Duke 05 by 360Crossmedia 360Crossmedia

Duke

The thought leadership factory INTERVIEW

Finance minister Pierre Gramegna:

We believe in a level playing field Page 10

SPECIAL FEATURE

Logistics Page 72

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Dear readers We are proud to publish the fifth edition of Duke, created to promote the Grand Duchy of Luxembourg abroad. This unique magazine presents a selection of fast-growing, innovative and dynamic Luxembourg-based companies. It aims to provide articles that depict other interesting aspects of this little gem of a country, its intriguing locations, most importantly, to highlight this country’s thought leaders and business drivers across various subject matters, some aspects of Luxembourg still unknown to some. We hope that after perusing through this magazine, you will feel inspired to further explore opportunities in this business hub in the heart of Europe. To get to know more about what Luxembourg has to offer. Enjoy Duke’s fifth edition!

The editorial team

ENTS

Duke 05

MONARCHY

FUNDS

POLITICS

ICT

INNOVATION

LAWYER

8. John the Blind: The legend of a knight 10. Finance minister Pierre Gramegna: “We believe in a level playing field” 14. Jérôme Bloch (360Crossmedia): 15 years of innovation

SUCCESS STORY

16. Bloodhound SSC: A rocket-powered assault on the land speed record

ASSOCIATION

20. Thierry Grosjean (ALCO): Compliance officers in 2015 22. Stéphanie Damgé (Jonk Entrepreneuren Luxembourg): Sharing skills 24. Marco Zwick (ALRiM): Risk management, a sector of the future 26. Raymond Schadeck (ILA): The Institute is one step ahead

SOCIAL CLUBS

27. Networking in Luxembourg

FUNDS

30. Denise Voss, Franklin Templeton: Luxembourg funds retain a global appeal 32. Steve David (Northern Trust): Helping Luxembourg enhance its fund industry 34. Simone Delcourt (CSSF): Regulation in a changing environment 36. Martin Vogel, MDO: MiFID II puts the open architecture concept at risk 38. Sébastien Danloy (RBC Investor & Treasury Services): Data management and the Fintech opportunity 40. Steen Foldberg, Julius Bär: A new business model for private banking 42. Emmanuel Bégat (MEBS): Governance for distribution

BANKING

44. Pierre Knoden (ING): Putting people first

FUNDS

46. Nicolas Boatwright (Abide Financial): Lifting the burden of regulatory reporting 48. Steve Bernat, Carne: Raising the profile of a global leader

BANKING

50. Olivier Renault (Societe Generale Securities Services): Cultivating core competencies

FUNDS

52. Bill Jones (ManagementPlus): The implications of corporate governance

BANKING

54. Alexandre Dumont (BIL Manage Invest): Step change for AIFMD management companies

56. Nick Curwen (SS&C GlobeOp): In Luxembourg for growth 58. Xavier Buck, EuroDNS: Trade secrets of a Luxembourg serial entrepreneur 60. Benjamin Bodig (Etude Garcia & Bodig): A new voice at the bar 62. Ingrid Dubourdieu (D.Law): The question of the remaining duties of alternative funds directors in Luxembourg and EU

CHINA

64. Lihong Zhou, Bank of China: Developing a global role in Luxembourg 68. CEO Lunch Summer 2015 70. H.E Paul Steinmetz: The keys to the Chinese-Luxembourg market

LOGISTICS

72. Arnaud Lambert (CHAMP Cargosystems): The world is our market place 74. Erik Hermans (DHL Express): Driven by team spirit 76. Daniel Liebermann (Ministry of the Economy): China: a priority market for Luxembourg logistics hub 77. Malik Zeniti (Cluster For Logistics): Integrating activities to create added value

BUSINESS

78. Pierre Kihn (Office Freylinger): Intellectual property on the move 80. Rocket Internet: Rocking the FinTech world 82. Latin American economies show a contrasted picture 84. Artur Sosna (Luxembourg-Poland Business Club): Interview 86. Social Typhoon: Recreating social links online

LIFESTYLE

88. Alexandre Farto aka Vhils: The urban artist 90. Zeng Fanzhi: The universal Chinese artist 92. Speakeasy: Hidden watering holes 94. Event Jonk Entrepreneuren 96. 13th EY International Fund of Golf Day 98. 5th edition of the Monaco International Fund of Golf Day 99. Launch Evening Duke 04 100. Ceos’ favourite addresses

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Publisher: Jérôme Bloch (jbloch@360crossmedia.com) Head of production: Anne-Sophie Théodore (Studio@360crossmedia.com) Conception & coordination: 360Crossmedia Sales: Pierre Rossi (care@360crossmedia.com) Artistic Director: Franck Widling Cover Photo: 360Crossmedia/M.M. Print run: 5000 copies www.duke.lu – Phone: (+352) 35 68 77 – contact@360crossmedia.com

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MONARCHY John the Blind

The legend of a knight MORE INFORMATION

www.myofficialstory.com/jeanlaveugle

The legendary figure of the Count of Luxembourg and King of Bohemia, also known as John the Blind, is intrinsic to Luxembourg’s collective identity, and was largely responsible for the Duchy’s development and cultural flowering. However, John the Blind was not just a monarch; he was the quintessence of chivalric heroism whose exploits attained mythological proportions commensurate with the Arthurian legends of the Knights of the Round Table. The apprentice king Although there is some doubt as to his birthplace, the general consensus among historians is that the Bohemian king was born in the County of Luxembourg on 10 August 1296. He was the eldest son of Holy Roman Emperor elect, Henri VII, Count of Luxembourg, and Margaret of Brabant, and at an early age came face-to-face with the internal politics and power struggles in medieval Europe. He was fourteen years old when his father conferred upon him the title of Count of Luxembourg, and in the same year, he was designated King of Bohemia when he married Elisabeth, daughter of the late King Wenceslaus II. When John was seventeen, his father, only recently crowned as Holy Roman Emperor, died at Buonconvento in Siena, but despite the young man’s claim to the title, he was considered too young to take command of the empire. Instead, he swore allegiance to Louis of Bavaria, who was elected King of the Romans, and in 1314, was crowned Holy Roman Emperor under the name of Louis IV.

A knight in every sense of the word The King of Bohemia was not one to rest on his laurels within the confines of his ivory tower. He much preferred the tumult of the battlefield to palace intrigues. In the conflict between the Habsburg and the Wittelsbach Houses, John renewed his allegiance to Louis IV and fought at the emperor’s side; and in 1322, largely due to the Bohemian king’s valour, they won a comprehensive victory at the battle of Mühldorf. King and knight extraordinaire, John the Blind was also on excellent terms with France, and in 1328, he came to the aid of the French king Philippe VI in his struggle against the Flemish army led by Nicholaas Zannekin. Once again, the Bohemian king’s intrepid conduct at the Battle of Cassel resulted in a decisive victory for the French troops, and further established his reputation as a heroic knight. His military campaigns took him from Prussia to southern Europe, and his resounding victories enabled him to expand his kingdom, which included Lusatia, Silesia and a large part of Lombardy.

A legend is born Despite some critics who called the King of Bohemia’s rule into question, the knight’s heroic exploits were already a myth in the making. Financial support from the King of France allowed him to further increase the County of Luxembourg’s territories and reinforce its fortifications. He also conferred city status upon the La Roche, Durbuy, and Bastogne districts. In 1340, John of Bohemia founded the Luxembourg Fair (Schueberfouer), which was a huge, annual international trade market strategically placed at the crossroads of the European north to south trade routes. Although stricken by ophthalmia, a progressive eye disease, the king was not deterred from engaging in battle. In 1346, Philippe VI once again called him to arms, and with boundless courage, John the Blind rode in the front line at the Battle of Crecy, where he fell in action at the age of fifty.

9 “His resounding victories enabled him to expand his kingdom.”

John the Blind, Count of Luxembourg, King of Bohemia

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POLITICS

Finance minister Pierre Gramegna

“We believe in a level playing field” Pierre Gramegna says Luxembourg is on the way back to a balanced budget, wants a level playing field on tax, and is a perfect test bed for financial technology. MORE INFORMATION

www.myofficialstory.com/pierregramegna www.mf.public.lu

>> 12

What is the state of the national budget following the VAT rate changes? Overall the situation is satisfactory. The effects of the ‘future package’ (“Zukunfspak”) measures start to be felt, as the IMF has just confirmed in its recent report. We are on track to return to a balanced budget for the central government by 2018, while maintaining one of the highest levels of investment in Europe – it will grow by 15% this year to nearly €2bn. And the growth trend is not restricted to investment; overall state expenditure will increase by an average of 4% a year between 2014 and 2018. As regards VAT, rate adjustments were necessary to compensate in part for the expected loss of revenue from VAT on e-commerce, which is estimated at around €700m for the current year. However, let’s not forget there hasn’t been any across-the-board increase. The 3% rate on food and other basic necessities as well as books, medicine and cultural events still applies, and our rates remain the lowest in Europe. Why has Luxembourg been singled out for criticism of its tax rulings? I think this is no longer the case. At first we were subject to scathing media accusations based on documents stolen from a Luxembourg company. If the theft had taken place somewhere else, it would have been another country in the firing line. We needed to make a big effort to explain that tax rulings are not unique to Luxembourg – they are a well-established practice in most countries. Now the European Commission is looking at how tax rulings are established in all EU member states, while the OECD is working on a proposed global legal framework for business taxation. Luxembourg is actively contributing to these efforts because we believe in a level playing field where the same rules apply to everyone. Meanwhile, Luxembourg’s progress on fiscal

transparency, an area in which we have been subject to attacks , is widely recognised by our partners, even if old stereotypes die hard, especially for certain media. All we can do is continue our efforts to restore the country’s positive brand image.

very few countries around the world, and thus a significant competitive advantage. The AAA rating highlights the strength of our public finances and investor confidence in Luxembourg’s economy, and promises the creation of new jobs in the years to come.

How will Luxembourg position itself in the new European and international tax environment? Luxembourg isn’t, and has never been, a tax haven – in 2013 the government’s tax take was 39.3% of GDP – but we have always maintained a competitive tax framework to attract companies and enable them to grow. Upholding and indeed improving the competitiveness of our businesses is a prime aim of our planned tax reform. Successive Luxembourg governments have manifested their commitment to fair tax competition between the countries because it’s the only way of preventing a negative spiral of continuing and excessive increases in tax rates. As part of this commitment, Luxembourg is actively involved in the OECDsponsored initiative on base erosion and profit shifting, which seeks to establish common rules that would implement a level playing field on a worldwide basis. However, I should stress that the tax regime has only ever been one element among many that attract businesses to Luxembourg. Other factors, including political and economic stability, long-term planning, high-quality infrastructure, a flexible and responsive administrative system, a legal framework that responds to the requirements of the economy, the availability of a skilled multilingual workforce and the country’s ideal geographical location are just as important.

What added value does Luxembourg offer Fintech companies such as Amazon, Rakuten, PayPal, Alibaba and eBay? I have made the development of the financial technology sector one of my priorities. It already accounts for 150 companies and more than 10,000 jobs in Luxembourg, and its growth potential is enormous. Luxembourg benefits from an infrastructure that few if any of its competitors can match. Companies can find here some of the most efficient data centres in the world, a well calibrated legal framework, and a real ecosystem at their disposal including specialist service providers, a network of nearby research centres, incubators and financing. In addition, our established financial industry offers an ideal research and development environment with hundreds of potential clients.

How important for Luxembourg is the confirmation of its AAA credit rating? The AAA rating is a guarantee of stability, a seal of approval shared with

Could Fintech companies become competition for the traditional financial sector? It’s interesting to see e-commerce specialists such as Rakuten obtaining a banking licence and launching activities, but I see them complementing rather than competing with established players. Traditional financial institutions cannot ignore the digital revolution and will have to adapt, and Fintech providers have an important role to play in helping our financial industry to diversify its offerings.

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POLITICS

and has never been, a tax haven, but we have always offered companies a competitive tax framework.” Pierre Gramegna, Finance minister

“Luxembourg isn’t,

Duke 05

INNOVATION Jérôme Bloch (360Crossmedia)

15 years of innovation MORE INFORMATION www.360Crossmedia.com www.socialtyphoon.com www.jeromebloch.com

How would you assess your 15 years of existence? We’ve learnt a lot. The first five years were mainly focused on event planning. It was interesting and exciting because we were recognised as a very innovative company, which resulted in us working all over Europe, in China and in the United States, but every year we had to start again from scratch. We were making money, but we were struggling to grow. The establishment in 2006 of our first magazine – Andy à Paris – marked our debut in the world of publishing, which now accounts for 90% of our turnover. At the time, the print press was already in trouble, but we came up with a new funding model that avoids the need for advertising. Within just a few years later, we have published more than 400 magazines, including 82 in 2014.

What are the secrets of your success? In Luxembourg, the key is personal relations. It’s a country where everyone knows everyone else. It is therefore much easier to build long-term relationships based on mutual trust than in cities like Paris or London. With that in mind, in my view there are three critical phases for an SME: 1. Survival, 2. The comfort zone, 3. Strong growth. In the beginning, it’s easy. All you have to do is keep your operating costs as low as possible and focus your attention on one or two flagship products in order to become profitable quickly. If neither of these products works, either the market does not exist or the company’s team is not good enough for it to succeed. Once the company has reached its comfort zone, you need to determine its corporate

As 360Crossmedia celebrates its 15th anniversary, the Luxembourg company stands out for the fact that it has gone strength to strength since the onset of economic in 2008, says CEO Jerome Bloch.

“Our DNA consists in creating solutions no-one thought of before.” © DR

Jerome Bloch, CEO, 360Crossmedia DNA in order to make the investments that will keep it profitable for a few years. While some people go to conferences to keep up with the latest trends, our DNA lies in creating solutions no-one thought of before: MyOfficialStory, free magazines, SocialTyphoon, SambaPrint, my360lab… it’s a long list! These innovations have enabled 360Crossmedia to grow. For us, the strong growth phase means recruitment and training, which paradoxically is our biggest problem in the Grand Duchy. The best individuals

already work for big companies and are often too expensive for an SME. In the meantime, we continue to draw on our network of talented freelancers based in eight countries, but we are just biding our time! What are you currently working on? We’re a bit like an aircraft with two engines. On one hand, we have our activities in Luxembourg with companies as diverse as law firms, restaurants, hospitals, professional associations and private individuals.

It’s fascinating work, very satisfying for our clients since we enable them to produce their own publications very quickly and mostly without spending a single euro. At the same time, we are developing an internationally-oriented business plan to create a platform that will enable users – advertising agencies, companies or individuals – to create high-quality content and publish it in an entirely new way. We recently took part in the TechTour in order to help raise €2m euros as a first step, and we are engaged in ongoing discussions with potential investors.

Bloodhound SSC

A rocket-powered assault on the land speed record The Bloodhound SSC project was initiated by Britons Richard Noble and Andy Green with the aim of smashing the world land speed record in 2016. With their supersonic, rocketpowered car – worthy of a science fiction movie – the team hopes to reach a speed of 1,610 kph (1,000 mph) in a human adventure that aims to break new technological ground. MORE INFORMATION

www.myofficialstory.com/bloodhound www.bloodhoundssc.com

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SUCCESS STORY

“The founding team’s greatest ambition is to build a car that can beat the 1,000 mph record.” Dr Ben Evans, Swansea University

Speed merchants The originators of the project are two fearless men with a passion for speed and technological innovation. Richard Noble, who was educated at Winchester College and trained at the Army Outward Bound School in Towyn, is a talented entrepreneur, whose first notable adventure was a cross-continent London to Cape Town expedition, and in 1984 he was the mastermind behind

the ARV Super2 light aircraft, which he piloted himself. One project followed another until the launch of Thrust SSC, with which he sought to beat the land speed record. This ambition was realised in 1997 with Andy Green at the wheel. A fighter pilot and now Officer Commander with the Royal Air Force, Green — as fascinated by speed and technical prowess as Noble — will again take the wheel in the Bloodhound SSC.

