Equity strategy

A good equity base not only protects its reputation, but is also part of the financial management and credibility of a bank. The LLB is considered to be of systemic relevance to the Liechtenstein economy. It is therefore part of our identity to have a sufficiently high-quality equity base at our disposal. A solid equity base provides clients, shareholders and employees with an important added value.

The LLB Group’s financial strength shall remain unaffected by the capital markets’ fluctuations. We simulate external influences and analyse how these affect our capital base using scenario analyses and stress tests and, where necessary, we take measures to minimise risks.

Our capital base covers the capital needs required for our objectives. The LLB Group continues to enjoy a high level of financial stability and security on account of its solid equity base with exclusively hard core capital. As at the end of 2015, it had CHF 1.8 billion in equity capital. (31.12.2014: CHF 1.7 billion). The Tier 1 ratio stood at 20.6 percent (31.12.2014: 18.3 %). By the end of 2015, we had again achieved our goal with Focus2015 of raising the Tier 1 ratio to over 16 percent. This gives us room to manoeuvre to make acquisitions.

The comprehensive reform package of the Basel Committee on Banking Supervision (Basel III) has been in effect in the EU since 17 July 2013. It aims to improve the equity base of banks with regard to capital adequacy and asset quality and to increase the requirements concerning liquidity regulations. The additional introduction of a debt limit ceiling and of an anti-cyclical buffer aims to ensure better protection for the banking sector against shocks to the financial system (see chapter “Regulatory framework and developments”). As of 1 February 2015, the EEA member country Liechtenstein implemented the EU Capital Requirements Directive (CRD IV) and, with it, the Basel III standard, which will come into effect from 2019. Since 30 June 2015, the Tier 1 ratio is calculated in accordance with the principles of the CRD IV.