Atlantica - 01.11.2002, Side 40

How is it to start a new bank in the turbulent financial markets
we are now witnessing?
The world equity markets have not been very favourable since
the bank’s establishment. They have, in fact, dropped significant-
ly, creating difficulties in the private banking sector. In spite of
this, this year has been favourable for the bank. The Icelandic
securities market has been one of the best performing markets
this year, with rising equity prices and falling yields in the bond
market, which have led to bond price increases as well. The
weaknesses in the international equity markets were evident
when we started acquiring business, and we have largely stayed
away from these markets. Preservation of wealth is our hallmark,
and we have been fairly careful and conservative in our
approach.
But why choose Luxembourg?
Luxembourg has been one of the major centres for private bank-
ing services for a long time. The advantages Luxembourg has are
indisputable. In a recent analysis on country risk, Euromoney has
ranked Luxembourg as the safest country in the world to place
your savings. The International Monetary Fund (IMF) has also
recently issued a report on the financial system in Luxembourg,
confirming its stability. The size of the market secures good infra-
structure, including service providers in different areas such as
legal advice, tax advice, fund administration, holding companies
etc. As the financial sector has become a major industry in
Luxembourg, it is of high priority for the authorities to main-
tain a reliable and respected financial sector with a compre-
hensive legal framework and supervision. As an example,
the anti-money-laundering laws and regulations are very
strict and have even been strengthened further after the
September 11th terrorist attack. As we also have activities
other than private banking, such as credit and treasury activ-
ities, we considered it important for us to be located within
the EU.
What about Luxembourg’s future as a centre for private
banking?
As an EU-member, Luxembourg seems to be under some
pressure regarding the EU-proposals on sharing information
between countries on financial income. Luxembourg has
wisely taken the position of declining to put itself in a more
unfavourable situation than non-EU countries. With the
recent reactions to these proposals from Switzerland and the
USA, an agreement does not seem to be in sight. Personally,
I believe that the outcome, with a time frame of seven to ten
years, could be some kind of an easy withholding tax system.
With the resistance to a withholding tax solution on finan-
cial income from other countries within the EU, even this
compromise is still far away from the negotiating table.
Therefore, I believe that Luxembourg will hold its advan-
tages as a financial centre in the foreseeable future.
www.bibank.lu
38 A T L A N T I C A
ICELAND BUSINESS
Búnadarbanki Int. S.A. is the first operation of Búnadarbanki outside Iceland. This bank began
operations with a reception in June 2001, where the Foreign Minister of Iceland, Halldór Ásgrímsson,
inaugurated the bank. Atlantica spoke to Thorsteinn Thorsteinsson, the managing director of the
Luxembourg bank, about the first year in operation and the future of private banking in Luxembourg.
Búnadarbanki International S.A. is located in central Luxembourg.Thorsteinn Thorsteinsson, managing director
Preservation of Wealth
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