A Gargantuan undertaking The Bloodhound SSC teams have worked for many years to attempt to set a new record. Led by aeronautical experts such as Dr Ben Evans, a specialist in aerospace engineering at Swansea University, the project has been an exceptional technological challenge. The Bloodhound Supersonic Car is composed principally of carbon fibre and titanium and is unique in its

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SUCCESS STORY

hybrid two-engine system, comprising the turbo Eurojet EJ200 and a rocket engine with a liquid fuel propellant. One of the key issues is adherence of the wheels to the ground. Using a high-performance computer, it has been possible to resolve many of these problems by simulation programmes: the customised carbon-fibre seat modelled from Andy Green’s body has been created through work as precise

as a goldsmith’s. The 3D-printed steering wheel is designed to fit the pilot’s hands perfectly. It has taken over 10,000 man-hours of work to design and perfect the car’s streamlined chassis. A record to beat all records In 2016, the Bloodhound Supersonic Car will attempt to beat the world record at Hakskeen Pan in South

Africa. Before this, the team will carry out repeated trials on a runway in England. Apart from the technological challenges, the project is also educational, seeking to inspire young people to follow scientific professions. Its creators also want to showcase the knowledge and skills of British engineers as well as enhance the image and values of the United Kingdom.

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ASSOCIATION Thierry Grosjean (ALCO)

Compliance officers in 2015 MORE INFORMATION

www.myofficialstory.com/thierrygrosjean www.alco.lu

An interview with Thierry Grosjean, President of the Luxembourg Association of Compliance Officers (ALCO). What are your priorities as new President of ALCO? Firstly, we will continue the key activities initiated by my two predecessors, Jean-Marie Legendre and Jean-Noël Lequeue: first the partnership with IFBL on compliance training, which is such a huge success in Luxembourg. Next, we will continue to publish our magazine – Le Bulletin – and continue to operate the working groups, round tables, insurance, question and answer sessions from members, and other activities. My ambitions are focused on two areas: 1. Obtain official recognition of Compliance Officer certification in Luxembourg as, at present, although training is a regulatory requirement, our certification is only implicitly recommended. 2. Promote partnerships with equivalent associations in Europe. We need to identify the most representative ones. This will help us ensure that ALCO and Luxembourg’s situation become better known, as Luxembourg is one of the European leaders in Compliance.

What challenges do Compliance Officers currently face? The challenges are enormous and vary according to the organization employing them. Compliance Officers are often overworked and they need a team to ensure all the skills are represented. The time when all you needed was an AML person (antimony laundering, Ed.) to check clients’ identity and the origin of funds has definitely changed. Now we also need to assess the risks inherent in each activity and update our knowledge in terms of regulation, which is continually changing. For this reason, the budgets of Compliance departments of financial market players are constantly increasing. It has become an essential function and the pressure that accompanies it is proof of this. There is a huge temptation to issue an unfavorable opinion, particularly on complex cases, whereas each case has the right to be treated according to the same, risk-based approach, without bias.

How do you see the Luxembourg financial market developing in general, and the role of the Compliance Officer in particular? Both are linked. Compliance Officers are an asset as they give to the company a good reputation, which facilitates good business development. They are an essential cog in the proper running of the company, enabling it to be forearmed and forewarned when it comes to reputational risk. In some ways they are the “Mr Quality” of the company, a role that extends to different sectors of activity. ALCO has been able to anticipate this phenomenon by opening its doors to other professionals such as lawyers, management companies and specialist PSFs, when previously it was only represented by the banking, insurance and fund management sectors. The future of the country depends on the capacity of the companies present here, financial or not, to integrate all the current legislation while continuing to grow. It is also important for Luxembourg to open up to new forms of business such as new trends in electronic currency, which must absolutely be regulated, something in which ALCO has a genuine role to play.

“Our profession cannot really be quantified in industrial terms.”

Thierry Grosjean, President of ALCO and CEO of Centuria Capital Luxembourg

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ASSOCIATION

“It’s an ecosystem that we are all responsible for.”

Stéphanie Damgé, CEO of Jonk Entrepreneuren

Stéphanie Damgé (Jonk Entrepreneuren Luxembourg)

Sharing skills MORE INFORMATION

www.myofficialstory.com/stephaniedamge www.jonk-entrepreneuren.lu

The day after Jonk Entrepreneuren’s tenth birthday, its CEO, Stéphanie Damgé, is taking stock and making plans for the future. What is your assessment of the first ten years? It has been important over the years to find the right structure. Today we have reached maturity thanks to public and private partnerships. Companies, schools and ministries are working with us more and more, which is indispensable if our work is to run smoothly. The evidence: today we are reaching almost 10,000 young people per year through 11 projects that raise their awareness of entrepreneurship and prepare them for the world of work. That is twice as many as six years ago, which is good growth for our small country. Children come to us for the first time at the age of ten, and we then follow them for several years. We have never stopped questioning ourselves: that’s a part of the entrepreneurial culture that we want to pass on! In every field, you have to adapt to the country’s economy and to companies’

expectations. Now we would also like to get more parents involved, since they play such an essential role in their children’s education. What is the feedback from the volunteers who lend their experience to your organisation? We currently have more than 300 volunteers. The feedback is very positive. Our challenge now is to continue to increase this number. The hardest part is bringing them onboard, they are often a little anxious at first, which is normal, but after the first experience their enthusiasm shows. They are trained when they join us and often decide to take on more classes or engagements later, galvanised by their interactions with the young people. The teacher is also a participant because they can build on our work to adapt their course. The young people are usually very

receptive to an external mentor. They generally have questions about their future and show a lot of interest in the concrete examples given by our volunteers. You are 80% privately funded. Why should a company fund your organisation? Our mission concerns everyone. It’s about the future of our country. Businesses are finding it more and more difficult to find qualified people and some are mainly recruiting abroad. We are trying to add value to our local talent and kick-start an entrepreneurial culture in Luxembourg. It’s an ecosystem that we are all responsible for. Businesses are enthusiastic because we are preparing young people in the right way: they can fit in equally well in a start-up or a multinational. Their support also strengthens our credibility.

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ASSOCIATION Marco Zwick (ALRiM)

Risk management, a sector of the future MORE INFORMATION

www.myofficialstory.com/marcozwick www.alrim.lu

Marco Zwick, President of ALRiM, answers our questions in his RBC office, in Esch. Interview. Can you present your association to us in a few words? ALRiM has 300 members and 12 people on its Board of Directors. The association publishes newsletters on specific topics - Cyber Risk or depositary risk for example - and organises events and conferences for its members. As an example, for the last six years we have organised a European conference with ALFI, and our members participate in Practitionersâ&#x20AC;&#x2122; Forums where they exchange their opinions on a riskbased theme in a small committee setting. In 2012, we changed our name to reflect the opening up of our

association to everyone involved in risk management. Iâ&#x20AC;&#x2122;m thinking of CFOs, Conducting Officers and Board members. Our old name, Prim Risk management professionals, was too restrictive. With ALRiM - the Luxembourg Risk Management Association - we have widened the scope. What are your main priorities? I have identified three: firstly, the continual analysis of the regulatory development of risk management. We have also been consulted by the CSSF (Financial Sector Supervisory Commission) about regulatory initiatives in Luxembourg related to

risk management. Our second priority is training. Two years ago, we created risk management certification with the IFBL. We offer two types of certification: one focuses on banking, the other on investment funds. We also offer international certification with GARP, the Global Association of Risk Professionals. We have initiated discussions with other bodies, for example the University of

“The challenge for risk managers is to make themselves heard.”

Marco Zwick, President of ALRiM

Luxembourg, to assess the option of introducing academic courses relating to risk management. The last area we are keen to focus on is a project with ALFI (Luxembourg investment fund industry body) aimed at securing a better position for Luxembourg internationally. In this area, risk management is undoubtedly a marketing argument. An international audience attended our last conference

and we were delighted to learn that the ALFI/ALRiM conference on risk management is currently unique at European level. What are the current challenges for risk managers? The main challenge is to make ourselves heard at management level. In risk management, the word “management” is key. You have to

manage risks, not reject them categorically. Risk managers are the company’s advisers. The question is to know when you have to do more than give advice. Today, risk managers report to the Executive Committee and the Board of Directors. In the future, I think that this advisory role will increase, as there will be more external directors and directors with Risk management skills.

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ASSOCIATION Raymond Schadeck (ILA)

The Institute is one step ahead MORE INFORMATION

www.myofficialstory.com/raymondschadeck www.ila.lu

The ILA recently celebrated its 10th anniversary. Raymond Schadeck, its new President, tells us about its current and future projects. Can you describe the ILA in a few words? The ILA (Luxembourg Directors Institute) was founded 10 years ago, by its founder-President Patrick Zurtrassen. It grew out of a simple finding: the increasing role that Boards of Directors play in corporate governance has redefined the role of Company Director. The main objective of this non-profit organisation, which is funded by its members, consists in properly preparing directors for these developments, via information meetings, conferences, working committees, trainings and certification. This has been our task under the presidency of Marie-Jeanne Chèvremont over the last four years, a task I will continue in my term of office. What are your activities in the financial sector? Today a majority of our 950 member directors work in this industry. That

said, there is a great diversity among our members, some of whom have been appointed by the parent company to serve in one of its subsidiaries - usually a financial organisation - and others who are independent or another stakeholder such as the State. The mark of a good Director is their ability to reconcile divergent shareholder interests in the best interest for the company itself. That’s what “independent” means. You have said that during your term of office you will be more open to other sectors. Can you tell us more about this? Our philosophy is to build on what we have while keeping one step ahead. As an auditor and consultant, I was more involved with industry, the public sector and SMEs than with finance. During my term of office, the Institute will aim to reflect the correct proportion in the

“We build on what we have while keeping one step ahead.” Raymond Schadeck, President of the ILA market (between the financial and non-financial sectors). It will be interesting for our members to administer smaller, family companies, supported by personal funds, which involve all types of governance models. However, the ILA’s main mission is still training. In our opinion, this is becoming mandatory, and we are preparing for this. Our programme takes account of the experience and training of our directors, and provides information on the specific features in place in Luxembourg.

SOCIAL CLUBS

ÂŠ 360CROSSMEDIA

Networking in Luxembourg

SOCIAL CLUBS Cercle Munster: www.munster.lu Golf Club Grand Ducal: www.gcgd.lu

British Chamber of Commerce: www.bcc.lu Indian Chamber of Commerce: www.ibcl.lu Nordic countries: www.nobelux.se

SERVICE CLUBS Rotary: www.rotary-interclub.lu Lions Club: www.lions.lu Round Table: www.trl.lu JCI: www.jci.lu Kiwanis: www.kiwanis.lu

PROFESSIONAL ASSOCIATIONS Banks: www.abbl.lu Investment Funds: www.alfi.lu Private Equity: www.lpea.lu Industry and Trade: www.fedil.lu

SPORTS Polo Club: www.poloclub.lu Tennis clubs: www.scheiss.lu, www.tennisspora.lu Golf Clubs: www.golfdeluxembourg.lu, www.kikuoka.lu, www.golfclervaux.lu, www.golfgaichel.com, www.golfclubchristnach.lu Fitness: www.justmove.lu, www.coque.lu Yacht Club: www.mycl.lu Pool: www.Q42.lu CHAMBERS OF COMMERCE Chamber of Commerce of Luxembourg: www.cc.lu American Chamber of Commerce: www.amcham.lu Italian Chamber of Commerce: www.ccil.lu French Chamber of Commerce: www.cfci.lu

OTHER BUSINESS LINKS Entrepreneurs Task Force: www.etfl.lu Luxinnovation: www.luxinnovation.lu Incubator: www.technoport.lu Regulator: www.cssf.lu Research: www.tudor.lu Government: www.gouvernement.lu OTHER WEBSITES Formalities: www.guichet.lu Schools: www.euroschool.lu, www.islux.lu, www.st-georges.lu, www.vauban.lu, www.empf.lu Foundations: fdlux.lu Tourism: www.visitluxembourg.com Automobile Club: www.acl.lu

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Market Data + Services

FUNDS

The Funds section showcases the key players in Luxembourg’s fund industry and their insights into current market trends. Companies active in the Grand Duchy share a consensus on the importance of maintaining and extending the country’s global appeal and its competitiveness as a fund hub in a rapidly evolving regulatory environment.

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FUNDS Denise Voss, Franklin Templeton

Luxembourg funds retain a global appeal MORE INFORMATION

www.myofficialstory.com/denisevoss www.franklintempleton.lu

Denise Voss, conducting officer at Franklin Templeton Investments, says that greater regulatory stability in the future allows the fund industry to intensify its focus on the changing needs of clients worldwide. How would you assess the funds industry in Luxembourg and abroad? Over the past five years the industry has been dealing with a large amount of new regulations, but we seem to be coming to the end of that cycle. Now our challenge is to think about product innovation and ensure that we remain focused on investor needs. For instance, how should we respond to the demographic challenges facing Europe? The UCITS regime is now 25 years old, and it has enjoyed demonstrable success not only in Europe but around the world. Challenges are emerging in Asia, with moves to create their own cross-border

fund marketing regimes, but Luxembourg UCITS remain a huge success in the region – for instance, they make up 71% of all foreign funds registered in Hong Kong. The adoption of the AIFMD for alternative funds is still in its early days – the directive only came fully into force last July – but it offers the opportunity to develop a second global brand. For companies like Franklin Templeton, the ability to set up a so-called Super ManCo for both UCITS and AIFMD in Luxembourg is critical, because of the broad overlap between the two regimes in areas such as risk management, conduct of business and conflicts of interest.

“The industry now has the opportunity to gain recognition as a global hub in fields such as risk management and governance.” Denise Voss, Franklin Templeton

How is Luxembourg responding to the changing environment? Although there is a focus on the new legislation, in reality the regulator has been working for a decade to improve areas such as fund governance, risk monitoring and reporting. The industry now has the opportunity to gain recognition as a global hub in fields such as risk management and governance. The country does face challenges in attracting all the highly qualified staff and skills it needs, although the government is making

efforts to improve provision of housing and education. The development of the University of Luxembourg, and especially the introduction of the master’s degree in banking and finance, is an important step. What qualities give Luxembourg an international advantage? Being small is an advantage; it’s easier and quicker to get things done, and people in authority are more accessible and approachable. Having

so many different nationalities and cultures within the country helps Luxembourg respond to the needs of an international client base, and to deal with their particular requirements, from time differences to domestic rules. At the same time, the industry is used to co-operating to develop the country’s global image and developing new capabilities and product areas. That’s why we are continuing to win new business and develop new markets, such as fund managers from China and Brazil that want their own Luxembourg UCITS.

