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SEptember-october 2011 / 06

Strong roots, strong vision FINANCE INTERVIEW | Franรงois Tesch, CEO Chairman of Foyer andS.A. CEO of Foyer S.A.



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Residence permits



Shining light on a black box

Risk Management in Islamic Finance

Outplacement services


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The mouse in the room

T. +352 26 10 86 26 F. +352 26 10 86 27 E. Internet: Eric Busch Publisher The Editorial Staff Delphine Reuter Sub-editor T. +352 26 10 86 26 Raphaël Henry Journalist M. +352 691 99 11 57 Editorial Committee Editorial Guests Karl Horsburgh Conor Sweeney Carlo Schneider Émilie Mounier Sales Manager M. +352 691 99 11 56 Isabelle Libouton Project Manager M. +352 661 50 36 26 Alexandre Trân Web Project Manager M. +352 661 16 44 70 Photography Sébastien Héraud Photos Finance Nation Layout Piranha et Petits Poissons Rouges Subscription Luxembourg 45,- € - Europe 55,- € FinanceNation Luxembourg IBAN LU53 0030 7526 7288 1000 BIC BGL: BGLLLULL TVA LU 19730379 RC Luxembourg B 95210 Maison d’éditions - Autorisation d’établissement N° 102739 © Toute reproduction, même partielle, est soumise à l’approbation écrite préalable de l’éditeur. Tous droits réservés.

Does applying for a work permit still boils down to tedious paperwork in Luxembourg? Before 2008, it was common to hear complaints about this time-consuming procedure. That year, hundreds of employees lost their jobs in Luxembourg and filled the ranks of the unemployed. The financial crisis gave employers looking for expert profiles an easy access to talents. It was also in 2008 that the Luxembourg legislator decided to stop ignoring the elephant in the room and simplify the application procedure for work permits. Since then, there is a single application for one permit allowing both residence and employment in Luxembourg. Today the procedure is smoother, especially for highly qualified applicants. But simplification does not necessarily mean clarification. Luxembourg is ahead of other EU Member States in proposing a single permit application. A new Directive should soon come forward to harmonise the conditions attached to residence permits, like access to social security and tax benefits. Non-EU workers would be granted the same rights as EU workers. But each Member State would retain the right to determine how many residence permits applicants it accepts on its territory. Luxembourg, a small state among giants, needs to take the bull by the horns and already clarify its existing procedures, such as its collaborations with Belgian embassies abroad, which streamline visa applications through their own channels. This regularly causes backlogs and applicants end up dealing with their own frustration instead of seeing Luxembourg as the ideal place to do business. Instead of being the mouse in the room, Luxembourg can show the way forward. 

By Delphine Reuter

Š 2011 EYGM Limited. All Rights Reserved.

The dynamic way to energize your business

Luxembourg Financial Connection September 2011 - Issue 16

september-october 2011 / 06

GLOBAL 18 - Allen & Overy - Time for a new business model in the private banking sector? 20 - Ernst & Young - IFRS crucial developments for banks 22 - Finarch - Opening up to Basel-driven technological changes 24 - Global News


28 - Focus - Residence permits 35 - PwC - Consolidation trend to accelerate in the financial sector 38 - Sandstone - Islamic finance: a risk-managed path to rewards 43 - BC  L - B asel III liquidity regulations and monetary policy transmission


46 - Kleyr, Grasso & Associés - A  ML, la responsabilité pénale des personnes morales 50 - Wealth@Work - On globalisation of wealth management 52 - Events - Lunch Governance with Vectis PSF 54 - E  vents - APSFS on the fast track 55 - Events - Innovation in Finance and financing innovation 56 - Local News

NATION 60 - exigo - The freelance track 62 - Galilei-Randstad - On outplacement services 64 - Seen from abroad - A Luxembourger in China 66 - Careers


CEO of Foyer S.A. SHOWING THE WAY Foyer S.A. is among the local actors which cannot be ignored as they help slowly but surely shape Luxembourg's financial landscape. Although its local, family-based roots are strong, the group has always shown a strong vision with bold, yet careful attempts to expand its business activities, locally and internationally. Recently the group announced it was launching CapitalatWork Foyer Group, a local wealth management company primarily targeting Luxembourg's residents. With revenues in June 2011 topping EUR 206 million, the group can look to the future with confidence. Foyer was founded in 1922 by a group of visionary Luxembourg businessmen (like Léon Laval, after whom the street on which Foyer S.A. is located today, is named) who prioritised independence, a value still held dear today by François Tesch, CEO of the group. Next year, it will celebrate its 90th anniversary.






Mr Tesch, who is Foyer Group today? Foyer Group was founded in 1922 as an insurance company. Over the years, Foyer has become more of a financial group, with activities not only in insurance but also in private banking. We also now offer products outside the borders of Luxembourg. This shows how much the group has grown in terms of geography and also in terms of widening its activity scope, over the past few years, and especially over the past 15 years.

and gave a lot of opportunities to insurance companies to develop new products, new services, and also to become more creative than had ever previously been possible. At our own level in Luxembourg, we started by focusing a lot on our commercial base, our agents, whom we professionalised. We also invested a lot in computer systems and PCs so as to give them the tools to work more efficiently. We also gave them a lot of independence in their tasks. This

seven European countries and our activity in this area is growing fast. Actually, that activity made us also move into private banking in 1998. Over the past ten years, we have grown very fast in that area too. Today, we manage more than EUR 4.5 billion assets and more than 100 people work in that business line. So you can see how, over this short period of time, we have transformed Foyer Group from a pure insurance player into a

“It is important that the roots be close to the people. And so is independence.” When I joined the group in 1983, the insurance business was very much regulated by national laws. Over the following years, the environment changed a lot because the Common Market was also becoming a reality for insurance companies. We went from a severely regulated environment – where all the products and tariffs had to be approved by public authority – to an environment of financial supervision but where products and tariffs were no longer regulated. This changed the rules completely



was a major step in order to get closer to our customers and improve our products as well as our services. Later, during the mid-1990s, we created and developed a new insurance company called Foyer International through which we started to commercialise life insurance products on a freedom of services basis. These products were aimed at being distributed over the borders of Luxembourg, especially to Belgium. We now sell them in more than

financial group offering not only non-life and life insurance products but also asset management and private banking services, nationally and internationally. How does the acquisition of CapitalatWork fit into Foyer’s development over recent years? We bought CapitalatWork in February 2009, which gave a strong boost to our size and accelerated our international develop-


ment. Today we have offices not only in Luxembourg but also in Brussels, Antwerp, Ghent, Breda (in the Netherlands) and Geneva. Today we can give our customers a choice among a wide range of products and also access to offices where we can serve them in different countries. I think that this is especially important when you can see a general trend from offshore to onshore. We are no longer limited just to Luxembourg. Customers do not come any more to Luxembourg as they used to just for professional secrecy rules. Today they are looking for specialised custom-made services. They also want to find these services they need in private banking in their own countries, close to their home. When did you first notice this offshore-onshore trend? This has already been in discussion for years. It was just a question of time. I think that during the past two or three years the evolution has accelerated enormously, mainly for two reasons. One is that there has been a need for governments in difficult times to raise as much money as they can. They increased the pressure on their residents to bring the money back home. This has certainly been

the case in Italy and Belgium, and, as we see it now, also in the U.S. The other reason is that the fight against money laundering and the financing of terrorism has also increased pressure on offshore banking activities to bring more transparency to their customer base, especially in the private banking sector. These two main trends dramatically accelerated this move from offshore to onshore. How did you adapt? We focus on the customer and we offer services and products where they live, as in Belgium, the Netherlands or Luxembourg. The main aim is no longer to attract foreign money to Luxembourg. We also focus very much on the local Luxembourg clientele. We have recently started a campaign and are focusing through our agents’ network to bring clients toward CapitalatWork Foyer Group. We see quite a substantial growth coming from that perspective in terms of the assets-under-management activity. How important is the idea of being a family business for the group? Foyer Group was started in 1922 mostly by Luxembourgers. The shareholders at the

time were mostly businessmen. Over time, Foyer became the number one insurance company in this country, thanks to a very stable and committed shareholder base and thanks to great local attention to the customer. In early 1990, we restructured the activities of the group by creating Foyer Finance, which became the parent company of the insurance companies, like Foyer Assurances, Foyer Vie, etc. In 1991, we sold our Belgian branch to Royale Belge. With the proceeds of this divestment, we took a shareholding in Luxempart (at the time it was called BIL - Participations) in June 1992. We bought it from BIL, who had considered making this non-banking section of their business a spin-off later on. From this moment on, not only were we an insurance player but we also had a foot in the investment activity. We took that major opportunity and took a big shareholding part of BIL - Participations with friend investors. We are today the main reference shareholder of Luxempart, a well-known investment company quoted on the stock exchange and investing in companies like SES, RTL, Paul Wurth, Foyer, etc. For the shareholders of Foyer Finance, this important move diversified their hold-




ings, so as not to depend too heavily on the insurance activity and offer a nice return. Then came 1995, when we created Foyer International, and 1999, when we launched the private banking activities.

Foyer stuck together and we managed to buy our shares back from AXA. Foyer was again a 100 percent Luxembourg-owned company, with a purely Luxembourg shareholder base.

Did being located in Luxembourg make it easier for Foyer to make the most of these opportunities so quickly?

This came about because AXA came under pressure from the EU Commission to make a choice: either buy Foyer, but then divest AXA in Luxembourg, or sell their shares in Foyer. For antitrust reasons, they could not put the two companies together because this would have meant they had more than 50 percent market share in one marketplace. During the process of buying back our shares, in 2000 we went public very quickly. We actually floated 20 percent of our company so as to raise money. These were dangerous times because the Internet bubble burst in 2001 and we went public in mid-2000. The shares which were floated on the market for EUR 39 came down to EUR 10 during of the 2001 crisis.

I think the same opportunities can be found in other countries. What is particular to Luxembourg is maybe to have an insurance business which is relatively small compared with other major European insurance companies. We are a large insurance company in proportion to the country, however with a big market share, which is unique. This is possible because in Luxembourg we have our own culture, our mentality, and we are very close to our customers. That makes the uniqueness of a group like Foyer and of the insurance industry in Luxembourg; the fact that it has kept a certain cohesiveness, a strong national identity. I would say the same for La Luxembourgeoise, the second largest insurance company in Luxembourg and which is also a family business. It is important that the roots be close to the people. And so is independence.

The past ten years have not been easy because we went through two major crises, in 2001 and then the financial crisis of 2008. Both times, Foyer Group’s results suffered. But, we still managed to make a profit because we are strongly capitalised, managed

the second financial crisis, but we still managed to buy that company and make the business grow. Keeping the group’s strength is a motto for Foyer. It’s a priority, really. I think that the difference between a family business and a listed company, where you don’t necessarily have core shareholders, is that we adopt a long-term vision. We also have a dividend policy which will not weaken the company’s strengths. It will also invest in ventures which are sustainable and which the company can develop with its own resources, without having to resort to the financial market. I think that today the situation is that the family shareholders control the business, and that makes a stable shareholder base. This is very important in these changing times. We’re not interested in short-term, speculative games; we’d rather privilege the company’s stability. The fact that we are listed forces us to have certain rules, like a company governance, an audit, compliance and risk management committee, and a remuneration committee. It also compels us to be transparent with our shareholders. These specific governance rules are

“The difference between a family business and a listed company is that we adopt a long-term vision.” It happened that in the early 1980s, we almost lost our independence when a Swiss company, the Compagnie Suisse de Réassurance (Swiss Re), bought a third of the whole Foyer Group's shares. At the time, we needed financial help to grow further with our activities. But three years later, Swiss Re sold their shares to a large British insurance group, Guardian Royal Exchange. Then, in 1999, they were taken over by AXA, which as a result became a very important shareholder of Foyer, with 33 percent shares. AXA was known to be aggressive in taking over companies but the family shareholders of



our assets prudently and even made our business grow at the same time. You started to accelerate the diversification of Foyer’s activities. Starting in 2000, we wanted to increase our size, especially the size of Foyer International. We invested in commercial resources so that we could be more active across more countries. Then we started growing our private banking business, until we took the decisive step of buying CapitalatWork in 2009. Again, this was in the middle of

very good for professional management of the company. For example, if a family member wants to work in the company, he has to be accepted by the non-family board members of the company. Going back to your customers, has there always been a strategy to adapt your products to them? At the time when insurance was fiercely regulated, the question was more “How to develop products which will conform to the legislation”. Everything was defined by


regulations, what you could and could not do. You had to submit the products’ conditions and your tariffs for approval by the controlling authorities, the Commissariat aux Assurances. You were not necessarily very much customer-minded, it was more an expert business and a discussion with government authorities. With the deregulation, we obtained the freedom to design the products and the tariffs according to our calculations and we did not need the Commissariat’s approval any more, so long as we respected framework laws like contract laws. That was a major change in our business model. Though at the time we did realise that we needed to get closer to our customers to see what they really wanted and to design competitive products. Before, it was more uniform. Everything became possible. For instance, one breakthrough was our fire insurance product, reebou. We were the first actually to introduce a product where the premium was no longer fixed according to the value of the house, value which was often difficult for the client to define, but where the premium of the house was fixed according to the square metres of living area it had. We reduced the parameters

and the complexity of products and made it much easier for customers to express their insurance needs and get the correct insurance cover. At the time, we told our customers that they would no longer run the risk of being underinsured. This meant that it became our responsibility to pay the right amounts in terms of claims. Before then, we could say “the value of your house you indicated to be insured was insufficient, your information was not precise enough” and we could therefore pay only a part of the claim. These were major steps forward made thanks to the freedom insurance companies got to design their own products and also to get closer to the customer’s needs. The same happened in the car insurance. It has also increased complexity for the customer, who has to compare more offers. The products have become simpler and more customer-friendly, but the choice has become larger. Of course every company can decide in-house to bring little differences to a product here and there, so the customer has to look closely at different

products. He has to talk to his agent and search for advice. Hence the need for new agents. Could you explain how you adapted your HR base? We had 1,100 agents 20 years ago; today we have more than 600 agents with their staff. We reduced the number of agents but we also consolidated them. Agencies became larger taking into account their employees. As we professionalised the insurance distribution, we had to give them access to technology, like computers, which is a cost, and using technology properly requires training. Most agents would do this job part-time, after working hours. Suddenly insurance became a highly professional business which could be handled only if you are a full-time agent. A great number of part-time agents disappeared. The biggest portion of the business generated today comes from professional agents. Who pushed for this evolution? This was a recognised trend which we saw quite early on. The business became deregulated and we were free to sell the product the way we wanted, and the customers







became the centre of our preoccupations. We think they need good products and services, which can be better provided by professional agents. We have more products than before, and customers have also become more demanding and may be satisfied in different ways from those they used to in the past. We encouraged our agents to become professional and follow this trend, or give the business up. For instance, what also changed is that, in the old days, customers would pay the insurance premium rather to the agent, who had to manage all cashflow problems linked to the business. Today customers pay premiums direct to the company. We said that agents were there to give advice on products, on the sales side, not any more to collect the money. We internalised invoicing and other back-office tasks. We always ask ourselves who is best placed to do what. The agent has to give advice to the customer, be available even after business hours, which makes the process very efficient and helpful for the customer. They give advice on products, but also on claims, they assist when customers need help. Agents are also very knowledgeable about tax issues, car registrations, etc. They issue the policies, and we often only have to validate them.

source of information for the clients, since companies have web portals where they publish information on their products. I think that the mentality of the Luxembourgers is to stay with an agent who has been advising them for a number of years. Very often, people still have the agent their parents had. These are trustworthy relationships, which suit the Luxembourg market and philosophy, which is what people want. Can you explain your decision to sell Foyer Re? In Luxembourg, legislation makes it attractive for an insurance group and also an industrial group to own and operate a fullyowned captive reinsurance company. This type of company takes the risk of the customer and reinsures it. The premiums you pay into these captives are tax-deductible, which makes it an interesting vehicle from a tax perspective. We had this Foyer Re company for a number of years; it grew in size and we had an offer to sell it to an industrial group which needed a captive of a certain size. It was a question of price. But it does not mean that we don’t need it any more, so the first thing we did after we sold it beginning 2011 was to incorporate a new captive insurance company, again called Foyer Re.

which had shares on their books suffered from the fall in their shares. When the first crisis hit, we had something like 30 percent of shares and we then reduced this figure down to 5 percent. We did the same again in 2008, where we came down from 25 to 10 percent. You can adapt accordingly but you still have a loss in substance, depending on how quickly you act and how many shares you have. We reacted quickly so we never had to show losses in our results, but they still came down. Today you have to be very careful and look at the solvency of the bond issuers. You look at sovereign debt, and try to avoid having any of the PIIGS countries in your portfolio. You try to invest in corporate bonds but you look at their credit worthiness to see how the bond issuers react. You also tend to keep the duration of the bond portfolio rather short to limit the impact an interest rise can have. We’re all relieved that the Americans found a deal on their debt-ceiling. Because everything is so interconnected today. Interconnected yes, but not very transparent. It’s very difficult to foresee the effect of something. If it goes wrong, you cannot

“We’re not interested in short-term, speculative games. We’d rather privilege the company’s stability.” What are the challenges you see on the local market?

