Luxembourg, the gateway for fund managers’ international growth
Luxembourg has positioned itself as the main European hub for investment funds and a world leader in the cross-border distribution of investment funds. According to Morningstar Direct, the assets of Spanish and Andorran firms in Luxembourg amounted to 26,649 million euros as of 31 May 2023, spread over 52 groups, and the upward trend is continuing. Moreover, Spanish institutions’ offering of Luxembourg products continues to grow considerably: in the past five years, 14% of the funds that have been launched on the market have been made with a Luxembourg ISIN.
Apart from an efficient tax system, Luxembourg offers a flexible structure for the creation of financial products, backed by a stable legal framework. This dynamic and flexible regulatory environment responds to the needs of investment funds seeking to expand their investor base, gain easier access to institutional investors and international markets, and increase the visibility of their funds without having to register them in each jurisdiction. Luxembourg law provides for a wide range of financial vehicles that guarantee maximum operational and regulatory efficiency, from UCITS and AIF funds, recognised for their being robust and having a European passport, to structures specialised in private equity, infrastructure or private debt.
The latter assets are gaining prominence in institutional investors’ and asset managers’ portfolios. Thanks to its flexible regulatory framework and structures adapted to this type of investment, such as Sociétés d’Investissement en Capital à Risque (investment companies in risk capital, or SICAR) and Reserved Alternative Investment Funds (RAIFs), Luxembourg has positioned itself as the leading European destination for alternative funds.
It is against this backdrop that Cecabank is entering the Luxembourg market with the aim of strengthening its presence in the global market, helping its existing customers to boost their mutual fund business in the market and diversifying their offering, while at the same time opening up new opportunities for those players who are having difficulty accessing specialised services. In an environment where many providers focus their attention on large customers, Cecabank has positioned itself as a strategic partner that offers solutions adapted to the needs of each institution, regardless of its size, and helps them to strengthen and grow their business in an increasingly competitive environment.
Cecabank is conscious that specialisation in this market provides a great differential value, and is this entering it with a clear focus: to offer the best service in depositary services, with the high level of specialisation that has made it a leader in the sector in Spain and Portugal. It has managed to position itself as the largest independent national depositary and the leading national provider of settlement and custody services in Spain, actively collaborating with asset managers, banks, insurance companies and investment services firms.
“Cecabank is conscious that specialisation in this market provides a great differential value, and is this entering it with a clear focus: to offer the best service in depositary services, with the high level of specialisation that has made it a leader in the sector in Spain and Portugal. It has managed to position itself as the largest independent national depositary and the leading national provider of settlement and custody services in Spain, actively collaborating with asset managers, banks, insurance companies and investment services firms.”
In 2024, Cecabank achieved its best ever financial results in relation to savings and investment vehicles’ depository activities and securities settlement and custody services. In the depositary business, in which the entity provides services to more than 45 managers of collective investment institutions, pension funds, EPSVs and venture capital entities, the volume of assets deposited as at December 2024 amounted to more than EUR 255.6 billion. The total volume of assets under custody, with more than 100 financial institutions as customers, amounted to more than EUR 351.3 billion in securities in more than 70 markets. The bank has thus established itself as a critical part of the Spanish financial system infrastructure.
The bank also has a strong international presence. Its entry into Luxembourg is not an unprecedented development, but rather the result of a well-established strategy based on its extensive experience in global markets. It has an established network in Europe’s main financial centres, a custodian infrastructure that allows it to operate in more than 70 markets globally, agreements with more than 200 correspondent banks and brokerage arrangements in more than 25 markets. Cecabank’s global reach has enabled it to extend its services to international entities and to be at the forefront in identifying new trends and needs in the sector. Thanks to this strategic vision, the entity maintains a close relationship with official bodies, regulators and supervisors, ensuring that its range of services is effectively adapted to current regulations.
Luxembourg has proven to be highly adaptable to a constantly evolving global financial environment. Its success is not based solely on its attractiveness for tax purposes or its regulatory stability, but also on its ability to anticipate industry trends and create a favourable ecosystem for innovation and growth. At a time when having an international outlook is key to asset managers’ expansion, having an operating entity in Luxembourg means access to a dynamic market, with a global distribution network and an environment that facilitates product diversification and attracting new investors.
Being present in Luxembourg is not only a strategic matter, but also a necessity for those entities seeking to remain at the forefront of the financial industry and to take advantage of growth opportunities in an increasingly globalised market. With its ability to attract international capital, facilitate the expansion of fund managers and foster innovation in the fund industry, Luxembourg will continue to play a key role in the transformation of the financial sector in the years ahead.
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