Values and corporate management
Information checkedInformation unaudited Information geprüft Information ungeprüft Values and corporate management
The values of “integrity”, “respectfulness”, “excellence” and “pioneering” (see chapter “Strategy and organisation”) form the basis for the corporate management of the LLB Group. Our Code of Conduct provides a reliable guiding framework for the value-based and forward-looking actions of all employees (see chapter “Employees”).
Responsible corporate management
We plan to revise our Code of Conduct next year and to incorporate the issue of human rights to a greater extent. Similarly, we intend to draw up a code of conduct for our suppliers to encourage them to act more sustainably. We are guided by the concerns of our clients and pay particular attention to meeting their security needs and our data protection standards for the use of the various distribution channels at all times (see chapter “Finance and risk management”). Our aim is to win over clients with good products and services. As the bank for the country and the people, being able to offer attractive and innovative price models is important to LLB (see chapter “Sustainability in banking”).
Corporate governance and corporate culture
The LLB Group promotes fairness, transparency and accountability as well as the ethically correct and legally compliant conduct of its employees. By doing so, we protect the interests of our stakeholders and ensure good, sustainable corporate management. And we can contribute to a more socially just society and economy.
As part of its corporate governance, LLB ensures responsible management, guarantees correct monitoring processes and promotes transparency. As a listed company, the SIX Exchange Regulation directive on Corporate Governance (DCG) forms the fundamental basis for corporate management. The Liechtenstein Law on the Control and Oversight of Public Enterprises (ÖUSG) and the Law on Liechtensteinische Landesbank (LLBG) provide a further framework. The Group Tax Compliance Department is responsible for ensuring implementation of the tax compliance strategy as well as compliance with the Automatic Exchange of Information (AEOI) and the FATCA agreement.
Besides strategy, corporate culture is also a key factor in our success. For this reason, LLB promotes the implementation of internal rules, processes and practices that foster ethical behaviour, fairness and transparency. Our Code of Conduct provides a reliable framework that offers guidance to all employees in acting in a value-driven and responsible manner. The principles it contains not only fulfil statutory requirements, but also meet ethical and social standards.
Compliance and legal risks
At the LLB Group, compliance and legal risks are defined as the risks of violations of legal and regulatory provisions as well as of standards, which can lead to sanctions and result, in particular, in financial losses or reputational damage. Ensuring good compliance is a challenging management task. LLB’s Board of Directors defines the guidelines and receives a written report once a year from Group Legal & Compliance on compliance risks and measures taken to remedy them. The Group Legal & Compliance Business Area informs, supports and advises the Group Executive Board on the assessing and monitoring of compliance risks. Key compliance issues such as following regulatory changes, implementing new requirements, training employees and monitoring are dealt with by the appropriate departments. These include, for example, Group Regulatory Compliance, Group Financial Crimes Compliance and Group Tax Compliance.
A set of internal rules and regulations exist for all key issues, including whistleblowing. Anyone with information about improper conduct by any employee of the LLB Group which is not consistent with its compliance principles and could be detrimental to the bank has the option of contacting the bank’s internal whistleblowing office either in writing, verbally or electronically. This can now also be done using a separate tool that enables anonymous reporting and communication with the bank. The whistleblowing office investigates reports made, determines whether there has been a possible violation of laws, rules and regulations, morality or the like, and classifies the information accordingly. The whistleblower is protected and must not suffer any disadvantage through making the report. If a compliance violation has occurred, it is then assessed in a regulated internal process and, if necessary, punished.
In the reporting year, no penalties or fines were imposed on LLB due to violations of legal or regulatory requirements. We expect all employees to observe the Code of Conduct, to act with integrity and to comply with professional standards as well as with the existing laws, regulations and directives.
Continuous adaptation of security infrastructures together with monitoring and analysis systems as well as training of the employees form the basis for the prevention of abusive conduct. Internal directives and measures are regularly adapted to changed framework conditions such as regulatory developments.