Did the financial crisis affect your business directly?

Agents have become more efficient with the professionalisation process. They succeed as well in safeguarding their ground against brokers more active in industrial risks. Up until now there is no general trend towards more brokers on the Luxembourg market except perhaps in some very specialised niches. Direct insurance is not an issue either. But Internet is nowadays a valuable

The two crises of 2001 and 2008 came from the asset side of the business. They did not originate from insurance issues like storms, floods or other disasters. An insurer who gets premiums invests that money in stocks, bonds, cash, buildings, according to a certain legislative framework. Of course when the stock came down, which happened twice, the insurance companies

predict the effects with accuracy. It makes it difficult for you to react and make the right decisions. What are your projects for the next months? With CapitalatWork Foyer Group, we want to grow and are going forward with the integration. Once we have achieved that, we shall aim at making this business line a bank. Then, we will consider external




“Very often, people still have the agent their parents had. These are trustworthy relationships, which suit the Luxembourg market and philosophy, which is what people want.“

developments by acquisitions, both in Lux-

there is no growth; and if growth is no lon-

embourg and in other countries. We shall

ger there, we have a major problem.

also work on our internal growth. It’s also most important for the banking Have you seen a trend of people

sector to remain anchored in Luxembourg

taking their money out of Switzerland

and to keep an attractive environment for

and investing it in Luxembourg?

the financial industry in general. In the U.K. and the U.S., it will probably remain

We have seen it, yes. I think that Switzerland

more attractive for people to work in the

remains very attractive for the world, the

financial industry than on the continent.

Far East, the Middle East, South America

Luxembourg should remain attractive for

but less for the EU. There is this trend now

highly qualified people. There’s always a

where governments put pressure on their

risk, for example, for the fund administration

residents to bring their money back home,

business, which relies on huge computer

and there is also the fact that customers like

systems, to simply be moved out to other

Luxembourg more because we are an EU

countries. I don’t think there is a real danger

Member State. Customers attracted by Swit-

but when I sometimes hear the government

zerland from other parts of the world are

saying that they focus on other industries

more difficult to attract to Luxembourg.

rather than the banking sector, I would be alarmed to see them neglect it. It is a real

According to you, what are the issues

force we have in banking, and the whole

that Luxembourg should first address?

country’s wealth heavily depends on it.

Competitiveness. Luxembourg needs to

But the government is also doing well in

remain competitive in terms of wages.

attracting companies like Amazon, which seems extremely happy to be here. Globally,

I also think that pension issues need to be

I’m not worried for Luxembourg.

addressed sooner rather than later. The Haut Comité de la Place financière is aware of the problem. Without competitiveness

banner_180x25.indd    1 14

Interview by Delphine Reuter

3/1/2010    5:06:29  PM  SEPTEMBER-OCTOBER 2011




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GLOBAL > Allen & Overy - Time for a new business model in the private banking sector? p18 > Ernst & Young - IFRS crucial developments for banks p20 > Finarch - Opening up to Basel-driven technological changes p22 > Global News p24




Time for a new business model in the private banking sector? For a couple of years, Luxembourg has more openly been facing increasing pressure on its financial centre to share information. This is mainly due to the fact that banking secrecy has been considered as being partially responsible for the financial crisis.

Jean Schaffner, Tax Partner at Allen & Overy Luxembourg

On 13 March 2009, the Luxembourg finance minister Luc Frieden announced, after consultation with his counterparts in Switzerland and Austria, that exchange of information would be granted under double-tax treaties, even if such information were to be sought from banks. Luxembourg has thus agreed to revise its views on banking secrecy, to avoid being blacklisted by other OECD member states and labelled a tax haven. This is a major change for Luxembourg banking and its inclination to secrecy. However, banks have been able, in general, to adapt to this new situation. Most Luxembourg private banks are indeed increasingly focusing on onshore business, getting rid of grey money. This change in attitude is needed, since, as well as an exchange of information under double tax treaties, Luxembourg also has to accept



administrative cooperation in the field of taxation, by virtue of an EU directive of 15 February 2011 (2011/16/EU) and may soon face an amendment to the EU savings directive 2003/48 of 3 July 2003. Luxembourg has currently entered into about 60 double tax treaties. Traditionally, exchange of information is granted under these treaties for information that enables the requesting member states to apply the double tax treaty or its domestic law, and applies to all taxes, even those not covered by the treaty itself, for instance inheritance tax. Exchange of information is not available if, for instance, measures are required which are at variance with the laws and administrative practice of the states concerned, if the information cannot be obtained under the relevant laws or in the normal course of administration of the states involved, if the information would disclose a trade,

business, industrial, commercial or professional secret or where such disclosure would be against public order policy. Luxembourg has traditionally considered that information protected by banking secrecy could not be exchanged, as, in particular, the Luxembourg tax administration itself is barred, under Luxembourg domestic law, from obtaining information from banks for taxation purposes

No “fishing expeditions” However, since the law of 31 March 2010, exchange of information is possible if such information needs to be obtained from a bank or another financial institution, nominee or person acting in an agency of fiduciary capacity or where the information relates to the ownership interest of a person. The purpose of the law of 31 March 2010 is to introduce a well-balanced system,

Tax Global

protecting taxpayers’ privacy, and not imposing an excessive workload on either banks or the judicial system whilst, at the same time, complying with the request for cooperation imposed by our main trading partners, with whom tax treaties have been signed. In particular, Luxembourg is keen to ensure that no exchange of information has to be granted if such information is requested on too broad a basis. “Fishing expeditions” should be prevented. For that reason, the request for information has to confirm that the requesting party has indeed used all available means in its own territory to obtain the information and has been unsuccessful. Information sought must be relevant for the requesting state, who must have grounds for believing that the information is indeed held by the requested party. To the extent it is known, the person that is supposed to have the information has to be communicated by the requesting party to Luxembourg. Finally, the information can only be used for the specific purpose for which it has been requested. It should not happen that a requesting state asks, for example, whether John Doe has a bank account with a bank opened in Luxembourg or with any banks of, for instance, French or German origin. In other words, the requesting state has to have done its homework, and has to have determined one bank or a limited number of banks, with which the information sought might be held. For instance, where the tax administration of the requesting state is aware of the fact that the taxpayer has transferred money to several banks, located in several jurisdictions, and has identified these banks, the requesting party does not need to determine with which bank the money is currently held. It is sufficient to determine a limited number or circle of banks where the money has transited. However, the EU directive on administrative cooperation of 15 February 2011 apparently imposes a lower standard than that applicable under double tax treaties, as it is sufficient that the requesting state informs Luxembourg about the identity of the person

concerned and the grounds of the request. In our view, to ensure a level playing field between EU Member States and non-EU Member States with which a comprehensive double tax treaty has been signed, Luxembourg should exchange information only where the possible holders of such information are identified by the requesting state.

Focus on exchange of information The EU directive of 2011 also provides for mandatory exchange of information, which was always perceived as a major threat to the Luxembourg banking centre. But mandatory exchange of information is granted only for income from employment and pension of non-residents, for director fees, for proceeds from life insurances and for real property income. Accordingly, automatic exchange of information pertaining to bank accounts is not given. In addition, mandatory automatic exchange of information applies only to information readily available in the requested state, implying that the Luxembourg tax administration would not have to conduct searches with potential holders of information, if this information was not already held on file. Nonetheless, the inclusion of a limited number of situations where automatic exchange of information applies, as well as the possibility for spontaneous exchange of information offered by this new directive, clearly show the trend to more transparency, urging Luxembourg banks to adapt their business model and to concentrate on onshore banking. Recent theft of information, from certain banks in Switzerland and Liechtenstein, which was then sold to tax administrations in France and Germany, may be another notable incentive for this adaptation of the banks’ business model. That being said, it is likely that a Luxembourg court would consider exchange of information illegal, if the indications were that it had been obtained by theft, i.e. in a situation which is manifestly contrary to public order policy.

Indeed, the Luxembourg legislator has provided for the possibility for each interested party to challenge in court a request for exchange of information, if the conditions of such exchange are against the provisions of the applicable double tax treaty. This court case is suspensive so that the rights of tax payers should sufficiently be protected. However, it has also to be mentioned that certain provisions in the judicial remedies may put the right of defence of tax payers at risk. For instance, the time limits for filing the request to court are relatively short, and banks have to determine, before handing over information to the tax administration, whether their client has indeed lodged a complaint against the request, which may be complicated in practice.

Toward more transparency The final threat to the Luxembourg financial centre is the revision of the EU savings directive 2003/48. It is planned to extend the scope of this directive to include all kinds of investments funds, as well as payments to intermediate tax haven companies (such companies would be deemed transparent). Life insurance contracts and trusts would also be covered by this new directive. The purpose of the EU legislator in this respect is to close all potential loopholes, so that the savings directive would be rendered more effective. Furthermore, withholding tax has been levied, since 1 July 2011, on interest payments falling within the scope of this directive, at a rate of 35 percent, which is in most situations higher than taxation on interest income in the jurisdiction of residence of the beneficiary, so that receiving undisclosed interest income from a Luxembourg bank may appear unattractive. Again, this underlines the trend to move to more transparency and induces Luxembourg banks to offer more sophisticated services, concentrating on high added value advice and new businesses, such as family offices or estate planning, and not merely managing “grey money”.

By Jean Schaffner



Global Accounting

IFRS crucial developments for banks The International Accounting Standards Board (IASB) is continuing in its efforts to overhaul financial reporting — a number of new standards have been issued and others are expected to be finalised over the next few months. Sylvie Testa

Partner at Financial Services, Ernst & Young, Luxembourg

Aida jerbi

Executive Director, Financial Accounting Advisory Services (FAAS) leader at Financial Services, Ernst & Young, Luxembourg


The new standard, IFRS 9 Financial instruments is being finalised in phases, the first phase on classification and measurement was completed in October 2010. The second phase, relating to the impairment of amortised cost financial assets, is the current hot topic and would potentially have a greater impact on banks than on any other industry. The third phase on hedge accounting, but without “macro” or portfolio hedging, is only expected to be finalised later in 2011. IFRS 9 phase I deals with the classification and measurement of all financial assets within the scope of IAS 39. The new standard is principles-based, with less extensive rules and application guidance than IAS 39. Therefore, its application will require the careful use of judgment. To be measured at amortised cost, debt instruments are subject to two tests: the business model test and the characteristics of the financial asset test. Qualitative and quantitative


indicators are considered for this assessment. The new impairment model would be based on expected credit losses and would determine expectations of future credit losses based on reasonable and supportable historical, current and forward-looking information. Assets subject to impairment would be divided into three categories based on the level of credit deterioration. This new approach potentially raises certain challenges and the operational success of the new approach could potentially depend on: (i) refining the criteria/factors that trigger a transfer from category 1 to category 2; and (ii) banks being able to maintain vintage information. The IASB proposes to substantially simplify hedge accounting, by better aligning the accounting for hedging activities with risk management practices. The exposure draft (ED) issued in December 2010 sets out the basic hedge accounting model, while a separate

ED for macro hedging is expected to be issued later in 2011. The EU created a ‘carve-out’ in 2005 from certain aspects of the IAS 39 hedge accounting rules to ease hedge accounting. The following aspects were carved out: hedges of prepayment risk in macro fair value hedges; hedges where the hedged risk is lower than that represented in the hedging instrument (also known as the sub-libor issue); and the ability to apply fair value hedge accounting to demand deposits. It is expected that the IASB will attempt to address these issues when discussing macro hedge accounting. However, it is not yet clear whether the new proposals will have the same broad effect as the EU carve-out.

A date tentatively deferred Recently on August 4, the International Accounting Standards Board (IASB) published, for public comment, an exposure draft (ED) of proposals to defer the

Accounting Global

mandatory effective date of IFRS 9 Financial Instruments to annual periods beginning on or after 1 January 2015. Earlier application would continue to be permitted. IFRS 9, as currently drafted, must be applied for annual periods beginning on or after 1 January 2013, including the presentation of comparative figures. The proposed deferral comes in light of the extension of the IASB’s timeline for completion of the remaining phases of the project to replace IAS 39 beyond June 2011, the feedback received from constituents and the IASB’s prior intention to allow entities to adopt all parts of IFRS 9 at the same time. The recent joint IASB/US FASB exposure draft (ED) “Offsetting Financial Assets and Financial Liabilities” proposed removing the existing differences in the offsetting requirements under US GAAP and IFRS. These differences result in significantly larger balance sheet sizes for banks reporting under IFRS when compared to those reporting under US GAAP. The key difference is that balances relating to derivatives that are executed with the same counterparty under a master netting agreement may be offset under US GAAP, whereas under IFRS, there also has to be the ability and the expectation that they will be settled net.

A major change, but not the only one As described above, IFRS 9 will have a huge effect on the banks’ financial statements. But the IASB announced significant decisions on different international accounting standards, not all endorsed by the European Union yet, that could impact them as well such as IFRS 10 on Consolidated financial statements, IFRS 13 on Fair value measurement or amendments to IAS 19 on Employee benefits. Issued by the IASB on 12 May 2011, effective for annual periods beginning on or after 1 January 2013, IFRS 10, replacing IAS 27 on Consolidated and separate financial statements and SIC 12 on Consolidation of special entities, establishes principles for the presentation and preparation of financial statements when an entity controls one or more other entities. The main change introduced by the new regulation is that consolidation financial statements shall include controlled entities, as assessed using a single control model (instead of the two-model approach, which is currently applied). Based on this model, the control is the basis for consolidation of all types of entities. According to the new standard, control is composed of three items: the power over the investee, the exposure or rights to variable

returns from involvement with the investee, and the ability to use power over the investee to affect the amount of the investor’s return. This means that banks will have to reassess which entities, including structured entities, they control based on this new approach. Moreover, a significant volume of disclosures about consolidated and non consolidated entities as set out in IFRS 12 on Disclosures of interests in other entities will require the financial institutions to update their database and systems in order to provide the requested information. Also issued on 12 May 2011, effective also for annual periods beginning on or after 1 January 2013, IFRS 13 on Fair value measurement, establishing new guidance on fair value measurement and disclosure requirements, aims to achieve a convergence between IFRS and US GAAP in that respect. The conditions to be met to use the fair value have not changed, the main change introduced by this new standard relates to how fair value is measured (both at the initial measurement and subsequent measurement). When determining the fair value of an asset or a liability, the entity shall take into consideration the characteristics of this asset or liability when market participants would consider them to determine the price

of these instruments. For example, the place where the asset is available or the restrictions on its use could be considered when determining the fair value of the related item. And, as usual, this standard will also result in additional disclosures in the financial statements. Regarding IAS 19 on Employee benefits, the main change, applicable from 1 January 2013, relates to the removal of the option for deferred recognition of changes on pension plan assets and liabilities (“corridor approach”). This will increase the volatility in the balance sheet of entities that applied the corridor approach and will limit the changes in the net pension asset or liability recognised in the income statement to net interest or income and service costs. All these changes will most certainly impact the financial data but the business, systems and organisation will be concerned too. The timing of the adoption of the standards will constitute an additional constraint to deal with for the entities. When assessing the impact of these changes in accounting, the banks will also have to consider all the interactions between accounting and other regulatory or economic matters such as Basel III requirements, taxes, etc. By Sylvie Testa and Aida Jerbi



Global Technology

Opening up to Basel-driven technological changes Once Basel III enters into force, EU regulators will want banks to be ready with robust architecture and processes. With the directive announcing new challenges -and thus new costs- for banks, temptation is high to favour in-house technology developments addressing localised needs instead of initiating a business architecture makeover. But, according to software designer Financial Architects, with Basel III requirements banks are facing changes calling for much more than knee-jerk fixes.

