Banking in Luxembourg and investment options
Banks in Luxembourg are leaders in financial services; this guide explains banking in Luxembourg and private banking, investment and asset management options for foreigners.
Luxembourg's banks are world leaders in financial services, offering investment, multi-currency accounts and offshore banking – what benefits can foreigners get from banking in Luxembourg, investing or opening a multi-currency or offshore account?
Today a new demographic of workers and families is increasingly living in double or multiple currencies, mortgages, languages and countries. Some foreigners find advantages to moving their finances into an international or offshore bank account, particularly serious investors, to help keep some continuity in payments abroad. As such, banks in Luxembourg cover the wide spectrum of client services, although with more focus on private banking in Luxembourg and assest management rather than personal saving accounts.
Despite the country’s small size, there are some 150 banks in Luxembourg, of which some 30 percent are branches of international banks. You can also follow the country's economic policy, exchange and stability on the Central Bank of Luxembourg's website in English. Whether banking in Luxembourg or offshore, the country has some of the world’s best financial institutions and advisors.
Find out how to invest and bank in Luxembourg, plus a list of banks in Luxembourg and information for private banking and assest managment in Luxembourg.
Banking in Luxembourg
Banking in Luxembourg has long been core to the economy, especially focused on international investors and financial services. Today banks in Luxembourg offer a range of worldwide and online services, with favourable tax benefits and legal flexibility attracting many large investors to its offshore banking system. There are no restrictions placed on foreigners owning a bank account in Luxembourg, therefore both residents and non-residents can bank and invest in Luxembourg.
Opening an account is not a legal difficultly in Luxembourg and all that is typically required is proof of your ID and your address (which can be in your home country), plus a work contract if you are a resident in Luxembourg. Some banks operate completely online, where opening a bank account and investment can all be done from abroad. If you want a debit or credit card, in most cases you will also need to show proof of income.
Luxembourg’s financial focus has transformed many of its banking institutions into investment banks that require a certain investment amount to open an account (EUR 50,000–100,000), and only a small proportion of Luxembourg’s banks cater to retail banking for individuals. Electronic banking is widespread, and the majority of banking functions can be carried out via an ATM machine or online banking.
Why bank in Luxembourg?
The benefit of opening a savings or investment account in a country such as Luxembourg is that you can gain possible tax-efficient benefits. Traditionally Luxembourg has been attractive for providing an advantageous tax situation, privacy, a stable economy and low corruption. The country’s offshore environment has attracted a wide range of international investment funds and services in Luxembourg, and today there are extensive online services for investors and traders worldwide. Read more about taxes in Luxembourg.
Private banking still lies at the core of Luxembourg’s financial activity, and you can find many international banks that can help you bank, invest and build a diversified portfolio. It has created an industry of financial professionals including banks, wealth managers and numerous institutions, that have gained extensive expertise in tailored investment services. Some banking institutions, for example, offer larger investors a global wealth structuring service which can incorporate all the client’s assets –investments, life assurance, real estate etc – alongside tax and heritage consulting services.
Besides being an ‘AAA’ country renowned for investor protection, the FGDL EUR 100,000 deposit guarantee brings added reassurance. You can also can find reputable companies by checking they have full bank status.
Luxembourg bank secrecy: fact or false?
Traditionally Luxembourg has been known for providing privacy for investors. Luxembourg, however, will become less known as a country for secret and clandestine accounts following the signing of the FATCA (Foreign Account Tax Compliance Act), which agrees Luxembourg to share the information of assets held by American citizens and residents with the tax authorities.
In the sector of private banking in Luxembourg, however, there are still financial institutions that say they offer confidential private bank accounts, for example, numbered accounts exist to preserve a customer’s identity. But this doesn’t necessarily mean your account with not be known to the tax authorities, particularly as reforms are increasingly regular as pressure is put on countries to erode the secrecy associated with offshore banking in Luxembourg and elsewhere.
Multi-currency bank accounts
The typical bank accounts offered are savings and investment accounts, although multi-currency accounts also offer certain advantages to expats. When considering which type of investment account to open, you need to consider what features you want to manage your investment types and the overall running costs. Compare levels of service, terms and fees so you aren’t caught out by hidden charges.
Multi-currency accounts allow internationals to manage and move money in different currencies between a number of sub-accounts, and in some cases, debit or credit cards can be provided so you can pay in multi-currencies while travelling. This integrated account can eliminate the need to manage multiple bank accounts in different countries, and offer added cost-saving benefits such as simplified or free money international transfers or free ATM withdrawals worldwide. Internationals typically choose a multicurrency account when they need regular access to foreign currencies or want to manage their money offshore.
If you’re in search of a central hub for all your international investments, you’ll benefit from a single account that offers easy access and management worldwide. It’s typical that your bank will offer a range of investment services to manage your cash and holdings in the one bank account, such as track stocks and ETFs on global markets, online trading and investment services, foreign exchange and lending.
Private banking Luxembourg
Luxembourg's private banking sector dominates the selection of banks in Luxemourg, with the majority offering invesment and financial services to high-net investors. Many of the private banks in Luxembourg require a substantial minimum deposit to open an account.
Alongside the Luxembourg Stock Exchange, banks in Luxembourg offer the full range of stock investment services, from facilitating active private investors to providing personalised investment guidance or even full management of investors’ funds.
