J.P. Morgan: why we chose Luxembourg
J.P. Morgan, established in Luxembourg since 1973, has a longstanding and substantial footprint in Luxembourg. Over more than four decades, the bank has become one of the largest custodians and fund administrators in the Grand Duchy. More recently it has expanded its Luxembourg based activities by opening its European wealth management division in the Grand Duchy. We met with Pablo Garnica, CEO of J.P. Morgan Luxembourg & Head of the private bank EMEA, to discover more about the company’s relationship with the Grand Duchy, their main activities and the impact of technology on their business.
Can you tell us about J.P. Morgan’s history in Luxembourg?
Going back to our roots in 1973, we started with our Securities Services business, including custody and then fund administration. This business grew in line with the success of the Luxembourg fund industry. Our Asset Management business established here in 1988, and then moving forward to 2016, we started the Treasury Services business, which is now what we call Wholesale Payments. In simple terms, that business enables clients to manage payments in different currencies all over the world, among other things. Most recently, we added the Private Bank in 2019 as a consequence of the expansion of the business across Europe. J.P. Morgan’s ambition is to be able to provide solutions locally to clients while leveraging our global footprint and knowledge. We may take our time to analyze new markets and their opportunities, but once we have made a decision, we tend to be very committed to the locations we enter. We continuously develop new products and services for our clients, and we regularly adapt to change and evolution.
What are your main activities here and in what way have they developed over the past 40 years?
We have three lines of business: Securities Services, the business that has been here the longest, including custody, fund accounting, transfer agency and collateral management; Wholesale Payments, where we help clients move money; Asset Management; and now the Private Bank, where we provide investment advisory, lending and wealth advisory services to our clients. All of these are a reflection of what we do across the world. We try to apply global consistency while having the ability to adapt to local needs, both from a client as well as from a regulatory point of view.
We develop activities based on how we can solve issues for our clients. Tools and services, such as J.P. Morgan Markets, allow our clients to access their information so they can analyze it and make decisions based on facts. In general, our evolution is happening alongside our clients. In some cases, we are going to be innovative, in other cases they are going to help us innovate. For example, with the emergence of passive asset management, we had to ensure that we could adapt and provide the services suited to such client needs in that investment environment.
What can you tell us about new or future activities?
We will continue to expand our Private Bank business. We now have 11 branches allowing us to accelerate our growth in the countries where we are present. To give you an idea, in Copenhagen, Stockholm and Amsterdam we hold a license to provide advisory services to private individuals. In the other two lines of business, growth will come through innovation, delivering new products and doing more with the clients than we already do. We will also be looking for new clients, driving organic growth and investing in people and innovation.
What are the benefits of being located in Luxembourg?
When we look at the benefits of any location or business, we look at what are the differentiating factors and how we can scale the business further. Firstly, we were already established here for many years, so we know the Luxembourg ecosystem. Secondly, it is very sophisticated in terms of financial services, with a great geographical location within Europe. While finding talent is never easy, Luxembourg provides a very good foundation from which to source. People here are highly skilled and often speak more than three languages. Another important factor is that the Grand Duchy is very welcoming to new business. Our experience of launching new businesses here has always been very good.
Can you describe the J.P. Morgan culture and give us some insight on how you bring this culture to the Luxembourg office?
Over 40 years our culture has flourished. We always want to do business in the best way possible for our clients while treating our employees with respect. We want to ensure that our people are proud to work for J.P. Morgan. And we also want to make sure that we live by example at all levels both inside and outside of the bank.
Within J.P. Morgan there is something that brings us all together: our principals. We like to be seen as culture carriers, that we are not only good at what we do but also at how we do it. What you should expect from others is to be treated as you treat them. I think that is the beauty of working for an organization like ours. We see a lot of people that have been at the firm for a long time and that does not happen by accident. Our culture also facilitates mobility, and so we have people here that came from the US, Europe and Asia. It is easy to integrate our employees thanks to our shared culture. Take me as an example. I have been in four different countries with the bank and have grown my career here at J.P. Morgan.
