With the continued tightening of financial regulations, Luxembourg is being presented a golden opportunity to race ahead by adapting with the speed that only a nimble market can possess. UBS Luxembourg’s Country Head René Mottas says the country’s wealth management and private banking business will continue sturdy growth, even without banking secrecy.
How can UBS Luxembourg compete in the post-2008 regulatory climate now that banking secrecy is gone?
Twenty years ago, banks moved into the wealth management or private banking business not only because they believed in its growth potential, but also because it held the assurance of predictable income. These days are gone. Today, regulatory requirements necessitate leading banks to build on a stable and solid legal framework. For example, from January 2018, an updated version of the Markets in Financial Instruments Directive, or Mifid II, will affect how banks report business and transactions to regulators. As a global leader in wealth management, UBS believes in doing all its business in the right way. You win if you adapt to regulations fast and thoroughly. This is an opportunity for us to gain a competitive advantage.
How do you see Luxembourg compared to Switzerland?
If you are in private banking, wealth management or the fund industry, you need to be present in the EU. It is indeed challenging for Swiss banks to do business in some EU countries as funds under Swiss law cannot be distributed to EU clients. It requires an EU-passported structure, potentially in Luxembourg or Ireland, which provides access and proximity to European investors. For this reason, many use Luxembourg – being a truly international and multilingual, yet highly efficient financial center – as their EU base.
What is your perception of the wealth management development in Luxembourg?
There has been a total evolution in wealth management following the disappearance of traditional banking secrecy laws. Clients still have privacy, if not secrecy rights. Business remains mostly European, although clients from Latin America and Asia Pacific are becoming increasingly interested. We also attract families and investors seeking geographical diversification.
How important is Luxembourg within UBS’s global network?
UBS is a key player for the Group providing a unique and complementing Wealth Management and Asset Servicing solution shelf to other locations. We service UHNW clients, as well as family offices seeking fund structures in a regulated market. Luxembourg fund solutions are in high demand now, and our asset servicing business has more than doubled in the past five years.
What more would Luxembourg need to truly flourish in fintech?
As a small country, Luxembourg is very efficient for business because it is nimble. Fintech has vast potential here, but in order to flourish Luxembourg will need to attract the respective talent in financial technology. Finding the exact right profiles within the local pool of talents is challenging. Brexit may spark further interest and it remains to be seen which businesses will relocate.
How does UBS Luxembourg manage to attract top financial talent?
Locally, we run several programs, including one concentrating on increasing female inclusiveness in finance, which we established with the Luxembourg School of Finance but meanwhile goes beyond. Because Luxembourg is rather small, we need to broaden our horizon to find talents across our borders. We have in the past five years recruited a number of young people coming from or moving on to other EU countries. UBS has proved to be highly attractive for the best talents and this makes us proud.