Ethics and governance in the European Financial centers

A couple of months ago, Véronique Poujol from the Lëtzebuerger Land published a lucid analysis of the situation in Luxembourg.

She underlined the contradiction of the Luxembourg model. Nothing is more volatile than the capital. The success of the Luxembourg business model, it is to be business friendly, flexible and pragmatic with the economic operators, including in the banking legislation. Luxembourg was flexible with the investors, more slackness with the savers that have a poor level of the guarantees. There will not be doubt in the arbitration which these people will make between the safety of their funds and discretion with which they are managed. The State have reserves which are not inexhaustible.

The guarantee of the deposits will remain limited to 20 000 EUROS as the director of the ABBL confirmed quoted by L'Essentiel. today



Who is lying ?

Minister Frieden today confirmed the amount of 100 000 EUR as reported l'Essentiel in contradiction with what the director of the ABBL said.




Doubts about the protection of the investor with the Madoff case, Doubts about the protection of the client's deposits with the Kaupthing case...

This is the reality of this pragmatic Luxembourg that anyway despises the client as demonstrated the reference book written by Alex Schmitt : in a book called La Responsabilité du Banquier en droit prive luxembourgeois (Banker’s liability in Luxembourg private law) he concludes that one could be pleased with what Luxembourg jurisprudence generally shows very clear-sighted vis-a-vis the investors from day to day (“L'on pourra se féliciter de ce que la jurisprudence luxembourgeoise se montre généralement très clairvoyante face aux investisseurs à la petite semaine”). In other words in case of litigation because of a bank failure, there is a country risk as the foreign investor will not win.

In a nutshell the investor is consirered as a sucker.