Employment costs in Luxembourg banks soar due to Brexit
Costs related to personnel grew by 10% in a year
Luxembourg has only welcomed two new banks in the aftermath of the Brexit referendum, nonetheless dozens of institutions have shifted UK-based roles to the Grand Duchy, inducing employee-related costs to swell.
In the second quarter of 2019 these reached €1.76 billion at Luxembourg banks, a 10% increase compared to a year earlier.
In its latest industry report the CSSF, the market watchdog, said the surging numbers were mostly driven by Brexit.
“The transfer of activities, especially in the areas of wealth management and fund services resulted in an increase on the payroll side as well as in higher other administrative expenses,” Bob Muller, banking supervision analyst at the CSSF, said.
The category of ‘other general costs’ ballooned by 11%, to €1.84 billion. The figures might still increase as not all banks have made their Brexit-related adjustments.
“Some impacted institutions have already made the move. Others await until there is more clarity on the final Brexit roadmap, before activating their transfer strategy,” Muller said.
However, there should be no more new players establishing in Luxembourg because of Brexit – the regulator has up 12 months to review a request for a banking licence hence those who wanted to obtain one, should have long applied for it.