Why expats choose Luxembourg to manage their investments
Luxembourg offers many advantages for international investors, and ranks as one of the top financial centres worldwide for investment funds.
Luxembourg ranks as one of the top financial centres worldwide for investment funds and offers international clients several advantages in terms of wealth management.
Luxembourg has long been popular with the European banking community with its history of multilingual banking and cultural knowledge of their banking clients’ home countries.
Despite its small size, Luxembourg is the second largest investment fund centre in the world after the US as well as being the premier captive reinsurance market in the EU and the premier private banking centre in the Eurozone.
Effect of the financial crisis
Since the credit crunch, the bank guarantee in Luxembourg has leapt from EUR 20,000 to EUR 120,000 (EUR 100,000 for cash and EUR 20,000 for investments) per client per bank based in Luxembourg. The crisis has also created greater transparency within the financial sector and this small European country operates effectively within the numerous EU directives and regulations which have been adopted within the framework of the Financial Services Action Plan.
Legislators have built up Luxembourg’s strong position in the banking world through skilfully working within any margins for manoeuvre in keeping with the Directives. The result is an environment within the financial sector which is both stimulating and grounded in the principle of investor protection. Banking clients can benefit from advantageous legal frameworks for products and services such as investment funds, pension funds, life insurance products and securitisation vehicles.
“Most banks in Luxembourg have been addressing international clientele since the beginning,” says Adel Nabhan, Marketing and Strategy Director of BNP Paribas Personal Investors. “Banks in Luxembourg have always focused on the international aspects of investing and the specialist teams working in the financial sector are both multilingual and multicultural.”
In Luxembourg, BNP Paribas Personal Investors, which provides its services to clients with portfolios above EUR 50,000, is typical of the quality and specialised banking services offered by banking institutions in Luxembourg.
Stability and remote savings management
“As well as benefiting from a personalised banking solution that is based in a European country and Luxembourg’s stable banking environment, our international clientele can benefit from our expertise in personal investments and our remote savings management, which is particularly useful for the expatriate community ” says Nabhan.
Expatriates also stand to benefit from tax advantages because of their expatriate fiscal status. Banks such as BNP Paribas Personal Investors have the international legal and fiscal knowledge that local banks would usually lack.
Open architecture and structured products
Like other specialised investment banks, BNP Paribas Personal Investors’ works within ‘open architecture’.
“This means we select the best product available on the market for our clients, whether it is one of our own or not, to enable them to manage their wealth optimally and in total transparency,” Nabhan explains.
After first assessing their clients’ objectives, BNP Paribas Personal Investors come up with a balanced portfolio which could include, for instance, structured products to allow them to invest with a specific objective and during a defined period with a capital guarantee or protection at maturity.
“For instance, in December 2009 just before the Copenhagen Summit, we proposed a green-structured product which ensures that clients get back 95 percent of protection at maturity on the amount they invested with us while benefiting from green investments growth opportunities,” says Nabhan.
“On a daily basis, we can recommend a selection of products tailored to each and every client. We not only advice clients when they have to buy a product but also when they need to sell it which is not really the case in other banks as we closely monitor our clients portfolios” he adds.