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FUNDS Steve David (Northern Trust)

Helping Luxembourg enhance its fund industry MORE INFORMATION

www.myofficialstory.com/stevedavid www.northerntrust.com

Since its establishment in Luxembourg more than a decade ago, Northern Trust has played an important role in expanding the jurisdictionâ&#x20AC;&#x2122;s scope and international reach as a fund services centre. Country Head Steve David looks ahead to new challenges and opportunities offered by the AIFMD and upcoming UCITS V legislation. At the forefront of regulatory change Right from the beginning Luxembourg has been a leader in the evolution of the European Unionâ&#x20AC;&#x2122;s single market for investment funds, having been the first EU member to adopt the original UCITS directive in 1988. Today 67% of authorisation agreements for distribution granted to

worldwide funds are allocated to Luxembourg funds. Northern Trust has also demonstrated leadership in the UCITS marketplace as the first financial institution to offer a thirdparty UCITS management company service in Luxembourg. Today the focus is on helping clients prepare for the UCITS V legislation, which seeks to strengthen investor protection, as

well as align depositary requirements and manager remuneration rules with those governing alternative funds and managers under the AIFMD. The advent of the AIFMD presents further opportunities for Luxembourg to grow its alternative fund industry alongside the traditional fund sector. Its experience and expertise in crossborder distribution has already helped

“Northern Trust is ready to play a full part in Luxembourg’s development over the next decade and beyond.”

it become a major domicile and servicing centre for hedge funds, private equity and real estate funds. This dovetails with Northern Trust’s track record as a provider of fund administration and depositary services to alternative managers, now expanded, for instance, to include AIFMD regulatory reporting for clients across multiple jurisdictions. A talent for innovation Over the years Luxembourg has repeatedly pioneered innovative developments for the fund industry, for example the introduction in 2004 of the first fully tax-transparent pooling vehicle for multinational investors, using the Fonds Commun de Placement (FCP) structure. This

Steve David, Northern Trust

contractual fund enables the individual national pension schemes of multinational corporations to benefit from pooled investment options such as global equity mandates, offering greater investment efficiency without suffering tax drag. Northern Trust played an important part in developing the concept, working with Luxemburg officials to draw up the necessary tax changes and supporting the launch of the first vehicle. Today the Luxembourg office supports a number of FCPs established by both multinationals and investment managers. Putting the customer first Luxembourg’s success has also been built on the quality of its client

servicing and infrastructure. Our fund servicing industry is supported by a highly qualified and multilingual workforce possessing the specialist expertise to service funds for an international client base across a broad range of strategies and asset classes. Ongoing professional development is a prime focus for Northern Trust in Luxembourg, complemented last year by a move to state-of-the-art offices in Senningerberg offering new scope to expand our workforce and capabilities. As the global reach of the fund industry continues to grow, Northern Trust is ready to play a full part in Luxembourg’s development over the next decade and beyond.

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FUNDS Simone Delcourt (CSSF)

Regulation in a changing environment MORE INFORMATION

www.myofficialstory.com/simonedelcourt www.cssf.lu

Simone Delcourt, director at the CSSF since 2005, in charge more particularly for the supervision of funds and investment fund managers, says financial technology and alternative funds are key opportunities for Luxembourg in the future. What changes has the CSSF undergone over the past three years? There have been two major areas of change. In the banking sector, the European Central Bank has taken over responsibility for oversight of all credit institutions, directly supervising so-called significant banks while

co-operating with national regulators for less significant banks. We are no longer alone in charge â&#x20AC;&#x201C; national authorities retain a certain responsibility, but the ECB now has the final say. Meanwhile, there have been major changes in the investment fund field, especially the introduction of regulation for alternative fund managers and the increased

substance requirements for management companies. How has the CSSF handled its day-to-day while managing a 15% increase in its staff? The CSSF, which now has over 600 employees, is managed in a fairly entrepreneurial way. We needed to

“We are no longer alone in charge.” Simone Delcourt, CSSF recruit individuals with particular skills for highly specialised and complex tasks. Our human resources team has also be strengthened as it had to cope with new duties. All our teams are highly committed because they understand the challenge for the CSSF and the country. Our most experienced employees have played an important role in training the new arrivals. I have to pay tribute to the huge volume of work undertaken by our staff over the past few years. My only regret is that we haven’t been able to hire more young people because of our need for people with years of experience in the financial sector.

What risks and opportunities do you see? In terms of opportunities, I see the financial technology field as well as alternative funds, especially private equity, real estate and European Long Term Investment Funds (ELTIFs). There are niches to exploit, and we have the capability to do so, while ensuring that we offer a high-quality legislative framework. From a different perspective, a lot of people seem to be unaware of the critical role played in our economy by the financial sector, which accounts for one-third of GDP. At a moment when there’s much talk of

“Our staff has grown by 15% over the past two years.” Simone Delcourt, CSSF nation branding, we also need to ensure that Luxembourg’s inhabitants understand the Luxembourg financial industry.

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FUNDS

Martin Vogel, MDO

MiFID II puts the open architecture concept at risk MORE INFORMATION

www.myofficialstory.com/martinvogel www.mdo-services.com

Martin Vogel, CEO of third-party management company provider MDO, says the fund industry is under pressure from the new MiFID II rules on distributor remuneration, but Luxembourg’s future should remain bright as long as it maintains its competitiveness as a fund hub.

What challenges are facing the management company ecosystem in Luxembourg? As a third party management company, MDO serves – among others – various small and medium-sized asset managers and banks, which are now wondering whether they can remain profitable while complying with all the new rules and obligations. On top of that, the fund industry is being called on to fall into line with

“Size matters more than in the past.”

side-effect arises: banks may raise their own commission to keep their revenues the same, but since they no longer receive commission from the asset manager, there is less incentive to offer their products. Since an “independent” distributor cannot receive retrocessions, the key issue is the definition of what constitutes an “independent” versus a “nonindependent” firm. We will discover shortly whether the banks will still play the game even without commission. Going back to closedarchitecture offerings would be a setback for investors. In the UK, the commission ban began back in 2013 with the implementation of the Retail Distribution Review, and there is a danger that this will soon apply all over Europe.

Martin Vogel, CEO of MDO

new legislation such as MiFID II, but this directive, for example, does not fully address the issue of transparency in other, related sectors such as insurance and structured products. Therefore, the goal of achieving a level playing field between these types of investments could not be achieved. How will MiFID II affect the fund industry? One of the biggest achievement of the

fund industry over the past 20 years has been in getting the big banks to embrace the concept of open architecture and to offer the funds of third-party managers to their clients. However, we are now at risk of a situation where the banks go back to selling their own products. The European political authorities want transparency, as do we all. But by preventing asset managers paying commission to the banks, a dangerous

How is MDO adapting? The UCITS brand is still going strong, despite efforts in Asia to establish competing cross-border fund regimes. The outlook looks very positive for Luxembourg for the next five to seven years. The only danger is that managers could establish funds for cross-border distribution in their home jurisdiction if the process becomes smoother, less expensive and faster than in Luxembourg. I’m also positive about third-party ManCos, but pressure from audit requirements and regulations means that size matters more than in the past, so consolidation lies ahead. MDO is well placed to expand and remain a leading third-party ManCo service provider. The current sale of RBS in Luxembourg has shown there is interest in such business models, and it won’t be the last deal.

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FUNDS “We are helping our clients to grow, and we are growing with them.”

Sébastien Danloy, RBC Investor & Treasury Services

Data management and the Fintech opportunity MORE INFORMATION

www.myofficialstory.com/sebastiendanloy www.rbcits.com

Sébastien Danloy, CEO of RBC Investor Services Bank S.A. in Luxembourg, explains how the group is working with a Fintech start-up to offer clients the benefits of big data – a model for the opportunities financial technology hold for the grand duchy. How is RBC I&TS adapting to today’s data management trends? Today fund administrators and custodians in Luxembourg are sitting on huge volumes of data that are not being leveraged to help their clients grow. But this is now changing – at the beginning of September RBC Investor & Treasury Services launched Fund Sales Intelligence (FSI) to empower its clients by providing them with actionable data. We are in a unique position to do so thanks to our transfer agency business – no-one else in the market has a database as large as ours, accessible in real time. Every year 10 million subscription orders are processed by our systems: this represents 30% of all cross-border UCITS transactions. We have developed this innovative service in partnership with Spallian, a French company specialising in big data solutions. Where is the added value for your clients? There are three main areas of added

value. First, our clients have access to their data in real time. They can identify the countries and distributors where their funds are selling well. Secondly, they can search consolidated data extracted from all our data flows, obtaining a macro view of what is happening in each country, for each type of distribution network. This allows them to benchmark how their commercial teams are performing compared with those of competitors. Finally, they have access to key macro economic metrics extracted from sources provided by one of the Big 4 professional services firms. How do you see Fintech developing in Luxembourg? Luxembourg has understood that Fintech is part of its future, but it is not the only country to come to this conclusion, and we need to seize this opportunity quickly. Financial services is the largest component of our GDP, and the public authorities are well aware of how strategically important the industry is. At the same

time, private sector players such as the Big Four professional services firms are taking the initiative in helping start-ups access potential financial sector clients. It’s a genuine partnership and a great way for a start-up to take off.

“No-one else in the market has a database as large as ours, accessible in real time.” Sébastien Danloy, RBC Investor & Treasury Services

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FUNDS

Steen Foldberg, Julius Bär

A new business model for private banking MORE INFORMATION

www.myofficialstory.com/steenfoldberg www.juliusbaer.com

Three years after absorbing Merrill Lynch’s international wealth management business, Julius Bär is growing strongly. Luxembourg managing director Steen Foldberg says abandoning the commission-based model was critical in aligning the interests of the bank and its clients. How did your business come through the crisis? We saw the changes coming beforehand. When we were still Merrill Lynch, we were the first firm in Luxembourg to close our cashier function in 2007 because cash was not our value

proposition. Our clients are entrepreneurs with anywhere between €20m and €250m, and they’re very well informed – to earn their business, you need to come up with a great value proposition and a convincing story. In 2007-08 we visited each client to ensure

that their structure was solid and fully compliant. We gave them advice on how to select the best set-up and provided strong support to those who needed it to take advantage of tax amnesties, working with tax lawyers, as time is a great advantage in dealing with tax matters.

“At the end of the day, the decision is down to the client.” Steen Foldberg, Julius Bär How did you adapt your business model? We helped our clients through the difficult times, and we changed our pricing model by switching to all-in fees, ensuring that our interests were aligned with those of our customers. This is a transparent model – the only way for us to generate more profit is to attract more money from the client or to help their portfolio to grow. The number of transactions no longer plays a role. When MiFID was introduced we use this as an opportunity to offer institutional fund share classes to our clients and adjusted the all in fee. The revenue from fund

retrocession is now insignificant and we don’t rely on this income. Our added value is the advice that we give, our ability to service our clients and at the end of the day, the decision is down to the client. What role is Luxembourg playing in this new environment? Clients have a tendency to invest more heavily in their domestic securities: Belgians in Belgian stocks, Germans in local bonds, and so on. However, we try to offer our clients a truly international and diversified investment strategy, analysing the best prospects in each market and creating a portfolio with

single issuers, using an ETF. Given the high cost of private banking in terms of people and systems, we focus on a client segment that offers us the possibility of making a decent return. Private bankers in Luxembourg must understand that it is an acquisition game – you can’t wait for the phone to ring! We need financial knowledge, coupled the good ability to put it into context for the client, relationship capabilities based on a true interest in the client, but also client acquisition skills. The fact that since 2009 we have had a net inflow of clients seems to validate our new business model.

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FUNDS

Emmanuel Bégat (MEBS)

Governance for distribution

“One of the real causes of the crisis is that one has sold anything, to anyone, anyhow.” Emmanuel Bégat, Head of Marketing & Communication at MEBS

MORE INFORMATION

www.myofficialstory.com/emmanuelbegat www.mebs.lu

Emmanuel Bégat, Head of Marketing & Communication at MEBS, analyses recent developments in the role of independent directors. What are the current challenges facing distribution? The economic crisis has reshuffled the cards on several levels. On the one hand, new regulations, such as MiFID 2 or IMD 2 for example, have overturned distribution. On the other hand, investors are increasingly better informed, which entails that distribution stakeholders need to rethink their strategies. Two major consequences have emerged. First of all, the asset managers have to face more demanding obligations in terms of due diligence on their distribution network. Secondly, they must comply with local marketing rules in the countries in which they operate, to the

risk of facing fines or publication by the regulators. In the 2000’s, the emphasis was put on financial risks. Following the 2008 crisis, investor information was put forward and distribution is now the focus of everyone’s attention. How can governance help to reduce the risks involved in distribution? Setting up a Board of Directors, with experienced people having complementary skills is essential to effective governance. An independent director may bring his personal knowledge and experience of distribution. He/she has an unbiased,

objective view and has the ability to help structure the distribution network. He/she has to accompany his/her mandates and identify potential issues. In that respect, MEBS has entered into a strategic partnership with FundGlobam, a specialist in the cross-border distribution of investment

ÂŠ 360CROSSMEDIA/P.D.

funds. Finally, monitoring is the key: in-depth due diligence must be carried out, and even on-site visits. What may an independent director bring to a Board? One of MEBSâ&#x20AC;&#x2122; strengths is that it provides Boards of Directors with

competent individuals, having complementary skills, who all share a common approach. The DNA of our independent directors may be summarised in three words: commitment, proactiveness and responsibility. We are often commissioned for our skills in a

specific area. As often, through the meetings, we demonstrate our expertise in other areas, thus building a relationship of trust, which warrants a long-term relationship. Our model has been validated by the facts: nearly one-third of our new clients have been referred to us by existing clients!

Pierre Knoden (ING)

Putting people first MORE INFORMATION

www.myofficialstory.com/pierreknoden www.ing.lu

There aren’t many banks where the head of HR has been with the company for 24 years, most of which in sales and branch management. In conversation. Why did you make the move to human resources? I started working for ING in 1991, at a time when the bank was still called “Crédit Européen”. It was really interesting working in branch and gave me a lot of valuable commercial experience, because our objective was to create relationships with non-residents who were coming to Luxembourg without necessarily wanting to open up an account here. I subsequently ascended the ranks to branch manager fairly quickly (in 1993), and that was when I began to appreciate and discover the nuances of leadership. In 2004, I was called on to head up the non-resident business in the branches and, in 2007, the CEO at the time asked me to take over the local business in Luxembourg. The issue and the main challenge were to counter the fall in international business within the branches by focusing more on the local market. It was a real challenge for me because, up until that point, I hadn’t really had any experience of the local business because I had focused mainly on the non-resident business. Despite

the impact of the lifting of banking secrecy and the exchange of information, my teams and I managed to rise to the challenge thanks to our ability to anticipate our customers’ needs and our flexibility, which enabled us to make rapid organisational changes between 2012 and 2013. However, contact with people was limited to the Retail Department and didn’t affect the rest of the bank, so when I had the opportunity to give way to younger people on the Retail side and take up a new challenge in Human Resources, I grasped it with both hands. It’s a natural progression at the end of the day: in my current role, I have to deal with our internal teams as if they were external customers. The rhetoric is the same: transparency. ING understands that a committed and engaged employee can create value in different roles. We are all encouraged to give internal mobility a go! With 25 years’ experience in retail, what do you see as the main trends? For 15 years, we have had to combine

“Think of our internal customers like our external customers.” Pierre Knoden, head of HR ING

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BANKING

“direct” banking with the traditional network without putting them against each other because they are complementary. We have managed to make the most of both worlds. What you have to do is put yourself in the shoes of our customers, whether they are young and active or much older: do older people want to carry on coming into the branch for simple transactions? Incidentally, we have found that a customer who uses the mobile channel a lot is likely to go into the branch more than the next person. As far as I’m concerned, that proves that both models are necessary. What’s more, the fact that our group has a presence in more than 40 countries also enables us to draw on other countries’ experiences,

at the same time as continuing to focus our efforts on innovation. How do you draw on your 25 years’ experience in sales to unite people internally? Communication is the thing. Serving doesn’t always mean saying “yes”, but you have to be able to explain why you are saying “no”. As for training, an employee who wants to take control of his or her career can be trained straight away, even if there is no vacancy available at that time. As regards burnout, we have set up a vigilance committee to identify the risks, because we know that it is better to be proactive in managing this issue than to suffer from it. The group’s image also

has a significant impact internally: even though our orange colour makes us stand out, we have to think outside the box with budgets that are sometimes lower than those of our competitors. Staff motivation is regularly assessed through surveys comparing us with our competitors and other group entities. We are the only bank with more than 500 employees to have been named as a “great place to work” for five years in a row. This is no doubt due to all the initiatives we offer our employees, such as encouraging them to work from home or buy days’ off. Finally, we work tirelessly on our “Orange Code”, which clearly sums up ING’s values and what we expect from our teams.

