Assets under management rose, whilst the number of private banks remained the same, at around 55-60 banks. There was some consolidation activity, but an influx of several new banks over the last 2 years (post-Brexit) kept the number stable and has led to an overall net increase in assets under management. Employment in the sector ralso emains stable at around 6,000 people.
Profitability remains an issue for private banking, especially for smaller organisations, who are disproportionally hit by the cost of regulation. Despite this, Luxembourg has managed to maintain its position and develop as an international private banking centre, due to its AAA rating, political and social stability, cross-border expertise, qualified workforce, and the comprehensiveness of the financial ecosystem that can be found here. The banking sector contributes around 30% of the GDP in Luxembourg, and is a significant contributor to the public purse.
ABBL/CSSF Private Banking Survey 2021
Figures stated as at 31 December 2020
ABBL/CSSF Private Banking Survey 2020
Figures stated as at 31 December 2019
Growth in assets
Assets under management rose by almost 10% year on year, to reach € 508 bn. at the end of 2020. The growth is due to normal net inflows for existing banks, assets from new banks relocating parts of their business to Luxembourg post-Brexit, and overall market performance in 2020.
In another existing trend, client segmentation continues to polarise. The proportion of ‘affluent’ clients, that is clients with less than € 1 mn. in assets, is around 7% compared to 13% in 2015. At the other end of the scale, ultra high net worth clients, with assets above € 20 mn. has increased to 58% compared to 54% in 2015.
21% of assets are from Luxembourg, with the UK, Belgium, Italy and Switzerland completing the top 5. Around 15% of assets are from outside Europe. There has been a marked change in the source of assets, with a much wider range of geographies compared to 15 years ago, when Belgium, France and Germany accounted for around 50% of client assets.