EU reports Luxembourg's banking system is solid

The European Union Thursday said it is not concerned about Luxembourg's banking system after reports in western media outlets expressed fear that the country could face the same fate like Cyprus whose banking system was also much bigger than its GDP. "Luxembourg cannot be compared with any other country .Our assessment is just not based on the ratio between the size of the banking sector compared to the GDP. It is also linked to the quality of the assets and the capitals of the banks in each (EU) member state," a spokesperson for the European Commission, Olivier Bailly, told a news conference here today. "We know that the (banking) situation is quite solid in Luxembourg. We keep monitoring the situation closely. We are not concerned," he added. Cyprus was forced to seek a 10-billion euro bailout from the EU and the IMF earlier this year after its once-thriving banking industry collapsed. Economic analysts blamed the collapse of the Mediterranean island's banking system to its un-proportional huge assets with regard to Cyprus' GDP. Tiny Luxembourg with a population of half-a-million has a GDP of 42 billion euro but its bank assets are worth 22 times as much. It has 141 banks, most of them are branches of foreign banks. Luxembourg is also trying to attract Islamic banks in particular Sharia-compliant investment funds.