It’s not every day that Luxembourg sees the creation of a new bank. Deutsche Börse, Clearstream’s parent company, has done just that, though, deciding to spin off all of its Luxembourg entity’s ‘funds’ business and moving it to a new organisation. “Over the last 10 years and more, we’ve had some success in developing a suite of fund-focused services within Clearstream,” says Philippe Seyll, head of the new Clearstream Fund Centre. “To take things further, we needed greater autonomy, by operating under a more appropriate regulatory regime for the business. While Clearstream is governed by the CSDR (Central Securities Depositories Regulation), our new organisation will be subject to MiFID requirements, which are better aligned with what we have to offer.”

Managed from Luxembourg

Deutsche Börse wanted the new bank, Clearstream’s sister company, to be located in Luxembourg, demonstrating its dedication to the financial centre and the Group’s strong relationships with its ecosystem, the regulator and the Ministry of Finance. The banking licence was secured last November and operations began in January. “The new organisation employs 200 people in its home location of Luxembourg, from where all international business will be managed. Further afield, from Singapore to Zurich and from Zurich to Sydney, operations will be handled by various sister entities employing another 800 people or so in total,” says Philippe Seyll.

Making it easier to do business

The new entity will help the Group to step up its development and strengthen its offering to the fund industry. “We act as a platform that makes it easier for distributors to access numerous products worldwide and for fund managers to make their funds widely available,” says the CEO. Vestima, Clearstream’s fund processing platform, already connects 850 distributors and the same number of asset managers, and covers around 300,000 ISINs. The bank’s business handles some €3,500 billion in assets under administration. “For distributors, the benefit lies in the ability to establish relationships with asset managers without having to develop their own connections.

Using our infrastructure, they can transform fixed costs to variable costs linked to individual transactions, and above all, reduce the overall costs associated with acquiring and holding funds. The approach, based on proven procedures and processes, also reduces the risks associated with these types of transaction.”

Expanding the range of services

From the outset, the new entity’s intention for this platform — part of the Clearstream Fund Services segment — was also to enhance its ecosystem of services around the product range. The Group’s integration of Kneip will support efforts in this direction, making it easier to provide players within the ecosystem with value-added data so as to meet fund management, administration and distribution needs. Generating efficiency gains building on these strengths, the Deutsche Börse Group’s new organisational unit has ambitious plans for sustained growth. “We’ve experienced double-digit growth over the last 10 years, currently generate nearly €400 million in revenue each year and employ around a thousand people. The aim is to generate efficiency gains and grow our revenues,” says Philippe Seyll.

Generate efficiency gains

Over the past year, the entity has recruited and onboarded around 100 people in Luxembourg alone, mainly assigned to the new bank’s control functions. “To meet these objectives, we intend to leverage our strengths to win market share across Europe and beyond. While our operations encompass €3,500 billion in fund assets under administration, the European market represents €15,000 billion in assets, and the Asian market some €10,000 billion. There’s a lot of room to grow,” says Seyll. Around the data, particularly in the area of alternative funds and sustainable finance, there are also major growth levers to pull on.” Given the appeal of the alternative funds market, Clearstream’s vision is to become the leader in the ELTIF product segment and in specialist private asset vehicles.