BIL: A Cornerstone of the Luxembourg Financial Centre

By Samantha Barnes – samantha.barnes@internationalbanker.com

Over the past few decades, the banking sector of Luxembourg has developed and expanded to the point of becoming a core feature of the global private-banking and asset-management industry. The country’s banking sector has become renowned for its specialist expertise and sophistication across the entirety of banking services, and today it serves a variety of clients from across the globe seeking the best options for their financial-services needs. 

Recognised as a private-banking hub and with a history of economic stability, Luxembourg benefits from its key location, with proximity to Germany, Belgium and France; for example, Luxembourg’s economy depends on foreign and cross-border workers for approximately 40 percent of its labour force. Although Luxembourg’s economy, alongside its European Union co-members, suffered from the 2008 global financial crisis, it has recovered better than the EU average—for example, unemployment is trending lower than other EU nations. The economy responded positively to the government’s stimulatory injection of capital into the banking sector following the crisis. Despite turmoil in the global financial markets, the country’s inhabitants continue to experience a historically high standard of living—with GDP per capita ranked amongst the highest in the world and currently ranked the highest in the EU. The financial sector is a dominant economic contributor in the country, accounting for 36 percent of GDP.  Currently many banks in Luxembourg are foreign-owned and carry out extensive foreign dealings—servicing a premier global banking platform and providing specialist expertise in particular areas, such as Shariah-compliant banking services.

BIL’s Luxembourg head office

Banque Internationale à Luxembourg (BIL) is a key organisation within the Luxembourg financial sector and has played a vital and active role in the development of the local economic environment.  BIL is the oldest private bank within the Grand Duchy; in 1856, the year of its founding, BIL issued its first banknotes and continued with this issuance until the euro was introduced. Since then, the bank has been serving both retail and business customers with a variety of services. The bank operates a retail-banking network across 40 branches and additionally offers private-banking, corporate-banking and financial-market services and activities. BIL has been recognised by the European Central Bank as a systemically important institution, under the current ownership of Precision Capital S.A.—a Luxembourg public-limited company regulated by the Commission de Surveillance du Secteur Financier (CSSF), Luxembourg’s financial regulator. Furthermore, BIL operates as one of the country’s top three banks and has been awarded one of the highest credit ratings in the banking sector, currently A-. BIL is an active participant within the financial capital markets—operating through its three trading floors based in Luxembourg, Zurich and Singapore.

BIL is an established and renowned key player in wealth management and private banking, with a history of first-rate expertise and skill in these areas. The bank offers services through its centres and specialised subsidiaries across Switzerland and Luxembourg. Further to this network, BIL currently has well-established international branches in a variety of locations, including Denmark, Singapore, Belgium and more recently the Middle East, where BIL became the first Luxembourg bank to locate in the Dubai International Financial Centre. Additionally, BIL has a number of subsidiaries, including Experta (corporate and trust services), BIL Manage Invest (alternative investment fund manager) and Belair House (multi-family office), which together with BIL offer customers a comprehensive and diversified selection of services and products.

BIL makes staff service a top priority at all levels of the bank structure. Employees are trained to apply a multi-disciplinary approach towards providing service solutions to meet customer needs on a customised, case-by-case basis. This approach is reiterated through the bank’s primary goal (which applies across all areas of the organisation): to provide 100-percent customer satisfaction. BIL strives to guarantee excellence at every level.

Hugues Delcourt, Chairman of the
Management Board

Banque Internationale à Luxembourg Group, which employs more than 2,000 staff across its local and cross-border subsidiaries, offers a broad range of retail-banking services to its customers. The bank furthermore provides many convenient solutions—including free customisable bank cards, access to a network of 90 ATMs throughout Luxembourg and a customer-service centre offering face-to-face interaction. The focus of the bank’s retail-services division is firmly centred on meeting customer needs and offering a comprehensive assortment of products to fulfill a variety of requirements. This has come to include current-account, day-to-day banking services as well as those related to milestones in a customer’s life, such as providing automobile- and housing-financing solutions. It is also complemented by a range of financial products designed to cover the various needs that arise over the course of a customer’s lifespan—such as family-based savings, retirement and succession planning, and individual-savings and investment solutions. The bank offers a full range of traditional banking products and services, spanning those from current-account and management services to credit, insurance and tax-deductible products as well as those designed for young people.

