VitalBriefing Business Update
Luxembourg’s banking sector sees 13.7% profit increase in first quarter

Luxembourg's banking sector has recorded aggregate profit before tax and provisions of €1.32bn for the first quarter, a 13.7% increase from a year earlier, according to the CSSF. The sector's average interest margin was down by 18.6% year on year to €1.16bn in the first three months of the year as a result of reduced interbank lending margins and loans to non-financial companies, and a fall in US interest rates. However, net commission income rose by 5.8% to €1.49bn, and there was a 284.4% increase in other net income to €576.2m, resulting from the sale of activities by a Luxembourg bank, while costs were up by 4.6% to €1.9obn.

Best source: Luxembourg Chronicle
See also: CSSF (in French)
Luxembourg Sustainable Finance Initiative launches energy transition measurement tool

The state-backed Luxembourg Sustainable Finance Initiative has partnered with think-tank 2° Investing Initiative to offer institutions a tool for measuring the alignment of investment portfolios with energy transition targets. The service, to be launched at the end of this month, will be open to all industry players on an anonymised basis. The organisation's director-general, Claire de Boursetty, says the tool is designed to increase awareness of the challenge posed by the energy transition, and it will issue recommendations to the public to encourage investors to align their own portfolios with climate targets. De Boursetty says that over its first 18 months the initiative has focused on raising awareness of sustainable finance in the financial community and the general public, and on consolidating Luxembourg's role as an international leader in the sector.

Best source: Wort (in French)
Court of Auditors faults EU efforts to curb money laundering

The European Court of Auditors has identified weaknesses in the EU's measures to curb money laundering, citing institutional fragmentation and poor co-ordination even when risks have been identified. National authorities have limited tools available and there is not currently a single EU supervisor, with powers split among various authorities and co-ordination carried out separately with each member state. The report also criticises the European Banking Authority, saying high-level decisions are too often influenced by national interests.

Best source: Börsen-Zeitung (subscription required, in German)
See also: European Court of Auditors
BaFin grants its first digital asset custody licence to Coinbase

BaFin has granted its first licence for digital asset custody and crypto-currency proprietary trading to Coinbase, launching a type of authorisation that the industry hopes will enable firms to develop business models based on digital assets. The German regulator, which has repeatedly warned about the risk of losses in crypto-currency trading, has underlined that it is not supervising individual crypto-currencies, only financial service providers.

Best source: Handelsblatt (subscription required, in German)
Shift in equity and derivative trading flows to Amsterdam creating few jobs: report

Trading in European equities and derivatives has migrated to Amsterdam following the UK's departure from the EU single market at the end of December, according to research carried out by Dutch consultancy De Argumentenfabriek. However, although asset managers and banks have relocated activities and key positions from London to Dublin, Frankfurt, Paris and Luxembourg, hardly any jobs have moved to Amsterdam, the firm says. JP Morgan says it expects staff numbers in Paris to increase to 440 by the end of this year, having already moved 140 jobs as a result of Brexit.

Best source: Finance Feeds
See also: Börsen-Zeitung (subscription required, in German)
See also: Les Echos (subscription required, in French)
US Treasury targets widely-used UHNW tax avoidance strategies

The US Treasury has unveiled proposals that could disrupt or dismantle some of the most popular tax avoidance strategies used by ultra-high net worth individuals, dynasty trusts and trusts that are able to move very large sums to heirs tax-free. The Green Book aims to compel dynasty trusts to pay capital gains tax on appreciated assets every 90 years, starting as early as 2030, and charge tax when assets are moved into or out of certain kinds of vehicles using tools such as the intentionally defective grantor trust. Overall, the measures seek to plug any loopholes in president Joe Biden’s plans to increase capital gains taxes on the wealthy and make heirs pay more.

Best source: Bloomberg
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