BANKING SYSTEM OF LUXEMBOURG

The financial sector contributes about 25% of the Grand Duchy of Luxembourg's GDP, 40% of government tax receipts, and employs 9% of the national workforce.
The “Commission de Surveillance du Secteur Financier” (“CSSF”) is the competent authority in charge of the supervision and regulation of the financial sector. The objectives of the CSSF include:

• promoting a favorable market framework in accordance with applicable laws;
• protecting the stability of the financial sector as a whole;
• guaranteeing the quality of internal control systems;
• enhancing risk management procedures;
• acting on behalf of the public interest.
The CSSF represents Luxembourg at an international and European Union level on negotiations with regard to the financial sector and is responsible for coordinating the execution of any international regulation or recommendation at a national level.

The Central Bank of Luxembourg supervises the activities of banks, financial establishments and other professionals in the financial sector, such as stock brokers, investment managers, financial advisers and investment funds. There are no restrictions on foreign ownership and no restrictions on repatriation of capital and profits. Luxembourg's banking system is sound and strong. As of October 31, 2004, a total of 167 banks were operating, with estimated total Balance Sheet assets of EUR 688 billion and approximately 22,500 employees.

The banking sector relies on skilled, multilingual employees from cross-border regions of Belgium, France and Germany. Many of its employees also come from a number of well-established European communities (Italian, Portuguese, Spanish, UK, Dutch, Scandinavian…). There is freedom of exchange and movement of funds for all purposes within the banking system.

Private banking has developed into one of the main businesses of the Luxembourg banking system. Luxembourg has a large share of offshore private banking wealth, estimated at 6%-8% of the worldwide total. Luxembourg also attracts large amounts of investment funds. This fee-generating business has become very important, and Luxembourg ranks among the three leaders in the world in terms of net assets managed.

All major European and international financial institutions are represented in Luxembourg.