Supervisory costs: beyond fees, a broader challenge for the financial sector

The question of supervisory costs in Luxembourg continues to draw attention across the financial sector.

It should, however, be seen in a broader context. Supervisory fees come on top of an already significant and growing regulatory and compliance burden faced by financial institutions, both in Luxembourg and across Europe.

For the ABBL, this issue must therefore be approached holistically, taking into account the cumulative impact of regulation on the sector’s competitiveness.

Based on an article published in Paperjam (Guillaume Meyer, 13 April 2026).

A more balanced public-private funding model, but limited impact on costs

The introduction of a state contribution covering around 10% of the CSSF’s budget reflects a positive evolution towards a more balanced public-private funding model, combining contributions from supervised entities and public resources.

Given the importance of the financial sector to the Luxembourg economy, such an approach appears justified and is consistent with funding models observed in other European jurisdictions. However, due to the largely fixed nature of supervisory costs, this contribution is more likely to help absorb rising expenses than to translate into a meaningful decrease for supervised entities.

At the same time, the ABBL recalls that supervisory fees are set through transparent and predictable mechanisms, based on multiannual cycles. Recent efforts by the CSSF to refine the calibration of these fees, introduce greater granularity and strengthen a risk-based approach are steps in the right direction. These efforts should now be further deepened and consistently applied over time.

Jerry Grbic: a holistic view of regulatory pressure

For Jerry Grbic, CEO of the ABBL, the key issue lies beyond supervisory fees alone.

He stresses the importance of taking a holistic view of the regulatory environment, where institutions are confronted with an accumulation of compliance, reporting and supervisory requirements.

This cumulative effect represents a growing share of banks’ investments and directly impacts their competitiveness. This is particularly relevant in an international context, where Luxembourg-based entities must continuously justify their cost base within global groups.

Regulatory costs: a key focus for the ABBL

The ABBL has been actively working on the broader issue of regulatory costs and their impact on the financial sector.

In December 2025, the ABBL, in collaboration with EY, published a dedicated survey analysing the cost of regulation for Luxembourg banks. The findings highlight a steady increase in compliance-related expenses, a disproportionate impact on smaller institutions, and the need for more proportionate and risk-based approaches.

More broadly, banks are operating in an environment where regulatory expectations continue to expand, from anti-money laundering requirements to digital resilience and sustainable finance. While the sector fully embraces these responsibilities, the accumulation of overlapping obligations can affect its ability to deliver efficiently.

These conclusions reinforce the ABBL’s long-standing position: this is not a call for deregulation, but for smarter, more coherent and more efficient regulation that supports both financial stability and competitiveness. This approach is further reflected in the ABBL’s policy paper “40 proposals for smarter regulation”

In parallel, the ABBL has also conducted comparative work on the cost of supervision across Europe, in close cooperation with its counterparts, in particular within the European Banking Federation (EBF). These analyses contribute to the ABBL’s ongoing reflections, although they are not publicly available.

Keeping competitiveness at the core of the debate

As regulatory initiatives continue to evolve at European level, including discussions around further centralisation of supervision, the ABBL underlines the importance of carefully assessing their cumulative impact.

Experience shows that additional layers of supervision at European level tend to complement existing frameworks rather than replace them, which can lead to an overall increase in costs for market participants.

In this context, ensuring that supervision remains both robust and proportionate is essential to maintaining Luxembourg’s attractiveness as a leading financial centre. The ABBL also highlights the importance of continuing efforts to improve operational efficiency, including through digitalisation and simplification of processes.