Last but not least, we think it is very important to be active in the communities that we operate in, where we promote voluntary activities. The J.P. Morgan Foundation is active in partnership with local non-profit organizations to tackle challenges such as education, and development of skills and training. It is not just the company doing this, but also the employees who participate in voluntary initiatives.
J.P. Morgan has announced large investments into technology. How is technology impacting a global bank such as yours?
In today’s world you cannot escape the impact of technology. We are very committed to continually investing in technology and we focus on many areas. One particular focus is on how we can make the lives of our clients and our employees easier. Technology is developing very fast and as a big company we have a responsibility to keep up with the pace of change. For example, in Wholesale Payments, we are now able to move about 6 trillion dollars per day in payments and over a hundred million transactions per day. And at an individual level, the way in which our clients interact with us is also changing – most of them today use mobile applications and want to be able to work from wherever they are. So, you need to keep up to speed and be able to communicate using innovative technology. From the top down we make every effort to make sure that we invest consistently in technology so we can get better at what we do. For example, J.P. Morgan recently built an e-wallet that gives online marketplaces and gig economy players the ability to offer their customers virtual bank accounts.
Can you tell us why J.P. Morgan’s private bank selected Luxembourg as its new EU headquarters?
We had an existing bank in Luxembourg with the earlier mentioned lines of business that are very complementary. In the Private Bank, we advise ultra-high net-worth individuals on how to invest their assets. It was an easy decision since the bank was already here, and it had the infrastructure that we needed. It offered a good platform for our private clients and it will enable us to expand our business in the wider region. Luxembourg was also a natural fit because of its complete financial ecosystem. We can now offer the same services to our clients in the different legal branches in other European countries, with Luxembourg as the headquarters. This choice gave us the opportunity to be ready for any kind of political outcome following Brexit. Our main objective was to make sure that we were ready to service our clients and reassure them, even in the event of the worst-case scenario, whatever that may look like.
How does a global bank like J.P. Morgan provide boutique wealth services for families and individuals with sophisticated businesses in Europe?
The way we see the client relationship is through a team approach. We have a team of specialists who understand the needs of our clients and develop tailored solutions, such as how to manage their liquidity needs. We then structure the solution based on what suits the client’s location, be it in Germany, in Spain, in London, or anywhere else. We are careful to consider the residency of the client, the relevant regulations and the personal circumstances. For these reasons, we believe that the footprint that we have is very important, the teams in all these branches live and breathe what our clients are experiencing every day. We combine our global products and the global intellectual capital our experts bring from around the world and deliver it to the client, wherever they are based.
What do you appreciate most about living and working in Luxembourg?
Luxembourg is a very diverse country, both in terms of population and thinking. We operate a global business with global clients, and I think you cannot live without diversity. It helps us connect better with our clients and our people. Luxembourg is in the heart of Europe and it provides us with a very interesting platform to continue to grow.
One of the biggest challenges in this industry is to find the right talent. We are making a big effort to make sure that not only do we attract talent but that we also retain people.
We believe that the value of a country or an industry lies within their people. That is one of the reasons why we want to increase our visibility. We want to be the employer of choice. We have to have a talented and diverse workforce to be truly connected to our international clients.
Being a globe trotter, I have lived in the U.K, Switzerland, Mexico, the US and Spain. I experience Luxembourg as very welcoming; you meet people who have travelled the world and tend to share a similar mindset. The Grand Duchy offers the opportunity to interact within an international community. That is a very attractive aspect. Given the mix of cultures and the diversity, you are always going to find somebody who has similar views to your own and also those that help you think differently. From that point of view, it is an interesting place to be and integrate.
Finally, as mentioned we want to be a significant participant in the community, whether it is through non-profit or voluntary organizations. We want to make sure that not only the firm but also our employees participate in giving back to the community. Luxembourg offers us the opportunity to do so.
LEO Mag December 2019, Luxembourg for Finance, Marjolein van Hoof