ABBL

The financial crisis has reminded all of us of the importance of trust. Indeed, the bedrock of any Financial institution is credibility and the trust of its clients and of its peers. When credit stopped flowing last year, it was because this trust had been lost. Banks no longer believed in each other and it was only natural that clients would follow suit. It is certainly no coincidence that the etymological root of the word “credit” is to be found in the Latin “credere”: to believe or to trust.

The global financial crisis has shaken people’s faith in the financial system. It is now up to the financial industry and governments, as bearers of the trust of their clients and citizens, to restore this faith. As an important international financial centre, Luxembourg needs to orientate itself more noticeably towards investors and depositors than it may have done in the past.

One of our strengths has always been our ability to listen to and adapt to the needs of the business community. Obviously, this is something we need to continue to foster. However, we also need to convince our clientele of the added value that the Luxembourg financial centre, with its long-standing expertise and its ability to innovate, can provide for them. Recent criticisms levelled against Luxembourg have shown that our image does not always correspond to reality. In response, we need to better communicate to clients that our professional standards, our Compliance and our internal control mechanisms count among the best in the world. Financial professionals around the globe are fully aware of this. It is why they come to Luxembourg. But what about investors and depositors?

Clients need to feel confident that their savings and their investments are in safe hands in Luxembourg. We need to make sure that clients know that the products they buy and the investments they make serve their own interests and not those of the intermediary marketing such products.

The government hopes to diversify the activities of our financial centre by encouraging the development of socially responsible investments, Microfinance, Islamic finance and investments in green technology. All of the above are in line with a réorientation towards investors, since, by definition, ethical investments take into account the personal convictions and interests of the client. Our financial centre has already made significant progress in some of these fields. For instance, Luxembourg has become a global leader in the field of Microfinance investment vehicles, thus playing an important mediating role between investors and Microfinance institutions that grant access to financial services for some of the world’s poorest populations. In other fields, we still need to develop our activities further.

One thing is certain, however, namely that trust is not given unreservedly, but has to be earned. As a leading global financial centre, Luxembourg needs to continue to convince clients that it deserves their trust.

Jean-Jacques Rommes (ABBL, General Manager)

(Editorial from the Luxembourg Banking Quarterly - 3/2009)