Siegfried van Puyvelde, Customer Relationship Director and Nigel Lee, Chief Commercial Officer at FinArch



Technology Global

“Since Basel III touches all areas of the bank business, the regulation has an impact on the organisation of the bank, Nigel Lee, Chief Commercial Officer at FinArch, said. They need to pay attention to the availability, the cost and the management of capital. All banks will need to increase their capital, and each bank needs to plan for it. The capital requirements will be more or less important depending on their reactivity, and the banks who don’t take notice of this will be bought out.” According to the Bank for International Settlements (BIS), USD 245 billions will be used by banks for business restructuring until 2018. Liquidity, leverage, and risk coverage will top banks’ agenda for a while in the European Union, which is the only region currently attempting to translate Basel III into law. Some large banks have already adopted new systems much ahead of the 2018 deadline. Other, smaller players prefer waiting on the sidelines for CRD 4 to come forward, whilst planning to allocate budget for technology adjustments. Some countries are more forward-looking than others. In the Netherlands, the Dutch regulator wanted banks to prepare a Basel implementation plan by the end of June 2011.

Different flavours of risk According to Finarch, Basel II had missed a big point: the inherent connectedness between different types of risks. Banks need

to adapt their tools to assess their need for measures aimed at not only managing capital risks, but also liquidity risks. “From our perspective, risk is risk, and it comes in different flavours”, Nigel Lee said. A data-driven perspective helps in determining what information should be shared across the bank’s various departments. “We want to make the company departments more inter-related, Lee summed up. You need to bring the same view into the same framework.” Today, there is a lack of connectedness within banks between their accounting and risk departments, according to Siegfried van Puyvelde, Customer Relationship Director at Finarch. “Under the IFRS 9 changes, there are new accounting rules affecting retained earnings. If you can’t calculate your retained earnings, it will affect the way regulators perceive you. This will have an ongoing effect on the amount you can lend, and on your liquidity calculations.” Banks also need to know about the probability of default, Nigel Lee added: “This may affect the amount of capital available. Regulators in Brazil will impose a penalty on banks which are using technological tools inconsistent between the risk and accounting domains. We spoke to the largest bank in Brazil about the capital adequacy for Basel; it’s running in the billions right now.” All in all, Nigel Lee summed up, “Basel III requires a risk and capital management platform, with a toolbox for the CFO and CRO, an accounting solution, and complete

reporting capabilities, including internal reporting and regulatory reporting”.

More demand for stress-testing Today, banks are both considering an allencompassing solution, or components they can use as building blocks. The most commonly required additional components are liquidity risk, counterparty risk, and interest-rate risk. More and more often, banks are also asking for a stress-testing engine. “Basel II did include a requirement for simulation, but it was by no means enough, Nigel Lee explained. Basel III is far more sophisticated.” There is also a greater demand from customers for simulation on individual items. “They want to understand exactly what would happen under various perspectives, for example if counterparties were to suffer from downgrades, he added. The value of risk needs to be stress-based. Technology should be based on a bank’s unique situation.” By Delphine Reuter

More info:



Global NEWS


Linklaters expands in China

don. The new Monaco subsidiary is now being integrated into the group with the aim of being fully operational by the end of 2011.

ING survey shows distrust of ECB measures Tien-yo Chao

The law firm Linklaters announced during the summer that it had appointed three experienced lawyers for its Chinese branch. Tien-yo Chao, Fang Jian and Betty Yap will focus on mergers and acquisitions in the financial services sector, including crossborder M&A into the commercial banking, investment banking, asset management and insurance industries, as well as Private Equity (Upstream and Downstream). On outbound M&A, the firm advised ICBC on the acquisition of a strategic stake in Standard Bank and in the Thai Bank acquisition. The China practice also focuses on advising Chinese banks on outbound financing, debt capital markets, equity capital markets (POs, rights issues, block trades and other capital raising), regulatory and anti-trust issues.

Banque Havilland opens in Monaco Dexia Private Bank Monaco S.A.M. is now Banque Havilland (Monaco) S.A.M. On 1 August 2011 Banque Havilland S.A., a Luxembourg private bank established in 2009 by the Rowland Family, announced the acquisition of this Dexia BIL subsidiary as part of its strategy to develop an international private banking group which will target Ultra High Net Worth clients. Previously the Banque Havilland group had no presence in Monaco but, it had already offices in Luxembourg and Lon-



On 20 July 2011 ING Investment Management (ING IM) revealed a survey of 52 large European institutional investors showing that 36 percent expect inflation in the Eurozone to be well above 2 percent in five years’ time. Twenty-three (44 percent) of the respondents warned that the current unconventional measures being used by the European Central Bank (ECB) such as unlimited liquidity and the purchase of peripheral bonds will ultimately lead to higher inflation. To underscore the strong upward tilt in the inflation outlook, the survey also reveals that the ‘tails’ of the inflation outlook were fatter on the upside than on the downside. A core driver of the upward bias in inflation expectations seems to be the erosion of credibility of the ECB. Only 23 percent (less than one in four respondents) said that they had a high estimation of the central bank’s ability to realise low and stable inflation in the medium term, while only seven respondents said that they felt that the current unconventional measures being used by the ECB will not lead to higher inflation. The survey also evokes commodity prices. More info:

E&Y’s worldwide tax and VAT guides available On 22 July 2011, Ernst & Young published its 2011 “Worldwide Corporate Tax” and “VAT/ GST” guides, two annual handbooks providing quick technical reference to corporate tax and VAT/GST regimes around the world. The “Worldwide Corporate Tax Guide” is a key publication for international tax planning dealing with cross-border investments. It provides an overview of the related corporate tax burden, with details on the taxes on corporate income and gains. The “Worldwide VAT and GST Guide” on the other hand is about the most relevant indirect tax aspects to be followed by corporate management to facilitate their decision-making process. This guide summarises the value-added tax (VAT), goods and services tax (GST) and sales tax systems in more than 90 countries and the European Union. It also reflects the changes contained in the EU VAT package, which entered into force on 1 January 2011. The guides contain a directory of Ernst & Young’s international and indirect tax contacts. For the Luxembourg chapters of the Guides:

Allen & Overy in Morocco Allen & Overy launches an office in Casablanca, Morocco, in September 2011. This office will be a key platform for Allen & Overy's strategy in Africa, enabling it to build on its existing Africa business. The firm considers Africa as an emerging market and intends on further developing opportunities there. The expected lawyers at the firm will be François Duquette, from A&O's Abu Dhabi office, and Yassir Ghorbal and Hicham Naciri, both currently partners at Gide Loyrette Nouel – Naciri & Associés. By 2012, there should be 25 lawyers in the Casablanca office.

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INDUSTRIES > Focus: Residence permits p28 > PwC - Consolidation trend to accelerate in the financial sector p35 > Sandstone - Islamic finance: a risk-managed path to rewards p38 > BCL - Basel III liquidity regulations and monetary policy transmission p43 > Kleyr, Grasso & Associés - AML, la responsabilité pénale des personnes morales p46 > Wealth@Work - On globalisation of wealth management


> Events: Lunch Governance with Vectis PSF p52 > Events: APSFS on the fast track p54 > Events: Innovation in Finance and financing innovation p55 > Local News p56





Residence permits: stepping in the right direction Before 2008 it was common in the financial sector to hear complaints about the lengthy deadlines and the general lack of transparency of the application process for work permits. This reflected badly on Luxembourg’s ability to attract talents from abroad - including overseas. Today applicants need only to focus on one and sole procedure, entirely supervised by the Ministry of Foreign Affairs. A separate channel even exists, which should speed up highly qualified applicants’ requests. But has the situation really improved? Find out what employers, HR directors, recruitment advisers, and representatives of foreign chambers of commerce think about the progress made in this field.

Twenty North Americans, nine Indians, seven Brazilians and seven Japanese, five Russians, four New Zealanders and four Canadians, three from Australia, Argentina and the Ukraine, two Turks and two Israelis, as well as only one from South Africa, from El Salvador, from the Philippines, Nigeria, Malawi, Mauritius, Mexico, Egypt, Costa Rica, Colombia, China, and Azerbaidjan: such is the Ministry of Foreign Affairs’ list of residence permits delivered to highly qualified applicants between January and May 2011. Many of these applicants have successfully started working in the financial industry, a sector which definitely remains Luxembourg’s strongest even given current economic and financial challenges. But, starting to work in the industry is not the same experience for everyone. Employees from outside the EU, who typically require residence permits before applying for a job, may wish to take their time to design their strategy. Since 2008, the Ministry of Foreign Affairs has brought the residence and work permits under the same appellation: everybody needs to apply for a residence permit. The category of “highly qualified workers”, who must have a salary at least three times the national minimum (around EUR 5,5006,000), was created in 2009. While it is safe to assume that most of the highly qualified applicants for a residence permit would usually work in the financial sector, it is not always the case. “It is no more the company but the worker himself who is starting the application process,” said Paolo Finzi, adviser to the Ministry of Foreign Affairs. “This



means that at first glance, it is harder to see in which sector they are active. Highly qualified workers do not necessarily work in the financial sector, and the financial sector does not necessarily only require highly qualified workers.” The Ministry of Foreign Affairs has seen many fingers pointed in its direction over the past few years. Some HR directors have complained about the length of the application process. The employment agency, ADEM, has also been criticised for its slowness to respond. Is it often the case? And is it a real burden to the efficient enrollment of financial experts from outside the EU?

A localised issue According to Sinéad O’Donnell, director of DO Recruitment Advisors, an HR company specialised in the financial sector, the demand for qualified candidates can easily be filled with profiles found on the European market. “There are more candidates than jobs on the market today”, she explained. “We had only two cases last year


“Employers are disheartened with the new system” Roy Suhash C., President of the Bangladesh Chamber of Commerce in Luxembourg “Before 2008, you could apply for a work permit “A”, “B” or “C”. Now it’s being replaced by the residence permit, with which the employee gets the same rights as a Luxembourg resident. He cannot be fired or the work permit cannot be stopped if he is not the right fit for the job, although this situation should be rarer in the financial sector. Today, employers are disheartened with the new system. If you choose to fire an employee who ©

then get unemployment benefits, it’s the law that you don’t get access to work permits for another two years. The former employee receives unemployment benefits, which can be Stéphane Toscano, HR manager at KPMG Luxembourg

quite high in the financial sector.”




Residence permits delivered to highly qualified applicants



2011 (January-May)


U.S. (47)

U.S. (32)

U.S. (20)


India (39)

Japan (14)

India (9)


Japan (18)

India (12)

Japan, Brazil (7 each)


Canada (16)

Russia (9)

Russia (5)


South Africa (12)

New Zealand (6)


Russia, Brazil (11 each) China (8)

New Zealand, Canada (4 each) Australia, Argentina, Ukraine (3 each) Turkey, Israel (2 each)

Brazil, Canada, Mexico (4 each) Israel, Mauritius, China, South Africa, Turkey (3 each) Uruguay, Serbia, Sin- South Africa, Salgapore, Azerbaidjan, vador, Philippines, Australia (2 each) Nigeria, Malawi, Mauritius, Mexico, Egypt, Costa Rica, Colombia, China, Azerbaidjan (1 each)

7. 8.

Turkey, Australia (7 each)

Source: Ministry of Foreign Affairs, Luxembourg

that required residence permits and it was a smooth process.” But, she said clients of her recruitment firm, even though “they know what they want and are willing to take more time”, “are having a nightmare of a time when they try to bring people across”. Another recruitment firm, Badenoch & Clark, made the decision a few years ago to stop accepting applications from people based in the U.S., on the basis that a recruitment firm can sometimes find it difficult to assist applicants. According to Darren Robinson, director at the firm, the decision was based on “client feedback”. “It would be an uncommercial activity to go through the stages of this application procedure, it’s very challenging,” he said, adding that the impact of this decision on the recruitment firm’s business is “negligible”. “We’re not at a stage where we need to find skills outside the EU” even if, he said, clients in the U.S. still contact his firm. Mr Robinson, who is the Vice Chairman of the British Chamber of Commerce and who also sits on Amcham’s HR Committee, added that the application procedure for a residence permit was “slow”: “people are reluctant to



enter this process of having to bring people from outside the EU”, he explained.

The future employee’s burden Multinationals with a European branch are regularly confronted to this application procedure, not only in Luxembourg but in all Member States. Through its “Global Mobility” programme, KPMG allows for transfer of competencies between its branches around the world. In 2011, KPMG Luxembourg has gone through about twenty transfers, including about seven or eight from non-EU countries, according to Stéphane Toscano, HR manager at the company. “Every year our Luxembourg office receives and sends people abroad, to the U.S., Africa and Asia,” he said. “Work permits are very important in terms of HR. If the person is coming for less than three months, there is no need for a permit. But it’s often for more than a year, and then the procedure kicks in. The issue is, we cannot contact the Ministry of Foreign Affairs ourselves, as it is the employee who needs to follow the procedure.

We help him in building his file but, we cannot intervene further.” “Our staff acts as a proxy but the employee needs to gather all papers himself,” said an HR manager from a Japanese bank who asked not to be named because his opinion might not reflect the company’s official view. “The process was heavy before, it’s still heavy now.” He explained that the people sent from the mother company in Japan are “mainly highly qualified applicants, Japanese mother tongue with university degrees and ten years of experience, profiles which cannot be found on the local market”. The applicants need to provide the Ministry of Foreign Affairs with the same information as other employees but, the process is usually smoother. “We need to provide certified documents and that may be a burden to the employee. For example a person might need to wait two months before the administration in his country delivers a certificate of good standing. A person may also need to contact a notary to certify the translation, and this costs time and money. So, the burden is quite relative. You don’t need to prove how many jobs will be created as a result, because the person will be employed anyway by the company. But, the Ministry


More involvement needed from Luxembourg here needs to make sure the person will not be a burden to social security.” No residence permit has ever been refused to KPMG Luxembourg. But, Stéphane Toscano said, it’s also because candidates are known as “transfers” and only present here for a limited time. “If an applicant wants to move to Luxembourg, it can sometimes become tougher,” he said. “We get 100 percent of positive answers because they know these people are going home at some point. It’s another thing for those who apply to KPMG in a view to settle in Luxembourg for good.”

Delays can vary greatly The 2008 law replacing work permits by residence permits did not make a lot of difference in terms of workload and delays, according to Tina Nossent, Talent Advisor, Luxembourg HR at HSBC in Luxembourg. “You need to know there is a least a three-month delay, and you need to learn how to work with it,” she said. “It does not seem to get better for now. And it puts a restriction on the mobility we would like to see in our group.” In 2011, HSBC made a few requests for residence permits, with one person recruited from Brazil and two from the Philippines. She said a lot of profiles can fairly easily be found on the local market. In the end, she explained, it’s not about administrative costs but it’s about getting the person here on time for a specific project. “There is clearly a need to get people from outside the EU and there does not seem to be any focus on them”, she said.

When we know that the employees’ files we submit are faultless, an answer period of three to six months seems really long.” He said Luxembourg risks of being badly perceived abroad, especially since KPMG only applies for highly qualified applicants, whose files should be processed faster than others’. “Six months in a country like Luxembourg where everything moves so quickly, and where the economy is this dynamic, it should also reflect through the country’s Ministry of Foreign Affairs, a key aspect of the economy.”

