Private Banking : Strengthening the centre of excellence and attracting a new range of wealthy clients to Luxembourg

A study by PwC reveals the re-positioning that Luxembourg private banking should implement to remain a main player by 2015.

What is the position of the Grand Ducal private banking industry in the global arena? What key products and services will guarantee its sustainable development? How can it target and attract new clients? PricewaterhouseCoopers’ study on the re-positioning of Luxembourg private banking by 2012-2015 addresses such issues. The study is the outcome of “think-tank” workshops which were organized between September and November 2007 and which gathered about thirty private banking executives in Luxembourg and other key stakeholders of the financial centre such as the ABBL, the CSSF, the ministry of Finance, professionals of the financial sector and members of the University of Luxembourg.

Philippe Sergiel, Partner at PwC Luxembourg explains: “ Our main role was to act as a facilitator; allowing private bankers, via the workshops, to share their points of view on opportunities that could develop Luxembourg private banks’ competitiveness and on challenges to be faced. We wanted to leverage the thinking that we started in 2006 in our previous study on the re-positioning of Luxembourgish branches within their group, and develop a real perspective for the profession. ”

Global figures show a strong trend for the market to increase in the years to come in Western Europe, Eastern Europe and in other parts of the world’s wealthiest regions.
Philippe Sergiel continues: “ Luxembourg should take advantage of the growth, but private bankers are aware that the Grand Duchy must generate a double digit annual growth and reach EUR 1,000 billion of AuM by 2015, in order to remain a key player at the global level. ”
To meet this objective, the study underlines three possibilities identified by the actors of the financial place.
Firstly, Luxembourg must be recognized as a centre of excellence for private banking. That implies, for actors in private banking, consolidating knowledge of wealth engineering, continuous innovation in terms of services and a pool of specialized resources.
Secondly, bankers must diversify their client base in terms of geographical and socioprofessionnal origin. The idea behind is to increasingly focus on the new generation of clients whose assets are worth more than EUR 20 million in liquid financial assets.
“ Bankers are clearly targeting a new range of clients, i.e. entrepreneurs or senior managers who have needs linked to their wealth management, or to issues related to retirement, succession, real estate property, among others ”.
Finally, the third factor of development mentioned in the study is the positioning of the Luxembourg entity within the group.

“ Players believe that if at least half of Luxembourg entities take on a European and global responsibility of private banking within the group by 2015, a virtuous circle of growth will naturally appear in Luxembourg and enhance a better collaboration between players. That will strengthen the financial centre’s worldwide competitiveness ”.
Beyond those three re-positioning considerations, a new opportunity was identified from the study. Clearly, players would like to rationalise their investments for the benefit of the financial place as a whole, i.e. development of market intelligence capabilities, research and innovation in terms of products and services, implementation of a certified training for the profession, maintenance of a competitive regulation, specific branding, infrastructures relating to the banking sector and global infrastructures (airport, etc.).
Philippe Sergiel concludes: “ Common efforts are necessary to develop and promote products and services that could serve as symbols for the financial place. The only way for Luxembourg to remain a significant global player is to consolidate synergies between private banking and other professions of the financial sector. By defining a vision, developing an action plan and identifying priorities, PwC’s study shows that bankers are preparing for the after-2012 period and that beyond individual interests, there is a common goal for Luxembourg to succeed within the global financial place .”

The study “Opportunities and Competitive Re-positioning of Luxembourg Private Banking by 2012-2015: Developing a recognized centre of excellence for new generation wealthy clients” by PricewaterhouseCoopers is available on www.pwc.com/lu .


Editorial notes :

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 140,000 people in 149 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice. PricewaterhouseCoopers Luxembourg (www.pwc.com/lu) has up to 1500 skilled professionals coming from more than 26 different countries.
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