In line with the Focus2015 strategy, the Private Banking Division succeeded in reducing complexity, cutting costs, increasing profitability and sharpening its focus on markets with potential. The position it has attained enables it to strengthen the profile of the LLB Group as an investment bank with first-class private banking, as well as to achieve sustainable, profitable growth.
Over the next five years, inspired by our new StepUp2020 strategy, we want to grow more strongly than the market in Switzerland and Austria. In Liechtenstein we have located, together with the Retail & Corporate Banking and Institutional Clients Divisions, growth potential. In addition to stabilising the business volume in our traditional offshore markets of Germany and other parts of Western Europe, we believe there are opportunities to gain new clients. At the same time, we are investing in developing our growth markets in Central and Eastern Europe as well as the Middle East to continue to achieve substantial growth.
Onshore markets of Liechtenstein, Switzerland and Austria
In 2015, our domestic markets of Liechtenstein, Switzerland and Austria developed according to plan. The onshore markets are the foundations on which we build.
Liechtenstein has a highly specialised and internationally linked financial center. It is distinguished by its reliability and stability, which was reflected in the success of our business in 2015 with private clients domiciled in Liechtenstein. The Swiss financial center will continue to be a leader in global, cross-border private banking in the medium term, and as a safe haven, it will continue to attract investors who are seeking safety and stability for their capital. Accordingly, Bank Linth was again able to strengthen its profile as an asset manager in 2015.
The Vienna financial hub is widely appreciated for its expertise in Central and Eastern Europe. On account of this function as a financial hub, the International Monetary Fund (IMF) ranks the Austrian capital as one of the 25 most important financial centers in the world. Our bank in Vienna, LLB (Österreich) AG, is an integral part of the banking center. After five years of development, our bank in Vienna reached the break-even point in 2014. LLB Austria successfully attracted new clients both in its home Austrian market as well as in the growth markets of Central and Eastern Europe in 2015.
Innovative pricing model
Since April 2015, as the first bank in Austria, LLB Austria waived retrocessions completely for its own and external investment funds. It has taken over the innovative, retrocession-free pricing model applied by the LLB and Bank Linth since mid-2014. This model generates transparency, provides a clear, comprehensive fee structure, and offers an attractive price / performance ratio. By implementing MiFID II (Markets in Financial Instruments Directive), the EU is ensuring a transparent system of commissions to protect investors when obtaining investment advice (see chapter “Regulatory framework and developments”). By applying its pricing model now, the LLB Group is already complying with future regulatory provisions.
Traditional offshore markets: Germany and other parts of Western Europe
Consistent client focus is also the decisive criterion for our positioning in the traditional, cross-border markets of Germany and other parts of Western Europe. For our asset management, Germany is still our largest and most important market. Thanks to competent advisory services our client advisors have been able to retain clients and optimise relationships with them. In 2015, we made further investments in the quality of our client services and enhanced our groupwide expertise in the complex issues associated with cross-border banking (see paragraph “Cross-border strategy”).
Growth markets of Central and Eastern Europe and the Middle East
Wealthy clients expect three qualities from their bank: they attach great importance to financial stability and legal certainty, first class advice and banking services, as well as excellent returns on their investments in competitive comparison. Our private banking advisers, who look after the target market of Central and Eastern Europe, from Zurich-Erlenbach, Geneva and Vienna, are part of a stable bank having strong investment competence.
At the same time, they are well aware of the needs and behaviour of clients in the local target markets. The LLB Group has adjusted its risk policy in light of the geopolitical situation as a result of the Russia / Ukraine conflict. We have also registered moderate and robust growth in the various CEE countries.
The LLB Group wants to continue to grow robustly in the Middle East market region, where we care for our clients locally from our representative offices in Dubai and Abu Dhabi. The booking center for these two offices is in Liechtenstein. Since 2014, we have provided our clients with access to the stock markets in Dubai and Abu Dhabi. To cope with our growth, we restructured our private banking in the region and added nine new client advisers in 2015. Starting from 2016, one team will mainly look after non-resident Indian clients while a second team will largely take care of Arab and other expat clients.
Dubai is regarded as the business hub for the Gulf region. Abu Dhabi has an important role in the development of the seven United Arab Emirates (UAE), who are among the largest capital investors in the world. The UAE is a business center for entrepreneurs. Businessmen in the Gulf states are well informed about the local financial markets and expect partner-like advice, good service and investment performance. Wealthy clients value our commitment to the local market as well as the security that the LLB Group and the Liechtenstein financial center provide.