Bank crisis no drama for Luxembourg: minister

LUXEMBOURG (Reuters) - Luxembourg's large financial industry is not immune to the global credit crisis but its impact to date has not been severe, the country's treasury minister said on Monday.

"So far the situation of the Luxembourg-based financial institutions has not been dramatic," Treasury Minister Luc Frieden told reporters at the Reuters Funds Summit.

"But it is clear, having such an international financial centre, that global turbulence is also having an impact of course on Luxembourg," he said.

Bank stocks plummeted on Monday after U.S. investment bank Bear Stearns BSC.N was forced to sell out to JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) after traders stopped doing business with Bear because they feared the firm might go bust.

But Luxembourg's financial sector, which relies heavily on the more staid fund management business, was less likely to be hit to a similar degree, Frieden said.

"Of course we are living in a period of great uncertainty... the Luxembourg-based banks might be less affected than some others due to the kind of activities that they do from their Luxembourg operations" Frieden said.

Luxembourg's financial sector makes up almost 30 percent of the country's tax receipts. The country is also Europe's largest base for investment funds with over 2 trillion euros in assets domiciled there at the end of 2007.

(Reporting by Philip Blenkinsop and Douwe Miedema; editing by Keith Weir)