Luxembourg is becoming a serious contender among nations bidding for business to come their way after the U.K.’s exit from the European Union, as insurers, asset managers and financial-technology companies are interested in setting up shop in the Grand Duchy.
Luxembourg is “a very natural choice” for companies looking to keep one foot in the EU, Finance Minister Pierre Gramegna told Bloomberg TV’s Francine Lacqua in an interview on Friday.
“Very large insurance companies have announced in the last days that they have chosen Luxembourg,” Gramegna said. “The same goes for asset managers. The same goes even for some fintech companies.”
Insurance giant American International Group Inc. said on March 8 that it plans to open an operation in Luxembourg to write business in the European Economic Area and Switzerland once the U.K. exits the EU. Lloyd’s of London has signaled that Luxembourg is among its possible choices, next to Frankfurt and Dublin, for a post-Brexit base in the EU.
British Prime Minister Theresa May intends to trigger the start of divorce negotiations by the end of this month, keeping Britain on track for an early-2019 departure. Leaving the EU would likely also mark an exit from the bloc’s single market for the U.K., as well as the end of passporting that many London-based firms rely on to service the rest of the EU.
“Many players have set up their structures in such a way that they are only in London and they cover all of the EU through London,” Gramegna said. “Now very many players have decided that they need a second leg. We are a very natural choice.”
Gramegna, who is traveling in Singapore, said earlier at an event there that London-based private-equity firms are “tending to decide for Luxembourg” to set up an EU hub.
Luxembourg remains the world’s second-largest fund market after the U.S., but no longer has the bank secrecy rules that once helped it lure companies. The nation also has come under increased pressure over some of the fiscal deals it arranged with multinational companies. Still, the country’s swift adoption of EU laws and rules for passporting fund administration and other services swelled assets under management at its banks.