Sudhir K. Kohli, President of the Indian Business Chamber of Luxembourg “The Belgian embassy handles the visa issuance in India. But, the officials there do not understand that Luxembourg’s residence permit process is quite different from Belgium’s work permit process. They ask that certain certificates be re-submitted in a legalised form, whereas under new Luxembourg laws these are not needed.” This is an issue because

According to an HR manager working for a Japanese bank, “you will never get a guarantee of time. The minimum I had to wait was three weeks, but I also had to wait for two months. I have a feeling that now within one month I have the permit. But it’s up to everyone to do their homework.”

the 'legalisation' process itself can take two months. By then, “most of the 90-day period granted under the “autorisation de séjour” for filing the visa application form is lost.” Also, “the local officials do not explain, neither on the website or over the phone, why there is a delay even when the

Marc Fischbach, the Luxembourg ombudsman said he had not received any complaint related to work permits since 2008. He said most people who have problems with the application process have actually not followed normal procedures.

application papers were submitted in the right order. They accept calls from the applicants only one hour per working day. Often they say that the delay is happening at the Luxembourg end.” Applicants have had to call visa officers in Luxembourg to clarify their

Although she said the process is slow, Tina Nossent from HSBC reckoned the Ministry is stepping in the right direction. “The immigration office is extremely busy but they are a lot more upfront with questions,” she said. “They can pre-review the documents to make sure the application is complete. They always say it’s better to ask.” By Delphine Reuter

situation. “Once the “autorisation de séjour” has been issued, there is no need for visa authorities in India to seek further approval of the Ministry in Luxembourg. There are no requirements to submit educational certificates and birth certificates.” According to Mr Kohli, the process should be clarified to local officials in India. The Ministry of Foreign Affairs should provide more contact

“For us it’s never quick enough,” said Stéphane Toscano. “The Ministry can take as long as six months before giving a final answer. I don’t know what their backlog his but, when we are running a business like this, being quick is key.

points such as helplines dedicated to applicants, and more information should be posted online, with a specific section for applicants from India.




”It’s not about lunch and kickbacks” You’re moving to Luxembourg? Congratulations. Now is the time to write to-do lists and hopefully start crossing things off. Future expats often need their local employer’s support to keep up with bureaucratic deadlines: along with a new job, they must find a new home, a new car, a job for a spouse, a daycare centre or a school, etc. Businesses like Sylvie Schmit-Verbrugghen’s European Relocation Services are booming at times when more and more employers prefer outsourcing what is deemed to be a very administrative and time-constraint process. ”Most of the companies that used to do it in-house now hire a company like us to take care of administrative details,” explained Sylvie Schmit-Verbrugghen, founder and managing director of European Relocation Services, which she launched in 2004. “People want a tailor-made solution. They negotiate on what they will pay and what the employee will take care of.” She would give no figures as to the cost of packages, but she said many options exist. “Some companies can choose to offer the same package in other branches. This happened when we offered our services during a joint venture.” She said she has been active in the sector since 1993. “We build our relationships with the administrations over a number of years. It’s not about offering them lunch and kickbacks. You need to work hand in hand with them.” As both private individuals and international companies seek relocation services, she has feedback on a broad range of clients. She said more needs to be done on both the companies’ side and the administration’s.

Overcoming challenges For example, delays can still be an issue, especially for non-highly qualified



applicants. “Not everyone starts with a monthly salary of EUR 5,500,” she explained. “Even in the financial sector, not only directors and specialists are hired. The situation can be tricky for companies that want to bring workers who have just come out of university, or are less qualified.” She also said that the employer may not provide enough information to the future worker. “There are employees who see a great opportunity for relocation and then write me to find a flat for EUR 500 a month, which just does not exist in this market. Employers should better inform their future employees, even more so if they consider bringing their family with them.” Finally, she explained that some companies are still not following the book and go ahead with hiring the candidates they prefer without waiting for the administration’s approval. “Following the crisis a lot of people lost their jobs and joined the ADEM’s list of the unemployed, including highly qualified applicants. At least considering this list of profiles means you keep the door open. I’ve worked with companies who did not even communicate with ADEM, so that ADEM had no idea whether the candidates they sent to the companies actually fitted the position. You have to keep this flow of information alive.” By Delphine Reuter

Application procedure (for non-transfers) 1. The employer looking to fill a vacant position, even if he/she has already found a specific candidate, sends a job description to ADEM 2. ADEM starts searching for candidates during a two-month period 3. The employer, if looking for a nonEU candidate, starts the application procedure for a residency permit by sending relevant documents (provided by the applicant) to the Ministry of Foreign Affairs 4. If the application is for a highly qualified worker, the Ministry’s Immigration service keeps it inhouse; otherwise the file is referred to ADEM 5. The employer can ask ADEM to renew the vacancy ad and pursue its search of candidates (for a renewed period of two months), and/or search at its own level 6. ADEM checks if the employer has respected all steps needed to successfully try to fill the position and sends its opinion within three weeks of receiving the file from the Ministry, back to the Ministry 7. The Ministry’s consultative commission meets (once every month or so) to examine ADEM’s opinion 8. If the commission agrees, the company can go forward with hiring the candidate it has found


More info (in French): - ADEM on non-EU candidates:

Sylvie Schmit-Verbrugghen, founder and managing director of European Relocation Services

- The complete text of the 2008 law uniting residence and work permits: What should be in ADEM’s opinion is outlined p34 - Ministry of Foreign Affairs on non-EU candidates :



Mergers and acquisitions Industries

Consolidation trend to accelerate in the financial sector


© PricewaterhouseCoopers S.à.r.l Photographer : Blitz agency


Partner in PwC Luxembourg's Corporate Finance department

© PricewaterhouseCoopers S.à.r.l

Mikael Vercauteren

Director in PwC Luxembourg’s Corporate Finance department

Since 2008, M&A activity in the European financial services sector has been far below its pre-crisis record levels, with restructuring efforts being the main drivers of deal flow. Looking ahead, M&A activity has been showing encouraging recovery signs in 2011 and should be further supported by (i) continued disposal efforts of non-core assets and (ii) an increasing interest from financial institutions and private equity players in “quality assets” opportunities. Attention should however be paid to developments regarding the growing concerns on government debt levels and the related market volatility, which could rapidly turn around the recovery in M&A activity. Here is a short overview of recent M&A deals in the Luxembourg financial sector and of key drivers which, in our opinion, should support further consolidation. Over the last ten years, we have assisted many clients from strategy definition up to successful closing of M&A transactions, including most of the deals listed below.

Group for EUR 1.35 billion in 2010 (subsequently blocked by the regulators).

The recent M&A deal flow in the Luxembourg financial sector has been relatively sustained when compared to European levels, with some flagship deals including (i) the EUR 1 billion acquisition of troubled Sal. Oppenheim by Deutsche Bank in 2010, (ii) the buyout of Fortis by BNP Paribas in 2009 and (iii) the sale of KBL European Private Bankers to Hinduja

Private Banking: a mix of restructuring and market opportunities

Some sectors in Luxembourg have been — and should remain — particularly active, like the private banking or fiduciary and trust sectors, even though they are not driven by the same fundamentals.

In the wake of the financial crisis, the private banking sector in Luxembourg has become far more challenging as a result of fundamental changes: regulatory pressure has grown heavier, domestic and cross-border competition has increased, customers

have changed, etc. Recent activity in the Luxembourg private banking sector has been mainly driven by restructuring efforts by some troubled players and a need to focus on core markets as a consequence of the financial crisis. For example, a number of German banks have revised their strategy, either willingly or due to constraints imposed by the European Commission. This has triggered several recent deals in Luxembourg like the disposal of HSH Nordbank’s private client business to Banque de Luxembourg in 2011, the acquisition of West LB Lux and LBBW Lux by DekaBank in 2010 and finally the acquisition of certain private banking assets of Unicredit Luxembourg by DZ Bank in 2010.



Industries Mergers and acquisitions

While restructuring efforts represent the bulk of recent M&A activity in Luxembourg, several important deals were also driven by strategic reasons as well as market opportunities. PwC's Corporate Finance team recently had the opportunity to provide lead M&A advisory services to Luxembourgbased Compagnie de Banque Privée in its crossborder merger with Quilvest Wealth Management (Paris, Switzerland) in 2011 to form a combined group with EUR 9 billion of assets under management and around 270 professionals. In December 2010, we also advised the Italian banking group Sella in the disposal of its Luxembourg subsidiary Banque BPP to a new entrant in the market, Crèdit Andorrà. Looking ahead, the consolidation of the Luxembourg private banking sector is expected to accelerate. Potential investors willing to expand operations or gain a foothold in Luxembourg are frequently asking for support, and we are seeing growing interest from private equity players and private and institutional investor groups from Switzerland, Russia, the Middle East and Latin America. Many players consider Luxembourg as an attractive gateway to enter the European Union and frequently envisage buying an existing bank as an alternative to a greenfield operation. Pricing is another catalyst that will support future


deal activity in the sector. Further to the financial crisis, valuation multiples have experienced a strong decrease, which has created a substantial expectation gap between buyers and sellers. From recent deals, we observe that these expectations eventually seem to converge, with (i) sellers realising that decreasing client loyalty, pressure on offshore assets and increasing regulatory and tax changes should be reflected in the pricing of their assets, and (ii) buyers recognising the scarcity of “quality” assets and being willing to pay a premium for these. On an average basis, we estimate that current goodwill pricing is in a range of 1 percent to 2 percent of assets under management, compared to an average 2 percent to 3 percent before the crisis. Obviously each situation is different and these price indications should be considered with care.

Trust and fiduciary: ongoing consolidation with strong fundamentals As another key component of the Luxembourg financial industry, the trust and fiduciary sector has experienced a sustained level of deal activity, which confirms the kick-off of a consolidation wave. Considering the top ten players by revenues in Luxembourg, it is striking that six of them have been subject to a transaction in


the last three years, including independent Luxembourg players, like SGG, which was acquired by Cobepa in 2010. More recently, we advised Alter Domus in its acquisition of Fideos in April 2011. The same goes for Luxembourg subsidiaries of international groups: Doughty Hanson acquired Equity Trust in 2010 and TMF in 2008, Intertrust was acquired by Waterland in 2009 and ATC was acquired by HG Capital in 2010. Despite recent consolidation, the sector remains relatively fragmented, with many small to medium-sized local players. This will reinforce the consolidation trend with the aim of creating global or regional champions, as current market trends increase the need for scale and global reach. As such, private equity owned players have been pursuing a “buy and build” strategy, which further supports the deal flow, both internationally and in Luxembourg. The strong interest from private equity players for the sector can be explained not only by attractive growth prospects, but also by industry business model specifics such as a high visibility on recurring cash-flows, comfortable margins and minimal working capital requirements. Current valuation levels are in a range of 6x to 10x EBITDA, with important premiums being paid for key factors like leadership position in core markets, international presence, client base quality, integrated offer, etc.

Looking ahead Current M&A activity in Luxembourg is sustained, with the ongoing sale process of KBL and strategic review of some international players with regards to their presence in Luxembourg (e.g. Banque Invik’s shareholder recently announced that it was disposing of part or all of the bank’s business). We believe that consolidation in the Luxembourg financial sector will continue and even accelerate. This trend should not be ignored, and local players should prepare themselves for this acceleration in consolidation, which creates both threats and opportunities. By Jean-François Kroonen and Mikael Vercauteren

PricewaterhouseCoopers Luxembourg was awarded “Best Financial Advisory Firm 2010” and “Best M&A Firm 2010” by CFO World.

AGENCE DE PUBLICITÉ / 00(352) 26 10 81 12 / WWW.PIRANHA.LU


industries risk management

Islamic finance: a risk-managed path to rewards Despite the widespread press coverage that Islamic finance has received in recent years, it remains a niche within a niche of “Ethical and Religious Investing”. Yet many institutions and countries continue to pursue the development of Islamic financial centres. They see a potentially lucrative market… if the risks can be properly managed.

The origins The application of Shariah law for finance originated out of Egypt and Malaysia. Despite some Statesponsored first attempts with Shariah funds and banks in the 1950s and 1960s there, this demand resulted in the establishment of the first commercial Shariah “interest-free”

The lure of Islamic finance is in its potential growth. The sustained annual growth rate 1 of this niche is in excess of 20 percent .With a Muslim population on track to grow from 1.6 billion in 2010 to 2.2 billion by 2030, one can conclude that this growth has many 2 more years to go . This has attracted the attention of financial institutions looking to diversify out from slow growth sectors and to serve this rapidly growing market. Proponents of Islamic finance argue that getting in now is of critical importance in order to capture future growth.

banks in the Arabian Peninsula in the 1970s.

A global market The global Islamic Finance market represents currently around USD 1 trillion, according to figures from the Dubai Islamic Bank from August 2011, out of the USD 120+ trillion assets under management worldwide. While one may choose to argue margins of error, the order of magnitude in difference indicates that Islamic Finance is and remains a niche market for the immediate future.



Where this future asset growth will come from is less apparent. The obvious sources in a world economy beset by uncertainty and sideways development are either reallocation of existing capital or fresh capital. Since a main feature of Islamic finance is conformity with Shariah law, which allows for Muslims to invest while remaining pure, most sources of capital would logically be conservative Muslim organisations and individuals. It is clear that a less religiously conservative investor, Muslim or otherwise, would almost certainly look for a secular fund where religious constraints do not restrain potential returns. Most secular mutual funds would see massive redemptions if management chose to arbitrarily implement

a policy to take a significant percentage of profits and donate them to charity. Clearly, mainly conservative Muslims will invest in Shariah-compliant funds. These investors will be driven to Shariah funds by their religious leadership, who will encourage them to invest only in approved Shariah funds. As these investors presumably should not have had their capital invested in “impure structures” in the past, lest their religious purity be cast in doubt, the most logical source of funds is fresh capital from conservative Muslim investors - capital currently “on the sidelines”. Where is this cash actually going to come from?

Watching sources of funds Like any economy, most capital creation in Islamic society is through legitimate business activities and there are certainly large pools of Islamic capital that have not yet been deployed into the global financial system. However, there is no financial system so far devised that is devoid of illicit capital production. While al-Qaeda has held the headlines for the last ten years, most analysts agree that organisations like Hezbollah in Lebanon and Hamas in the Palestinian territories are more serious long-term threats. These groups are

risk management industries

more strategic in their planning and better organised in their operations. Hezbollah has a long history of using social services in order to gain political power, spending an estimated 50 percent of its annual budget on such activities and outperforming the Lebanese State in this regard. This presents serious problems for Islamic finance. Social services necessitate the use of charitable organisations, which could unfortunately also be used both as donors and as recipi3 ents of funds from terrorist organisations . For example, there is ample evidence that Hezbollah has cultivated relationships for many years with drug cartels on the tri-border area in South America (Brazil, Paraguay and Argentina) and more recently in 4 Mexico . This is but one example; there are numerous documented cases of organised crime and terrorist groups cooperating for 5 financial purposes . The lure of Islamic finance to fundamentalist Muslims, connected with the untraceable nature of the Hawala money transfer

strict legal compliance, but also to mitigate the increased criminal and reputational risk. In seeking to capture profits from the growth of the Islamic finance niche, there is a steep learning curve that includes legal, cultural and religious elements. Both the legal and cultural can usually be solved in good time with existing legal and diplomatic know-how, as these are secular problems that have already been solved by most organisations in other scenarios. The religious elements are the core of Islamic finance. They are also decidedly difficult to approach.

A look at the Shariah board For the financial services provider, in addition to the classic risks of a standard regulated investment vehicle, there are two major new sources of risk in an Islamic fund, both being religious in nature. The first is the Shariah board and the second is the process of Zakat. Each of these presents a specific set of risks to the

are (passport copy), where they live (utility bill) and their self-submitted personal history (CV), the institution must be sure that their motives are aligned with the fund and must be certain that their ideals and morals do not permit for the notion of extremism. To know the Shariah board, one must examine their contacts and professional networks. Often they and many of their contacts may be considered PEPs. They and their contacts must be screened for ties to extremism, whether individuals or organisations. This review must also look at their influencers, both religious and patriotic. Their finances must be monitored and reviewed in order to ensure that their lifestyle reflects their means and status. Their sources of income must be known along with all of their personal and family investments and charitable donations. All of their professional and pro-bono affiliations must be disclosed and reviewed. Finally, the professional decisions they make on the Shariah Control Board must be recorded and reviewed.

