Standard & Poor's Issues Report On Luxembourg's Banking Sector

by Carla Johnson, Investors Offshore.com

13 June 2002

Standard & Poor's has given Luxembourg's banking sector a clean bill of health, the ratings agency reported on Tuesday.

Although S&P expressed concerns over the possible impact of competition from other jurisdictions, and of the much-disputed EU savings tax directive on the Duchy's financial sector, its report concluded that:

'The continued liberalization of Europe's financial markets, the Luxembourg government's and banks' initiatives to develop fee-earning businesses, and the sector's experience in certain niche activities should ensure that the Grand Duchy remains attractive as a center for all forms of personal investment business.'

The analysis praised Luxembourg's long-established banking sector as 'cost-efficient', and cited factors such as the jurisdiction's political stability, favourable location, highly qualified and multilingual workforce, tight banking secrecy, and advantageous fiscal framework, as reasons why Luxembourg is attractive as a location for both foreign and domestic financial service providers and their clients.

Standard & Poor's also revealed that the workers in the financial services sector make up around 11% of the total population, and that: 'the sector accounted for 31% of GDP at year-end 2001, and contributed to 32% of the government's tax receipts, reflecting its importance to the domestic economy'.

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