Finance

CSSF 2016 annual report

More staff, more inspections, and a favourable regulatory framework

Rapport annuel 2016 de la CSSFIn its annual report for 2016, Luxembourg's Financial Sector Supervisory Commission (Commission de Surveillance du Secteur Financier - CSSF), which 'polices' the Grand Duchy's financial centre, confirms its role as regulator and draws up a favourable report on the sector. Regarding the financial sector's activities, the income generated and the assets under management remain at a high level, while on the supervisory side, the amount of fines remained stable at 1,330,950 euros in 2016, despite an enormous increase in staff numbers and on-the-spot inspections.

The CSSF fully accepts its role as regulator

It increased its staff by 72 in 2016, and recruitment is continuing in 2017. In December 2016, the CSSF had a staff of 674 (+7.32%); they carried out 273 inspections, compared with just 185 in 2015. No fewer than 139 inspections were carried out on-the-spot - a figure that confirms the CSSF's firm intention to remain vigilant and consolidate its position as the regulator of the financial sector, an ever-expanding sector in the Grand Duchy.

Make-over for the financial centre

According to the CSSF, Luxembourg as a financial centre can congratulate itself on a growing total banking result, showing an increase of 27 billion euros compared with 2015, reaching the sum of 770 billion euros in 2016. The same is true for the banks' result before provisions and the assets under management by collective investment undertakings. The report paints the picture of a healthy, flourishing financial centre that is attracting investors and financial institutions despite historically low interest rates and present and future pressure on the profitability of the financial industry's stakeholders.

This evolution is without a doubt due in part to the substantial modernisation of the Grand Duchy's legislative and regulatory framework implemented by its Government. Thus, consultations began in 2016 with a view to amending the law on the financial sector with regard to professional confidentiality. The CSSF has also set up a working party to analyse whether the present regulatory framework meets the requirements of the new technologies, such as distributed ledger technology.

Brexit - a golden opportunity for the Grand Duchy

But what about Brexit? The result of the referendum on 23 June 2016 threw Europe's financial markets into turmoil, but Brexit could prove to be to the Grand Duchy's advantage. The Grand Duchy is positioning itself to provide a home for the businesses and institutions which will be leaving the United Kingdom and setting up in the European Union. For its part, the CSSF, according to its report, "welcomes these requests, on condition that the entities have sufficient substance in the Grand Duchy, abiding by Community requirements, and do not delegate or sub-contract almost all their activities to the United Kingdom, which would be equivalent to granting a European passport to legal entities with no economic substance".

So the CSSF remains optimistic after a year that began in a difficult international context but went on to improve. At 31 December 2016, there were 141 banks registered in the Grand Duchy, and the financial sector employed 26,060 people.

(article written by the editorial team of the portal luxembourg.lu)
  • Updated 12-09-2017