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The Covid-19 crisis appears to have spared 2021: recovery year?
Monaco’s financial sector. Traditionally a After 2020, a year marked by the biggest €125 BILLION UNDER
heavy-weight of the economy, the financial health crisis since the Second World War, MANAGEMENT
activities and insurance sector was, according there are a lot of question marks at the start
to IMSEE, the largest contributor to the of 2021. With the arrival of the Covid-19 According to quarterly figures from the
country in the third quarter of 2020, with a vaccination, everyone hopes to turn the page Banque de France, as at 30 September
turnover of €1,434 billion, representing a 3.5% on this crisis as quickly as possible and to 2020, the market had fallen a little in
increase. Overall in 2020, the profitability of see a strong recovery in the economy. In terms of inflows, with €125 billion under
investments was good. “The performance of Brussels, the mood is careful: “The pandemic management (deposits and securities).
clients’ portfolios should satisfy them and continues to be a serious risk for public “This decline in assets is linked to
banks noted a high level of transactions on health and for economies,” warned Central the Covid-19 crisis and the decline in
the financial markets, as well as a good trend European Bank (ECB) President, Christine financial markets; but the Banque de
in loans, the value of which is over €26.5 Lagarde, in December, admitting that “the France also notes withdrawals.” In this
billion,” points out Hervé Ordioni, in charge of extent and duration” of the second wave context of confinement, it is difficult
promoting the Monaco financial marketplace “had not been anticipated”. For this reason, to work effectively for the promotion
at the AMAF. But how long can this last? growth forecasts for 2021 were reviewed and of Monaco. “You have to sow before
Can this trend be sustained into 2021? “If lowered to 3.9%, Christine Lagarde counting you reap. However, in 2020, we could
companies* get into great difficulty, that on “a stabilisation of the economy” in 2022.
could change the profitability of their lenders To help exit the recession linked to the not sow. In 2021, I hope to be able to
in 2021; but let us not be birds of ill omen: the Coronavirus pandemic in the Eurozone, the meet management companies and
sector has shown itself very resilient during ECB has boosted its emergency asset buyback wealthy people who want to settle in
the crisis,” reassures the banker. programme linked to the pandemic, a total of the Principality with their families and
€1,850 billion! This exceptional measure has their activities.”
been extended until March 2022.
The current regulatory framework for
the fight against money laundering and
Deflation or inflation?
The risk of deflation may still be looming the financing of terrorism (Monaco has
over the Eurozone (the ECB sees inflation just transposed the Fifth Directive) and
progressing there by just 0.2% in 2020) but the taxation of savings, represents real
some economists predict a return of inflation a argument in favour of the market.
for 2021. At Natixis, Patrick Artus identifies “Twenty years ago it was difficult to
four structural factors that support this convince a very picky Anglo-Saxon
hypothesis: an ageing population; the that the Monégasque banking centre
energy transition boom (with the switch was amongst the good students.
to more expensive energy sources); Today, Monaco ticks all the boxes and
de-globalisation and the relocation also benefits from the Brexit effect,”
of value chains to a regional level; notes a banker. No more clichés of
as well as a “correction of the non-residents arriving in Monaco
distortion of income sharing to with suitcases stuffed full of cash?
the detriment of employees”; and, “Since 2005, the Monégasque banking
the key element, a possible rise in marketplace has completely renewed
interest rates. its clientèle: we have encouraged all
our clients to declare themselves for
Impact of Biden presidency tax purposes or leave,” notes Hervé
Another factor that could play a Ordioni. Far from signing the death knell
major role in 2021 is the Biden for the marketplace, the onshore trend
presidency. What will be the has boosted its activity. In 15 years,
new commercial relationship assets have multiplied two-fold and
between the new American loans five-fold. Two-thirds of customers
administration and the rest are now onshore.
of the world? “Joe Biden has
been elected but it’s likely that

*With the guarantee fund, more than 400 cases were processed by the banks in 2020 and more than €40 million disbursed.

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