Risk and reputation management
The LLB Group proactively manages opportunities and risks, and this enables it to identify and mitigate risks in good time. Risks can have a significant impact not only on LLB’s standing in the market, with the public as well as with clients and staff, but also on the success of the business. By acting diligently and in compliance with the law, we can further mitigate risks and uphold our reputation along with the good name of the Liechtenstein financial centre. We are intent on identifying potential risks early so that appropriate measures can be taken promptly. In this way, we not only ensure the bank’s continued existence, but also protect our clients and all other stakeholders.
To this end, LLB takes a holistic approach to risk and reputation management with organisational and independent control processes and authorities. The Board of Directors of the LLB Group determines the basic risk strategy, risk policy and risk tolerance with the support of the Group Risk Committee. The Group Executive Board is responsible for the implementation of the risk management processes within the intended scope. It is supported by the various risk committees.
The Group Credit & Risk Management Department identifies, assesses and monitors risks. It reports to the Board of Directors and the Group Executive Board on the LLB Group’s key risks. The division is functionally and organisationally independent of the operative units and supports the Group Executive Board in the management of overall risk.
For the LLB Group, digitalisation and innovative strength are of major importance. The banking business has been undergoing digital transformation for decades. Starting with settlement in the core banking system, successive processes were digitalised until finally the transformation also reached the client business. Apart from cash, there is no other financial service that is used exclusively in the physical world. With the growing penetration of technology into everyday life, interpersonal interaction such as in advisory meetings is being increasingly supported digitally.
To ensure our continued success, we are intent on using the opportunities that digitalisation brings to our processes and to the development of new products and services. Our innovative strength allows us to capitalise on competitive advantages that we reap from digitalisation. With our offerings, which reflect changing needs, we create customer experiences. Lower development costs and better scalability of products and services have a positive effect on LLB’s profitability, which ultimately also benefits our stakeholders. At the same time, we are keen to actively counter any negative effects of digitalisation for our clients, employees and society. Digitalisation can lead at LLB to a change in internal job specifications. Other possible consequences are a reduction of service levels and anonymous services or even manipulative techniques in online distribution. We are aware of the negative effects and want to counteract them with our solutions: with our omni-channel advisory service, we continue to operate a physical channel; we set high data protection standards; and we promote honest, transparent communication.
With its “LLB.ONE” programme, LLB aims to optimise and digitalise its core processes end-to-end – i.e. from the initial contact to the termination of the client relationship – by 2026. It has earmarked a budget of CHF 100 million for this programme. With “LLB.ONE”, LLB has committed itself to a zero-based design approach, whereby existing structures are revisited and, if necessary, redesigned. Core components that have already been redesigned include measuring the success of projects and initiatives, involving clients and external stakeholders in ongoing development, and continuous reviewing its own internal work.
“Sustainability” was centre stage in the area of digitalisation and innovation for LLB in 2022. Besides anchoring sustainability as one of the Group’s three strategic objectives, LLB followed through with an offering on the market: “wiLLBe” enables sustainable investment on the basis of personalised sustainability topics. “wiLLBe”, the LLB Group’s first fully digital offering, was launched in 2022. The sustainable investment app enables paperless onboarding within minutes and, for the first time, provides retail clients with an asset management service with individual securities at very competitive costs.
The greatest challenge for LLB as well as for the whole industry over the next few years will be, despite complexity in the regulatory banking environment, to integrate efficient and scalable digital solutions, while at the same time providing maximum benefits to clients.
Regulatory framework and developments
LLB considers it a top priority in a highly regulated business environment to closely monitor ongoing legislative developments and, where possible and expedient, to play an active part in shaping developments as well as to prepare for innovations in good time. The employees implement the regulatory requirements and thus make an essential contribution to the success of the business and to the good reputation of LLB.
The most important regulatory requirements and developments in the reporting year are summarised below. We have focused primarily on regulations that were of particular importance in the reporting year due to their topicality. Other regulatory requirements that are of relevance to the LLB Group can be found in previous annual reports.
Our sustainability strategy focuses on tackling some of society’s biggest challenges but also addresses the concomitant regulatory and political requirements. Of specific importance here is Regulation (EU) 2020/852 (EU Taxonomy). As described in the following chapters, it has an impact on our core strategy, our product development and the way we deal with our clients and stakeholders. The customised implementation of the EU Taxonomy helps us to develop our own ambitions further and is coordinated and acted upon within the LLB Group.