With Luxembourg’s access to major international markets and sophisticated financial services, it has become a leader in stock market investments for an international client base of residents and non-residents. Many banks in Luxembourg also offer multi-language services.
The complete range of stock market investments offering – bonds, equities, funds, structured products, tracker funds, warrants, etc. – are typically accessible online and available for global markets, with most banks also offering side services such investment advice or complete wealth management.
If ETFs in Luxembourg meet the double condition of being quoted on the stock exchange and having their sole objective as reproducing one or more indices, they are exempt from annual subscription tax (taxe d’abonnement) in Luxembourg.
Trading investment funds on the stock market offers the flexibility of stock trading with the diversity of a mutual fund. Typically, Exchange Traded Funds (EFTs) can be distinguished by passively reproducing a financial index, which in Luxembourg can be achieved traditionally, from assets that consistently reproduce the underlying index, or synthetically, by the use of derivative instruments.
In Luxembourg there is wide access to international EFTs listed on global stock exchanges, services for self-directed investors, access to market information and tools for managing investments worldwide.
Investment funds in Luxembourg
Investment funds and trading information are commonly accessible through online banking in Luxembourg. Luxembourg has become one of the leading investment fund centres in Europe due to its legal framework that combines investor protection with a flexible fund management structure, allowing investment options to be tailored to a specific market or client’s needs. Due to the legal flexibility for setting up an investment fund, today Luxembourg specialises in administration and cross-border distribution of investment funds, as well as attracts promoters who want to market their investment funds worldwide.
In particular, Luxembourg is a leader in cross-border distribution of undertakings of collective investment (UCI). Some three quarters of undertakings for collective investment in transferable securities (UCITS) sold into multiple countries are based in Luxembourg.
Cross-border distribution is handled by bank branch networks, independent financial advisers, life-assurance companies or directly by their management company, and there is a range of professional distribution agents offering services of all levels.
There are many investment funds in Luxembourg to choose from, covering all key categories, currencies, regions and sectors. Many investment banks in Luxembourg provide daily reports, fund management, recommended funds and a range of online tools to help you search and analyse funds to meet your investment criteria.
Investors looking to build their portfolio without adding funding have several borrowing options in Luxembourg. If an investor doesn’t have the upfront funds to make an investment, some of Luxembourg’s investment banks will allow them to use other securities as collateral or borrow against the value of their holdings. This allows investors to act on opportunities at a moment’s notice and competitive borrowing rates or deals might be on offer, such as only paying interest on what you use. Margin trading, however, involves a high degree of risk and is not suitable for all investors.
Derivative investments in Luxembourg
Banks in Luxembourg typically offer access to derivative investment products that can be all managed within one account via online banking. Whether you want to trade Forex, CFDs, Options or Futures, you can manage all your investments easily in one account. Investing in derivative products also carries a very high degree of risk.
The best bank in Luxembourg for you depends on your investment profile and what services you need, whether you're looking to enter Luxembourg's private banking sector and are in search of asset managment or an investment bank in Luxembourg, or whether you just want to open a personal bank account in Luxembourg. Below is a list of banks in Luxembourg, with a short description about their profile.
Banque et Caisse d'Epargne de l'Etat (BCEE)
Established more than 150 years ago, the BCEE has a sole shareholder, the Luxembourg State and offers a wide range of products and services adapted to the needs of private individuals, professionals and young people.
BNP Paribas Personal Investors
With more than 15 years' experience in the management of financial assets, BNP Paribas Personal Investors in Luxembourg offers independent and personalised advice, discretionary portfolio management and top-of-the-range services to an international clientele as well as expatriates.
Crédit Agricole Bank
A wholly owned subsidiary of the Crédit Agricole group, Crédit Agricole Luxembourg has been a member of Luxembourg’s financial community since 1920.
Banque Carnegie Luxembourg S.A.
Carnegie is an independent investment bank with Nordic focus, providing securities broking, investment banking, asset management, and private banking as well as in pension advice to institutions, corporations and private clients.
Banque centrale du Luxembourg (BCL)
The Luxembourg State is the sole shareholder of the Central Bank, whose capital is set at 25 million euros. Its independence, however, is provided for by its founding law and by the Maastricht Treaty.
A private bank specializing in asset management, and in particular private asset management.
Banque Privée Edmond de Rothschild Europe
Subsidiary of a Swiss bank in Luxembourg, specialises in wealth management, investment fund administration and custody as well as global asset management (family office).
Private accounts and business accounts.
www.raiffeisen.lu (website French and German)
Banque Internationale à Luxembourg
Business activities in the Grand Duchy cover the fields of retail banking, private banking, trading on the financial markets, as well as fund management and fund administration for which it has Group responsibility.
Previously known as Banque Invik, Catella Bank focuses on wealth management, payment and corporate banking services to those living in Europe.
DZ Bank international
Private banking and investment funding.
Founded in 1920, provides full range of financial services.
The result of a merger in 2003 of Crédit Européen SA and ING Bank (Luxembourg) SA, provides full range of financial services.
Private banking group.
Established 1978, covers a spectrum of products and services for private and corporate customers.
Nomura Bank (Luxembourg)
A fully licensed banking entity promoting depositary bank clearing and custody services as well as general funds administration services within the Nomura Group.
Founded in the mid 1970s, private banking, merchant banking, asset management and third party fund business.
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