Adrian LEUENBERGER, Member of the
Management Board (Private Banking)

Banque Internationale à Luxembourg has furthermore kept pace with innovative technological solutions when it comes to serving the needs of its retail clients. The bank offers SMS (small to medium enterprise) banking services and environmentally friendly paperless document services, and also a number of convenient solutions and access points through iPhone, iPad and Android apps. The bank provides a range of products that offer secure online-banking access—including the LuxTrust range of solutions—allowing customers to complete ad-hoc transactions online. The system is kept secure by requiring an electronic signature, while offering customers convenience in completing their financial dealings. A further innovative solution on offer from BIL is BILnet Mobile, a free service that allows customers to carry out many bank transactions through their mobile devices anywhere anytime. A further enhancement to this solution has been Quick Banking, a simpler, more accessible version of the BILnet Mobile service with increased speed and convenience. As part of Quick Banking, customers are able to use a service called Quick View to check account and bank-card balances at a glance and without the need of a code and then carry out a number of banking transactions after entering their PINs—such as Quick Transfer, which allows them to transfer small amounts quickly and easily with just a few clicks. Furthermore, into the future BIL is working on developing a multi-channel strategy by placing increased emphasis on its online-banking channels, BILnet and BILnet Mobile.

Christian Strasser, Member of the
Management Board (Retail Banking)

As part of the bank’s innovative approach in developing effective technological solutions, in June 2014 BIL announced, in partnership with the Avaloq Group, plans for a business-process-outsourcing (BPO) centre in Luxembourg. BIL, after a thorough search, recently selected the Avaloq Banking Suite as its new core banking system. The bank and the international software provider announced that they intend to carry out a joint strategic-partnership project to establish, pending regulatory approval, the first independent provider of full BPO services in Luxembourg for private and universal banks in the target markets of Benelux and France. BIL continues to play an active role in the economic development of Luxembourg, and with these plans the bank reiterates its intentions to further contribute to the future transformation of local banking and financial-services sectors. 

As a key player within the Luxembourg banking sector as well as an active participant within the global marketplace, BIL places a great deal of importance in and directs resources towards corporate social responsibility. Since its founding more than 150 years ago, BIL has played an active role in socially responsible endeavours with an emphasis on developing the local economy. The bank has supported communities, companies and individuals. Further to this, the bank currently invests significantly in social, cultural and humanitarian projects. It is actively involved in projects that promote equal opportunities, support for young members of society, humanitarian and charitable work as well as community sports projects.

As a provider of a wide range of products, BIL is in a position to offer excellent banking services into the future. The bank, as of today, provides a diverse set of solutions spanning investment, insurance and credit products and services, as well as those geared towards meeting day-to-day banking needs. The bank serves a broad range of customers with tailor-made products designed to satisfy specific requirements—from Luxembourg’s young people and senior citizens to cross-border commuters and the Portuguese community. The bank also caters to specific small- to medium-enterprise groups, including farmers and winegrowers.

The bank has set in place plans to broaden the range of products and services on offer—plans of which BIL shareholders have shown strong support, given the solid platform currently in place, which the bank has developed consistently over the past 158 years. In addition, BIL has announced its intentions to pursue expansion both within the domestic Luxembourg market as well as across the international-banking marketplace in the future. Underpinning these expansion plans has been a strong financial performance: BIL reported a net income of 68 million euros (after tax) for the first half of 2014. In part these results are based on strategic projects launched in the first quarter of 2013 that have bolstered the bank’s profitability further.

Additionally in April 2013 (following approval by the board of directors in December 2012), the bank launched the “BIL 2015” programme with the medium-term objective of consolidating BIL’s position as a leading player both within the Luxembourg market as well as within certain targeted international markets. This comprehensive programme sets out key milestones for progress across all areas of business within the bank and indicates the bank’s trajectory of becoming an increasingly effective, efficient and successful banking and financial-services institution into the future.

Regulatory, political-policy and tax issues have historically been key considerations of foreign and domestic clients utilising the superior banking services of Luxembourg, a hub of foreign and private financial activity. Into the future, as the Organisation for Economic Co-operation and Development and the European Union look to close cross-border disparities in banking policies, certain elements of this service provision may suffer. As is the case for the entire global banking industry, regulatory change will be a defining factor in shaping the Luxembourg banking sector over the next decade.