“In seeking to capture profits from the growth of the Islamic finance niche, there is a steep learning curve that includes legal, cultural and religious elements” 6

system , means that the risks of money laundering and terrorism financing in Islamic finance are higher, in relative terms, when compared to these same risks in secular finance. This is compounded by the added complexity of Shariah compliance and the potential naivety of a non-Islamic financial institution attempting to commence operations in the sector. Therefore, risk management is of paramount importance, not only to ensure

institutions and individuals involved. This article addresses the risks related directly to the Shariah board. To conform with Shariah law, a Shariah Control Board must oversee the Islamic funds. This Shariah Board presents several risks. The scholars must be sufficiently wellknown to the financial institution. From a professional intelligence officer’s viewpoint, this is a classic counter-intelligence problem. In addition to knowing who they

The first hurdle in the selection of Shariah board members is “qualifications”. There is no universal definition of what qualifies a Shariah scholar and since their interpretation of Islamic law applied to finance carries great weight in the investment process, there remains a wide gap of uncertainty with respect to governance and compliance in Islamic investing. Furthermore, it is in the nature of religious beliefs that they are often adamant in position and inviolable in proclamation. Finding a common




Jed Grant, Partner of Sandstone s.a.



risk management industries

ground is not always possible in cases of problematic positions taken by a scholar. One can expect to be confronted with at least occasional conflict from the Shariah Board throughout the life of an Islamic investment management programme. A programme of “specific remuneration” to resolve these issues will only increase their frequency and cost.

Conflicts of interest The system of Shariah scholars is beset with conflicts of interest that would be unacceptable under other circumstances. There is a shortage of Shariah scholars. As a result, few Shariah scholars control assets across many institutions. These institutions are often in direct competition. These scholars often sit on the boards of self-regulating organisations, such as AAOIFI (Accounting and Auditing Organisation for Islamic Financial Institutions), yet are being paid by the institutions that these organisations claim to regulate. These scholars often reside outside the jurisdictions in which they control funds. In the event that a Shariah scholar is involved with an AML/CFT case, there could be consequences affecting all institutions involved with that scholar, including criminal charges under existing 7 organised crime legislation . Imagine that a Shariah scholar is deemed a terrorist and added to a watch list, immediately causing the regulators in all FATF jurisdictions to freeze the funds over which this scholar had influence or control. Sheikh Yusuf al-Qaradawi is the head of Qatar Islamic Bank’s Shariah Control Board, and the founder and president of the International Association of Muslim Scholars. He is considered a leader in the development of Shariah law for finance. But al-Qaradawi made a call in his publicly proclaimed manifesto for Muslims around the world to join the jihad against “disbelievers”. He is banned from entering the U.S. or U.K. due to his

extremist ties. In 2001, the United Nations and the U.S. Treasury Department shut down Bank al-Taqwa for funding violent extremist groups. Al-Qaradawi was, at the time, the chairman of Bank al-Taqwa’s Shariah advisory board and also a large shareholder in the bank. It was founded by the Muslim Brotherhood. Another scholar, Muhammad Taqi Usmani, is paid by many financial firms, including Saudi American Bank, Citi Islamic Investment Bank, and Guidance Financial Group in the U.S. Usmani spent 20 years as a Shariah judge on the Supreme Court of Pakistan. His published works call for violent jihad against 8 non-Muslim cultures .

A tricky situation Clearly, one must know in depth who the people are behind the faces and CVs on the Shariah board. An independent review of a Shariah scholar’s works is required before appointing them to a Shariah board. This must be done in order to ensure that their views and even potential quotes from their past will not be damaging to the financial institution’s future. The selection, composition and motivation of these scholars present clear risks to financial institutions offering Shariah-compliant investment services. One must balance the risk of selecting fundamentalist scholars with the risk of selecting scholars that are not “pure” or authentic enough for the potential investors. This presents a very tricky situation because the most extreme Imams have the power and the will to forcefully direct their followers to invest in those funds that have Shariah boards composed of like-minded fundamentalists. Those boards then influence the investments and the Zakat of the Shariah funds under their supervision. In a later article, I will discuss Zakat and what steps regulators need to take in order to go ahead with risk management. Jed Grant

References : 1. Ernst & Young, Islamic Funds and Investment Report 2010 2. The Pew Forum, “The Future of the Global Muslim Population: Projections for 2010-2030”, 27 Jan. 2011 3. Joint Special Operations University, “Hezbollah: Social Services as a Source of Power”, June 2010 4. A  rizona Police Memo, Sept. 20, 2010 “U/FOUO Hezbollah in Mexico”, leaked by LulzSec, July 6, 2011 5. New York State Office of Homeland Security, “The Crime-Terror Nexus”, 13 March 2006 6. Interpol ( FinancialCrime/MoneyLaundering/ Hawala/default.asp); 25 Jan. 2001 7. For example, the RICO statutes in the United States 8. comment/faith/article2409833.ece

About Sandstone s.a. is a risk mitigation and economic intelligence consultancy based in Luxembourg since 2008. Prior to founding Sandstone, Jed Grant held several senior executive positions with technology providers, financial firms and international organisations, notably as an executive director of a PSF with EUR 180 million in deposits and as a civilian staff officer within NATO.



Banking Industries


Basel III liquidity regulations and monetary policy transmission in Luxembourg Gaston Giordana

The Basel Committee on Banking Supervision has developed new regulatory standards for liquidity risk surveillance. A quantitative study, performed by two members of the Financial Stability Department at the Banque centrale du Luxembourg, assesses the potential impacts of the new regulation on the mechanism of monetary policy transmission in Luxembourg 1.

Ingmar Schumacher

Building upon the lessons of the financial crisis in 20072009, the Basel Committee on Banking Supervision (BCBS) suggests the introduction of the Liquidity Coverage Ratio (LCR) and the Net Stable Funding ratio (NSFR)2 within a new regulatory framework, Basel III. These new rules are expected to lead banks toward sounder liquidity management practices. The behavioural changes and balance sheet restructurings induced by these standards are likely to affect monetary policy transmission mechanism.

Economists, Financial Stability Department, Banque centrale du Luxembourg

Monetary policy affects the real economy and, ultimately, the price level through different channels. One channel through which a central bank can affect the real economy is the bank

lending channel. This channel operates if, after a policydriven increase in short-term interest rates, banks are not able to compensate the reduction of core deposits with alternative sources of funding, requiring banks to sell assets and to constrain their credit supply. This is likely the case for banks characterised by either few liquid assets or insufficient capital buffers, or for small banks with a worse prospect of accessing wholesale funding markets. Likewise, we evaluate if the LCR and NSFR are relevant drivers of the banks’ responses to monetary policy shocks. This study makes use of bank level data from a sample of banks covering between 82 and 100 percent of total assets of the banking

sector in Luxembourg from 2003q1 to 2010q4.

Basel III liquidity standards The LCR imposes a constraint on the short-run liquidity risk a bank is allowed to hold. This ratio requires that banks hold high-qualityliquid-assets (HQLA) to meet liquidity needs over a 30-day time horizon under an acute liquidity stress scenario 2. Banks are induced to hold a higher stock of highly liquid low-risk securities (e.g. government bonds) and fewer short-term loans to financial institutions. This should reduce the impact of contractionary monetary policy shocks. The main focus of the LCR definition of liquidity needs is on



industries Banking

stable versus unstable deposit financing. Stable financing refers to deposits from counterparties that are expected to be unaffected during crises or are less likely to withdraw during turbulence periods because of their established relationship with the bank. Unstable sources of funding come from counterparties without operational relationship or sources that are more strongly affected by crises (e.g. deposits from monetary and financial institutions). Thus, one would expect that the LCR leads banks to rely less on the short-term market financing and on deposits from financial institutions, but more on retail and on non-financial corporate deposits. Unlike the expected restructuring of assets, the potential changes to the liability side should increase the reaction of the supply of loans to monetary policy developments. The NSFR focuses on a bank’s maturity mismatch and creates “[…] incentives for banks to fund their activities with more stable sources of funding on an ongoing basis” 2. One would expect that the loan supply of those banks with a higher NSFR will be less responsive to monetary policy. Firstly, the higher the NSFR the larger a bank’s stable funding base which increases the resiliency to liquidity shocks. Additionally, a bank that exhibits a risk resulting from a larger maturity mismatch should face a higher external finance premium. In the Luxembourg banking sector, the median of the LCR


declined from a maximum of 80 percent in 2003q4 to a minimum of 30 percent in 2010. The median of the NSFR in Luxembourg was initially above 100 percent before 2005, but declined continuously until 2007q3 (i.e. the start of the liquidity crisis) to a level of 80 percent. It then recovered mainly due to reductions in the loan supply and capital increase. Given these estimated shortfalls in the LCR and NSFR, we expect potentially sizable modifications of banks’ balance sheets in order to comply with these ratios.

The impact on monetary policy transmission We find a small but statistically significant role for the bank lending channel in Luxembourg. The smallest banks that have relatively large maturity mismatches, as measured by the NSFR shortfall, are those that are most affected by contractionary monetary policy shocks (i.e. a reduction of total loans by 0.165 percent following an increase of one percentage point in the short-term interest rate). Specifically, big banks with a small NSFR-shortfall are able to increase their lending, by 0.122 percent, following a policy-driven increase in the interest rate. This follows from the fact that Luxembourgish banks are intra-group liquidity providers. Further analysis indicates that the degree of liquidity of banks’ assets is not a relevant characteristic for the identification of the bank lending channel. However,


small banks mainly funded through sources considered as unstable by the LCR, are better prepared to cushion monetary policy shocks than other small banks.

What complying with the LCR means These results give us a hint on the potential effects that complying with the liquidity ratios may have on monetary policy transmission. Firstly, complying with the NSFR would reduce the importance of the bank lending channel in Luxembourg because banks would be better prepared to resist a monetary policy tightening. However, complying with the LCR would only reduce the relevance of this channel for banks with a small NSFR shortfall whilst it would increase for the others. The intuition is straight-forward given that a higher LCR shortfall is related to a larger funding base relative to the stock of HQLA. Thus, smaller LCR shortfalls would tend to reduce the funds available for feeding the growth of loans. Further, if banks are already lacking stable funding, the reaction of the loan supply to a monetary policy tightening should be stronger. The historical bank level data might only provide limited information on the way that the LCR and NSFR would change monetary policy transmission, and the information is bound to be less correct the larger the impact of the regulations on banks’ balance sheets. We simulate balance

sheets by maximising banks’ profits subject to the balance sheet constraints and the requirements of the new regulations. We use the simulated data to identify the bank lending channel as if the Basel III framework would have been implemented since 2003q1. The outcome of the counterfactual exercise confirms the previous analysis and brings us to the general conclusion that, in Luxembourg, monetary policy transmission through the bank lending channel would be constrained after compliance with the new standards 3. By Gaston Giordana and Ingmar Schumacher

References 1. Giordana, G., and Schumacher, I. “The impact of Basel III liquidity regulations on the bank lending channel: A Luxembourg case study”. Banque centrale du Luxembourg, June 2011. 2. Basel Committee on Banking Supervision, “Basel III: International framework for liquidity risk measurement, standards and monitoring”, Bank for International Settlements (December 2010). 3. The views and opinions expressed here are those of the authors and do not necessarily reflect those of the Banque centrale du Luxembourg.

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Industries AML

AML : la responsabilité pénale des personnes morales La loi du 12 novembre 2004 relative à la lutte contre le blanchiment et contre le financement du terrorisme telle que modifiée, ci-après loi AML, sanctionne pénalement1 le non-respect des mesures préventives qu’elle impose aux personnes morales et physiques expressément désignées et soumises aux obligations professionnelles de (i) vigilance à l’égard de la clientèle, (ii) de disposer d’une organisation interne adéquate, (iii) de coopérer avec les autorités, ainsi que celles particulières aux avocats et casinos, ci-après les obligations professionnelles. Jusqu’à l’entrée en vigueur de la loi du 3 2 mars 2010 , seules les personnes physiques étaient susceptibles d’être poursuivies et condamnées pénalement pour de telles infractions. En effet, jusqu’à cette date, le droit pénal luxembourgeois ne connaissait que la responsabilité pénale des personnes physiques. Néanmoins, tout en admettant selon le principe « societas delinquere non potest » qu’une personne morale ne pouvait pas délinquer, nos juges imputaient la responsabilité pénale à la personne physique par l’intermédiaire de laquelle la société agissait. Conformément à la jurisprudence bien établie en la matière, cette personne est prise en sa qualité d’individu ayant commis l’acte illicite et non en sa qualité d’organe de la personne morale.

Rosario Grasso

Partner chez Kleyr, Grasso et Associés, Avocats à la Cour


Nos juges apprécient souverainement, en fait, la valeur probante des éléments sur lesquels ils fondent leur intime conviction et constatent, à l’aide des éléments de la cause, quelle est la personne physique par


la faute de laquelle l’être fictif de la société a été amené à contrevenir à la loi pénale et imputent ainsi à cette même personne 3 l’infraction . Tel qu’il sera précisé ci-après et à l’égard des personnes morales dépourvues de la personnalité juridique, cette technique «jurisprudentielle» continuera certainement à être appliquée par nos juges. Dorénavant, les personnes morales visées par la loi AML sont également susceptibles d’être sanctionnées pénalement à des amendes en cas de manquements aux obligations professionnelles, tel que précisé ci-après. Il est utile de signaler qu’au regard du taux des amendes prévues en la matière, les infractions visées constituent des délits, tel que cela résulte de l’article 16 du CP et comme cela a d’ailleurs été confirmé dans 4 un arrêt récent de notre Cour d’Appel . En faisant abstraction des contraventions, notre législateur a délimité le champ d’application matériel de la responsabilité pénale des personnes morales à (i) tous les crimes et délits prévus par le Code Pénal (CP)

AML Industries

et (ii) par l’effet de l’article 100-1 du même code, à tous les crimes et délits prévus par les lois spéciales, sauf règles dérogatoires, donc aussi les délits sanctionnés par la loi AML. Au vu des dispositions du nouvel article 34 CP, toute personne morale, à l’exclusion de l’Etat et des communes, devra répondre pénalement des crimes et des délits à condition qu’ils aient été commis (i) en son nom et dans son intérêt, (ii) par un de ses organes légaux ou par un ou plusieurs de ses dirigeants de droit ou de fait, s’agissant là de conditions cumulatives.

se référer aux règles de la législation spécifique applicable au type de personne morale visée en vue de déterminer l’impact de ces règles sur la naissance et le maintien de la personnalité juridique. Il semble pertinent de signaler que les sociétés de droit privé à but lucratif, à l’exception de la société européenne, acquièrent, selon le système dit 7 « de libre constitution » , la personnalité juridique dès la conclusion de l’acte constitutif et ce indépendamment du dépôt de leurs actes constitutifs au Registre de Commerce et des Sociétés ou encore de la publication de ces actes au Mémorial, Recueil des Sociétés et Associations. De ce

La charge de la preuve Pour que la responsabilité pénale des personnes morales puisse être retenue, il faut 12 que «l’auteur immédiat» (un de ses organes légaux ou un ou plusieurs de ses dirigeants de droit ou de fait) ait commis un crime et/ou un délit caractérisé et prouvé en sa personne qui sera alors imputé à la personne morale. Le juge pénal appréciera souverainement et décidera selon son intime conviction si tous les éléments constitutifs de l’infraction sont donnés en fait et en droit et si elle a été commise en nom et dans l’intérêt de la personne morale par un de ses organes légaux

“La responsabilité pénale d’une personne morale ne pourra être retenue que si elle est dotée de la personnalité juridique” Un champ plus large de poursuites Le législateur dispose expressément que la responsabilité pénale des personnes morales n’exclut pas celle des personnes physiques, auteurs ou complices des mêmes crimes 5 et délits qui continuent à devoir répondre pénalement de telles infractions. Ainsi et en application du principe de l’opportunité des poursuites, le Procureur d’Etat pourra donc poursuivre l’une et l’autre ensemble, de même que seulement l’une d’entre elles. 6

