Credit risk policy

The LLB Group supports private persons, companies, small businesses and municipalities to finance their plans for the future. The majority of the loans in 2015, i. e. 87.0 percent (2014: 86.6 %), comprised credits secured by mortgages. Moreover, we granted operating loans and Lombard loans.

The LLB Group pursues a conservative credit risk policy in all divisions and penetrated markets. Its integral parts include the specialised and individualised assessment of loan applications, the conservative assessment of collateral values, the individual calculation of affordability as well as compliance with standard market equity requirements. Through various economic phases, we have thus managed to fulfil our performance mandate reliably and to keep risks under control.

Outside of the target markets of Liechtenstein and eastern Switzerland, the LLB Group provides mortgages in cases that involve an important client relationship or in cases in which such a relationship can be verifiably established within a reasonable period of time. In terms of real estate financing, we observe the minimum requirements approved by the Swiss Financial Market Supervisory Authority (FINMA) for mortgage financing. These were drawn up by the Swiss Bankers Association (SBA). We also apply the EU guidelines on assessing, evaluating and processing mortgage secured loans.

We developed a Group-wide uniform methodology for determining the collateral value of our Lombard loans. Among other things, this particularly takes into account the liquidity, the counterparty risk and volatility of individual securities and, on top of that, the diversification of the assets provided as security and pledged by the borrower. Credits against non-diversified securities or single asset lending may only form an insignificant portion of a Lombard loan portfolio. Loan securities outside of examined and approved existing markets are excluded from this.