Duke 05

FUNDS Nicolas Boatwright (Abide Financial)

Lifting the burden of regulatory reporting MORE INFORMATION

www.myofficialstory.com/nicolasboatwright www.abide-financial.com

Nicolas Boatwright, head of business development for continental Europe at Abide Financial, says specialised regulatory reporting providers can relieve the increasing burden that new regulations such as EMIR, REMIT and MiFIR are placing on the financial industry. How is regulatory reporting evolving in Europe? Since the financial crisis scrutiny of the financial services industry has steadily increased, accompanied by ever-tighter regulatory reporting requirements. In Europe the EMIR, REMIT and MiFIR transaction reporting regimes seek to bring greater transparency to the market and reduce risk to the financial system as well as curb market abuse. These measures require reporting of all instruments, whether cash, physical or derivatives, traded on- or off-venue â&#x20AC;&#x201C; in certain cases under multiple regimes. Increasingly all counterparties are responsible for reporting at least their side of transactions, with few

exceptions. The new regimes determine what transactions are reportable, how, and to whom. We hope there will be increasing harmonisation of reportable data and other requirements to end national inconsistencies. The implementation of reporting rules is co-ordinated by European authorities with day-to-day oversight devolved to national regulators; sanction regimes should be harmonised in time. What is the impact of this for asset managers? Transaction reporting is often delegated by asset managers to their clearing brokers, but this solution is not always adequate, as a recent

â&#x20AC;&#x153;Options exist to reduce complexity while maintaining control over the reporting process.â&#x20AC;? Nicolas Boatwright, Abide Financial survey by the CSSF of ManCos and AIFMs suggests. While operational delegation is possible, the asset manager remains legally responsible for the accuracy of reporting done on its behalf. Clearing brokers may have different reporting models, complicating the necessary reconciliation exercise. In addition, MiFIR will require asset managers to report data such as the identity of investment decision-makers, which is not readily available to an executing/ clearing broker. Transparency and control over the final submission is a

ÂŠ 360CROSSMEDIA/M.M

challenge with delegation, and can mean delays in identifying and correcting errors. However, options exist to reduce complexity and maintain control over the reporting process, while improving compliance and handing over the operational burden: specialised regulatory reporting hubs such as Abide Financial. How does Abide Financial serve the industry? Abide Financial was founded almost five years ago to address the

challenges of transaction reporting, including interpreting and managing the ever-evolving scope of regulatory obligations, and offer market participants an alternative to building and maintaining their own reporting infrastructure. We evaluate each clientâ&#x20AC;&#x2122;s specific obligations, according to their geographical jurisdiction, entity classification and transaction types, to create a tailored reporting solution. As a strategic compliance partner, we ease the impact on our clients of an environment where a single transaction may require

multiple messages to the regulator, and reporting rules can change regularly. Our clients benefit from lower risks, less resources and effort to achieve compliant reporting, as well as ongoing service support and performance audits by a dedicated service manager. We provide solutions for banks, asset managers and brokerages worldwide, and in Europe we specifically act as a reporting hub for EMIR, an Approved Reporting Mechanism for MiFID/MiFIR and a Regulatory Reporting Mechanism for REMIT.

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FUNDS Steve Bernat (Carne)

Raising the profile of a global leader MORE INFORMATION

www.myofficialstory.com/stevebernat www.carnegroup.com

Steve Bernat, the new CEO of Carne Luxembourg, wants the firm to be recognised as the independent governance provider of truly global stature, serving the world’s top asset managers from a network of offices worldwide. Why did you join Carne? Simply, I was convinced by the firm’s long-term vision. Carne is the only group seeking to institutionalise governance services on a global basis. Our aim is to be recognised as the commonly recognised standard for this sector, the Deloitte or KPMG of governance. From a Luxembourg point of view, my focus is to make Carne more visible in the fund industry. We are already highly active

behind the scenes, but our aim is to raise our profile among fund professionals. I would like to see Carne acknowledged for what it really is: a leading independent governance provider of truly global stature. Achieving this goal in a country like Luxembourg is about people, and as one of the few Luxembourgers born and raised who are fully committed to the country and to the fund industry, I feel that I can rise to this challenge.

What makes Carne different? We enjoy a couple of competitive advantages. First is our size – we service 13 of the world’s 15 biggest asset managers, including Barclays, HSBC, Allianz, Deutsche and BlackRock. We provide governance services to almost $1trn in assets, including substance for $200bn in fund assets under management of which $20bn is in Luxembourg. We are already a sector leader with offices

“We service 13 of the world’s top 15 asset managers.”

Steve Bernat, CEO of Carne Luxembourg

in eight jurisdictions including Luxembourg, Ireland, the UK, Switzerland, the Channel Islands, the US and the Cayman Islands, and our target is to become the number one provider in each jurisdiction. Second is our range of services. Our focus on governance encompasses independent management companies, especially here in Luxembourg, but also AIFM services, directorships and conducting officer services. Our size enables us to provide tailored solutions – for example, a client can access fund registration as a standalone service. Being able to provide the critical missing pieces is an important part of our differentiation.

Ultimately, investment managers require both local and global market intelligence, helping them to make decisions about compliance, distribution, best practices and risk, to name a few. Because our clients are global, or aspire to be global, and certainly distribute globally, they need global partners in governance, just as they do for other services. Carne has the depth of experience, and the global foot print, to support those aspirations. Where is the Luxembourg fund industry going? Luxembourg has written a great success story over the past three decades, one that I believe will

continue thanks to all the talent and expertise we offer as a financial centre. We are the only cross-border platform capable of serving any manager in the world. The fact that 100 new fund promoters come to Luxembourg every year, including from the US and Asia, shows the strength of the brand. If we work together, Luxembourg will continue to expand its client base and asset volumes. However, we need to focus on innovation. As back office tasks slowly shift to other countries, the only way to deliver high added value is through innovative services. If Luxembourg remains the international fund industry’s trendsetter, its future will be bright!

“Taking the lead on global distribution services is a must.”

Olivier Renault, Country Manager of SGSS Luxembourg

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BANKING

Olivier Renault (Societe Generale Securities Services)

Cultivating core competencies MORE INFORMATION

www.myofficialstory.com/olivierrenault www.securities-services.societegenerale.com

Olivier Renault, Country Manager of Societe Generale Securities Services Luxembourg (SGSS) says supporting clients in their international development is a priority. Do you indentify the wave of regulatory changes – AIFMD, EMIR, FATCA, MIFID2, UCITS V- impacting the fund industry as an opportunity to gain in competitiveness? Saying that all new regulations are an opportunity is stretching the point. The impacts of the different regulations on our activities are not all comparable. For instance, FATCA or CRS generate large investments in order to comply with the Foreign Tax Authority requirements and can hardly be considered as a commercial opportunity for service providers. On the other hand, Solvency 2, EMIR or AIFMD generate opportunities for us to market new product in terms of reporting, valuation and distribution services. Transforming regulations into an opportunity is a question of capacity: capacity to adapt our offer to the required changes, capacity to invest, capacity to transform our business model. Our approach is to leverage on this wave in order to create new services, and to make the most of it on behalf of our clients. Some service providers might not be able to enter the competition due to the level of investment involved. In this context we can expect a consolidation of the market with a reduction in the

number of asset servicers. Among the remaining providers, the quality of services and the ability to create added value will be key differentiating factors. A famous French author, André Gide said: “Intelligence is the capacity to adapt”, this is particularly true for our business. How is it possible to maintain Luxembourg’s expertise in fund services and create value for your clients ? If Luxembourg is recognized as the first global fund center in Europe, it is mainly because it has always been proactive in adapting its environment and providing financial players with a pragmatic legal and regulatory framework. This is combined with a highly skilled international work force and an efficient and reliable fund infrastructure. Luxembourg has made of the UCITS brand its own trademark, but this brand has a cost and the country is now in direct competition not only with its traditional European competitors, Dublin and London, but also with Asia. Being able to offer an all-in-one service to any financial actor has been the key advantage of the Luxembourg market place and surfing the international wave of UCITS its source of growth.

Remember that France was number 1 in Europe until 2006, but only focused on its internal market. Now Luxembourg is number 1, but today the Grand Duchy fund industry needs to further develop its skills and competencies to justify the cost of the infrastructure offered. Service providers have to follow this international trend by offering global services on global platforms. In this context only large banks with a wide international network will emerge. Taking the lead on global distribution services is a must and the launch of our Global Distribution Hub offer recently has been very well perceived by the market. What is the strategy of SGSS in Luxembourg and globally? In Luxembourg we have doubled our assets in the last 4 years. This growth is mainly due to three things: 1. Our ability to accompany the growth of our existing clients. 2. The UCITS mandates we have won. 3. Our expertise in servicing Alternative Investment Funds, with assets multiplied by 4 in just 4 years. Luxembourg is key in SGSS’ development and competitiveness plan. We will leverage on it in our ambition to become the player of reference in Europe.

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FUNDS Bill Jones (ManagementPlus)

The implications of corporate governance MORE INFORMATION

www.myofficialstory.com/billjones www.mplgroup.com

ManagementPlus founding partner Bill Jones says the changing regulatory environment puts more emphasis on corporate governance â&#x20AC;&#x201C; and the greater requirement for substance at Luxembourg management companies represents a competitive advantage for the Grand Duchy. Governance as operating system Corporate governance is analogous to a computer operating system â&#x20AC;&#x201C; everything works around it. The legacy tends to be formalistic, with a strong focus on board meetings, compliance with regulations, reporting and monitoring. All these things still have to be done, but they are no longer sufficient : today there is a bigger operational focus than ever before. From a service provider perspective, the key change lies on the ability to have more subject matter-specific knowledge and substance related to portfolios, risks, administration, distribution, regulation and tax.

Luxembourg as core processor? Whatâ&#x20AC;&#x2122;s critical right now is that Luxembourg is adjusting. The CSSF is hiring many new employees and expanding its focus into new areas. Education in the sector is improving thanks to the efforts of organisations such as ALFI and ILA. The private banking industry is accepting the short-term pain of losing banking secrecy, which is very good news for the country in the long-term. Meanwhile the fund sector is attracting increasing numbers of private equity, real estate and hedge funds and service providers; for example, few people know that 17 of

53 “We are part of our clients’ teams, working for them on the outside.”

Bill Jones, founding partner, ManagementPlus

the 20 top international administrators are in Luxembourg. The much-criticised AIFMD has brought benefits in the requirement for a regulatory framework for alternative funds and greater substance. Luxembourg management companies and their clients should benefit from this as historically they have had more substance than those in other jurisdictions. One key issue will be the ability of Luxembourg to deal with the particular style of large American managers used to operating

their own Cayman and Delaware fund structures. The universal adaptor I see the ManagementPlus team acting in the same way as an electric adaptor, helping clients conduct business across borders from one country to another. The team is led by three experts, myself for hedge funds, Antonio Thomas for UCITS and Keith Burman in real estate and private equity. We expect to be joined by another private equity specialist to

complete the team. Our physical presence and knowledge of the main six leading global jurisdictions Luxembourg, Cayman and Dublin for funds, and London, New York and Hong Kong for traditional and alternative investment management – enables us to service clients with international service needs across multipole asset classes. Having all worked on the asset servicing side, we consider ourselves as “part of our clients’ team, just working for them on the outside”.

54 Alexandre Dumont (BIL Manage Invest)

Step change for AIFMD management companies MORE INFORMATION

www.myofficialstory.com/alexandredumont www.bilmanageinvest.lu

The AIFM Directive has given Luxembourg the opportunity to further extend its leading position in the European fund industry to alternative asset classes. However, Alexandre Dumont, CEO of BIL Manage Invest says that with non-EU managers looking to benefit from the passporting regime, the role of the management company is now even more critical than ever. A new opportunity for the Luxembourg fund industry The adoption in 1988 of the first UCITS Directive by the Grand Duchy put it in pole position to become the domicile of choice for retail investment funds marketed throughout the EU. A quarter-century later, the AIFM Directive has brought alternative investments, including real estate and private equity funds, into the scope of EU regulations. As an incentive, compliance with the Directive provides alternative funds with a marketing passport via the AIFM, giving them access to sophisticated investors throughout the EU with a minimum of additional regulatory and administrative formalities. The potential creation of a genuine single

market for alternative funds offers new opportunities to investment managers and has enabled Luxembourg to take a significant share of the European alternative fund market. However, it also poses new risks, especially for those managers who mistakenly see the governance processes and structure as essentially the same as those applicable to retail funds under the UCITS regime. The challenge of fund distribution in Europe The UCITS Management Company sector in Luxembourg has become extremely competitive, with opportunities for new entrants being limited. By contrast, opportunities abound within the alternative asset

space, which is growing rapidly but tends to attract smaller asset managers who lack the scale to establish their own ManCo substance. Additionally, non-EU based managers are now realising that reverse solicitation is not a sustainable means of attracting European investors, whilst national private placement regimes are destined to disappear, if they have not done so already. That leaves the distribution of the alternative fund via

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BANKING “The creation of a genuine single market for alternative funds offers new opportunities to investment managers”

Alexandre Dumont, CEO of BIL Manage Invest

the AIFM passport as the only viable option, although for the time being, it remains limited to European funds managed within the EU. Many non-EU Managers, such as those based in the US, are looking to create EU-domiciled mirror structures for which they require a third-party AIFM. The new management paradigm Many managers of alternative funds,

who in the past were subject only to light or no regulation, now fall within the scope of the AIFM Directive with increased scrutiny of their investment management activities. Unlike the Management Company under the UCITS regime, which is essentially an administrative oversight role, the AIFM for alternative funds is required to take on full responsibility for the investment decision-making process. This is a critical role, requiring specialist knowledge and expertise, particularly in the case where the AIFM retains the Portfolio Management function with the fund initiator acting as investment advisor. For this reason BIL Manage Invest is staffed with experienced professionals from the investment management industry, allowing us to perform the portfolio management function or

provide oversight of the delegated portfolio manager with a full understanding of the assets being managed. Today, BIL Manage Invest offers a robust fund governance platform, providing real added value within the investment management process. The backing of a strong banking group gives additional comfort to our fund promoter clients, to the governing body of their funds and to their underlying investors. It is no longer sufficient for a management company to simply hold the title of AIFM and provide administrative oversight duties – it is now about fulfilling the governance and oversight roles in compliance with the prevailing regulations, whilst at the same time providing fully informed portfolio and risk management functions.