Selon l’intention du législateur , la responsabilité pénale d’une personne morale ne pourra cependant être retenue que si elle est dotée de la personnalité juridique. Le champ d’application personnel de la responsabilité pénale des personnes morales étant ainsi défini, il convient, quant à leur existence, de

fait, leur responsabilité pénale pourra être engagée dès leur constitution, de même que pour la société européenne depuis son immatriculation au Registre de Commerce 8 et des Sociétés . La personnalité juridique propre d’une personne morale étant une condition nécessaire pour engager sa responsabilité pénale, il ne sera pas possible d’engager celle des personnes morales dépourvues de personnalité 9 juridique, telles les sociétés en formation , 10 celles de fait , les associations momentanées, 11 celles en participation ou encore les groupes de sociétés. Néanmoins en application de la technique jurisprudentielle bien établie, nos juges ne manqueront certainement pas, dans ces hypothèses, de retenir la responsabilité pénale individuelle des personnes physiques qui composent l’entité et qui sont à l’origine de l’état infractionnel.

ou par un ou plusieurs de ses dirigeants de droit ou de fait. Dans l’affirmative, il retiendra la culpabilité de « l’auteur immédiat » et imputera l’infraction à la personne morale, sans qu’il soit nécessaire que « l’auteur immédiat » soit également poursuivi. Par contre, si le juge le déclare non coupable, l’infraction ne pourra pas être mise à charge de la personne morale. Au regard de ce mécanisme, les causes d’irresponsabilité 13 ou de non-imputabilité , celles d’atténuation 14 de la responsabilité , ainsi que les causes 15 de justification objectives , prévues par le CP et que le juge pénal pourrait retenir en faveur de «l’auteur immédiat », bénéficieront également à la personne morale, avec les conséquences favorables tel que de droit. Toute personne morale déclarée pénalement responsable se verra condamner aux




“Toute personne morale, à l’exclusion de l’Etat et des communes, devra répondre pénalement des crimes et des délits” 16

peines prévues par les articles 35 à 38 du CP. Les personnes physiques, auteurs ou complices des mêmes infractions, poursuivies personnellement sur base du principe du cumul de la responsabilité pénale des personnes morales et physiques, s’exposent à celles prévues par le CP et les lois spéciales pour les crimes et délits objet de la condamnation. Au sujet des peines, celle de la dissolution, expressément exclue à l’égard des personnes morales de droit public, est, au vu de sa gravité, soumise à des conditions 17 d’application spécifiques dans deux cas seulement : (i) la personne morale a été intentionnellement créée pour commettre les crimes ou délits qui lui sont reprochés, (ii) son objet a été intentionnellement détourné afin d’exercer systématiquement des crimes ou délits punissables à l’égard des personnes physiques d’une peine privative de liberté égale ou supérieure à trois ans. Les peines d’amende allant de EUR 500 à EUR 750.000, taux maximal pouvant même être quintuplé pour certaines infractions 18 limitativement énumérées , la confiscation spéciale ainsi que l’exclusion de la participation à des marchés publics constituent des peines non moins graves. Il importe en outre de souligner que dans le procès pénal, la personne morale bénéficie elle aussi du principe de la présomption d’innocence. Le Ministère Public, à qui incombe la charge de la preuve, doit engager les poursuites à son encontre en la personne de son représentant légal à l’époque de l’introduction de l’action publique, sans préjudice à la désignation de toute autre personne bénéficiant d’une délégation de pouvoir, qui la représenteront à tous les actes de procédure. En cas de



désignation d’un représentant ou de son changement en cours de procédure, la personne morale devra en faire connaître l’identité à la juridiction saisie par lettre recommandée avec avis de réception. Si en application du principe du cumul des responsabilités pénales des personnes morales et physiques, le Procureur d’Etat poursuit également le représentant légal pour les mêmes faits ou pour des faits connexes, la personne morale désignera un autre représentant. En cas d’absence du représentant légal, respectivement omission de sa désignation, en cas de décès ou de démission par exemple, le Président du Tribunal d’Arrondissement, sur requête du Procureur d’Etat, désignera un mandataire 19 de justice . Cette mesure purement administrative n’est pas susceptible de recours. N’intervenant que pour le bon déroulement du procès pénal, tant devant les juridictions d’instruction que de jugement, le législateur reconnaît implicitement au représentant légal et au représentant désigné, ainsi qu’au mandataire de justice, non poursuivis personnellement, des garanties particulières : ils ne pourront pas faire l’objet d’un mandat de dépôt ou d’arrêt par exemple. La seule mesure de coercition expresse susceptible d’être prise à leur égard est en effet qu’en cas de refus de comparaître, comme pour le 20 témoin , le Juge d’Instruction ou la juridiction de jugement peut les y contraindre par la force publique.

Perte de la personnalité juridique Concernant l’action publique, il paraît pertinent de signaler que celle-ci s’éteint à l’égard d’une personne morale par la perte de la personnalité juridique, suite à sa dissolution

In a nutshell Selon Rosario Grasso, les changements apportés par la loi du 3 mars 2010 sont conséquents en matière de lutte anti-blanchiment: “ce ne sont plus uniquement les personnes physiques, comme les employés de banque, les responsables d’agence, les comptables ou encore les dirigeants de la société qui peuvent être inquiétés. Dorénavant, le Procureur d'Etat pourra poursuivre directement l'institution financière, la fiduciaire ou compagnie d'assurances. A l'égard de ces personnes morales il devra cependant prouver que le délit ou le crime a été commis au nom et dans l’intérêt de la société par un de ses organes légaux ou par un ou plusieurs de ses dirigeants de droit ou de fait.” A noter que “même les infractions d'omission en matière d'AML, comme celles de ne pas déclarer d’opération suspecte, peuvent, selon les circonstances et le degré d'implication de l'auteur, constituer un acte de complicité, voire de corréité de blanchiment ou financement du terrorisme.“

About Rosario Grasso est spécialisé en droit pénal, notamment le droit pénal des affaires, la législation AML et l’anti-corruption.

AML Industries

volontaire ou judiciaire avec liquidation, ou en cas de fusion ou scission par exemple. Néanmoins, elle pourra encore être exercée ultérieurement, si la perte de la personnalité juridique a eu pour but d’échapper aux poursuites ou si la personne morale a été inculpée avant la perte de la person21 nalité juridique . Dans ce contexte, le Juge d’Instruction peut d’ailleurs ordonner à titre provisoire l’interdiction ou la suspension de la procédure de dissolution ou de liquidation d’une personne morale pour empêcher qu’elle n’organise sa disparition juridique. La perte de la personnalité juridique n’éteint cependant pas la peine à l’égard 22 des personnes morales condamnées , contrairement au principe énoncé pour les personnes physiques pour lesquelles les peines s’éteignent par la mort du 23 condamné . Le but est d’empêcher les personnes morales de tenter de se soustraire à l’exécution de leur condamnation en « mettant fin » à leur personnalité juridique par la décision de leur dissolution volontaire avec liquidation par exemple.

Des peines pouvant être élevées En conclusion, notons que les infractions en matière d’anti blanchiment prévues par la loi AML et même celles de blanchiment et de financement du terrorisme dans le CP sont des délits, respectivement des crimes susceptibles d’être commis par plusieurs personnes morales et/ou physiques dont la responsabilité pénale pourra être engagée en leur qualité d’auteur, co-auteur ou complice. Donc, non seulement la responsabilité morale des personnes morales et/ou physiques, expressément désignées par la loi AML pourra être retenue en ces qualités du 24 chef des délits prévus par cette loi , mais

elles risquent même, selon les circonstances et leur degré d’implication, d’encourir, en tant que auteur, co-auteur ou complice 25 du chef des infractions de blanchiment et/ou financement du terrorisme des condamnations aux peines prévues par le CP dont la plus grave est celle de la réclusion 26 de quinze à vingt ans . Il appartient bien évidemment au Ministère Public de rapporter par tous moyens, la preuve que les éléments constitutifs des infractions à la base des poursuites sont donnés en fait et en droit et que les personnes poursuivies sont coupables et responsables en leur qualité d’auteur, sinon co-auteur ou complice. En outre, pour obtenir la condamnation d’une personne morale il devra aussi prouver que le crime et/ou le délit ont été commis dans les conditions cumulatives suivantes : (i) en son nom et dans son intérêt, (ii) par un de ses organes légaux ou par un ou plusieurs de ses dirigeants de droit ou de fait. Il est concevable que le Procureur d’Etat rencontre des difficultés pour prouver l’existence de la réunion de toutes ces conditions cumulatives, ce qui semble mettre à l’abri les personnes morales de condamnations pénales. Néanmoins, si en pareille hypothèse le Ministère Public devait, pour des raisons de difficulté d’administration de la preuve, décider de ne pas poursuivre la personne morale, il pourra toujours exercer l’action publique contre la ou les personnes physiques par la faute de laquelle l’être fictif de la société a été amené à contrevenir à la loi pénale. Par Rosario Grasso

Références 1. Amende de 1.250,00 EUR à 1.250.000,00 EUR. 2. Loi du 3 mars 2010 : 1. introduisant la responsabilité pénale des personnes morales dans le CP et dans le Code d’Instruction Criminelle (CIC), 2. modifiant le CP, le CIC et certaines autres dispositions législatives 3. Cas. Lux. 29.03.1962 Pas.18, p.450. 4. Cour d’appel du Grand-Duché de Luxembourg, dixième chambre, arrêt N°492/10 X du 8 décembre 2010, not 12446/09/CD.2 5. Nouvel article 34 alinéa 2 du CP. Le cumul des responsabilités pénales des personnes morales et physiques permet notamment d’éviter que des personnes physiques se servent du couvert d’une personne morale pour masquer ou pour se soustraire leur responsabilité personnelle, voir Projet de loi n° 5718 précité, p. 15. 6. Voir projet de loi n° 5718 commentaire des article s, p. 11. 7. Voir Isabelle Corbisier, « Les lignes de forces des récentes réformes vers un droit commun des personnes morales », in André PRÜM [coordinateur] Le nouveau droit luxembourgeois des sociétés, Collection de la Faculté de Droit d’Economie et de Finance de l’Université du Luxembourg, Bruxelles, Larcier, 2008, p.15-19, et Isabelle Corbisier « La réforme du droit luxembourgeois des sociétés » in Revue Pratique des Sociétés, Bruxelles, Bruylant 03/2008, n° 6985, p. 271. 8. Article 2 de la loi du 10 août 1915, concernant les sociétés commerciales telle que modifiée, ci-après loi du 10 août 1915. 9. Article 12bis de la loi du 10 août 1915. 10. Cour d’Appel, 20 mars 1991, R. n°11451. 11. Article 2 de la loi du 10 août 1915. 12. Notion reprise dans le Projet de loi 5718 précité, page 13 et suivants. 13. Articles 71 et 71-2du CP : troubles mentaux abolissant le discernement de l’auteur ou le contrôle de ses actes et force, contrainte à laquelle l’auteur n’a pu résister. 14 A  rticle 71-1 du CP: troubles mentaux ayant altéré le discernement de l’auteur ou entravé le contrôle de ses actescette circonstance lorsqu’il détermine la peine. 15 Articles 70 et 416 du CP : ordre de la loi, commandement de l’autorité légitime, légitime défense. 16 L es peines criminelles ou correctionnelles encourues par les personnes morales sont: 1) l’amende, dans les conditions et suivant les modalités prévues par l’article 36 ; 2) la confiscation spéciale; 3) l’exclusion de la participation à des marchés publics ; 4) dissolution, dans les conditions et suivant les modalités prévues par l’article 38. 17. Article 38 1er alinéa du CP. 18 Article 37 du CP. 4 19. Toute personne jugée apte à représenter dûment la personne morale, comme par exemple le chef du personnel, le chef du service technique ou juridique ou même une personne tierce. 20. Nouvel article 244 du CIC. 21. Nouvel alinéa 2 de l’article 2 du CIC. 22. Nouvel alinéa 4 de l’article 86 du CP. 23. Alinéa 1 de l’article 86 du CP. 5 24. Cour d’Appel arrêt N° 340/11 V. du 28 juin 2011. 25. Article 135-6 du CP.



Industries Family Office

Globalisation of wealth management calls for more expertise, understanding Wealthy families are today more globalised. Because of the general context of financial uncertainty, their needs for wealth preservation and growth have become more sophisticated and complex. As a result, the need to consolidate assets is one of the priorities of the family office market. Therefore it is essential to be able to give sensible advice to the families, at the right moment, with a global view of their wealth entrusted to several managers deposited in several banks in several countries.



Founding Partner of Wealth@Work


The global financial landscape changed a lot since the worldwide sub-prime crisis of 2008. Numerous other changes such as the European debt crisis, banking confidentiality, the OCDE grey list crisis, and the new financial regulation in the U.S. and Europe about hedge fund transparency, have influenced families and their wealth worldwide. Because of the crises, families’ wealth is not only spread across many banks but, it also depends on a sound management by many asset managers located in different countries. Pure wealth management solutions are supported by a network of financial services providers with, among others, an independent wealth manager, an independent native manager overseeing the


trust, a philanthropy adviser, etc. They propose a range of services in wealth, inheritance and financial engineering. The key benefits of having a family office are perceived in a very similar way by wealthy families; the most important objective is the trans-generational wealth management and the fact that it can consolidate the functions of a family’s wealth management and control. Not only is there an interest for this growing market, but also a need for expertise to understand what it entails. To avoid disclosure under the new financial regulation about hedge fund transparency, George Soros converted his hedge fund into a family office. Also, in the U.S., 65 family offices

came together to help inform congressmen and senators to understand what a family office is (e.g. family offices in the U.S. can only manage money for those related by blood, marriage or legal ties).

The need for consolidated reporting Since investment and wealth management are a family office’s highest priorities, reporting is paramount to keep track of diverse and varied activities such as asset allocation, risk management, business opportunities, governance issues, family matters, family office operations, trustees, special events, lawsuits, etc. The family office pursues a conservative investment

Family Office Industries

strategy and wants to understand the way their investments are being managed by all their external asset managers. For this reason they set up an asset allocation with the risk/return on their global wealth. Assets will be allocated according to geography, asset class, currency, etc. All asset classes have different levels of risk and return and behave differently over time. The family office will set up a profile and its benchmark portfolio and make a choice of the best asset managers in each asset class, as well as on every stock market. Afterwards they will outsource both the management and the assets to different custodians, different asset managers, across different countries. The value of assets are changing given market conditions. As a result, the managed portfolio needs constantly to be re-adjusted

and optimised in order to maintain a long-term goal. The general premise of dynamic asset allocation is to reduce the fluctuation risks and achieve returns that exceed the target benchmark for a given risk. For this reason the family office needs a reporting that can consolidate all assets anytime and anywhere, and control that the benchmark and strategy are respected by referring to a given return/risk for each custodian and asset manager.