Implementation of regulatory frameworks 2015–2022
- 4th EU Anti-Money Laundering Directive
- Agreement on the Automatic Exchange of Information (AEOI) signed by Liechtenstein / EU
- Undertakings for Collective Investment in Transferable Securities Directive V (UCITS V)
- Complete revision of the Investment Undertakings Act (IUA)
- Implementation of AEOI
- Revision of Due Diligence Act (DDA)
- Markets in Financial Instruments Directive II (MiFID II)
- EU General Data Protection Regulation (GDPR)
- EU Mutual Assistance Directive
- Deposit Guarantee Schemes Directive (DGSD)
- EU Payment Services Directive (PSD2)
- Implementation project for the Financial Services Act (FinSA) / Financial Institutions Act (FinIA) Switzerland
- Adaptation to the Due Diligence Act (DDA) to implement the 5th EU Anti-Money Laundering Directive
- Regulation on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation)
- Regulation on sustainability‐related disclosures in the financial services sector (Disclosure Regulation) and Regulation on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation)
- Adaptation to the Liechtenstein Banking Act and to the Banking Ordinance to implement the Capital Requirements Directive V (CRD V)
Regulatory disclosure obligations under Article 8 of the EU Taxonomy Regulation
The aim of the EU Sustainable Finance Action Plan is to direct capital flows into environmentally sustainable economic activities. This requires a common understanding of what constitutes environmentally sustainable economic activities. This prerequisite was created with Regulation (EU) 2020/852 (EU Taxonomy), which entered into force in Liechtenstein on 1 May 2022. In addition to establishing the criteria for determining whether an economic activity qualifies as environmentally sustainable, the EU Taxonomy also lays down comprehensive reporting obligations for credit institutions.
In accordance with Article 3 of the EU Taxonomy, an economic activity qualifies as environmentally sustainable if it contributes substantially to any one of the environmental objectives below. At the same time, it must not adversely harm any of the other environmental objectives and must comply with the minimum safeguards laid down.
The following six environmental objectives provide a benchmark for assessing the environmental sustainability of an economic activity under the EU Taxonomy:
- climate change mitigation
- climate change adaptation
- sustainable use of water resources
- transition to a circular economy
- pollution prevention, and
- protection of ecosystems and biodiversity.
The conditions under which an economic activity qualifies as contributing substantially to climate change mitigation and climate change adaptation and as causing no significant harm to any of the other environmental objectives are determined using the technical screening criteria laid down in Delegated Regulation No. (EU) 2021/2139. The technical screening criteria for the other environmental objectives are expected to be adopted in a delegated act during the course of 2023.
In accordance with Article 8 of the EU Taxonomy, the LLB Group is obliged to disclose information about the proportion of total assets of the LLB Group that is associated with economic activities that qualify as environmentally sustainable under the EU Taxonomy. The reporting obligations are specified in Delegated Regulation No. (EU) 2021/2178 and will enter into force gradually by the 2025 reporting year.
The reporting obligation for the 2022 reporting year covers, on the one hand, the proportion of exposures related to taxonomy-eligible economic activities. This corresponds to the proportion of total assets that is associated with economic activities described in Delegated Regulation No. (EU) 2021/2139. Neither compliance with the technical screening criteria nor compliance with the minimum safeguard standards is essential for this. For the 2022 reporting year, the proportion in total assets of exposures related to taxonomy non-eligible economic activities is also disclosed. The same applies to the proportion in total assets of exposures to supranational issuers, central banks and central governments, the proportion in total assets of derivatives, the proportion in total assets of exposures to entities that are not obliged to publish non-financial information under Article 19a or 29a of Directive 2013/34/EU, the proportion in total assets of on-demand interbank loans and the proportion in total assets of the trading portfolio. The reporting obligation for the 2022 reporting year covers not only quantitative information but also qualitative information in accordance with Annex XI of Delegated Regulation No. (EU) 2021/2178.
