In response to ING’s that it will end its retail banking activities in Luxembourg, the Luxembourg Bankers’ Association (ABBL) and the country’s retail banks migrate to other institutions. ABBL CEO Jerry Grbic is calling for calm, while seeking to raise awareness about the challenges facing the sector among decision-makers.
Guillaume Meyer: Is two months really enough time to transfer 30,000 clients?
: Some comments are unnecessarily dramatising the situation. I call on the customers concerned to remain calm. ING has acted in accordance with its general terms and conditions by announcing the end of the commercial relationship with two months’ notice. However, with the increase in applications to open an account, this notice period could prove insufficient. We have brought together all the banks to ensure that no customer is left without a bank account. If necessary, solutions will be found to extend the deadline beyond two months. I am confident that the situation will be resolved by the end of the year. Specific cases, such as customers who need documents from an embassy or are abroad, will also be taken into account.
What is your assessment of the support measures put in place by the other banks to welcome ING customers?
The other banks were surprised by ING’s decision, but they reacted swiftly, demonstrating their commitment to remaining in the Luxembourg market. This is reflected in their , even aggressive communication. But also through their commitment on the ground, where the banks are giving themselves the means to integrate these 30,000 new customers. I would remind you that the onboarding of all these people is superimposed on the day-to-day activity of the banks, which have had to quickly adjust their internal organisation to manage this influx.
Isn’t it ING’s responsibility to organise the transfer of its customers to other establishments, as was done in France when it withdrew from the retail market?
In France, the case was different because Boursorama bought ING’s customer portfolio. We don’t know whether ING Luxembourg approached any of the banks in Luxembourg to do this. What is certain is that ING has undertaken to facilitate this transfer. It must also ensure that all accounts to be closed comply with regulatory requirements, in particular KYC (know your customer). As there is regular monitoring of these files, adjustments should be limited. In an ideal world, if customers provide ING with the latest information, they should not have to resubmit it to their new bank. This is something we are working hard on to facilitate this transition.
We are seeking the support of the CSSF to ease the onboarding process for new customers.
What exactly is the ABBL’s role in this situation with ING?
Our role is twofold. Firstly, the ABBL acts as a facilitator between the banks, the ministry of finance and the Luxembourg Financial Sector Supervisory Commission (CSSF). Our association is organised into clusters, including one dedicated to retail banking. This is where we came in. Although we were not informed of ING’s decision in advance, we acted in the interests of our customers to manage this transition as effectively as possible. We have asked ING to specify the number of accounts concerned and their complexity, and we have examined how other banks could adapt.
We are also seeking the support of the CSSF to ease the administrative burden of onboarding new customers. We want to simplify the transfer of accounts so that new accounts can be up and running quickly.
What is the ABBL’s second role?
It’s to make decision-makers aware of the now extremely complex challenges involved in opening and monitoring accounts. These challenges probably influenced ING’s decision to leave the market, judging the business to be insufficiently profitable given the regulatory constraints. In fact, while this situation is very regrettable for the customers concerned, it may have a collateral benefit: the ING case crystallises the difficulties linked to KYC and KYT (know your transaction), which we have been talking about for years.
Do these rules make access to banking services more difficult than before, even for retail customers?
Absolutely. The diversity of our customer base, added to the international nature of Luxembourg, requires extensive expertise to assess risks according to nationality and other factors. While a private bank can choose to focus on high-risk customers--provided it manages that risk thoroughly--most retail banks have to offer basic services to everyone, as required by law, which makes account opening procedures much more complex.
These procedures, which were once simple, now require a multitude of documents and a thorough understanding of regulatory obligations--hence the need for skilled and specialised staff. What’s more, with technological advances such as instant payments, banks have to carry out rigorous checks in a very short space of time, which requires major IT developments. If there is one lesson to be learned from the ING affair, it is that these procedures need to be simplified.
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How can this be done?
We are already working on potential improvements that could make life easier for banks and their customers. We are looking to pool certain procedures, always in compliance with European legislation. Technologically, this is feasible, but the involvement of the regulator will also be necessary. This is a matter of general interest, crucial both for the banks, which would gain in profitability, and for customers, who would benefit from simplified processes.
In the current international situation, particularly in view of the importance of the Financial Action Task Force rating, to what extent can these procedures be reviewed?
It’s obviously not a question of throwing the AML (anti-money laundering) and KYC rules overboard. But adjustments at the margin are possible.
I don’t expect a sharp rise in unemployment as a result of ING’s decision.
What reasons do you see that led ING to withdraw from the retail banking market in Luxembourg?
The banking sector, including retail banking, faces many challenges. In Luxembourg, we have a very competitive market, with just 660,000 people and five major banks sharing the market (alongside other smaller ones). Add to that the demanding regulatory environment--I mentioned the AML and KYC rules--which adds considerably to operational costs. With a smaller market share than some of its competitors, ING may have felt that it was not achieving the critical mass necessary for a profitable business, and therefore reconsidered its investment here. Note that ING may have been achieving profitability that it considered insufficient, whereas another structure would have been satisfied with it: this is also a question of corporate culture.
How is retail banking currently faring in Luxembourg?
We are coming off an exceptional 2023. The rise in interest rates has resulted in a higher return on the cash that banks deposit with the central bank, in compliance with their prudential obligations. However, this does not mean that banks are relaxing their efforts. Bankers are actively thinking about the future. They are not worried, but they are aware that the current situation will not last indefinitely. It is therefore crucial to continue to control costs, develop the business and invest in digitisation. Cyber security is another area where a lot of investment is needed.
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Do you have any figures on the profitability of retail banks?
Unfortunately not, because there is no uniform legal definition for this activity at the level of the CSSF or the Luxembourg Central Bank (BCL), on which we depend for these data. Definitions vary from one institution to another. For example, a very local bank like Raiffeisen is involved in corporate, private and retail banking. Nevertheless, we carry out sector studies every year based on CSSF data, and the next study is currently being prepared.
How do you see retail banking developing, particularly in terms of employment?
The retail banking market is growing in line with the country’s demographics, and in this respect we are still in a growth dynamic. As we have a shortage of staff in the sector and in bank branches, I don’t expect a sharp rise in unemployment as a result of ING’s decision. The fact remains that the sector is changing, particularly with technological developments enabling employees to concentrate on more rewarding tasks such as customer interaction and advice, rather than routine administrative tasks.
Originally published in French by and translated for Delano