Brexit

Gramegna tries to reassure London's financial centre

Pierre Gramegna spoke to the members of ICMA on Thursday
Pierre Gramegna spoke to the members of ICMA on Thursday
Photo: Steve Eastwood

By Pierre Sorlut (trans. Steve Hoscheit)

During his welcome speech at the International Capital Markets Association (ICMA) annual general meeting and conference that takes place in Luxembourg this year, Luxembourg Finance Minister Pierre Gramegna made a point of ''de-dramatising'' Brexit and of insisting on the continuation of financial flows between the UK and the EU once the divorce is official.

''There is room to move,'' the government representative explained. Gramegna said that Luxembourg could turn out as the natural welcoming ground for financial operators from London that will lose access to the single market along with their European passport.

''Substantial activity'' needed

To the hundreds of professionals from the City and Canary Wharf present at the convention centre in Kirchberg, the Finance Minister set out the rules of the game. The presence of financial operators in London is not put into question, but they will need to install a structure in one of the countries in the euro area.

''They will have the choice, but Luxembourg is already very well positioned,'' Gramegna insisted. And he added: ''Some have already considered this option''. AIG, one of the global leaders in the insurance sector, bank J.P. Morgan or investment manager M&G have already publicly stated that they will -- at least partly -- use Luxembourg as a relay for their activities.

There is no use in opening an office with one or two employees however, according to the minister. ''Substantial activity'' are the key words. Pierre Gramegna insists on the necessity of a ''credible and sustainable presence,'' in line with European rules and regulations. "The number of employees depends on the activity, whether you're an insurer, an investment manager or a bank,'' he went on to say.

Luxembourg's goodwill

There is no use  relocating institutions with thousands of employees either. The representatives of Luxembourg's finance sector identify activities in which the sector is already well positioned, beginning with fund management.

Managers -- based almost exclusively in London today -- could find an asylum of predilection in the Grand Duchy, Gramegna thinks. ''This would not mean that every fund manager will have to move to the continent. They will have to do it to a certain extent by associating certain functions to it, like risk management,'' the Finance Minister reassures.

In order to prove Luxembourg's goodwill, Pierre Gramegna told the international press that since the referendum of June 23 last year, his government ''didn't take any particular measures to attract actors from London to Luxembourg,'' and that it wasn't planning on doing so in the future.

''Because it's not necessary and because this would not be the right signal,'' the Finance Minister stated as justification. He plans on keeping London as one of the main business partners after Brexit, currently under negotiation.

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