Of those clients, 85% live in Europe, only 21% of which in the grand duchy.

In 11 years, the amount of assets in Luxembourg has more than doubled, according to the annual survey by the Private Banking Group Luxembourg of the ABBL. The amount reached €466bn in 2019, compared to €395 billion the previous year.

"If the market effect partly explains this evolution, it remains nevertheless considerable and exceeds the forecasts of the last survey,” the association stated in a press release. That forecast was €450bn for total assets in 2019 for private banking. The private banking sector accounts for 11% of the value added to GDP by the financial sector in the country, according to the study.

21% Luxembourg clients

Clients seem to be getting richer as well. The share of those with more than €20m is increasing, representing 58% of total assets. Conversely, those with less than €1m are fewer and come in at 8% (compared to 13% in 2015). “This clientele evolution implies new requirements for the private banking sector, which has had to design more sophisticated products and services, while specialising to remain efficient and serve them adequately,” according to the ABBL. 

Only 21% of them live in Luxembourg and 17% in neighboring countries (Belgium, France, Germany). In all, 85% of the assets come from European customers. Stable figures, compared to 2018.

Fewer employees

However, private banks are hiring slightly less: they had 6,224 full-time employees in 2019, 6.8% less than the previous year. The number of private banks also fell from 57 in 2018 to 54 the following year.

Going forward, "There are great opportunities for private banks. Starting with Brexit, which confirmed the attractiveness of the Luxembourg financial centre,” the ABBL stated. This despite the covid-19 crisis, to which banks have "been able to adapt" through remote work and services. 

The next challenge will be the rate of profitability. "The growing increase in regulatory costs, a negative interest rate environment, the need to invest in operational systems and the creation of new products and services: all of this could put pressure on the profitability of private banks in Luxembourg . "

This article was originally published in French on Paperjam.lu and has been translated and edited for Delano.