Risk management and performance attribution Emotions like fear and remorse were, and still are, understandable consequences of the crises. But, wealth managers must work to better understand their clients. Drastically reducing their exposure to risk is not justified. The level of risk and the anticipated

return must be discussed and conceived before the portfolio recommendation is done. All facets of portfolio risk have to be understood and the investor has to have a perception of this risk. Some investors put a very strong emphasis on the stability of returns around their mean and put significant less importance on extreme but rare losses. Other are sensitive to how a shortfall will be taken care of with respect to their minimum acceptable level of wealth. Reallocating portfolios every month with the proper risk perception enables portfolio managers to tightly monitor and control risk exposure. The family office needs a comprehensive reporting on performance attribution to compare the return of a portfolio with the return of the strategy, and measure or explain the added value. By Diana Diels-Kneip

About The family office is a dedicated professional centre that services an affluent family’s financial and personal needs. Clients want information and advice on a nearly real time basis. Planning, investing and measuring become very important, especially in the current financial markets context. It has to be a continuous process that is hard to keep track of and to successfully put in place without an appropriate front wealth management program and risk tools with detailed performance attribution.



industries GOVERNANCE


Gouvernance: être concret tous azimuts La gouvernance, concept somme toute très théorique, peut donner lieu à des résultats tangibles au sein de l’entreprise. Tout est une question de redéfinition des rôles et responsabilités de chacun en accord avec les objectifs de l’entreprise. C’est ce que démontrera Vectis PSF avec la technologie Goverline lors d’un lunch organisé avec Finance Nation Luxembourg. UN PSF AU SERVICE DES PSF En tant qu’agent de constitution et gestion de sociétés, Vectis PSF intervient comme un véritable “architecte d’entreprise” auprès de ses clients grâce à une expertise de l’analyse organisationnelle acquise au fil des années. Grâce à une connaissance poussée du fonctionnement d’une organisation, les conseillers de Vectis PSF peuvent intervenir à différents phases d’évolution, dans différents domaines. Afin de créer de la valeur

Vectis PSF, société de conseil et spécialiste de la mutualisation des questions de gouvernance, a mis en place depuis sa création en 2005 une méthodologie éprouvée pour appuyer les professionnels du secteur financier dans leur démarche d’excellence. “Depuis six ans, nous avons gardé le même credo et le même créneau: il y a une valeur dans le fait de simplifier la définition des objectifs et de mettre en place les ressources et les moyens nécessaires pour les atteindre”, explique Jean-Philippe Wagnon, fondateur de la société.

ajoutée, Vectis PSF se concentre sur notamment les processus de gouvernance, mais aussi le contrôle interne, l’organisation, ainsi que la compliance et l’audit de ses clients. Si nécessaire, les conseillers peuvent prendre une part plus active dans le

Dans le cas de la gouvernance, il s’agit de remettre à plat l’organisation interne. “Il faut pouvoir définir les objectifs de l’entreprise, dit Jean-Philippe Wagnon. Cela paraît évident mais ce n’est pas toujours ce qu’on observe dans la réalité.”

processus de prises de décision d’une société, agissant comme secrétaire lors des comités de direction et des conseils d’administration, voire occupant un poste-clé lors de ces réunions. Vectis accueille même des clients en ses locaux, agissant alors comme incubateur d’entreprise.



Selon lui, “les PSF n’ont parfois pas toute de suite conscience des enjeux réglementaires qu’être PSF représente. On propose de la valeur à partir des contraintes que les circulaires contiennent. Le but n’est pas d’ajouter de la réglementation à ce qui existe au sein de l’entreprise mais de simplifier et clarifier ce qui existe.” 

Avec LuxTrust, Learch et CDDS Vectis PSF, depuis sa création il y a six ans, a amassé une profonde connaissance des flux de décision que la société a ensuite modélisé pour proposer des solutions-types à ses clients. Avec la technologie Goverline, un outil de visualisation des objectifs de l’entreprise et des rôles des collaborateurs qui promeut la transparence, la société propose une solution technologique aux défis liés à la gouvernance d’entreprise. Goverline est un logiciel de visualisation des rôles et des responsabilités de chacun au sein de l’entreprise, joignant également une définition plus claire de ceux-ci en regard des circulaires en vigueur. Il s’agit de centraliser l’information pour ensuite mieux décider. Goverline définit les rôles et responsabilités de chacun, liste les documents internes, les deadlines, les processus de vérification et d’approbation internes et peut même devenir un outil de gestion de documents. La solution inclut aussi un agenda listant les prochaines décisions à venir : meetings, comités de direction, etc. “Cet outil de supervision et de pilotage rend les processus

Lunch CE GOVERNArN e 2011 b Mardi 18 octo

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de suivi opérationnels plus transparents. En bref, Goverline permet de gagner du temps”, résume Jean-Philippe Wagnon.

En intégrant la signature électronique et l’archivage légal dans Goverline, Vectis PSF s’engage sur la voie de la traçabilité et de la simplification : plus besoin de présence physique au sein de l’entreprise pour approuver un PV d’une réunion en apposant sa signature sur un document. Le document signé peut ensuite être archivé – et si besoin est utilisé plus tard dans un contexte juridique. “La ligne de temps de la gouvernance est devenue le centre moteur de chaque entreprise. Elle guide et structure la prise de décision, la lecture de documents, leur validation ou contestation, etc.”, ajoute Jean-Philippe Wagnon.


En octobre, Goverline passe à la vitesse supérieure avec l’intégration de la signature électronique LuxTrust et l’archivage légal avec Learch (Luxembourg e-Archiving s.a.). Vectis propose donc déjà la quatrième version de Goverline, lancée seulement en janvier 2011. Goverline est offert sous forme de portail (Saas) ou intégré inhouse chez le client. Le mode Saas permet des évolutions continues: une fonctionnalité de lutte contre le blanchiment (KYC, AML/ MIFID) est proposée en partenariat avec CDDS et un service de gestion des risques opérationnels sera ajouté au premier trimestre 2012.

Jean-Philippe Wagnon, fondateur de Vectis PSF



Industries EVENTS


APSFS on the fast track Outsourcing is on an upward curve in the financial industry: there are now about 80 companies with a PSFS status (“Support PSF”) in Luxembourg. According to the APSFS, the PSFS’ representative body, current revenues and jobs created signal a very positive future for the sector, which represents about 8,000 highly qualified positions.

Today, due to current economic conditions and technological advances, the very nature of outsourcing projects is evolving. The 2008 financial crisis showed financial institutions the importance of better controlling their cost structure and focusing on their core business - as underlined in the CSSF’s 2010 activity report. More and more companies decide to outsource complex operations to PSFS, including entire internal processes (Business Process Outsourcing). Financial services providers propose virtualisation tools in their package. They offer their customers to share technology platforms with other companies. Cloud computing is slowly but surely making its way in the financial sector, while the CSSF must give its opinion on more and more complex outsourcing contracts.

A public/private partnership There are a lot of opportunities today. The regulatory framework and prudential surveillance must be adapted to the dematerialisation and virtualisation of economic exchanges. For Luxembourg to be a centre of excellence of outsourcing services for the financial sector, private and public partnerships must be created. This can help to improve the legal framework and to guarantee the integrity and confidentiality of the data managed by customers active in the financial industry.



Founded in October 2007, the APSFS represents the majority of companies active in outsourcing services dedicated to the industry. It is the representative body of the Luxembourg-based companies having adopted the status of “PSF de support” as defined in the law of 2 August 2003. The APSFS is also a member of PROFIL in order to play an active role in the promotion and development of the financial industry. Promotion and visibility of the status of “Support PSF” beyond the country’s borders is paramount for the APSFS. It made concrete proposals to the Haut Comité de la Place Financière to further develop the “Support PSF” cluster and make Luxembourg become a true “Information Trust Centre”. The government seems convinced that this economic sector can become a solid pillar of the financial place.

A long-awaited law

As far as prudential rules are concerned the CSSF prefers to deal with the APSFS. The Commission is now working on modernising the surveillance framework for Support PSF. According to the APSFS it’s about efficiency and pragmatism. The framework should be based on a risk-based approach that gives a real added value without bringing additional costs. The APSFS is aware of internal governance issues and has worked on a text proposal partly based on the CSSF’s 10/437 circular about salaries in the financial industry.

Annual conference The APSFS will hold its annual conference on 6 October 2011 at 4:00pm. The Minister of Finance Luc Frieden and the Chairman of the ABBL Ernst Wilhelm Contzen will be speaking. The event is a networking

The APSFS is actively working on promoting a favourable legal framework for developing e-archiving. It is to be hoped that this law proposal which will guarantee the legal value of dematerialised documents and which will introduce the status of financial service providers for dematerialisation and archiving (“PSCD” in French) can see the light of day as soon as possible. Luxembourg could be given a jumpstart in this key sector.

platform for companies having the Support PSF status and customers from the financial industry. The themes will be the diversification of the outsourcing activity and the promotion companies’ expertise on the local and international levels.

More info on :

Events Industries


Innovation in Finance and Financing innovation A mind-opening debate: that’s what Anne-Laure Mention, Project Manager at the Public Research Centre Henri Tudor, aims at achieving with the Centre’s first Innovation for Financial Services Summit taking place September 21-23. Why did the Public Research Centre Tudor decide to launch such an event? Are there specific needs in the financial industry? Innovation in finance largely remains under-investigated and poorly understood. Paradoxically, the financial sector and surrounding services play a dominant role in economies. Meeting the innovation needs of the financial sector is thus essential and challenging, and is contingent on a multiactor approach. Therefore, the collaboration between the financial industry, support services and research is the desired approach. Organising a dedicated event is fully in line with the PRC Henri Tudor’s strategy to concentrate on key economic sectors.

Is it wide-ranging or on the contrary very specific? Typically, innovations relate to new products and services. This event will also concentrate on other facets of innovation, such as the role played by regulation to foster innovation at both firm and sector level. The influence of new technologies on organisational practices, customer interactions (e.g. use of social network to communicate with customers) and product or service co-creation will also be exemplified. Financing innovation, usually of intangible nature, will also be debated. We thus opted for a balanced approach between specificity and indefiniteness, in line with our conference objective. Who should attend and why?

What is different in this conference compared to other events?

The conference programme is available at: home/programme Further information about other initiatives will be shortly released on:

This event is the first of its kind and will provide both international academic coverage and pragmatic insights from leading practitioners. Next to the plenary sessions and keynote speeches, participants will also be able to benefit from feedback experience through luminary sessions. Furthermore, three interactive sessions will allow participants to immediately apply the concepts and recommendations presented in the plenary sessions.

The event targets academics, practitioners and consultants interested in innovation from various perspectives (such as quality and organisation, marketing and relationship management, information technologies and operations). Anything planned beyond the summit? A second edition in 2012, together with other initiatives for the financial sector. Interview by Delphine Reuter



Local News


Microinsurance on the rise

A tribute to Lucien Thiel

Lucien Thiel

"First of all, I would like to express my heartfelt condolences to Lucien’s wife Maggy and their children. My thoughts are with them in these difficult times. I want to let his family know that they are not alone and they can count on our help and support. Lucien Thiel has always acted in the best interest of this country, whether it was as a journalist, as General Manager of the ABBL, as a member of parliament or as Chairman of the CSV parliamentary group. He was a brilliant mediator between the world of politics and the business world. He has always had a talent for explaining complicated subject matters in the easiest terms possible, and with his expertise and know-how he has managed to facilitate the work of his parliamentary colleagues on new draft laws. He was also very much dedicated to social causes. Not content with simply sparing a thought for the underprivileged, Lucien Thiel spared no effort to actively assist those in our society who needed help. Beyond his undeniable expertise and proficiency, I appreciated Lucien Thiel on a personal level. Lucien knew how to enjoy life and always had a smile and a friendly word for other people. I fondly remember the many occasions when Lucien and I got to discuss motorcycle riding, our common hobby, over a good glass of wine. With Lucien Thiel, Luxembourg has lost a great individual. " From Ernst Wilhelm Contzen, chairman of the ABBL



In a July 2011 study, the Microinsurance Network analyses commercial insurance companies’ incentives and long-term perspectives in the microinsurance sector. The Luxembourg-based global network contacted the top 50 insurance companies from the Forbes “The Global 2000 Insurance” list and five local ones. The majority of the respondents believe that the offer and demand of microinsurance will grow by more than 100 percent over the next years. The four biggest challenges identified were the high costs of distributing the products in relation to the low premium; the lack of insurance awareness and understanding among the low-income populations; the lack of distribution channels for products to be sold directly to low-income people; and finally, the lack of reliable data, which is needed for risk assessment and premium calculation. Companies believe that longterm benefits of the microinsurance market are both tangible (offering a financially sustainable product) and intangible (increasing brand awareness).

burg», which compares annual revenues of German banks’ Luxembourgish branches and comments on the German banking sector’s evolution in Luxembourg. The survey was published by Thomas Schiffler and Rima Adas, Partners at PwC Luxembourg. It underlines the main mergers and acquisitions which happened in 2010-2011, such as Dekabank Deutsche Girozentrale Luxembourg’s acquisitions of WestLB International and LBBW Luxemburg, DZ PRIVATBANK’s partly acquisition of UniCredit Luxembourg’s private banking business, the merger between Dresdner Bank Luxembourg and Commerzbank International, the planned merger between WGZ Bank Luxembourg and DZ PRIVATBANK, the liquidation of IKB International, as well as other changes within the Luxembourgish entities of HSH Nordbank. The survey also analyses the “de-risking” strategy adopted by many banks. It can be downloaded (in German) on

More info:

M&A in German banks: a survey Rima Adas (© PwC - Blitz Agency)

Organisations concerned about CSSF independence

Thomas Schiffler (© PwC - Luc Deflorenne)

On 20 July 2011, PwC published its analysis «Auswertung der Jahresabschlüsse 2010 der deutschen Eurobanken in Luxem-

In a letter sent on 20 July 2011 to the Minister of Finance Luc Frieden and the Minister of Labour Nicolas Schmit, five organisations criticised the CSSF’s lack of independence, due, they said, to the absence of representatives from the civil sector and of investors on its committees. The Luxembourgish union of consumers, the trade unions ALEBA, OGB-L and LCGB, and the associa-

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tion Protinvest complained that the CSSF’s committees and its Board are exclusively made of civil servants, representatives of the financial sector and lawyers. “This situation does not ensure the transparency and balance needed for the CSSF in its mission as a control body,” they wrote. “The 2008 financial crisis showed how much an efficient control would have been necessary.” They underlined that Germany’s financial services regulator, BaFin, includes employees and clients from the financial sector. The signatories think there should be an equal representation on the CSSF’s committees of experts, on other consultative committees, as well as on its Board. “There should be at least one member representing consumers and investors, and one for employees,” they wrote. They asked the ministers to adapt the articles 6, 15, and 15-2 of the law of 13 December 1998 establishing the CSSF.

250th issuer of depositary receipts at LuxSE The Luxembourg Stock Exchange reached the milestone of 250 issuers of depositary receipts on 20 July 2011. Depositary receipts are instruments used predominantly by companies in emerging economies to enable them to gain access to international capital markets and therefore to raise capital abroad. These issuers come from seventeen countries in regions as varied as East Asia, South Asia, central Asia, Eastern Europe and South America. Most of the issuing companies come from India and Taiwan. The majority of the Taiwanese issues are from technology companies, while most Indian issuers are active in construction, industry, software, and biotechnology. In terms of number of issuers, and based on current data from the various stock markets, the Luxembourg Stock Exchange is the leading exchange in Europe for these instruments and it is in second position worldwide behind the New York Stock Exchange (306 issuers) but ahead of the London Stock Exchange (196 issuers) and Nasdaq (106 issuers).

BCEE among world’s safest banks

funds with those specialised in non-regulated funds of the private equity type. This new practice area represents more than 140 lawyers. Also, there will be more opportunities for training at the Arendt Institute, in the fields of AIFMD, UCITS IV, depositary banks, European Law, MiFID, tax law, private banking and anti-money laundering.


On 5 September 2011 the Banque et Caisse d’Epargne de l’Etat, Luxembourg (BCEE) announced it had been elected 8th safest bank in the world by the financial magazine “Global Finance”. Fifty banks were selected for this online ranking from a pool of the world’s 500 most important banks. As a classification method the magazine referred to the banks’ quality of assets and their long-term credit ratings given by Moody’s, Standard & Poor’s, and Fitch.

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A&M continues expansion, strengthens training offers

In July 2011 the law firm Arendt & Medernach transferred some of its teams to the new “Président” complex situated on avenue J.F. Kennedy in Kirchberg. The firm retains its two buildings on rue Erasme but has moved out of the building on the Place de l’Etoile. This move is only temporary as all employees will move to a brand-new building in 2014. The firm also merged the teams of lawyers specialised in regulated

In September 2011 the English group CAPITA acquired AIB International Financial Services, an outsourcing services and solutions providers to financial institutions and companies. AIBIFS belongs to the Investment Banking department of the Capital Markets division of Allied Irisk Bank Plc. AIBIFS is located in Ireland, Hungary, Luxembourg, Switzerland and the Netherlands. In Luxembourg, AIBIFS is represented by AIB Administrative Services Luxembourg sàrl, which is by chance located in the same Limpertsberg building as CAPITA's Luxembourg branch. AIBASL represents about 20 employees, and CAPITA in Luxembourg, about 70.

