Luxembourg

Abstract

The 1981 Banking Law provides for the uniform treatment of all ‘credit institutions’, defined as institutions incorporated or established in Luxembourg, whose business consists of accepting deposits or other repayable funds with a view to using them for their own account in credit or investment operations (Art. 1). The Law states which leasing and factoring operations are deemed to be credit operations. Credit institutions are divided by the Law into three categories:

• (i) banks and savings institùtions: these institutions may as a rule carry on all types of banking business and may accept sight or short-term deposits. This category includes the two existing public credit institutions: the Caisse d’ Epargne de l’Etat (State Savings Bank), which combines the functions of a savings bank and a commercial bank with some of the functions of a central bank, and the Société Nationale de Crédit et d’Investissement (National Credit and Investment Company), whose function is mainly to contribute to the development of industry and commerce by extending financing facilities to those sectors;

• (ii) agricultural savings banks: these may also accept sight or short-term deposits;

• (iii) non-bank financial institutions: these may not accept funds for a term shorter than two years, except from associated companies and other credit institutions. Before the 1981 Banking Law, these institutions were known as ‘credit institutions’ and were subject to Article 12 of the Decree Law of June 19, 1965, but not to most of the other banking legislation.