“As an asset manager, you don’t necessarily need to set up a management company in Luxembourg, there are solutions out there in the industry,” points out Steve Bernat, CEO of Carne Group in Luxembourg, a global fund management solutions provider, whose core business is providing third party management company services.
“As an industry, we have dealt with asset managers from around the world for the last three decades, so we do understand the local market nuances, and in line with that, we have built innovative solutions. We provide that additional and independent layer of risk management and control, which allows the asset manager to concentrate on their core business which is managing their portfolio.”
DEVELOPING RISK MANAGEMENT EXPERTISE
Luxembourg is one of the company's main operational hubs, and with more than 120 staff globally, it is now the fastest-growing entity within the group that spans across eight locations. “The beauty about being based in Luxembourg is that no matter what you need and want, there are always people in the industry who have that knowledge and expertise in the marketplace,” says Bernat whose staff have an average expertise of 17 years in the fund's industry.
“If I look at my team in Luxembourg, they have experience dealing with so many asset classes, both liquid and illiquid, developed markets and emerging markets. They have a depth of experience that a lot of other financial hubs don’t have.”
Carne Group has invested heavily in technology and has built its own IT team with senior developers, who have constructed state-of-the-art systems, to deal with the new rules and regulations (such as the implementation of UCITS V, the CSSF Circular 11/512 and AIFMD).
“As the management companies have become more sophisticated in the last five years, the financial regulator also has growing expectations of the management company,” adds Bernat. “We have focused on putting the right technology in place to make those processes efficient, so for example, to be able to focus on exceptions rather than going through all the details every single day.”
SUPPORTING INNOVATION THROUGH REGULATION
Indeed one of Luxembourg´s strengths is innovation in regulation. The country´s legal and regulatory framework for investment funds is highly regarded by the global asset management community and leads the way in investor protection.
“I always have the feeling that Luxembourg is setting the standard for the industry and you can clearly see that other domiciles pretty much follow the standard that Luxembourg is setting, especially in the area of risk management. For example, the regulator insists on semi-annual risk reporting which is not required in other domiciles. That is probably why Luxembourg is so far ahead regarding the expertise it has. Because what we have been doing for several years, other domiciles are only now starting to do.”
THE FUTURE OF BANK RISK MANAGEMENT
Established for more than 120 years in Luxembourg, Société Générale Bank & Trust (SGBT) is the oldest foreign bank in the country. It employs more than 1000 staff and offers highly skilled cross-border banking expertise.
“Risk management is of primary importance to us because we are confronted with all types of risks. It can be currency risks, interest rates, liquidity, Anti-Money-Laundering linked to transactions, reputational or even cyber security risks,” says Véronique de la Bachelerie, CEO, Société Générale Bank & Trust.