No preference for credit transfers According to the 2010 payments statistics published in September 2011 by the European Central Bank, Luxembourg was the Member State where credit transfers were used the least for non-cash payments during that year. The ECB's 2010 statistics on non-cash payments comprise indicators on access to and use of payment instruments and terminals by the public, as well as volumes and values of transactions processed through payment systems. The data show that the relative importance of each of the main payment instruments varied across EU countries. The biggest difference was observed for credit transfers, with a usage of just 10 percent of all non-cash payments in Luxembourg, compared to 72 percent in Bulgaria. The total number of non-cash payments in the EU, using all types of instruments, increased by 4.4 percent to 86.4



billion in 2010 compared with the previous year. Card payments accounted for 39 percent of all transactions, while credit transfers accounted for 28 percent and direct debits for 25 percent. The number of credit transfers within the EU increased in 2010 by 3.8 percent to 24 billion. The importance of paper-based transactions continued to decrease. The number of cards with a payment function in the EU remained relatively stable at 726 million.

Š Raoul Somers Photography

Finesti's platform welcomes UCITS IV solution

to transmit high volumes of documents to all thirty regulators in the European Economic Area.

Law firm becomes OPF Partners On 15 September 2011, the Luxembourg independent business law firm Oostvogels Pfister Feyten changed its name to OPF Partners. Since its inception 12 years ago, OPF Partners has become a recognised player on the Luxembourg and international legal markets, advising financial institutions and private equity houses, as well as large industrials and (alternative) asset managers.

Dexia goes mo-BIL-e

Dominique Valschaerts, CEO of Finesti

Finesti, the Luxembourg-based information agency for the collection and dissemination of fund information, has launched a new service for cross-border notifications on its existing platform, The service enables investment funds to comply with the requirements of the UCITS IV directive concerning European cross-border notifications. Thanks to this directive, which harmonised the various national procedures and introduced a regulator-to-regulator process, time is saved. Before, the notification procedure took two months. Now, an investment fund that wishes to sell its shares in jurisdictions other than its home country transmits a standard notification package to its home country regulator, who has a much shorter ten working days to review it and to transmit it to the host country regulator. Once this process is completed, the fund then has the right to market its shares. Finesti's solution is a notification service built on secure, automated electronic communication. It has the capacity

From 8 September 2011 on, Dexia BIL customers will have the possiblity to choose to use the Dexiaplus Mobile application for iPhone, iPad or iPod Touch. The functionalities of this new, free application answer the need of tech-savvy customers for forward-looking, modern services. Dexia BIL already had an iPhone application but it only allowed for the reading of some information concerning the bank and its products, the geo-localisation of agencies across the country or the nearest ATM. These functionalities will be available through the new application. Customers will also be available to see their account statements, liquidities and loans, the list of the transfers made through Dexiaplus and Dexiaplus Mobile, make transfers between their accounts and beneficiaries listed in Dexiaplus, as well as see their credit cards statements and limitations. The solution's strongest advantages will be its easiness of access, mobility and security. Access to customers' accounts will be secured through the token LuxTrust. For now available on Apple products, the solution will soon be made accessible through other Smartphones.

Nation > exigo - The freelance track p60 > Galilei-Randstad - On outplacement services p62 > Seen from abroad - A Luxembourger in China p64 > Careers p76



Nation Trends

The freelance track Going for a certain job insecurity for a more attractive salary and more flexibility... In a world where job security is not always an option, more and more banking experts decide to jump over the fence to start an independent business and sell their services to different clients in different countries. Their mottos : organisation, availability, independence, adaptation and the ability to anticipate. Acquiring a freelance status requires thinking, preparation, and measuring risk. In the right conditions, it allows for one’s expertise to be valued - a recognition often soughtafter once a certain career level has been reached. The status is a synonym of expertise and knowledge transfer. For success to be guaranteed, this type of status requires various competencies that complement each other, so as to be an expert in a precise sector. These can range from a deep knowledge of a banking management IT system, to the perfect command of financial decisions to be made in a trading room, to funds investment consulting, tax advisory, etc. Becoming an independent also means that one needs to manage his own company, as well as take care of the accounting, administrative and tax aspects. The freelancer needs to look for the right people to advise him/her on how to best take advantage of this new position. Planning and anticipating unforeseen events or issues are essential to strategically manage self-employment?



The more highly specialised the freelancer, the more important it is to find a high-growth niche. Recessions happen and one needs to keep an eye on the market to know when to change strategy. Choosing when to adapt to new products and systems is key. One needs to know how to sell one’s expertise - networking playing a big role in a freelancer’s business, along with keeping in touch with consultants, specialised recruiters and the institutions themselves. When considering where to open the business, one needs to consider where his potential clients will be based. Missions can lead to Paris, Luxembourg, or Geneva as well as other continents. A banking software specialist for example can be required to move far away from home for long periods of time.

A true partnership Over the last few years, and since the first crisis caused by the 9/11 events, there has been a rise in banking experts going freelance. The collaboration between freelancers and Advisory Firms is usually a win-win situation as both parties can

benefit from the status. A freelancer’s time is dedicated to working for his clients and not necessarily to finding new opportunities for his career. Advisory firms have a sales force that can bridge that gap and keep him updated about market trends. They can act like a purchasing adviser, taking over the freelancer’s commercial role and referring prospects to him. They can also assist and inform him about tax issues. On the other hand, the freelancer’s success is also the Consulting firm’s - ensuring business growth and showing a positive image to clients. Through this collaboration, an interesting balance between common interests and risk-sharing can be found. By Pascaline Mulet


Pascaline Mullet, HR Manager at exigo s.a



nation Outplacement

”A job search is not always a linear progression” What outplacement services can do for candidates whose career paths became uncertain in a wave of restructuring, mergers and acquisitions. Mrs Sültmann, can you explain outplacement in a few words? Outplacement is a service designed for people who have to leave a company due to redundancy, restructuring, a merger or acquisition and is usually set up by the employer. It is the process of supporting the people being made redundant on a psychological and practical basis. The career guidance support helps employees through these challenging times by dealing with the uncertainties of their future and helping them to re-enter the job market. It also reassures people staying in the company that their colleagues are being cared for. An outplacement programme includes career evaluation, resume writing, interview preparation, network developing, job search skills, job targeting, contract negotiation, as well as feedback and support in the first weeks of the new job. What specific services have you put in place to help candidates find jobs? Firstly, we have an alumni database and network that has grown over the years, which can be found through our intranet or via Linkedin. We also organise recruitment days with some recruitment agencies in Luxembourg. Candidates get to meet the agents personally and introduce themselves, which they cannot



always do when they try to contact them directly. And last but not least, all of our consultants have their own contacts and networks in Luxembourg and abroad. What is especially challenging for them in their job search? The most challenging part for candidates in their job search is understanding which method best suits them to approach the job market. Which channels should they use to send their applications? And to get relevant information? Some candidates simply don’t choose the job ad and/or company which best corresponds to their objectives. Job seekers sometimes ignore or underestimate the power of their network. Another challenging issue is “What should I say when I introduce myself to a recruiter, to an HR manager or to an operational manager?”, and “What should I mention and focus on? “ Are there typical profiles of job seekers interested in outplacement services? Frankly, no. Career transition, job coaching and outplacement are for pretty much everyone: employees and middle management to top management. It also concerns all age groups : we can meet and help people close to retiring but also people in the heart of their professional journey

or young professionals. They can come from all academic backgrounds and all job sectors. Are you more often contacted by employers or by employees? Usually the employers contact us when they are in the process of restructuring departments, negotiating social plans or preparing for individual redundancy. But in the past two years, we have noticed quite a change in scenery…more and more people have been contacting us directly for career evaluations. They are interested in identifing their strengths, skills and achievements. After this first step of career evaluation, they often stay with us for coaching sessions. How soon in the process of jobseeking do you step in? The sooner the better. If the employers contact us early enough, we are able to give psychological support to people right after they have been made redundant. This first and immediate contact with candidates is very helpful for them: they can express their emotional roller coaster or their anger. In the case of social plans and restructuring, we meet unions and employees’ representatives very early on, explain our services and discuss how we can help their colleagues. Of course, this is all done confidentially.


Uta Sültmann, Career services & outplacement consultant, Galilei - a Randstad company

Are candidates and employers in Luxembourg familiar with the outplacement concept? Fortunately more and more have been becoming familiar with the outplacement concept since 2006, when we started our activities in Luxembourg. More often than not, a budget for outplacement programmes is negotiated into social plans. In addition, we also have a number of ‘faithful’ clients for whom outplacement services come almost naturally with the exit package, whether for individual or multiple lay offs. For the most part, individual candidates know or have at least heard of the concept of outplacement. On both sides of the spectrum though, there is still a lot of work to do to raise employees’ and employers’ awareness and understanding.

In the U.S. where the business seems to be booming following the economic crisis, candidates looking for jobs complain of standardised services that don’t match their needs. How is outplacement in Luxembourg different from what is offered there? We definitely focus on candidates’ expectations. It is important to know what they truly need and how we can help them on an individual basis. We adapt our programme and trainings to each person. Of course we have a well-tried across-the-board method, which we rely on, but we remain flexible. A job search is not always a linear progression. We need to have our candidates be prepared for each and every event that may occur. Interview by Delphine Reuter

A partnership with the IFBL and ABBL “We started working with the ABBL and IFBL two years ago. In 2009 Galilei supported around 40 people who had been made redundant and whose employers were members of the ABBL. We helped them with a job coaching program (including individual meetings and workshops) and, along with the IFBL, we validated their training budget.“



Seen from abroad - Shanghai

Carlo Wolff

VP Business Developmentat IMIG China

ID card: What is your nationality? Luxembourgish

How old are you? 38

Where did you grow up? In Luxembourg

When did you leave Luxembourg? In 2003

When did you start working in China? In 2004

What are your hobbies?

© Photography Jackson Lowen

Public Speaking, socialising, sports, reading




Can you describe your role at IMIG China?

What image(s) of Luxembourg do your colleagues and customers have?

IMIG China is one part of my professional activities in China. IMIG is a leading German consultancy for process optimisation. As Vice President, Business Development, my mission is to empower IMIG clients to achieve the best use of financial and productive resources – through efficiency increases. Working with IMIG’s consultant team and being closely connected with industry leaders in China, my main objective is to develop and promote high-ROI services to IMIG clients.

Luxembourg is perceived in China as being a small and rich country and that is beautiful too. I am not sure where this is coming from, but since my arrival in 2003 I have heard this many times from Chinese.

In addition at IMIG I am in charge of building partnerships with other leading consultancies and market players in China, as well as spotting market trends. What was the biggest challenge you had to take on so far at IMIG? By far the biggest challenge - which is a daily one - is building trust with a local clientele. Trust is the basis for any sound business relationship; however this is arguably even more pronounced a truth in China. For instance when bidding for a recent cost reduction project with a large Chinese industrial company, it was by far not enough to introduce a similar successful client reference to the prospect. Here, we had to identify a person of trust to the prospect - on a personal basis, before the discussions could go ahead. In addition to that, when you offer services – even more than when you offer products Chinese clients challenge us regularly with requests for return on investment guarantees, in our case measured through efficiency increases. The real challenge then becomes to thoroughly set up the KPI measurement process together with the prospect. But sometimes indeed, it is the wisest thing to walk away from such a deal where guarantees requested are too stringent.

Has being from Luxembourg been an advantage for you in your business relationships? How? Luxembourg is perceived as the heart of Europe and its proximity to Germany and France has as advantage of Luxembourg being assimilated to the club of leading European Nations. This constitutes an advantage of being taken seriously. If you left China for Luxembourg today, what lessons or ideas would you try to bring back with you? Don’t take your status quo for granted and keep moving, whether you are a company or a country. China has incredibly quickly changed in the last years. One hears this often, and even though it may sound like a stereotype, it is true indeed. Also, the adaptability of China as a country and the Chinese people are a phenomenal lesson. Change is driven by China’s vision to become a leading actor on the international scene. My lesson here is that both private and public leaders need to every day look at their visions to ascertain that they both are on track and remain on the forefront of international developments. How do you perceive the development of Luxembourg’s financial centre? If you had the power to change or improve something, what would it be? Having worked myself in the financial sector in Luxembourg for about six years, I can say that whilst Luxembourg boasts operational excellence combined with a solid regulatory framework as factors for

keeping an edge, it may need to be closer to what is happening on the international scene. For instance, the fact that strong investment flows are going out of China is an opportunity that in my view is maybe not as fully captured by Luxembourg as a financial industry yet. However, ODI (overseas direct investment) is a number one priority in China right now. If I could improve something I would push promotion of Luxembourg as a financial centre with even more intensity in China, as I see this as a potential strong lever for growth of the Luxembourg financial centre in the years to come. What message would you address to the Haut Comité de la Place Financière, responsible for the development of Luxembourg as financial sector? When Minister Luc Frieden related to the "vision internationale" I think this is the message I would address to the Haut Comité de la Place Financière: create an even stronger vision for Luxembourg as a financial centre, in order to foster an identify on the international arena worth remembering. Malta is currently undertaking a very visible marketing effort to establish ifself as credible financial centre with Chinese audiences and carving such an identity in the local minds. I would encourage the Haut Comité to grasp the opportunity and put Luxembourg in the limelight here too. Today, not tomorrow - as Chinese traditionally put strong emphasis on, and have deep respect for, first movers. Luxembourg must not miss out on this opportunity. What is your relationship to Luxembourg today? How Luxembourger do you feel? Luxembourg is my country and it will always be. The longer I am away from Luxembourg, it may be fair to say that I feel more Luxembourgish than ever.



Nation people


François Pauly at the head of Dexia

On 1 September 2011, François Pauly officially became Managing Director and Chairman of the Executive Board of Dexia BIL, thereof replacing Frank Wagener who stepped down from these roles last March. Among other things, Mr Pauly will supervise the Private Banking activities of Dexia BIL. He joined Dexia BIL in 1987 and later moved to Italy where he headed the Italian branches of the group, before coming back to Luxembourg in 2003. Between 2004 and 2010, François Pauly took the position of Managing Director of Sal. Oppenheim Jr. & Cie. Currently he is also Managing Director of BIP Investment Partners and holds a seat on various executive boards in Luxembourg and abroad.

Finnova appoints Luxembourg Country Manager On 19 July 2011 Fabrizio Romano became the new Country Manager for Luxembourg at Finnova. Mr Romano has been in charge of operational business at Finnova’s legally independent Luxembourg subsidiary since mid-2010.



New domiciliation expert at MPLAW

Guillaume de Villenaut has joined the law firm Mayer & Pochon, MPLAW as the manager of the domiciliation department. He has a solid knowledge and experience of contract law in Luxembourg.

MNKS appoints a new Managing Partner Marie-Béatrice Noble was appointed as Managing Partner of the law firm Noble & Scheidecker (MNKS). She co-founded the firm in 2004 with Katia Scheidecker and has played a key role in the development of the firm. She notably launched the Corporate and the Employment law departments, advising local and international clients namely on mergers and acquisitions, international structuring projects and dispute resolution.

New HR Director at Ernst & Young

New risk expert at ING

Alain Cordenier became Chief risk officer and a member of the managing committee at ING Luxembourg, supervising market risk management, credit risk management and non-financial risks. Mr Cordenier started to work for the ING group 25 years ago. In 2005, he took the positions of CFO/COO of ING Belgium working from the Swiss branch of Geneva, as well as officer and market risk manager of ING Switzerland.

Daniela Binda became Human Resources Director at Ernst & Young after having held the position of HR Director at Brown Brothers Harriman (Luxembourg) S.A. and another Big 4 firm in Luxembourg. Formerly she also was Senior HR Business Partner of Amazon EU Sàrl.

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FinanceNation #6 // September-October 2011  

Strong roots, strong visions : Finance Interview, François Tesch, CEO of Foyer S.A.

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