Four decades after the Bank of China opened its first European branch in Luxembourg, the Grand Duchy has become the quiet cornerstone of China’s banking presence in Europe. Today, seven major Chinese banks call Luxembourg home, drawn by stability, credibility, and a strategic vantage point in the EU’s single market.
In 1979, both China and Luxembourg were on the brink of era-defining change. China had the year before begun its ‘reform and opening’ period, shifting from a centrally based system to a market-based economy. Meanwhile in Luxembourg, the dominant steel industry was undergoing massive restructuring, and a new government had stepped into power.
It was against this backdrop that the Bank of China opened in Luxembourg, marking the first overseas branch of any Chinese bank since the formation of the People’s Republic of China in 1949. This would mark the start of a continuing partnership between the two countries.
Jacques Bortuzzo, President of the China-Luxembourg Chamber of Commerce (ChinaLux), explained: “About 20 years [after the Bank of China] you had the Industrial and Commercial Bank of China (ICBC) opening in 1999,” he says. “And another almost 15 years later, you had an avalanche of Chinese banks coming in: China Construction Bank, Agricultural Bank of China, China Merchants Bank, China Everbright Bank, and Bank of Communications.”
Their main goal: corporate lending and corporate banking.
“The internationalisation of the Renminbi [editor’s note: China’s effort since the late 2000s to make its currency comparable to the US dollar] has been a key driver here, as the Chinese banks in Luxembourg are active primarily in trade finance and banking services to Chinese corporations operating in Europe,” says Tom Théobald, CEO of Luxembourg for Finance (LfF). “The majority of China’s large banks have chosen Luxembourg as their principal EU hub, operating in different EU markets with branches of their EU subsidiary in Luxembourg.”
According to PWC Luxembourg, in 2023 Chinese banks made up the second largest banking group in the country, accounting for 11.6% of market share.
This evolution has served Luxembourg well. “Looking at the importance of China in today’s world, it’s the second biggest economy in the world,” Bortuzzo says. “If Chinese banks are in Luxembourg, others will be interested in why that is the case. And so they will follow.”
Mutual benefits
ChinaLux, LfF, and ABBL agree that banks from China were drawn to Luxembourg for several key reasons including stability and multilingualism.
Théobald stressed the importance of Luxembourg’s position and the benefits it offers, including AAA stability, a predictable EU-aligned regulatory framework, an experienced supervisory authority, a multilingual talent pool, and post-trade infrastructure.
“Chinese banks and other international banks didn’t come to Luxembourg because rules are simpler,” Paul Wilwertz speaking on behalf of the Luxembourg Bankers’ Association (ABBL) added. “But because they see Luxembourg as a good place. It’s central, it’s safe, it’s stable, so it’s a good place to do international business.”
Beyond banks and businesses themselves, the development of Chinese trade has brought its own benefits to Luxembourg.
“Their arrival has further strengthened Luxembourg’s role as a bridge between Europe and Asia, expanding the market’s international connectivity and its range of financial services,” Théobald says.
Kelly Jorritsma, former Head of China Desk Europe with Intertrust (now CSC), identifies the outward growth that extends beyond banks and includes the employees, which are estimated to number several hundred networks, and accompanying services. “You have accountancy, tax advisory, legal, administration. You have data service providers, you have technology, and so on,” she says. “There is a value chain in this ecosystem.”
For ABBL, the impact of Chinese banks operating in Luxembourg is straightforward. “Out of 117 banks, the vast majority have their headquarters abroad,” Wilwertz says. “Most of them are focused on international activities, so their impact and their interaction with the Luxembourg economy is low, but of course, they pay taxes and provide jobs locally.”
A move from M&A to Greenfield
ChinaLux representatives are keen to point out the shift that the industry has seen: from mergers and acquisitions to new ground-up operations. Here, they anticipate growth, too.
“There will be more and more opportunities, so you’ll probably see more Chinese companies here in the future,” Bortuzzo says. Positioning themselves as a neutral platform, he added, “We just want business to meet business, that’s it.”
Following the EU-China summit earlier in 2025 and amid geopolitical tensions, Luxembourg’s associations reassert that successful business remains at the core of these relations.
ABBL views their role similarly, and intends to maintain this position across the board. “We are here to defend the interests of our members,” Wilwertz says. “And the interest of Chinese banks is that doing business in Luxembourg should be easy.”
LfF says that while Luxembourg’s priority is to provide a stable, transparent and well-supervised environment across Europe and beyond, future developments are largely dependent on how broader economic and geopolitical dynamics play out. Cautioning against continued fragmentation of global financial flows, Théobald says, “Ensuring open, rules-based channels for financial cooperation remains essential for supporting growth, stability, and resilience across all markets.”
As global finance grows more fragmented, Luxembourg’s ability to remain a neutral and trusted bridge between East and West may prove to be its most valuable asset yet.
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