a cross-border wealth planner from Luxembourg, had the highest premiums written on the international market with a value of approximately 329 billion euros.

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The financial sector in Luxembourg

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