The Luxembourg financial center is benefiting from the boom in alternative investments

Luxembourg

Since Brexit, Luxembourg has focused on funds and insurance.

(Photo: dpa)

Frankfurt Since Great Britain left the European Union (Brexit), the financial center of Luxembourg has primarily tried to attract new fund companies. The Duchy was also successful in 2021: Last year, the Luxembourg financial supervisory authority issued 77 new licenses for financial service providers.

The bulk of the licenses went to Alternative Investment Fund Managers (AIFMs). This is the result of a statement from Luxembourg for Finance (LFF), the agency for the development of the Luxembourg financial center, which was previously available to the Handelsblatt.

Smaller alternative funds, whose assets under management remain below a certain threshold, received 41 licenses. There were also eleven licenses for normal AIFMs. In addition, six investment companies and seven reinsurance companies were also approved by the supervisory authority.

“A smaller proportion of the additional settlements, particularly in the area of ​​alternative investment fund managers, may still be directly attributable to relocations that were necessary after the United Kingdom left the EU,” says LFF boss Nicolas Mackel.

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“But overall, the development shows the post-Brexit reality,” emphasizes Mackel. He understands this to mean that companies that want to serve the EU internal market no longer choose London as their location. “They are now more likely to settle in financial centers within the Union, including us in Luxembourg.”

Positive impact on labor market

Assets under management in Luxembourg investment funds rose by 17.8 percent year-on-year to EUR 5.85 trillion. Almost half of this growth came from the inflow of new investor funds. In addition, the positive development on the financial markets ensured volume growth.

These developments have also had a positive impact on the labor market: the number of jobs in financial and insurance institutions in Luxembourg in mid-2021 was around three percent higher than the previous year.

The figures from Luxembourg are an example of the different strategies that the major financial centers of the EU have been pursuing since Brexit: Luxembourg has concentrated on funds and insurance, Paris is emerging as the most important trading center, and Frankfurt is the seat of a particularly large number of European headquarters of international banks become. JP Morgan has just bundled three EU subsidiaries in Frankfurt.

>> Read here: No big, but many small winners – These financial centers are winners of Brexit

Frankfurt also recently secured the seat of the International Sustainability Standards Board. The organization aims to develop internationally recognized standards for how companies report on sustainability.

However, the German metropolis on the Main has not secured a monopoly on sustainable investments: Luxembourg is one step ahead when it comes to sustainable funds: “Luxembourg is already the world’s largest center for ESG funds and accounts for 44 percent of the total at the end of the first half of 2021 assets managed in European ESG funds (Article 8 and Article 9),” the statement said.

More: Paris overtakes Frankfurt – and becomes the most important trading center in continental Europe

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