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FUNDS Nick Curwen (SS&C GlobeOp)

In Luxembourg for growth MORE INFORMATION

www.myofficialstory.com/nickcurwen www.sscglobeop.com

Nick Curwen, Director at SS&C GlobeOp describes how his company is using Luxembourg as a springboard for international growth. Two years after being licensed by the CSSF, how is SS&C evolving? We recently moved into bigger offices where we can accommodate up to 40 employees. We started 24 months ago with a first client, and are steadily growing since, both through existing group clients as well as newly acquired ones. Today, we have more than USD 2 billion worth of assets through vehicules and 20 legal structures, with a similar amount already in the pipeline. For Luxembourg’s office, belonging to a 5,000 plus employee international group creates 2-way relationships. We work closely with the London and US sales teams to identify opportunities, but also drive our own growth in continental Europe by being a part of the right bodies and joining key events. Our vision is that central administration for all funds is now technology-based given the amount of transparency and regulatory reporting required. It is a data game. Let the banks be banks and the data companies manage the data. What makes your company different? First of all, we own all of our software and rely on 2 revenue streams: one

coming from the software and another related to services. We are a technology driven company, fully committed to fund administration. A lot of our staff have worked for asset managers or banks, on or near the trading floors. We can fully take care of our client’s trade capture, reconciliations, valuations, the complete lifecycle of the trade, NAV calculations, investor services… So that our clients can focus on their core

activities: raising and managing assets. This service and software model allows us to propose a very modular approach. For example we can propose regulatory reporting services as a stand-alone service when many competitors only provide them to clients using other services. What is your analysis of the current alternative market? Globally speaking, alternative funds

“Our vision is that central administration for all funds is now technology based.”

Nick Curwen, Director of SS&C GlobeOp have seen a huge growth since the crisis. Pension funds and insurance companies for example are looking for yield. This drew interest all across the board: PE, Hedge funds, Real Estate. AIFMD required adjustments but Luxembourg has a long track record of adapting pragmatically. Investors remember that the Grand Duchy has succeeded with UCITS and see the value the country can offer. In Luxembourg specifically, the market is evolving with the arrival of new players like us and with the growth of several actors. Considering that growth is driven by investor demand and trust, Luxembourg will continue to be a strong alternative centre. Sometimes, the country underestimates its ability to service alternative funds: “We can service alternative funds” is the message that needs to get out on the market. On the other hand, every business has to address its cost base and Luxembourg needs to make sure it remains competitive on the price aspect.

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ICT

Xavier Buck, EuroDNS

Trade secrets of a Luxembourg serial entrepreneur MORE INFORMATION

www.myofficialstory.com/xavierbuck www.eurodns.com

Xavier Buck is one of the entrepreneurs who have put Luxembourg on the map as a centre for innovation and international business development, particularly in the IT, media and communications sector. Thereâ&#x20AC;&#x2122;s no substitute, he says, for having faith in and passion for your business. As a serial entrepreneur, what is your secret for success? People often ask me how I did it, but I have to admit there is no straightforward answer to this question. Every start-up I have created or helped to build has followed a different path to success. However,

some common and necessary habits will help you achieve your goals: 1. Whenever you are faced with an obstacle, split large problems into a large number of small ones. 2. Find the right people to work with, and accept or learn to delegate. 3. Be aware of your strengths and

weaknesses. 4. Have faith in and passion for what you do. That ensures that wealth and recognition will come as a pleasant surprise. 5. Listen to your customers. All your hard work or innovation will not matter if you donâ&#x20AC;&#x2122;t pay attention to their needs and opinions.

Making-of here

What role does Luxembourg play in your international strategy? Most young entrepreneurs don’t ask themselves where to set up their company. I was born and raised here, so it was naturally in Luxembourg where I decided to launch myself into the entrepreneurial adventure. Since then I have established many branch offices and co-investments throughout the world, and as you grow and become international, location becomes a necessary aspect of your strategy. Today I still choose Luxembourg as the best domicile for an international holding company, especially for overseeing European business development. In the IT and communications sector, Luxembourg is the ideal hub to cover most of Europe. The country has a strong and stable economic base and political framework. It’s easy to deal directly with with the government, public institutions and the private sector in

“Today I still choose Luxembourg as the best domicile for an international holding company.” Xavier Buck, EuroDNS general. Besides, the international workforce and multilingual skills are both exceptional and essential for an internationally-minded business. How should entrepreneurs respond to the challenges of the new data-driven world? Entrepreneurs and their companies need to first understand the importance of protecting their data, especially their customer data. The new data privacy and network security infrastructure legislation that

is about to come into force across Europe will impose higher data protection standards. However, companies should not wait for these laws to act. It’s high time that every firm devotes much more attention and resource towards data and network protection. Their focus should be on encryption of data whenever possible, the development of strong procedures, the monitoring of data flows, and of course regularly updating the company’s IT infrastructure and software.

Benjamin Bodig (Etude Garcia & Bodig)

A new voice at the bar MORE INFORMATION

www.myofficialstory.com/benjaminbodig www.Cjbl.lu

Benjamin Bodig, the newly elected President of the Conférence du Jeune Barreau de Luxembourg (Young Barristers Conference, Luxembourg), assumes his new position as of September 15th. Interview. As the new President of the Young Barristers Conference, what would be your priorities as President? My priority would be to continue the work I have been doing with the current President, Anissa Bali. Our work revolves around two main areas. 1. Bring together the 1,600 members of the Conference - all barristers practising for less than 11 years - and get to know them better so we can represent them better. We must continue to offer social activities and assist with the continuous training each lawyer is required to undergo all practising barristers are required to receive a minimum of 16 hours’ training per year. 2. Communicate! To make ourselves heard and understood. We are not and will not become a trade union, but we must defend our members’ interests with the President of the Bar, the National Bar Council and the Ministry of Justice. We have our own opinions to express, so that we can take part in the discussions surrounding the profession and changes in the law. As I personally do not think that number of years in practice is an indication of value, I would like to improve the image of young lawyers, both in the eyes of the public and among the rest of the profession.

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LAWYER “Using a lawyer does not necessarily mean going to court. This is where we need to remove some of the drama.” Benjamin Bodig, President of the Young Barristers Conference, Luxembourg What image do lawyers have? When you ask children: “What would you like to be when you grow up?”, many say they’d like to be a firefighter, doctor or nurse... The answer “lawyer” is more commonly heard from parents. Unfortunately, it’s an unpopular profession. The image is tarnished by prejudices that have existed ever since the profession was created. “They don’t attend court, they earn too much money, they defend criminals...” etc. I’d like to work with the Young Barristers Conference to better explain our role, our importance in society and to deconstruct some of these prejudices. Using a lawyer should not be a drama! This bad image is not recent however, as even 19th century caricaturists like Daumier painted lawyers as dark and sinister. It is true that lawyers have their own special language and ways of addressing each other - which can create a distance - we are managed by an Order and we wear gowns. All

these things contribute to the obscure caricature of our profession. Films and TV series also help to construct this false image. In Luxembourg, the sector itself has changed the way our profession is perceived. There are a huge number of lawyers, and some very large law firms, so most people think that we’re all corporate lawyers. Ever since advertising was permitted in the legal profession, only the largest firms are very visible, and they are mainly corporate lawyers. This is a pity as there are many of us who help and support our clients on a daily basis. We help them at all stages of life: for example in matters of adoption or surrogate parenthood, and in everyday matters such as hiring or firing an employee, selling a property, renting out a property and managing tenants. Using a lawyer does not necessarily mean going to court. This is where we need to remove some of the drama. Disputes do not have to end up before

“19th century caricaturists like Daumier painted lawyers as dark and sinister.” Benjamin Bodig, President of the Young Barristers Conference, Luxembourg

a judge. Mediation, arbitration and conciliation are alternative solutions that are quick and less expensive, particularly when the matter does not involve large sums of money. The amount at dispute leads me onto a thorny issue often mentioned by our clients: our fees. The issue is not the fees but their transparency. Our clients need to know and understand in advance not how much it’s going to cost exactly, as it’s very difficult to precisely estimate costs at the beginning of a case, but they need clear information on our hourly rate and what it covers, so that there are no nasty surprises. What solution would you apply to this image problem? After long discussions with my colleagues, we have concluded that the majority of public opinion thinks our pricing is opaque, which tarnishes our image. To remedy this, we have introduced a charter. Lawyers can freely choose whether to sign up to this charter or not. It contains three points: 1. communication of hourly rates (freely fixed by the lawyer); 2. setting a threshold depending on the case; 3. commitment by the lawyer to sign this charter with the client. This charter will be an advantage for both clients and lawyers. It’s a win-win situation which will definitely reduce the number of disputes between some clients and their lawyers.

62 Ingrid Dubourdieu (D.Law)

The question of the remaining duties of alternative funds directors in Luxembourg and EU MORE INFORMATION

www.myofficialstory.com/ingriddubourdieu www.dlaw.lu

When an alternative investment fund (AIF) appoints an external authorised alternative investment fund manager (AIFM), what role and duties remain with the AIF’s directors? Are they reduced to a non-executive role? The answer, says law firm D.Law, is not necessarily the same in Luxembourg as in other EU jurisdictions. Responsibility towards investors The delegation of responsibilities by an AIF to an external authorised AIFM raises the issue of how the AIF’s directors are to fulfil their fiduciary duties. Does it consist solely of exerting oversight over the AIFM, or shall the directors exercise their statutory duties as to management and control over the AIF and AIFM? What are the directors’ statutory responsibilities, and what risks do they run? As per the Luxembourg legal framework, the directors of an investment company may appoint service providers to assist in their functions, but they cannot, as the investment company’s governing body,

wholly assign all their powers and duties to a third party. On such basis, although an investment company may appoint a third-party (management) company to conduct its entire day-to-day management, this does not significantly affect the liability of the investment company’s directors, who remain responsible in the first place to investors for properly supervising and coordinating delegated tasks. Care, skill and diligence From a Luxembourg standpoint, the responsibility of the directors does not end with the selection and appointment of the external authorised AIFM and

approval of procedures and models. They are still required to exercise reasonable care, skill and diligence, act honestly and in the best interests of the AIF, and be responsible for proper monitoring and supervision of the appointed AIFM. While the Luxembourg legal framework does not include a statutory code of corporate governance specifically for AIF directors, current practice requires them to have thorough understanding of the AIF’s operations, portfolio and distribution, as well as market dynamics and related risks such as AML, valuation, remuneration and conflicts of interest. There is to date no publicly

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LAWYER “Delegation of execution does not mean delegation of ultimate control.”

Ingrid Dubourdieu, Partner, D.Law

available domestic case law addressing specifically this point. One may resort to that of jurisdictions such as the Cayman Islands or, for its legal regime closer to ours, Belgium, which offer indications of how these obligations may be interpreted. Interpretation in other EU jurisdictions However, the foregoing interpretation may not apply similarly in other EU jurisdictions. German jurisprudence reserves the prerogative of authority to the fund and its governance structures in areas mandatorily required by corporate law, such as distribution of

profits or definition of the AIF’s investment principles, as opposed to valuation and NAV calculation, which is the responsibility of the AIFM. The authority to conclude or terminate the AIFM service agreement should typically remain with the AIF’s (independent) directors. With a French investment company, its legal representative is its “Directeur-Général”, while UK open-ended investment companies have in practice a sole Authorised Corporate Director, which must be a regulated entity; in both cases this legal representative or entity is usually the AIFM, so that the latter would actually be deemed to be the AIF’s

governing body. This being said, a certain degree of similarity with Luxembourg may be found with listed public companies in the UK, where the AIF’s directors must be independent of the manager and have the task of selecting, appointing, monitoring and supervising the AIFM. D.Law therefore concludes by recommending that AIF directors revisit their own procedures and governance and internal compliance principles where delegating relevant duties to an external authorised AIFM since delegation of execution does not mean delegation of ultimate control.

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CHINA

Lihong Zhou, Bank of China

Developing a global role in Luxembourg MORE INFORMATION

www.myofficialstory.com/lihongzhou www.boc.cn

ÂŠ 360CROSSMEDIA/P.D.

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CHINA

General manager Lihong Zhou says the Bank of China’s Luxembourg branch is poised to take on an expanded role for the institution in Europe as its global asset management platform and one of three hubs worldwide for its custody business.

What makes Bank of China different from its competitors? We are the oldest bank in China, having been established as the treasury of the Qing Dynasty [1644 -1912]. After 1912, it was renamed Bank of China and soon became the central bank, having branches all over the world, including the US, Europe and south-east Asia. Today Bank of China has 1,600 financial institution correspondents in 179 countries, including 1,290 with renminbi clearing accounts, and our activities range from commercial and investment banking to direct insurance, investment management and aircraft leasing. Bank of China is the leading emerging market institution to be designated as global systemically important bank by the Financial Stability Board. We are not the world’s biggest bank, but our ambition is to be the best.

Why did Bank of China establish a Luxembourg office in 1979? We were the first Chinese bank to open branches abroad after 1949, so when the government adopted a policy of opening to the outside world in 1979, while Luxembourg was expanding its scope as a financial centre, it was the right time for both countries. We serve local Chinese clients and Chinese companies looking to access new markets, but now the Luxembourg office acts as our European headquarters, co-ordinating activities in six countries. We have played a key role in M&A deals such as HNCA’s investment in Cargolux, or the acquisition of Philips’s lighting components business by GO Scale Capital. In the other direction, we helped Sweden’s Atlas Copco invest in several businesses in China and with Goldman Sachs arranged a syndicated loan to finance a pipeline in Turkey. Over the past five years, our assets, liabilities and profits have grown very rapidly.

How do you see the Luxembourg branch developing over the next five years? Our business is growing by 20% a year and we continue to meet the targets of our three-year development plan; meanwhile we have little exposure to the volatility of the Chinese stock market. The good news for Luxembourg is that our head office in Beijing has decided that the grand duchy should be the asset management platform for the entire group, and one of three custody hubs alongside New York and Singapore. We already have 100 staff in Luxembourg, out of 170 in Europe, and the numbers should grow to 200 and 300 respectively. We will be ready to take advantage of the opportunities arising from the convergence of the Chinese government’s 2013 ‘One belt, one road initiative’ and the Juncker Plan in Europe.

67 “Luxembourg will become the asset management platform for the entire group.”

Lihong Zhou, Bank of China

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CHINA

CEO Lunch Summer 2015 MORE INFORMATION

www.myofficialstory.com/thoughtleadershipfactory

On July 9, 360Crossmedia brought together 21 CEOs at the Um Plateau restaurant for its twice-yearly CEO Lunch. In a presentation on Chinese outbound investment in Europe, Dr Shaohui Zhang from Allen & Overy noted that outbound investment is rising as the authorities seek to change the structure of Chinaâ&#x20AC;&#x2122;s economy. Luxembourg offers many advantages as a platform for foreign investment thanks to its legal framework as well as its economic and political stability. The grand duchyâ&#x20AC;&#x2122;s geographical location and the diplomatic relationship between the two countries is an incentive for Chinese investors to make Luxembourg their headquarters for EU investments, but obstacles often arise as a result of problems in communication and cultural conflict.

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CHINA H.E Paul Steinmetz

The keys to the ChineseLuxembourg market MORE INFORMATION

www.myofficialstory.com/paulsteinmetz http://pekin.mae.lu

His Excellency Paul Steinmetz, Luxembourg’s ambassador to China, shares with us his dual expertise in China and Luxembourg. Your Excellency, what is your analysis of trade between Luxembourg and China? Trade between Luxembourg and China has many positive points. From the end of the 19th century, Luxembourg engineers led by Eugène Ruppert contributed to the development of the steel industry in China. ARBED, then Paul Wurth, were some of the first Luxembourg companies to set up business there. Shortly after the Second World War, the railway worker Mr Franck helped China develop its rail network. Passionate about China, and a friend of Mao, he was the first foreign national to be officially decorated with the honorific title “Friend of China”. Today, the country is Luxembourg’s

primary economic partner in Asia and its second most important partner after Europe. Politically, ChineseLuxembourg relations have always been blessed by mutual respect and solid friendship. In 2006, His Royal Highness the Grand Duke made an official visit to Shanghai and inaugurated on the same occasion the Consulate General of Luxembourg in the same city. He also visited the Luxembourg’s stand at the Universal Expo in Shanghai in 2010. Over 1,500 Luxembourgers and 120 companies were present at this event. Their Royal Highnesses the Hereditary Grand Duke and the Hereditary Grand Duchess chose China as their first official destination after their marriage, a sign of China’s

“Learning Mandarin is the guarantee of a good career!” Paul Steinmetz

importance to Luxembourg. For its part, China organised an official visit to Luxembourg in May 2012, attended by the President of the National People’s Congress, WU Bangguo. His visit was a great honour for Luxembourg. Currently, the three largest Chinese banks have their European headquarters in Luxembourg. Three other Chinese banks will settle in the next coming months. Luxembourg is not stinting on its efforts to present itself as an offshore centre for RMB and a platform for its internationalisation. I have noticed also that Chinese companies in various sectors have set up business in Luxembourg, that Chinese students are enrolled at our University, and that more and more

ÂŠ DR

trying to get to know the people youâ&#x20AC;&#x2122;re dealing with. Itâ&#x20AC;&#x2122;s not possible to impose our own culture on business, but the opposite is true as well.

