Swissquote Bank Europe takes over Keytrade Bank Luxembourg

Dave Sparvell (right) and Nestor Verrier believe that by pooling their respective strengths and experience, Swissquote Bank Europe will be able to become the leader in digital investment services in Luxembourg. Photo: Romain Gamba/Maison Moderne

Dave Sparvell (right) and Nestor Verrier believe that by pooling their respective strengths and experience, Swissquote Bank Europe will be able to become the leader in digital investment services in Luxembourg. Photo: Romain Gamba/Maison Moderne

The transaction is expected to close in March 2022. Swissquote Bank Europe and Keytrade Bank Luxembourg will then merge to become the leading online trading and investment bank in Luxembourg with the European financial services market in its sights.

The acquisition comes at a time when Swissquote is working to develop its range of services in order to gain market share in the European Union and to win over institutional clients.

At present, B2B activities account for around 25% of the Swissquote group’s turnover. According to Dave Sparvell, CEO of Swissquote Bank Europe, the Swiss bank hopes to quickly increase this share to at least 30%. “This is something we are actively developing at the moment,” he says. This service should be launched in the Luxembourg market during 2022, targeting the entire asset management sector. It will be “an offer which will be based on the experience acquired in terms of Swissquote’s own multi-asset platform and which will address the entire value chain of the asset management industry,” explains Nestor Verrier, general manager, Swissquote Bank Europe. It will be a “unique” offer, he insists.

“Our competitors in Luxembourg may focus on this or that aspect, such as administration or custody, but they are unable to cover the entire value chain, which we can do by offering to take care of the brokerage side as well.” Another advantage highlighted is the banking licence held by Swissquote Bank Europe. “We think it is more interesting for asset managers to have a partner with such a licence. If only for regulatory reasons.”

In Luxembourg, Swissquote Bank Europe is mainly active in the B2C niche.

Investing in B2B is a big part of our growth ambitions.
Dave Sparvell

Dave SparvellCEOSwissquote Bank Europe

“Investing in B2B is a big part of our growth ambitions,” says Sparvell. The group plans to strengthen its presence in various national markets in the coming months by combining brokerage services with banking services for institutional investors and asset managers.

The Swissquote group set up in Luxembourg in 2019, following the acquisition of Internaxx Bank, to conquer the European market. The group was already present in the European Union with a subsidiary in Malta, but this only offered custody services to investment funds. However, it is from its headquarters in Kirchberg that the group wants to conquer the European market.

Internaxx Bank offered its services on a global scale. Once it became Swissquote Bank Europe, the entity focused on the European market. “Swissquote is the market leader in Switzerland for investment platforms for private individuals and brokers and has the same ambitions for Europe in the long term,” Sparvell adds. Its other subsidiaries--based in London, Hong Kong, Singapore and Dubai--will be responsible for working the English-speaking, Middle Eastern and Asian markets.

Strong European ambitions

For the time being, Swissquote is not present on the American market. This is a conscious choice: “Our priority is the European market.” The European market, while still less dynamic than the American market, is currently booming, thanks in particular to the pandemic, during which private individuals became interested in online investments in both traditional assets and in the assets of the moment such as cryptos.

Swissquote is also making huge marketing efforts to raise its profile. The group has notably become a sponsor for two UEFA competitions: the Europa League and the Europa League Conference. A way to be able to play in the Champions League...

The bank is also investing in its platform. “An ongoing process.” Aware that the main platform is aimed at “sophisticated investors”, Swissquote is undertaking to adapt locally to the specificities of the various markets it is prospecting. And a version of the platform “more accessible to beginners” has been available since 2021.

New products in the pipeline

The acquisition of 100% of Keytrade Bank Luxembourg was signed in November 2021, concluding negotiations that began at the end of March with the online bank’s shareholder, the French group Crédit Mutuel Arkéa. The parties are now waiting for the green light from the ECB and the CSSF, which they hope to receive by the end of March.

As soon as the approval is obtained, the two entities will merge under the Swissquote banner and access will be given to Keytrade Luxembourg clients to the Swissquote platform. All employees--with the exception of management--will be integrated into Swissquote Bank Europe’s premises in Kirchberg. The price paid will remain confidential until the transaction is completed.

Sparvell does not expect the integration to be a problem. "Our businesses are very complementary. And while we have been direct competitors for the last 20 years, we have the same philosophy, which is to offer online trading and investment services through a digital platform. We were pioneers in online investing long before the arrival of millennials." The first customers for these services were expatriates. Now, the retail client base is predominantly made up of younger people looking for a full digital experience and followers of new asset classes such as crypto-currencies popular with millennials.

With the merger, Keytrade clients will have access to Swissquote’s multi-asset platform--a platform that handles digital assets and crypto-currencies in particular--and Swissquote will be able to add futures and options trading to its range of services, a service that will come in 2022 to complement the current trading services for shares, funds, ETFs, CFDs, digital assets and Lombard credit--a line of credit against the pledge of your assets. Until such time as dedicated NFT services are integrated, which are currently very popular.

Sparvell and Verrier also stress the benefits that Luxembourg’s financial centre will gain in terms of influence in the digital investment sector and intend to participate actively in the various groups working in the fields of banking digitalisation and cybersecurity.

Originally published in French by Paperjam and translated for Delano

Updated to correct the share of turnover that B2B represents and the timing of the deal