Carolyn Cohn and Huw Jones

LONDON, (Reuters) – Two-thirds of Luxembourg’s funds with Russian exposure were suspended after the invasion of Ukraine, said the Grand Duchy’s securities regulator on Tuesday. He also stated that Russia’s exposure to Luxembourg’s sector is only 0.3% of its total assets under management.

Claude Marx (director general, Commission de Surveillance du Secteur Financier) said the total exposure to Russia was 18.2 Billion Euros ($20.02 Billion). The Commission regulates Luxembourg’s largest fund centres. Two thirds are in equities while the other third is in bonds.

Marx spoke at an ALFI conference on Luxembourg funds. He said that 41 of the 61 funds had more Russian securities than 10% and that 41 were suspended. Investors cannot withdraw money from these funds.

To cut off ties to Russia, the West has imposed a series of severe sanctions. The suspension of trading in shares in companies that are listed in Moscow remains in effect.

Marx stated that the disruption to the financial industry caused by the Ukraine war was much less than the two-year ago lockdown of the economies to combat COVID-19.

Marx declared, “We have not seen any other liquidity crisis or liquidity situation than we had in March 2020.”

He said, “That’s not to say it won’t happen. If we have many corporates running into treasury issues because of oil and gas prices, then we need some liquidity to sell money market funds. But we haven’t seen anything like that.”

Together with its British counterpart the Financial Conduct Authority the CSSF are investigating whether “side pockets” could be used to segregate Russian or Belarusian assets from other investments.

QUOTAS ARE IMPORTANT

Marx was also asked his opinion on boardroom diversity. He stated that banks had failed to make more women boards, and that quotas was the best solution.

Marx claimed that one in five Luxembourg banks’ board members are women, and that a third of bank boards do not have any female directors.

From that perspective, it’s a complete disaster. Marx stated that we are not in a favorable situation.

We’re still stuck in this self preservation phase. Typically, an older white man controls the world regardless if he performs well. This will not change without coercive means, and we’ll need quotas in our industry to make it work.