Chinese tourists are visiting our country. As the official ambassador to China, I obviously find this very encouraging. Do you have any advice to give a European businessman wishing to invest in China, or a Chinese businessman wishing to make Luxembourg his European hub? As with any business project, I can only advise my fellow citizens to properly analyse the Chinese market, to take an interest in the culture of the country, its history and traditions, and finally its legal, tax, regulatory and financial situation. Is my product or service suitable for the Chinese market? Am I ready to adapt to the

specific demands of my clients? After only a few months in China, I can confirm that relationships are very important here. You become friends before you do business together, not the opposite. This means you need to get to know each other and learn to appreciate each other. Intellectual property is important: it is definitely better respected, but needs to be carefully protected. The system of financing companies is not the same as in Luxembourg. Plus, you have to find the right partner. The Luxembourg companies that succeed in China have done this and have benefited from their networks and contacts. Finally, I would advise adopting an Oriental approach, being humble and considered, and really

What opportunities can you identify for the future, to strengthen the links between the Grand Duchy and China? The internationalisation of the Chinese currency, the RMB, is undoubtedly a promising vehicle for developing our relations. As I already mentioned, the presence of the largest Chinese banks in Luxembourg and the number of bonds issued in RMB on the Luxembourg stock exchange have made our financial market one of the most important for transactions in Chinese currency. We are also in a leading position in Europe in terms of loans, deposits and investments funds in RMB. However, beyond the financial market, there are also opportunities for developing our relations in other sectors: logistics, with the takeover of some Cargolux shares by the province of Henan; and automotive equipment, with the acquisition of IEE by a Chinese consortium. We hope in the future to see major names in electronic commerce, the telecommunications sector or video games setting up business in Luxembourg. Finally, I am keen to promote our cultural exchanges, with designers and artists visiting China, and vice versa. There is of course a huge potential for development in the tourist sector, as we have so many things for the Chinese to discover. Lastly, despite the distance, I would like to see more Luxembourg students enrolling in Chinese universities: learning Mandarin is the guarantee of a good career!

Arnaud Lambert (CHAMP Cargosystems)

The world is our market place MORE INFORMATION

www.myofficialstory.com/arnaudlambert www.champ.aero

The CEO of CHAMP Cargosystems, the world leader in air cargo IT management solutions, answers our questions. What are your priorities as CEO of Champ Cargosystems? I have three. The first is to focus on satisfying customers, shareholders and employees, whose respective expectations are not always compatible, although it is essential that they are balanced. For our customers, we ensure that they can concentrate on their core business, while we take care of their IT solutions. My second priority is “operation & delivery excellence”, as over 100 airline companies and 4,000 forwarders are now connected to our platform. Finally, I place a lot of importance on innovation. For example, in addition to Cargolux, we provide solutions to Singapore Airlines, Japan Airlines and very soon Cathay Pacific, which gives us a lot of traction in Asia. We must

deliver impeccable quality and remain innovative to serve “Tier 1” customers. How does a company like yours conquer the world from Luxembourg? There are three main elements that make out the powerful DNA of CHAMP Cargosystems: entrepreneurial spirit, multiculturalism - we employ 37 different nationalities - and agility. Also, as a Luxembourg-based company, we are lucky to enjoy international neutrality, which means we can work with any country. The world is our market place! Our international growth however is equally down to the strength of our solutions: for example, we enable passenger transport companies to manage up to 40 tonnes of cargo in the belly of the aircraft. An airline that

makes four daily return journeys to Asia could carry as much cargo in one day as a full freighter with 140 tonnes! This can represent up to 20% of the total profit contribution, if it is managed correctly. Last, but not least, we are lucky to have two strong shareholders in the aeronautics industry which have expanded our global influence, particularly in terms of contacts: Cargolux in Luxembourg which operates in the air cargo sector, and SITA (Société Internationale de Télécommunication Aéronautique) in Switzerland which serves airports, passengers and aircrafts. What are the opportunities for a company like yours? CHAMP is lucky to find itself at the centre of the largest community in our

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LOGISTICS

Arnaud Lambert, CEO CHAMP Cargosystems

“Luxembourg’s precious neutrality means we can work with countries all over the world.”

industry, as we now represent over 36% of the global market. This means we can provide the industry with operational data collected at source and work hand in hand with organisations such as IATA, TIACA and ICAO to define the standards of the future. Our community role also involves enabling all participants within the supply chain to access e-business, regardless of their size. There are some extraordinary things to be achieved in this area, particularly in emerging economies. As we help countries, airports and service providers to connect on a global level, we are preparing for future growth and reducing the impact of the traditional risks within the air cargo industry: fuel prices, the recession, conflicts, exchange rate, security, etc.

“Achieve all our targets ‘As one’.”

Erik Hermans, CEO of DHL EXPRESS Luxembourg

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LOGISTICS

Erik Hermans (DHL Express)

Driven by team spirit MORE INFORMATION

www.myofficialstory.com/erikhermans www.dhl.com

Erik Hermans, who has over 30 years’ experience, explains his vision of management to us. Can you sum up your career in a few words? After studying finance in Belgium, I began working at the Termonde Chamber of Commerce in Belgium before joining DHL Int’l in Brussels in 1982. In 1985, I moved to the office in Luxembourg, becoming its Director in 1988. How do you explain this longevity? Our company has experienced numerous changes over the years, but our corporate culture, values and passion are the reasons for our success. Like in sport, my other passion, I can count on a solid, united team, which has enabled our company to continually evolve. My credo also reflects this state of mind: “If you believe, you can achieve”. What are the specific features of the Luxembourg market? The Luxembourg market and our company are very similar: it has an international environment where all cultures mix thus creating some very specific needs. Our company has been able to adapt to Luxembourg’s market and, thanks to its Certified International Specialists, is very well placed to meet any demand from all its customers. It’s a fast-changing market, and in order to meet this demand, we have to continually challenge ourselves and be innovative in the solutions we offer customers.

What projects does DHL EXPRESS Luxembourg have? Our company, which is already very present in B2B, is now going to address the exponential growth of e-commerce. Our goal is to position ourselves in the B2C segments that will best meet the demands of our customers and our organisation. We are also investing heavily in technology as these days, the tracking information is just as important as the actual delivery. Our objective is to make our global network accessible to as many people as possible, while respecting our environmental commitments as set out in our “GoGreen” policy. Above all, we are a service company whose success depends on the personal qualities of all our employees. When recruiting, we set a great importance on professional qualifications, but also on the candidate’s personal qualities, to ensure they fit into our corporate culture. Our employees are the ambassadors for our company, and it’s thanks to them that our company has been able to grow. Besides recruitment, we also invest a lot in training, to continually improve our employees’ professional knowledge and communication skills. Finally, the role of management is essential, to convey our passion for excellence and motivate our teams to achieve all our targets, together, “As one”.

76 Daniel Liebermann (Ministry of the Economy)

China: a priority market for Luxembourg logistics hub MORE INFORMATION

www.myofficialstory.com/danielliebermann www.gouvernement.lu/3313559/minist-economie

China is a major manufacturing powerhouse and has become a leading player in international trade. As chinese companies have moved up the value chain to become global recognized brands, they will need for efficient, time - and cost effective supply chain solutions. In paralell to China’s economic growth, a robust middle class has emerged creating an increasing demand for European products. Located in the heart of Europe, Luxembourg provides chinese companies with many strategic advantages for successfully distributing their goods in, from and to Europe.

Logistics: one of the key sectors of Luxembourg’s economic diversification strategy Over the last decade, Luxembourg has continuously improved its positioning as an intercontinental and multimodal logistics hub in Europe for added value logistics activities. More recently, Luxembourg has initiated a multiproduct specialisation strategy within its logistics sector by focusing on certain types of products requiring specific handling and storage solutions. Focusing on special cargo and multimodal solutions A lot has been achieved these last years to reinforce Luxembourg logistics hub. Luxembourg’s airport, one of Europe’s leading freight airport

connected, has been reinforced with the establishment of LuxairCARGO’s dedicated Pharma & Healthcare Center. In complement, Luxembourgbased logistics actors have successfully implemented an innovative project that made Luxembourg the first airfreight hub in the world to become fully certified according the latest WHO and EU guidelines on Good Distribution Practice for pharmaceutical products. Further, the Luxembourg Freeport provides a secure storage solution for valuable goods (e.g. artworks, collectable items, fine wines). Although Luxembourg is a landlocked country, it is only 300 km away from major ports of the North Sea such as Rotterdam and Antwerp. Moreover,

CFL Multimodal rail/road platform supported with their reliable and scheduled combined (containers and semi-tralers) rail network connections makes Luxembourg an extended gateway to major European ports. China is a priority market With numerous cargo flights operated every week, Luxembourg and China already enjoy longlasting and deep ties. Beside Cargolux new chinese shareholder (HNCA) and the dual hub strategy between Luxembourg and Zhengzhou, China has always been a priority market for Luxembourg logistics hub. Today, we are convinced that Luxembourg and China could further benefit from cooperating even closer together.

Duke 05

LOGISTICS Malik Zeniti (Cluster For Logistics)

Integrating activities to create added value MORE INFORMATION

www.myofficialstory.com/malikzeniti www.clusterforlogistics.lu

The new manager of C4L explains the challenges of logistics in Luxembourg. Interview. How big is the logistics sector in Luxembourg? It’s not easy to say with accuracy as we only have access to figures from specialist logistics companies, not the logistics departments of the major industrial groups, who deal with it internally. We know that logistics represents directly 4% of jobs in Luxembourg and is worth 3.3 billion euros. We’re not a global hub like Hong Kong or Singapore, but compared to the population of the country, our figures put us on the European podium. The main multimodal logistics asset of Luxembourg is still its airport, but the country is beginning to grasp the challenges and potential of the sector, with for example 150 million euros of investment in Bettembourg. What are your priorities as the new manager of C4L? My priorities are in three main areas: increase awareness of logistics and make the sector more attractive, develop niche markets and strengthen

collaboration. The diversity of jobs available is still not widely known, with on the one hand sophisticated jobs with a high potential for promotion, and on the other more basic jobs that could in time solve the problem of structural unemployment in Luxembourg. The development of niche markets will enable Luxembourg to do business beyond its immediate neighbours, in the global logistics market. Finally, we will promote collaboration between everyone involved in the sector: logistics companies and departments, regulators and the public authorities.

What are the logistics risks and opportunities for Luxembourg in the medium term? ICT represents a huge opportunity, with the creation of new logistics tools such as product traceability software or temperature sensors for the food processing or bio-pharma industry. Collaboration with new industries and start-ups will also promote the growth of high added-value activities such as “contract packaging” and “contract logistics”. Business professionals in Luxembourg, mostly involved in a few sectors, are not aware of the potential of logistics, which is a real risk. Finally, logistics depends on good traffic flow, which is a problem in Luxembourg. The solutions could be technical - extra roads - or technological, using CITA type Traffic Data systems.

“The development of niche markets will enable Luxembourg to do business in the global logistics market.” M. Zeniti, manager of Cluster for Logistics

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BUSINESS

“It is always more difficult to defend yourself than to protect yourself, especially before courts in far-flung countries.” Pierre Kihn, CEO Patent and Trademark Attorney, Office Freylinger

79 Pierre Kihn (Office Freylinger)

Intellectual property on the move MORE INFORMATION

www.myofficialstory.com/pierrekihn www.freylinger.com

Intellectual property is evolving. It is a choice asset for companies now more than ever. We meet up with Pierre Kihn, Office Freylinger’s CEO and Patent and Trademark Attorney. Trends Two major trends are becoming evident in Europe. First of all, the European single patent, which will make it possible to reach 25 EU Member States at the same time. Only Italy, Spain and Croatia are remaining outside the process. It’s something of a minor revolution for IP professionals. The second major trend relates to the new trademark package, where two systems currently exist alongside each other, namely the Community trademark and individual countries’ trademarks. The former, which is managed by OHIM, enjoys great success because it enables the entire European Union to be covered for a marginal cost. The new package is a reform of the Community trademark set up in 1996. It improves a series of points and gives weight to the national offices in order, for example, to dissuade a local grocer from filing for the entire EU without any real commercial reason for doing so. Structuring of Intellectual Property To my mind, intellectual property is a bit like the family silver that you have to keep in a safe place, i.e. out of reach of any exposure to commercial risk. Bankruptcy, for example, causes the loss of all the

intellectual property. Yet if the intellectual property is safely inside another vehicle, it is possible to start up the business again. An executive from Coca-Cola once said that if all the brand’s production plants were destroyed, Coca-Cola could start up again on account of its brand. We are positioning Office Freylinger as a trusted partner. It is not rare to see companies where protection has not kept pace with commercial development. Sports brands like Adidas sell fragrances today, while brands that started out as local are expanding into a number of countries. In both cases, these new opportunities must go hand in hand with new formalities. Article 50 Bis – the tax regime for IP The merit of this law is that it raises awareness about the value of intellectual property. It encourages companies of all sizes to invest in intellectual property in order to protect themselves and generate a return on investment. We recommend placing the intellectual property in a special vehicle capable of awarding licences. Equivalent laws exist in other countries. That being said, the OECD has indicated recommendations which will be the focus of parliamentary questions. So we should expect developments in this field, but it remains in force.

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BUSINESS Rocket Internet

Rocking the FinTech world MORE INFORMATION

www.myofficialstory.com/lpea

FinTech is out to revolutionize and reshape the financial services industry. LPEA had the opportunity to interview the founders and CEOs of three FinTech start-ups, namely Paymill, Spotcap and Zencap. Each of them is a company of Rocket Internet, the global incubator headquartered in Berlin, which expanded its operations to Luxembourg last year. FinTech is ramifying into every corner of the financial industry. Is FinTech complementing or taking the place of the traditional banking industry? Paymill: The FinTech sector won’t completely replace the traditional banking industry. But it will make them rethink their current models, since they will start to struggle if they don’t keep up with their digital competitors in terms of flexibility. Spotcap: There was a time when banks used lobbying to slow down fintech. Now, the trend leans towards cooperation. We have seen banks partnering with fintech companies, setting up venture funds to fund fintech companies, creating startup programs to incubate fintech companies, acquiring fintech companies and creating subsidiaries. Zencap: To my mind, one thing is certain: The FinTech revolution will take the old world of banking by storm. And how will banks respond? My assumption: We will see some sort of Amazon phenomenon for the financial sector, offering a wider range of products within the next five years.