The taxonomy eligibility analysis is an intermediate step in the reporting and corresponds to full compliance with the regulatory requirements under Article 8 of the EU Taxonomy until the full reporting obligations under Article 10 of Delegated Regulation No. (EU) 2021/2178 enter into force.
From the 2023 reporting year, the LLB Group is obliged to disclose the proportion of exposures related to taxonomy-aligned economic activities1 of a defined portion of the assets. Known as the green asset ratio (GAR), it indicates the proportion of business volume of the LLB Group that is associated with economic activities that are environmentally sustainable under the EU Taxonomy.
To enable comparability over time, the calculation of the key figures for the 2022 reporting year corresponds to the specifications for the calculation of the GAR.
Total assets minus exposures to central governments, central banks and supranational issuers in the denominator were therefore used as the reference value for calculating the seven key figures below. In accordance with Article 7 and Annex V of Delegated Regulation No. (EU) 2021/2178, the following exposures were also excluded from the numerator for the calculation of the first two key figures:
- exposures to central governments, central banks and supranational issuers
- financial assets held for trading
- on-demand interbank loans.
The exclusion of exposures to entities that are not obliged to publish non-financial information under Article 19a or Article 29a of Directive 2013/34/EU was not made for the 2022 reporting year due to limited data availability.
The calculation of the key figures for the 2022 reporting year was based on regulatory financial reporting requirements and the scope of prudential consolidation. The table below summarises the results of the reporting obligations applicable for the 2022 reporting year.
1An economic activity qualifies as taxonomy-aligned if it contributes substantially to any one of the environmental objectives, does not adversely harm any of the other environmental objectives and complies with all social minimum safeguards.
Proportion in % of total assets 2
Proportion of exposures related to taxonomy-eligible economic activities
Proportion of exposures related to non taxonomy-eligible economic activities
Proportion of derivatives
Proportion of entities that are not obliged to publish non-financial information under Article 19a or 29a of Directive 2013/34/EU
Proportion of trading portfolio
On-demand interbank loans 3
Exposures excluded from the calculation
Proportion in total assets of central governments, central banks and supranational issuers
2 Excluding exposures to central governments, central banks and supranational issuers
3 Term < 1 year
Financial centre strategy
In 2019, the Government published a comprehensive financial centre strategy designed to further enhance the competitiveness of the Liechtenstein financial centre. The path of tax compliance should continue to be pursued. The same applies to compliance with international rules and standards. The focus of the strategy is on unrestricted and equal access to markets and improving the framework conditions for innovative enterprises. In addition, the Government has set four strategic goals in order to meet international expectations in the area of combating money laundering and terrorist financing. Dialogue with key partner countries is to be intensified. Membership of international bodies such as the International Monetary Fund (IMF) will thus continue to be explored. The Government also attaches great importance to digitalisation and blockchain technology. With the Blockchain Act (Token and TT Service Providers Act, TVTG), Liechtenstein is the first country in the world to develop a legal basis for the token economy.
International tax topics
Disclosure of cross-border tax planning arrangements
According to the OECD, the lack of comprehensive and relevant disclosure about potentially aggressive or abusive tax planning strategies is one of the major challenges facing tax authorities. In this context, the EU, with the amendment to the EU Mutual Assistance Directive (Directive 2011/16/EU – “DAC 6”) which came into effect in 2018, has introduced a disclosure requirement for cross-border tax arrangements directed at EU intermediaries (especially fiduciaries, lawyers, tax advisers and banks).
International co-operation on tax topics
The Principality of Liechtenstein is intent on creating an attractive tax system that takes account of European law and international developments. Hence, the Principality has implemented the international automatic exchange of information with 114 partner or reporting countries since the beginning of 2016. The FATCA agreement with the USA was concluded in 2014. The Global Forum of the OECD confirmed in November 2021 that Liechtenstein is fully compliant with the OECD requirements and described the Liechtenstein legal framework as “In place”, which corresponds to the highest rating.
Plans for international group taxation
While the OECD’s plans for an internationally unified approach to digital taxation presented in autumn 2019 are still in progress, the Group of Twenty (G20) countries endorsed in autumn 2021 a global minimum tax for corporations, which is set to apply from 2023.
