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Banking Trends & Figures 2021

What does ESG mean for banks?

The Banking Industry in Luxembourg has proven its incommensurable success over time, able to become a stable international hub for banks coming from Europe, America and Asia. It has also been resilient to the different waves of disruptions that we have been analysing in this series, coming from the entrance of non-bank financial players, to digitalisation and the regulatory changes. This year, it will come as no surprise that we have decided to analyse the ESG wave.

The ESG revolution has underpinned massive changes within the European financial industry in recent times, with societal changes and mounting pressures from stakeholders leading to a re-evaluation of industry players’ priorities, and the legitimacy of firms whose businesses do not serve society being called into question.

Key Takeaways

Key Takeaways

With mounting pressure from stakeholders and regulators alike, banks are increasingly realising, now more than ever, the need to pursue the total sustainability transformation of their core businesses. However, the attainment of this transformation is a long process that would require guidance. In this context, we see the following steps as relevant:

  • Incorporating ESG into the bank’s strategy is not yet the status quo

  • Organisational structure could facilitate ESG integration

  • Continuous adaptation is key to successful change management
  • Progress must be quantified by developing KPI’s and non-financial reports

Luxembourg's Banking Sector Evolution

Number of banks
Number of banks

With 128 authorised banks at the end of the financial year 2020, the number of banks rose by one.

Countries of origin of banks established in Luxembourg

In terms of geographical representation in the Luxembourg financial centre, German banks still make up the largest group at 17.2%, followed by Chinese banks and French banks, both with 10.9% and Swiss banks with 10.2%.

Countries of origin of banks established in Luxembourg
Balance sheet total (in EUR million)
Balance sheet total (in EUR million)

In 2020, the balance sheet total increased by EUR 41.6 billion (+5.1%), confirming an upward trend observed since 2017. The COVID-19 pandemic caused an increase of the aggregated balance sheet since investment funds reallocated the funds’ assets in more safe reinvestments. 56% of banks saw a growth of their balance sheet, notably the largest banks of the financial centre as well as the banks active in asset management on behalf of private and institutional customers.

 

Contact us

Roxane Haas

Luxembourg Banking & Capital Markets Leader, PwC Luxembourg

Tel: +352 49 48 48 2451

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