The Private Banking Group presented its assessment of the year 2021 at a press conference on Friday, during which journalists were told that the rise in interest rates was incidental. 48 private banks operated in the Grand Duchy last year, 18 fewer than in 2018.
However, the Private Banking Group representatives stated that this should “not be a cause for concern,” especially given that private banks managed a record-high of €600 billion worth of assets in 2021. To put things into perspective: this means that the figure has more than doubled over the past ten years.
Pierre Etienne, head of the Private Banking Group, remains cautious about this year, anticipating that 2022 will be more challenging for the sector. The record figure recorded in 2021 will no longer be as high, as the markets are losing momentum.
Nonetheless, the balance sheets remain positive for the time being, as the banks are constantly attracting new, rather wealthy clients. The number of clients whose wealth managed by private banks exceeds €20 million has risen steadily over the past ten years and now stands at 61%. It is therefore no surprise that the rise in interest rates is not affecting the business of private banks significantly.
Etienne explains that private banking customers “can benefit from the cash they hold,” but high rates may cause problems in other areas, such as lending. “Customers will have to take out loans at higher rates,” according to Etienne.
The head of the Private Banking Group ended the press conference on a note of reassurance, highlighting that Luxembourg remains a popular choice for private banks, in particular thanks to the country’s laws and the socio-political stability of the Grand Duchy.
An earlier version of this article’s headline erroneously stated that private banks ‘dispose of’ assets worth 600 billion euros.
