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The overall impression gained from the market in Luxembourg is that the crisis that engulfed economies around the world did not hit home quite as hard there. "The financial crisis to be honest didn't affect us as much as we thought....

The overall impression gained from the market in Luxembourg is that the crisis that engulfed economies around the world did not hit home quite as hard there. "The financial crisis to be honest didn't affect us as much as we thought. We were quite surprised. We have suffered a lot less than others," says one partner.

Be that as it may, there were still some remnants of crisis that did make up aspects of firms' deal flows. "There has been a lot of restructuring. There is a whole new landscape in banking in Luxembourg. There has been a lot of insolvency and liquidation work too," explains a partner, before giving a succinct overview of how it stands currently: "As a macroview of the sector, German banks are quiet and Scandinavian ones are consolidating. The French powerhouse bank BNP Paribas is still very strong."

In terms of investment, those in the market remain bullish about Luxembourg's position: "We were very active in 2010. Luxembourg is still a preferred choice for investors," states a partner, who adds: "I was a speaker at an event in London recently and it was very clear that Luxembourg was a first choice jurisdiction to invest in."

In the banking area, one partner had an interesting theory about private banking. Basically, there are a lot of private savings accounts held by "the Belgian dentist or German artisan" type who put their savings in Luxembourg. Now, the average age of private banking customers in Luxembourg at the moment is between 59 and 65 and as these people die their inheritors will come in and relocate the funds outside of Luxembourg, leading to a massive outflow of funds. The partner felt that, due to this, private banking will atrophy over the coming years, cumulatively reducing the value of the country.

M&A is even sprightlier than banking, with deals back up and running. As ever, "internal M&A is insignificant", with the country still primarily engaged with cross-border deals: "Luxembourg is the place for worldwide investments. I would say 90-95% of clients and transactions are multinational," says a partner. "We are on a crossroad, a hub for deals. That's what we do," adds another.

Having said that, the corporate scene is still having to clear up some of the wreckage from the crisis, despite new deals coming up: "The market is still focussed on some restructurings. We are seeing some pure M&A though, with financial institutions at the centre," comments a corporate practitioner.

The level of private equity activity was difficult to judge with practitioners holding different views. One partner comments: "M&A has been quite strong, though private equity is slow," while another states: "Private equity is very active at the moment, and there have been some big bank deals we have been involved in."

Another interesting trend here is the variation in investors. The US and the EU have always been frontrunners, but other regions have been getting involved too. "What we have seen is an increase in foreign investment from Asia. A Chinese group bought an Italian bank through Luxembourg for example," states one partner, while another lawyer remarks on an increase in Russian involvement: "We have seen an interesting shift in that there are more Russian investors now, especially in the real estate market."

The markets too have been fairly upbeat, with the Europe-wide trend of high-yield bond issuance replicated here. "More recently, capital markets have been active, especially high-yield bond offers. They are very popular," agrees one partner. With Luxembourg being the second-largest market for debt securities after New York, it is perhaps unsurprising that a lot of these offers are actually listed in Luxembourg.

The equity side however doesn't seem quite as vibrant, as one partner says: "Equity markets are slow. There are IPOs pending but we have to wait and see."

Lastly, there has been a drive by the government in Luxembourg to rid the country of any hint of impropriety regarding the secrecy of banking practices in the country. It's a topic that partners expand on at length, as it is an important factor in the health of the market.

"There is a reshaping of Luxembourg as a financial centre. The government for years has been moving a lot of different legislation through. The government has been very active on the topic of remuneration policies and also very active with anti-money laundering and insider dealing and any other criminal banking activity," explains one partner.

Another expands on this: "We have a certain reputation for 'grey listings' and things like that but Luxembourg has tidied itself up now. We will provide banking information upon request and if there is a suspicion of wrongdoing, not just offering it out there. It's all about market transparency."

The last year has been an important one for investment funds, as the law updates and the market begins to emerge in a concerted way from the marginal slowdown that was the global economic crisis."There is a definite pattern showing, in that investment funds in Luxembourg are evolving," says one partner, who adds: "There will be new legislation and hedge funds will be more regulated....

The last year has been an important one for investment funds, as the law updates and the market begins to emerge in a concerted way from the marginal slowdown that was the global economic crisis.

"There is a definite pattern showing, in that investment funds in Luxembourg are evolving," says one partner, who adds: "There will be new legislation and hedge funds will be more regulated. The government, and all of us lawyers, really want to develop this."

Another investment funds lawyer weighed in with his approval of the new regulatory landscape in Luxembourg, and says: "It will make investing with Luxembourg far more attractive when it's all regulated properly."

To be specific, the really big news with regards to investment funds this year is the adoption of Ucits IV (Undertakings for Collective Investment in Transferable Securities), with Luxembourg being the first country to put these new EU-led rules in place. The changes are extremely important in respect to increasing the efficacy and profitability of funds, as partners explain: "These new Ucits regulations are very important. It means you can set up funds to be managed elsewhere, and streamlines the entire process," says one, and another sees it in a broader sense: "It helps Luxembourg promote itself as a platform, and hedge fund managers can use Ucits structures to give access to other investors, not just sophisticated ones."

One partner states the benefits clearly: "Mergers of funds will be much more possible. There will also be an increased scope for cross-border management of these funds."

As well as the possibility of cross-border fund management, the new rules also allow for master-feeder structures. This means, for instance, a fund can directly invest in its own sub-funds, aimed at specific niche interests, though this flow of funds cannot be reciprocal.

Overall, the new aspects of the law in this area are coming thick and fast, and will place demands on lawyers active in the market. "There is a tsunami of regulations coming as policy makers want to regulate everything. We will have to be more sophisticated to navigate through all these new regulations," comments a partner.