To catch up with all the unprecedented changes that have happened since March 2020, this year we decided to take you for a walk through the new scenery and on our way, we will point out the different changes in the Luxembourg landscape, which we think had the bigger impact on the way the Banking sector operates. Most of these changes have been going on for a number of years with technological disruption, growing awareness of climate change and the way to address it, and new ways of working but it all accelerated with the COVID-19 crisis.
Foreword
The pandemic has forced us to rethink, to refocus and to realign our priorities. Challenges remain, but there are also many opportunities ahead of us. Banks, and more importantly, our customers, have embraced digital technology, meaning that we will have to be better at anticipating trends and developing tools to provide the services they demand in a responsible and secure manner.
Considered for quite a long time as only a trend, ESG and Sustainable Finance are now fully blossoming. Banks not only need to adapt their products portfolio to this new, growing demand, but it has become mandatory for them to also keep up with the increasing regulatory pressure if they want to be sustainable in the long run.
Appreciating the new Banking landscape
Electronic Money Institutions (EMIs) and Payment Institutions (PIs) in Luxembourg
Payment Service Providers represent one of the most interesting fields of opportunities in the financial services universe boosted by change in legislation, continuous technological advances and digital and non-cash mechanisms accelerated expansion in reaction to the pandemic.
A thorough comparison of the regulatory regimes applicable to Payment Institutions and Electronic Money Institutions reveals many similarities, particularly in terms of authorisation and operating conditions requirements. Both institutions can also support a broader commercial project and will then be referred to as “hybrid institution”. Some differences remain, mainly regarding capital requirements and calculation of prudential ratios. The overlap between regimes is also to be mentioned as EMIs, as well as PIs, can perform payment services.
A guided tour through the Luxembourg Sustainability road
The continuous growth and development of technology, climate change, mass migration and relentless growth in a planet with limited resources are concerns leaders are facing now more than ever. Environmental damage, biodiversity loss and extreme weather are just some examples of what the world has to deal with already. The global transformation towards a sustainable future is progressing and from a government perspective as well as a business it becomes inevitable to actively contribute to this transformation and to align all activities into an overall strategy.
The Asset Service Provider Sector: One of Luxembourg’s best kept secrets
ASP makes up substantially the ecosystem in Luxembourg. It adapts, creates solutions, and offers services from global relationship models right down to local specialisms, technology as a service, and a full range of so-called “managed services”.
Over the pas few years, has expanded across multiple forms, from the emergence of third party Management Companies 15 years ago, to the more recent “managed services” players offering specialist aspects of the Asset and Fund Manager responsibilities on a scale which leverages the collective volumes of the sector into mini-enterprises, and more recently still with the emergence of the heritage Corporate and Trust services business expanding their proposition into Management Company, depositary and fund administration particularly around alternative funds.
An informal business dinner with Mr Taxation
2020 has seen the continuing need for the Luxembourg government to cope with new challenges raised by the transposition of some EU legislations and the compliance with OECD recommendations as regards tax matters. What tax perspectives should you look out for in 2021 and onwards?
Contact us
Julie Batsch
Audit Partner, Banking and Capital Markets Leader, PwC Luxembourg
Tel: +352 62133 24 67
