Investments in innovation

Forward-looking pricing model

The LLB Group constantly strives to identify developments, changes and trends in good time, to analyse the consequences of them, and to formulate appropriate measures and activities. In strengthening investor protection, within the scope of its MiFID II directive, the EU wants more transparency in relation to commissions in investment advisory services (see the chapter “Regulatory framework and developments”). With its new pricing model, the LLB already complies with future regulatory provisions.

The Liechtensteinische Landesbank, as the first bank in Liechtenstein, and Bank Linth, as one of the first banks in Switzerland, introduced an innovative pricing model in investment business on 1 July 2014. In both asset management and investment advisory business, the LLB and Bank Linth decided to forego distribution payments for LLB funds, and pay retrocessions for external funds fully to their clients without being requested to do so. Furthermore, they are among the first banks in Europe to make the fees for strategy funds dependent on performance, and for bond funds dependent on the interest rate level.

In living up to its mission statement, the LLB is fulfilling the need of its clients for more transparency, a clear fee structure and an attractive price / performance ratio. The combination of an innovative pricing model with prize-winning investment competence has created a very strong competitive position for the LLB Group as an investment and asset management bank (see the chapter “Institutional clients”).

Standard-setting investment advice

In 2015 we are continuing to implement the measures developed in 2014 to formulate solutions for our clients. In an innovative partnership with Avaloq, a leading international provider of integrated solutions for wealth management, universal and retail banks, as well as swissQuant Group, a company specialised in risk and earnings analysis, the LLB is formulating innovative investment advisory solutions. This enables us to distinguish ourselves from our competitors while creating new possibilities of providing advice to clients.

For our clients this means a completely new advisory experience with the aim of constructing an optimal portfolio:

  • All client portfolios will be monitored fully automatically.
  • In the event of deviations to the risk profile the client will be notified.
  • If required, the client will receive an automatic portfolio restructuring proposal.

With this IT platform for investment advisory services, we are setting a new standard because it incorporates automatic investor protection and compliance provisions. This innovative investment advisory system fulfils all the regulatory requirements of the MiFID II directive in the EU / EEA and the FIDLEG directive in Switzerland. It will be completely integrated in our Avaloq core banking system and therefore become an integral part of our omni-channel strategy.

By consistently focusing on the needs of our clientele and taking proactive action, we can to an extent act as a pioneer in the development of the market and clearly distinguish ourselves from our competitors.

Tax compliance

At a time of fundamental change in the banking industry, our competitiveness is of particular importance. This includes the question of taxation. The LLB Group supports the tax compliance strategy of the Liechtenstein financial center and actively embraces the transformation process. Settling taxation issues as quickly as possible is of primary importance in successfully shaping the future. The Liechtenstein financial center and the LLB have already made significant progress in adapting to the new regulatory framework.

On 1 January 2014, a withholding tax agreement between Liechtenstein and Austria to regularise previously untaxed deposits came into force. At the same time, the existing double taxation agreement was revised and adapted to conform to international standards. On the one hand, the taxation agreement set up a mechanism for the subsequent taxation of previously undeclared assets, and on the other, it established a withholding tax for future capital gains. By the end of June 2014, the LLB Group had completed the disclosure process for its Austrian clients.

The LLB Group also decided to implement the stipulations of the FATCA agreement. These requirements focus on the identification of clients, a possible withholding tax on US-based payments and a US taxation reporting system. By signing up to the FATCA agreement of 16 May 2014, which specifies an automatic exchange of information with the US tax authorities, Liechtenstein has safeguarded access to the US capital market for its financial service providers.

Moreover, Liechtenstein is one of the 52 countries, which signed an agreement regarding the automatic exchange of information on 29 October 2014 (see the chapter “Regulatory framework and developments”).

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