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SpanishCaixaBank opened its private banking subsidiary in Luxembourg in mid-2020. What is your assessment of these first months of activity?
We are really satisfied with the evolution since the beginning. 2020 was a year of frenetic activity with the creation of the new bank. In the first part of the year, we focused on the final preparations to be able to provide services to customers. This allowed us to start the bank’s own activity, with a very positive response from customers, enabling us to exceed our targets in the first few months.
What added value does your Luxembourg subsidiary bring to CaixaBank’s customers?
In addition to all the power of CaixaBank’s Private Banking and the Luxembourg bank’s team, proximity is key for the model.
There is a global trend that leads investors to apply jurisdictional diversification in the country where they deposit their wealth. In this environment, our objective is to offer a solution to this need through proximity, i.e. to bring the bank that is in another country or jurisdiction closer to the customer’s location, providing them with a banker who has a presence in Spain for their relationship with CaixaBank Wealth Management Luxembourg.
In addition, our value proposition is based on independent advice. We can say that we are the first bank in Luxembourg to declare itself with 100% independent advice, with all the advantages that this brings to the investor.
What do you see as the benefits of independent advice in private banking?
Independent advice offers the private banking client numerous advantages, starting with transparency in the relationship between the bank and the customer, as well as the alignment of interests between both parties to achieve their objectives.
It is also important for the customer’s interests not only to say that you are independent, but also to be obliged by regulation and contract with the customer to base your relationship on the explicit payment previously agreed between the two.
Likewise, in the customer portfolio construction process, we always look for the best alternative in terms of profitability and cost, evaluating a wide range of different providers and offering our own product as an alternative.
What do you think of the ecosystem that Luxembourg offers in the financial services industry?
In addition to transparency, political and financial stability, Luxembourg offers an environment that is conducive to business development, and this is perceived from the first day you land in the Grand Duchy. But not only that, it also offers an innovative climate for financial services, with regulation that is pioneering for the evolution and future of the asset management, insurance and banking industry.
The country has also demonstrated, through the measures taken during the pandemic period, a flexibility to adapt to radically different settings and a greater resilience than many other countries in the region, which is key for banks and other financial services institutions.
Thanks to all this, Luxembourg has managed to become an international hub for the financial industry with a robust regulatory environment and high supervisory standards.
CaixaBank leads the world rankings in corporate sustainability. What trends do you think will shape the future and how is the private banking sector adapting to the new demands of its customers?
At CaixaBank we want to be a major contributor in the application of sustainability criteria in private banking. We do not believe that this is a passing trend, and we want to take advantage of the recent implementation of the disclosure and taxonomy regulations so that they become a lever for transforming the business and not just another regulation to comply with.
We aim to be active agents of change together with our customers. That is why we are working in a number of areas. The first is training our bankers to be able to explain sustainability concepts to clients in a simple way and to ensure they see the differences in approaches to sustainability as well as avoiding greenwashing.
Secondly, we are preparing the way in which we will implement sustainability preferences in the suitability test in order to adapt the customer value proposition.
And thirdly, we are modifying the range of products we offer, both from third parties and our own. In this regard, CaixaBank is carrying out a profound transformation of its family of multi-asset funds to art.9, focusing on five SDGs under the heading of people and planet.
Do you think that COVID-19 has affected private banking clients’ decision-making about their wealth? What role does the financial advisor play in this context?
In recent years, we have experienced a moment of profound change in the private banking business model that goes beyond the effect of COVID-19. There has been, and we believe the trend will continue, a significant increase in discretionary management and this helps to weather crises in a different way. Delegating decision-making to asset management allows decisions to be more rational and less emotional, which is an undeniable value, especially in times of crisis.
The COVID-19’s endorsement of the digital relationship with costumers confirms a trend that is not temporary and that is consolidating the relationship between advisor and costumer.
What are the challenges that CaixaBank Wealth Management Luxembourg faces in the medium and long term?
We have a clear challenge, which is to consolidate our position as an alternative for investors when it comes to managing their wealth outside their country of origin, and to become a benchmark in independent advice in Luxembourg.
Authors
Álvaro’s professional career has been closely linked to private banking from the beginning, starting at Morgan Stanley as a wealth manager and later in different areas such as large clients, business development and product development. He was director of liability product development at CaixaBank, and in 2020 he led the project to launch the bank in Luxembourg. This success, he confirms, would not have been possible without the CaixaBank team in Luxembourg, of whom he is extremely proud for their human and professional qualities.