Are major established players of the financial industry able to create disruptive change within their organization? Or can fundamental change only be triggered by the outside, e.g. by start-up companies? Spotcap: It’s certainly possible but only very few will succeed. Disruptive change needs a certain mindset and environment. Fintech startups have the great advantage of flexible structures and agility. We don’t need representative prime offices and countless employees to serve our clients. Zencap: Paul Volcker, the former chairman of the Federal Reserve, said in anger over the financial crisis: ‘The only useful banking innovation was the invention of the ATM.’ We completely agree with this statement. For a long time, banks have been stuck in complex restructuring processes which they fail to manage well. Fundamental shift cannot be triggered from the inside. You need people who think about financial services from a different angle, who recognize that innovative technology and Big Data are crucial to drive disruptive change.

The FinTech sector is much lighter regulated than the banking industry. Looking at tendencies such as the Bitcoin regulation - what is your opinion on the potential impact of an increased regulation to the FinTech industry? Paymill: Indeed, the more participants and the more complex processes become - the more rules and regulations need to be set up. Service providers and customers will benefit from it. What’s important for the FinTech sector are helpful guidelines and a common sense on several topics like EU regulations. But we hope those remain flexible or at least suitable to the digital environment. Spotcap: In the end regulatory requirements will deter dishonest financial service providers from entering the market. This will be an advantage for us and other reliable financial service providers. If authorities enforced regulation, we would strongly lobby for it. What are the exit route(s) of preference for FinTech companies? Spotcap: I don’t believe in the existence of one preferred exit route. There’s always

81 Download the magazine Capital V6 here

CAPITAL

#6 2H 2015

The magazine of the Luxembourg Private Equity & Venture Capital Association

Paymill, Spotcap, Zencap

ROCKING THE FINTECH WORLD Finance Minister Pierre Gramegna: “We believe in a level playing field” The world of Luxembourg sparkling wines

Toby Triebel, Spotcap Founder and CEO

Mark Henkel, Paymill Founder and CEO

Dr. Matthias Knecht, Zencap Founder and CEO

a whole spectrum of exit opportunities. Paymill: To my mind, it would be coopetition: the innovative ideas of start-ups combined with experience, workforce and resources of incumbent players. It all depends on the size of the company. Once the company has achieved a certain level of growth IPOs are also an option for FinTechs once the market has matured. Luxembourg strives to become a leading hub for FinTech companies. As an entrepreneur - what are the Top 3 picks that could make you decide where to set up your next venture? Zencap: In order to set up a FinTech venture, you need to consider the regulatory environment of a country. The competitive landscape is also an important criterion. For example, although other online lending platforms have launched before us, Zencap was the first one only focusing on SMEs in Germany. Another factor is rather an

emotional factor than a hard fact. We decided to set up Zencap in Berlin because the city is a melting pot of different cultures and a great place to live. We benefit from the diversity of our employees every day, and Berlin attracts an incredible inflow of highly talented people from around the world. Paymill: Important is the access to people and resources, similar to what we see in London or Munich. Living costs also play a critical role. That’s where Berlin has few peers in Europe, offering a mixture of infrastructure as well as an attractive cost of living. Last but not least is the regulatory environment in the country. Luxembourg is regarded as one of the most business-friendly countries in the world. If you had three wishes for free - which ones would be yours as a FinTech entrepreneur? Spotcap: On top of the list is my wish and ambition to change the antiquated image of the financial industry. At Spotcap part

of our mission is to show that the financial sector can keep up with times and reinvent itself. My second wish would be for the faster acceptance of fintech companies by traditional lending institutions. Technological progress will continue to transform the financial sector. I’m certain that collaboration between fintech companies and traditional financial institutions will give this transformation an additional boost and be mutually beneficial for both parties. Finally - and this is tech-related - I would love to have an API that is publicly available to third party providers. This way we could reach even more clients and provide our financing solutions wherever they are needed. Paymill: I’d start with open-minded regulatory. Of course that requires open-minded politicians, so that’s my second wish. Keeping with this openminded theme, I’d wish for the incumbent players to be both approachable and acceptive of the FinTech industry. Zencap: For now, I could settle with only one wish: We are on our way to transform one of the last resorts in the global economy that has not been disrupted by innovative challengers yet. Banking won’t look the same 10 years from now. To change an industry that is as old, as powerful, and that has turned as far away from its customers as the banking industry, we need the best and brightest to shape this change. I hope we can attract even more top talents to the FinTech industry that share our vision and convince strong partners to help us drive this change. Interview conducted by Michel Feider, partner private equity, and Carmen von Nell-Breuning, senior manager business development private equity, EY Luxembourg, on behalf of LPEA.

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BUSINESS Latin American economies show a contrasted picture MORE INFORMATION

www.myofficialstory.com/yvesspeeckaert

Whilst the Andean trio of Chile-Peru-Colombia are the star performers of the Latin American sub-continent, with Mexico and Central America close behind, the economic engine of south cone countries such as Brazil and Argentina is gripped, and facing slow or even negative GDP growth, which mirrors both the downturn in commodity trading around the world and hazardous politics. status as the “Luxembourg” of Latam, with sound economic management and a Baa2 Moodys investment rating. The second cluster of countries are the Andean bloc and particularly the Andean Three of Chile, Colombia and Peru – which have a combined GDP equaling 65% of that of Mexico, totaling USD739 billion. The Andean Three have bound themselves together, creating both Free Trade and investment agreements, along with the integration of their Stock Exchanges. Their respective “Bolsas” have merged to form the Integrated Latin American Market, (MILA), with a combined stock market capitalization of USD550 billion. Interestingly, Foreign Direct Investment (FDI) as a percentage of GDP since 2005 averages 41 % for the bloc (17% and 21% for Brazil and Argentina, respectively). This dynamism is partially due to the rapidly growing trade links with Asia

Yves Speeckaert, VP Private banking, Banque de Patrimoines Privés

The rise of the Andean three: Chile, Peru, Colombia Latin American economies show a much contrasted picture in terms of economic growth, political risk and regional integration. Three economic clusters are emerging, each with their proper dynamics. The South Cone economic bloc, mainly Brazil and Argentina have experienced sluggish growth and are entering, in 2015, into full blown recession. Their economic policy is inward looking and plagued by weak political management – even though Brazil and its competent Finance Minister, Joaquim Levy, is taking the right set of measures to restore credibility in the markets. Two exceptions though: Paraguay has experienced high GDP growth, sustained by reform minded President Horacio Cartes and the increased competitiveness of its agri-business sector. Uruguay is consolidating its

LATEST IMF PROJECTIONS

(Real GDP growth, annual percent change) 2013

2014 Est.

2015

2016

Projections

Argentina

2.9

0.5

-0.3

0.1

Brazil

2.7

0.1

-1.0

1.0

Chile

4.3

1.8

2.7

3.3

Colombia

4.9

4.6

3.4

3.7

Dominican Republic

4.8

7.3

5.1

4.5

Mexico

1.4

2.1

3.0

3.3

Panama

8.4

6.2

6.1

6.4

14.2

4.4

4.0

Peru

5.8

2.4

3.8

5.0

Uruguay

4.4

3.3

2.8

2.9

Venezuela

1.3

-4.0

-7.0

-4.0

Paraguay

Sources: IMF, World Economic Outlook; and IMF staff calculations and projections. Note: Regional aggregates are purchasing-power-parity GDP weighted averages, unless otherwise noted.

(5% of growth annually), which are closer than for other Latam countries. The third cluster is formed of Mexico and Central American economies. Mexico is a regional giant with a USD1.25 trillion economy, the 11th largest economy in power purchasing parity. With 122 million inhabitants, and the second largest trading partner of the USA, Mexico is both a commodity and manufacturing power in its own right. As one of the world top ten oil producer, Mexico has been affected by the end of the â&#x20AC;&#x153;commodity super cycleâ&#x20AC;? and has seen its GDP growth reduced to the 2-3% range in 2013 and 2014. Given the strength of its automobile and other consumer manufacturing industry, it is expected to renew with > 3% growth in the coming years. Lesser known, the Central American countries such as

Costa Rica, Guatemala, Nicaragua and especially Panama, have all recorded dynamic level of growth, above 4.0% level . Panama in particular is outperforming all other Latin American economies with average GDP growth in the 2010-2014 period above 8%. This is largely due by the dynamism of its well developed service sector (75% of its GDP), which includes the Panama Canal franchise, a modern banking sector, and the Colon Free Trade Zone (CFZ), the second largest such free port in the world. At a smaller scale, Panama is becoming the Singapore of Latam. The future of Latin America: stronger regional integration and diversification An eagle overview over Latam subcontinent economies yields some

interesting lessons on the factors contributing to economic success and macro-economic balancing on the one hand, and economic stagnation and its damaging social impact on the other. Overall, the best performing economies of Latam (such as Chile, Panama, Peru, Colombia, Paraguay, Uruguay, Santo Domingo), have all played the regional integration game to their advantage, liberalizing their markets, anchoring their small national market to the larger international one, and deepening their regional integration. Each managed also to create a differentiated and competitive industry cluster, such as the Free Trade Zone for Panama, agro-business export and re-export for Paraguay, etc. On the other hand (and albeit blessed with immense resources) political mismanagement in Venezuela and Argentina, lead to further isolating these medium size countries from investment and virtuous cycles of growth. In conclusion, Latin America is truly an emerging market super-power in its own right, better positioned to profit well from the next world economic growth cycle, as it has finally shed (mostly) the worn out mantle of messianic nationalism and isolationismâ&#x20AC;Ś Download the magazine Flag for Brasil & Latam here

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BUSINESS Artur Sosna (Luxembourg-Poland Business Club)

Interview MORE INFORMATION

www.myofficialstory.com/artursosna www.lpbc.lu

Luxembourg-Poland Business Club President Artur Sosna answers to our questions about his background and LPBC. Interview. Tell us about you in a few words? I was born and grew up in Poland until the age of 18. After that I spent 15 years in Germany where I graduated from university and then worked for a global player in the education business. In 2007 I moved to Luxembourg to open a branch of a worldwide company and finally in 2015 started my own business (InspiringSpeaker Office). I am married and have two kids. I run marathons, I am the President of the “LuxembourgPoland Business Club” and speak six languages fluently. Finally I am passionate about the diversity of languages and cultures based in Luxembourg and think it is quite a unique place in the world. What are LPBC’s current activities? We are working on further developing our website to establish a platform through which companies can get connected with talented trainees and professionals looking for opportunities in Luxembourg. This could also apply

to companies based in Poland. Secondly, in June 2016 we will host the first “Summer Business Ball” in Luxembourg with 250 selected guests from politics and business from both countries. Lastly, we observe the growing demand for the business network between Luxembourg and Poland. To keep up with these developments the LPBC is expanding its activities. We are also considering to extend our executive board with accomplished business leaders. What are the future developments for LPBC? Luxembourg´s and Poland´s economy are developing well. Geographically, both countries are seen to be well positioned for growth. Very important for their future development are the growth of some key sectors in ICT, Automotive, Logistic, Bio-Technology, Finance and Environment, to mention a few. This means to me that there is a great potential for future events to help bring together people in those sectors.

Download the magazine LPBC #1 here

P. 6

P. 9

portrait

Artur Sosna: Polish ambitions

energy

Back in Poland. Bringing Impact Energy.

P. 11

politics

Leaving or staying?

LPBC #1 Luxembourg-Poland Business Club magazine

P. 12

cover story

Interview Xavier

Bettel

85 “In June 2016 we will host the first “Summer Business Ball” in Luxembourg with 250 selected guests from politics and business from both countries.”

Artur Sosna, President at LuxembourgPoland Business Club

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BUSINESS Social Typhoon

Recreating social links online MORE INFORMATION

www.myofficialstory.com/socialtyphoon www.socialtyphoon.com

360 Crossmedia has developed an innovative technology designed especially with hospitals, healthcare institutions and senior citizens in mind. Announcing a technology for the future. ‘Life stories from the Grande Région’ project The idea behind this project is to give a common identity to the four countries that make up the Grande Région— France, Luxembourg, Germany and Belgium. To this end, we shall be

publishing one hundred short, life stories that we believe are most relevant to the history of each country. They will be translated into three languages so that all the inhabitants of the Grande Région can read and enjoy them. A cross-border project of this kind means

a thorough knowledge of each country’s history; as well as taking into account cultural differences so as not to offend any partner of the Grande Région. Why Social Typhoon? Helping to overcome the isolation and

“Our technology helps users to remain active and creative’.” 360Crossmedia

! h c u o t n i Ke e p

SECURITY QUICKNESS SIMPLICITY

loneliness often suffered by the elderly is an ongoing societal challenge. Sharing is one solution to the problem. Thanks to Social Typhoon, users can safeguard and share information and experiences—recipes, traditional skills, family lore and secrets—that otherwise risk being lost in the course of time. They can also publish their anecdotes and histories in tabloid form, or as a book or magazine. Our technology also allows users to recreate social ties through interactive interviews with

their loved ones. By re-establishing contact with friends and family, users will feel more surrounded and less lonely. From 3 to 99 years old – a technology for all ages In less than two minutes, the system allows users to create three questions to send to their loved ones, either by email, or via social media, and each recipient can reply by text, video, sound or a photo, depending on what the author of

the interview has set up. Thanks to our EBRC, all personal data is completely safe and protected. Further to this, all replies to the interviews are published on a page where the user has complete autonomy over the privacy settings. Social Typhoon encourages group participation and offers support to carers wishing to help their loved ones and to volunteer visitors in hospitals and healthcare institutions, and helps them to navigate the program to collect user data.

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LIFESTYLE

Alexandre Farto aka Vhils

The urban artist MORE INFORMATION

www.myofficialstory.com/vhils www.alexandrefarto.com

The artist Alexandre Farto aka Vhils, answers our questions regarding his vision of art. Interview. Where does your inspiration come from? In general terms, inspiration can come from anything that life provides. Most of the time I find it hard to pinpoint where the idea for this or that came from. I’m very interested in the world and what goes on around me, but sometimes it’s the smallest details that make an impression, even on a subconscious level. I like history and visiting cities – I find the chaos of the urban environment very inspiring, especially the different contrasts the city offers and the different levels on which it operates. I’ve always had a fascination with walls and the urban environment. Part of this comes from my days as a graffiti writer, which was when I began leaving an imprint on public walls, but also from what I witnessed while growing up here in Portugal where the walls were still

covered with what remained of the political murals that covered much of the country after 1974. These made me understand the power that large-scale pictures on public walls have as a means of communicating with people or expressing a message. This is quite clear in the way advertising uses the same spaces, even in this age of digital communication. Large-scale images that can be seen by everyone are very powerful, but to me this power lies in the knowledge that I can give people something for free, while also (hopefully) contributing to the embellishment of the city.

It is one of the largest pieces I have ever done (10 x 26 m) and took nearly a month to conclude. It features several techniques combined to form the same mural piece – some of the segments are carved into the wall, while others were created with recourse to a concrete framework. The mural piece is part of the larger Scratching the Surface project which I started in 2007 and which speaks of identity and the interaction between people and the urban environment in the face of globalised development and the increasing homogenisation of the world.

Where does the concept of freeport sculpture come from? How did it all happen? The piece at the Luxembourg Freeport, created in 2014, was a commissioned work which I accepted as a challenge.

