TheINsiders interview Lux Finance Minister - TheINsiders

TheINsiders interviews Lux Finance Minister

Finance: Monday saw Luc Frieden speaking at the NZZ Capital Markets Forum in Zurich. He was amongst a line-up that included the chair of the Swiss National Bank, the CEO of FINMA the Swiss regulator, and the chairs of several major Swiss financial institutions.

The timing of the conference is pertinent for the host nation as politicians, business leaders and regulators engage in a broad discussion about how to respond to its own ongoing mini-crisis coinciding with the wider EU economic downturn and possible fragmentation.

The Swiss and Luxembourg private wealth management sectors are experiencing the same underlying pressures with assets being repatriated by foreign investors as the appeal of holding funds offshore fades. The Swiss private banking industry also remains in the cross hairs of unrelenting legal actions by the US Department of Justice whilst simultaneously implementing FATCA compliance strategies.

For Luxembourg, any repositioning by Switzerland is important, not only because of the hundreds of billions of euro held in Luxembourg vehicles by Swiss asset managers on behalf of their clients, but because of the shared history of investor protection via banking secrecy.

Prior to the speech by the Luxembourg finance minister, the Grand Duchy had already been highlighted as a competitor to the Swiss jurisdiction. Urs Rohner, chairman of the Credit Suisse Group announced that “Switzerland could become another hub for alternative investment in competition to Luxembourg”, something that later Luc Frieden dismissed pointing out that only one nation was in the EU. When asked by Delano if Luxembourg would see an increase in activity by Swiss firms in the alternative sector, Frieden confirmed that it is likely. This was also confirmed separately by Rohner, who reported that there were no plans to reduce Credit Suisse staff numbers within Luxembourg.

Frieden reported that it is not just the financial sector that is changing but society. He asked: “why does it suddenly seem strange for corporations to pay tax in foreign jurisdictions”? He was questioned about the presence of untaxed money being held in Luxembourg accounts to which he replied: “Since 2005 and the implementation of withholding tax this is no longer an issue”. He frequently referred to the necessity to restore trust and develop a finance of permanence not based upon greed and envy but to take the long term view. “Banking secrecy was buried in 2009; individuals’ rights are being respected and so is the way that governments can collect taxes.”

With reference to the euro crisis he commented that “many leaders talk about panic and urgent action, however we must relax a little bit”. It is an advantage to sit at the EU table, he said. In this respect “Switzerland missed out”.

Original article published here

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