Luxembourg is expected to have an economic impulse as a new unregulated fund product, the Reserved Alternative Investment Fund (RAIF), company law reforms and recent moves of Chinese banks to the country will significantly stimulate the activity in the country.
Following Brexit, Luxembourg’s Finance Minister, Pierre Gramegna predicted that London-based asset management, financial technology and private banking firms could expand in Luxembourg as a base from which to service EU customers. British officials however emphasized that a pending divorce from the EU does not alter the United Kingdom's growing economic ties to Beijing.
In the last years, Luxembourg managed to attract all the Chinese banks that are operating internationally. CCB, Bank of China, Industrial and Commercial Bank of China, Bank of Communications, China Merchants Bank and Agricultural Bank of China all have a significant presence in Luxembourg. Ogier practice partner Francois Pfister said: "There has been speculation that the process around Brexit will push more entities to Luxembourg and Dublin as an alternative to the UK, and we have certainly seen an increased level of activity."
When Britain leaves the EU it is widely expected that financial firms based in London will lose their "passporting" rights, which prompts Luxembourg to encourage banks, insurers and fund managers to build up outposts there and obtain "passports" there.
Francois Pfister said that the RAIF, which cuts duplication of compliance obligations by targeting regulation at managers and not underlying funds, and company law reforms have offered new opportunities for fresh approaches to structuring. "[Together with] the presence of an increasing number of Asian – and particularly Chinese – institutions demonstrates that this interest is leading to tangible activity," he said.
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