When you create a new urban piece in a neighbourhood, how do you want it to influence people in that area? The idea behind working in the public space is fundamentally to humanise it

“Large-scale street images that can be seen by everyone are very powerful.” Alexandre Farto aka Vhils walls do hold a special significance for me as they establish a connection with the time when I started out, painting graffiti. I like painting and carving them. They carry the marks of time and the characteristics of a given space and culture. To me it is fascinating to be able to interact with this. They also have a special appeal because they are the perfect surface to communicate

with a wide audience, as people walk or drive past them while going about their daily lives. They have presence and, when in the ideal location, high exposure. They also enable you to work on a large scale. Visual communication started on walls and before the advent of the printing press and television, walls were the quintessential medium for public communication.

in some way. I believe that people and their surroundings are locked in a cycle of reciprocal influence, shaping each other. It is very clear how geography and climate have been crucial in shaping different cultures and peoples around the world, so the same should be true for other elements in our surroundings. The relationship between a city and its citizens is like a complex network of reciprocal stimuli, of cause and effect. Both the city and its people are constantly changing, adapting to new elements while also contributing with new elements. So with these works I hope to contribute towards this interaction in a positive way. Which material do you like to use? And why? I’ve been working with recourse to many materials, from walls to advertising posters, from wood to metal, from styrofoam to cork, among others. All of these have their own special qualities and characteristics, so it’s difficult for me to claim one is more interesting than the other. However,

Duke 05

LIFESTYLE

Zeng Fanzhi

The universal Chinese artist MORE INFORMATION

www.myofficialstory.com/zengfanzhi

A symbol of the globalisation of Chinese contemporary art, Zeng Fanzhi is one of a handful artists to enjoy fame both at home and abroad – and to command high prices for his works in the world’s auction rooms. greatly influenced by classic Chinese art as well as the 19th century German expressionists. Blending of styles Zeng’s arrival in Beijing in 1993 marked a major change in his environment with the discovery of urban life. In a country that had begun to open up in 1979, the young artist found life in the capital “more cynical”, and while not discarding his previous artistic background, he worked on the mastery of new techniques and began to mix styles from different ages and geographic regions, enabling him to express his

A channel for expression Having been born in 1964 in Wuhan province, Zeng Fanzhi grew up during the Cultural Revolution and was greatly influenced by the changes he observed in his environment. Where he lived, close to Wuhan’s General Hospital, is reflected in the subjects favoured in an early series of artworks: patients, hospitals beds and operating tables. In this period, Zeng explored his sensitivity to his surroundings and came to recognise that he expressed himself better via drawings and paintings than with words. At the Hubei Academy of Fine Arts between 1987 and 1991, he was

Mask Series No.6, Zeng Fanzhi (1996)

Download the magazine China #02

sensibility in his own unique way. Today Zeng’s work is recognisable at first glance to anyone familiar with the artist – and if the piece does not tell you its authorship right away, Zeng’s inimitable signature certainly does. Worldwide appeal Zeng, who has travelled extensively, can be considered the first Chinese artist with truly global appeal. Previously the country’s only contemporary artist renowned abroad was Ai Weiwei, the father of civil disobedience through art. What is remarkable about Zeng, though, is

that his popularity in China is as strong as elsewhere. Since the early 1990s he has enjoyed universal acclaim for bringing together contemporary, classic, Chinese and Western artistic traditions in his work – a popularity increasingly reflected in sale prices, including a series of traditional Chinese masks revisited in a modern way. In 2013, Zeng’s most famous work, The Last Supper – inspired by Leonardo da Vinci’s painting – set an all-time record for a work by a Chinese contemporary artist when it was auctioned by Sotheby’s in Hong-Kong for US$23.3m.

“If the piece does not tell you its authorship right away, Zeng’s inimitable signature certainly does.” Zeng Fanzhi

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LIFESTYLE Speakeasy

Hidden watering holes MORE INFORMATION

www.myofficialstory.com/speakeasy www.the-butcher.com

We uncover the world of Speakeasies, secret bars whose origins date back to the Prohibition. The Butcher It’s 8:50 p.m. when I walk into The Butcher in Amsterdam. It’s known for serving the best Black Angus beef burgers in the city. But it soon becomes apparent that there is more to it: pretty girls dressed up for more than just burgers step through the door of the restaurant, cross the room, and vanish! I count 8 in 30 minutes. None of them return. Realisation hits me: the gourmet fast-food joint is a front. The real venue is hidden in the back. The next day, having called The Butcher and been given a password, I make my way to the back of the restaurant. My path is barred by the heavy steel door of a freezer, and an intercom unit. I press the buzzer and give the password, feeling like Ali Baba opening the cave. The door swings inwards, revealing a vestibule where a beautiful woman offers to take my coat. Inside, I find a lounge bar where the landlord pours delectable Bloody Marys. Altogether different from last night’s coca-cola. Born out of prohibition In Prohibition-era New York, speakeasies enabled people to drink alcohol away from the prying eyes of the police. Disguised behind false

shopfronts and often run by organised crime, their name comes from the practice of speaking softly so as not to arouse suspicion. It didn’t matter that the beverages served were often of dubious quality - these locales were first and foremost a way to have some clandestine fun. Their hushed atmosphere has always been seductive to those wanting a sip of the sweet tonic of olde to loosen their inhibitions and their lips, letting them “speak easily”. Top 3 around the world Speakeasies can be found in all the big cities. There might even be one just around the corner from you. These are a few of our favourites. Number 1, Please Don’t Tell in New York, took the top spot in the World’s 50 Best Bars in 2011. Accessed via a secret passage from a phone booth, PDT is the quintessential secret establishment. Number 2, Club Feather Boa in Hong Kong. Camouflaged behind the drawn curtains of an old antiques dealership, this small baroque-themed bar serves fantastic daiquiris in glasses coated with cocoa powder. Number 3, Le Candeleria in Paris. Walk through the Mexican restaurant, open the door at

the back of the room and ask for a “Green wasp” made with chili-infused tequila. We’ve whet your appetite; now it’s up to you dig deeper!

“Realisation hits me: the gourmet fast-food joint is a front. The real venue is hidden in the back.”

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LIFESTYLE

Event Jonk Entrepreneuren ON THE 8TH OF JULY 2015, JONK ENTREPRENEUREN WAS CELEBRATING THEIR 10TH ANNIVERSARY. The event took place at the Abbaye de Neimënster. Many sponsors, schools and founding members were present for this occasion. Moreover HRH Le Grand-Duc Héritier and La Grande Duchesse Héritière were present to show their support to the association.

THE 2015 FUND FORUM NETWORKING EVENT IN PICTURES Marking the end of an era in sunny Monaco, this year’s White Night cocktail party was a special one. The most prestigious location in Monaco, the ballroom and upper deck of the Yacht Club de Monaco set the scene to welcome over 450 professionals of the fund industry who turned up dressed in white to network and enjoy the hospitality of the event’s sponsors: Arent & Medernach, KNEIP, MDO, and Victor Buck Services. One of the event’s highlights was the performance by legendary rock group “The Derivatives”. Shaking things up this year, Georges Bock, Olivier Coleman, and Jan Jansen from KPMG Luxembourg joined the band, bringing powerful guitar, driving bass, and tight drums to the mix.

With next year’s conference being held in Berlin, we will look to reinvent the White Night, keeping it the Fund Forum International’s most anticipated social networking event.

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LIFESTYLE

13TH INTERNATIONAL FUND OF GOLF DAY The 13th EY International Fund of Golf Day was organized in prestigious Golf of Luxembourg-Belenhaff, Junglinster on June 9th 2015. More than 100 players and non players participated in this exciting tournament. The players benefited from a great atmosphere provided by Jaguar test drives, car cleaning services, cigars and pianist, and a superb terrace wto create new relationships or to reinforce existing ones. MORE INFORMATION: www.360crossmedia.com/#!golfey/c1edv

” “SO BRITISH EDITION

TITLE SPONSOR: EY CO-SPONSOR: MDO, BNP Paribas Securities Services, Jaguar PARTNERS: Citabel Golf, Funds Europe, Luxair, Duke,

360Crossmedia

PALMARES 2015

NETT SCORES WINNERS 13TH ERNST & YOUNG INTERNATIONAL FUND OF GOLF DAY Stéphane Bourg, Tony Buche, Gregory Das Merces, Nicolas Bannier 2nd place: Richard Neale, Tony Whiteman, Steven Brown, Alan Botfield 3rd place: Tonika Hirdman, David Winters, Olivier Wurtz GROSS SCORES 1st place: Mark Houston, Marc Kriegsmann, Mark Philips, John Beavers ROOKIES Linda Lamri, Marylène Alix, Olivier Sibille, Thomas Fahl LONGEST DRIVE Men: David Winters NEAREST TO THE PIN Men: Steve Brown – Women: Veronique de la Bachelerie

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LIFESTYLE

5th MONACO INTERNATIONAL FUND OF GOLF DAY The 5th edition of the Monaco 2015 PALMARES International Fund of Golf Day NETT SCORES took place in the prestigious 1st place: Pieter Theron, Charles-Henri Rey, Ian Visser, 57 points (61 gross) Golf Mont-Agel in Monaco on 2nd place: Staffan Kampe, Martin Larsson, the 29th June 2015. Jakob Hommel, 57 points (65 gross) 3rd place: Mario Mantrisi, Forrest Hayes, A total of 60 players, beginners and Neil Wise, 57 points (69 gross) nonplayers took part in this event. 4th place: Patrick Folley-Brickley, Dave Dodd, David Banfield, 58 points Everyone developed and built on already existing relationships and forged new ones. ROOKIES: Winner: Nicolas Huras, Michael Dean, Partners: Funds Europe, UBS, KNEIP, Eugene, Yohann BlueBay Asset Management, Multifonds, NEAREST TO THE PIN Colm Quirke – 1,52 Maitland, 360Crossmedia. LONGEST DRIVE Jakob Hommel

MORE INFORMATION www.360crossmedia.com

Launch Evening Duke 04 ON THE 22ND OF APRIL 2015 HUNDREDS OF GUESTS WERE GATHERED BY 360CROSSMEDIA TO CELEBRATE THE LAUNCH OF THE 4TH EDITION OF DUKE MAGAZINE. In company of Josée-Lynda Denis, editor in chief, the event took place at UmPlateau in Luxembourg in a warm and sunny atmosphere. MORE INFORMATION www.duke.lu Pour voir tous nos évènements : www.360Crossmedia.com

Download the magazine Duke #04

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LIFESTYLE Ceos’ favourite addresses

Brasserie Schuman

EATING UPSCALE

Bouquet garni: www.lebouquetgarni.lu Clairefontaine: www.myofficialstory.com/ clairefontaine De jangeli: www.dejangeli.lu La maison lefèvre: www.lamaisonlefevre.lu La Mirabelle: www.espaces-saveurs.lu La Rameaudière: www.larameaudiere.lu Le Windsor: www.windsor.lu Léa Linster: www.lealinster.lu Les roses: www.casino2000.lu/restaurants/lesroses Ma langue sourit: www.mls.lu Mosconi: www.mosconi.lu

CASUAL

Bick Stuff: www.bickstuff.lu

Um Plateau

Boccon di vino: www.boccondivino.lu Brasserie k116: www.k116.lu Brasserie Mansfeld: www.mansfeld.lu Brasserie Schuman: www.myofficialstory.com/ brasserieschuman Boos K Fé: www.boos.lu House 17: www.house17.com Ikki: www.ikki.lu Kjub: www.kjub.lu La Bergamote: www.labergamote.lu Um Plateau: www.myofficialstory.com/ umplateau

SPECIALITIES

Burger: Le Booster’s: www.booster.lu Italian: Voglia Matta: Tel.: (+352) 26 48 20 98 Indian: Maharaja: Tel.: (+352) 24 17 45 Asian: Opium: Tel.: (+352) 26 360 160 Sushi: Yamayu Santatsu Tel.: (+352) 46 12 49

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Bick Stuff

Sofitel Grand Ducal

CIGAR

La tabatière: www.la-tabatiere.lu

Palais Grand ducal: 17 Rue du marché-auxHerbes, Luxembourg

LEASURE

PARTY

CASTLES

Beaufort: 24 Rue du Château, L-6310 Beaufort Bourglinster: 8 rue du Château, L-6162 Bourglinster Clervaux: Am Schlass, L-9774 Urspelt Vallée des sept châteaux: Leesbach, L-8363 Septfontaines Larochette: 4 rue de Medernach, L-7619 Larochette

CULTURE

Mudam: 3 Park Drai Eechelen 1499, Luxembourg www.myofficialstory.com/mudam Philharmonie: Place de l’Europe L-1499, Luxembourg Casemates: 30, place Guillaume II, Luxembourg

Rives de Clausen: www.myofficialstory.com/ rivesdeclausen Bypass: www.bypass.lu White House: www.white.lu

HOTELS Sofitel Grand Ducal: www.myofficialstory.com/sofitel Hotel Le Royal: www.hotelroyal.lu Le Place d’Armes: www.hotel-leplacedarmes.com Melia: www.melia-luxembourg.com

www.luxembourgofficial.com

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talent! We are looking for articles for the next edition of “Duke” Topics: technical subjects, testimonies, your hobbies Format: 1 title, 1 short introduction (200 characters maximum), 3-4 titled paragraphs – totalling a maximum of 2.300 characters (including spaces). Contact us: contact@360crossmedia.com

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The world at your fingertips SEPTEMBER 2014 • ISSUE 129 • €40

AUTUMN 2014

OCTOBER 2014 • ISSUE 130 • €40

WINTER 2014

OCTOBER 2014 • ISSUE 130

SEPTEMBER 2014 • ISSUE 129

RATE RIDDLE

CAYMAN ISLANDS

Reducing duration

Strong despite AIFMD

OPENING UP

Saudi Arabia’s stock market

Sukuk

First-time issuers

South Korea

India since the election

MODI’S MOMENT

Listed asset managers in Europe

TOUGH BATTLE

Distribution battle

DEFENCES

RIVAL

Investing in China’s internet

Frontier markets

INTERVIEWS

FLOOD

NEW

Alibaba

Multi-asset funds in the face of sudden change

TOP DOWN

Shanghai-Hong Kong Stock Connect

North Korea, Iran and Cuba

The ETF strategists

› Aviva Investors, COO › BNP Paribas IP

TAIWAN DISTRIBUTION • SECURITIES LENDING • ISLAMIC FINANCE

GLOBAL CUSTODY SURVEY 2014 • MIFID II • SIBOS PREVIEW

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TECHNOLOGY • INTERVIEWS • FUND ADMINISTRATION

FRONTIER MARKETS • FUND ADMINISTRATION • CLEARING & SETTLEMENT

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NOVEMBER 2013 • ISSUE 121 • €40

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NOVEMBER 2013 • ISSUE 121

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HIGH

Plus

❱ Private equity panel ❱ Fund manager roundtable

HOPES Colombia on the rise

Argentina Finding a debt solution

Multi-management Competing with asset allocators in a fixed income world

STATE

IRAN

Beijing fund industry roundtable

CONTROL China’s economy and systemic risk as seen by its local chief executives

Why Russian equities are dominating portfolios

Returning to global markets?

Plus

› Branding: special discussion › Ending Europe’s inducements

TRANSFER AGENCY • FUND FORUM PREVIEW • PEOPLE MOVES

❱ Brazilian retail investment ❱ The Cuba investor ❱ Custody banking

DUBAI VS RIYADH • AFRICAN ASSET SERVICING • EGYPT

CORPORATE BONDS • CLEARING & SETTLEMENT • AWARDS SHORTLIST

funds europe funds europe is the only dedicated journal for cross-border fund professionals

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funds europe and funds global are a key resource for everyone involved in the global investment fund business, and in tracking and interpreting developments in institutional and retail fund markets. Whether you’re concerned with distribution, asset allocation, human resources, technology or outsourcing, we have the essential business strategy magazines for the asset management industry.

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Request sample copies today! funds europe and funds global 288 Bishopsgate London EC2M 4QP, UK T: +44 (0)20 3178 5872 F: +44 (0)20 3178 4002 E: contact@funds-europe.com www.funds-europe.com www.fundsglobalmena.com www.fundsglobalasia.com

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