More than half of the banks operating in Luxembourg's private banking sector could disappear when the automatic exchange of bank data is introduced in 2015, a lawyer has suggested.
The gloomy prediction was made by renowned Luxembourg tax lawyer Alain Steichen at a conference exploring the implications of the move.
"It is expected that only 60-70 banks will continue in the coming years," he said.
Luxembourg's financial centre currently counts 141 banks, of which 120 are active in private banking. “I expect a serious change in the banking landscape, because there will be customer withdrawals," the lawyer explained, suggesting that the majority of the banks would not be able to survive mass withdrawals.
The Luxembourg Association of Bankers (ABBL) evaluates private banking volume at around 300 billion euros, of which more than half is owned by EU nationals who will no longer benefit from banking secrecy vis-à-vis the tax authorities.
According to Mr Steichen, the majority of European bank customers have assets in Luxembourg of between 100,000 and 500,000 euros, essentially funds which are unreported to tax authorities in account holders' countries.
"The majority of customers to the Luxembourg banks have invested undeclared money," Mr Steichen said, adding that after 2015 they will have no choice but to close their accounts in Luxembourg and repatriate the money to their own country.
Mr Steichen's comments come in contrast to those of Luxembourg Prime Minister Jean-Claude Juncker who, earlier this month, said that Luxembourg had not lived on the money of tax evasion.
He earlier said that the lights would not “turn off in 2015" for Luxembourg banks after the lifting of banking secrecy.
Translated from an article by AFP