Access to the EU market
Thanks to its membership of the EEA, Liechtenstein has unrestricted access to the internal European market. The internationally oriented fund location benefits in particular from this. It has a legal basis that is focused on clients and investor protection. The investment fund law comprises three pillars: the Act on Certain Undertakings for Collective Investment in Transferable Securities (UCITS Act, 2011), the Law on Alternative Investment Fund Managers (AIFM Act, 2013) and the Investment Undertakings Act (IUA), which was revised in 2016.
Data protection and cyber security
Due to increasing digitalisation, client data protection and information security play a fundamental role in banking practice. Sophisticated information processing systems, which guarantee confidentiality, availability and integrity, protect against dangers and threats and help to prevent damage as well as minimise risks. By taking appropriate technical precautions on information security and data protection, we can ensure the seamless operation of digital systems, engender trust among our clients and employees and promote economic activity in Liechtenstein. We also contribute to the protection of the country’s critical infrastructure.
The Group Information Security Department bears primary responsibility for client data protection and information security. The laws and supervisory guidelines in Liechtenstein, Switzerland and Austria together with the specific regulations in our target markets (in particular, the Banking Act, the Data Protection Act, the GDPR as well as FINMA and FMA requirements) regulate, in a clear and binding manner, the responsibilities and measures for client data protection and information security. We process personal data in accordance with the General Data Protection Regulation. At the LLB Group, the principles and policies are set out in directives that are binding throughout the Group. Employees are regularly trained and sensitised in the responsible handling of client data and information.
Standards for cyber security are very high at the LLB Group. Specialists from the responsible data centre continuously analyse new cyber threats and, depending on the risk, take appropriate countermeasures. External comparisons and penetration tests guarantee a good level of security on a continuous basis.
In the reporting year, LLB registered no substantiated complaints regarding breaches of client privacy or losses of client data.
EU General Data Protection Regulation (EU GDPR)
LLB has implemented the requirements of the European EU General Data Protection Regulation (EU GDPR) Group-wide. The regulation regulates and standardises the collection and processing of personal data by companies and public authorities. LLB has established corresponding rules which are applicable throughout the Group and made the necessary adjustments to implement the requirements appropriately.
Data protection laws in Switzerland and Dubai (DIFC)
The Swiss Data Protection Act was completely revised in 2020 and partially adapted to the EU GDPR. But it retains its own basic concept. It will come into force on 1 September 2023.
In the Dubai International Financial Centre (DIFC), the new Data Protection Law came into force on 1 July 2020. It sets an important benchmark for data protection in the Middle East and largely aligns the legal situation with the EU General Data Protection Regulation, which is gradually becoming an international benchmark.
Protection against money laundering and terrorist financing
Liechtenstein has a zero-tolerance policy towards money laundering and terrorist financing. As a member of the EEA, Liechtenstein has meanwhile also implemented the 5th EU Anti-Money Laundering Directive and in doing so has improved transparency with regard to beneficial owners as well as risks relating to virtual currencies. The directive also tightens and harmonises the criteria for assessing high-risk third countries. These international requirements have been implemented domestically through the Due Diligence Act and the Due Diligence Ordinance.
Compliance with international standards
The Financial Intelligence Unit (FIU) serves as the country’s central authority for obtaining and analysing information that is necessary to recognise money laundering, predicate offences for money laundering, organised crime and terrorist financing. It represents Liechtenstein in the Committee of Experts on anti-money laundering and terrorist financing in the EU. The current version of the FIU Law of 2019 and the adaptations made to the Due Diligence Act in 2021 ensure Liechtenstein is fully legally compliant with the international standard.
In 2002, 2007, 2013/2014, the International Monetary Fund (IMF) and Moneyval (the Council of Europe’s Committee of Experts) assessed to what extent the Liechtenstein provisions on anti-money laundering and combating the financing of terrorism meet the standards laid down by the Financial Action Task Force (FATF 40 + 9 Recommendations). The IMF and Moneyval attested positively to Liechtenstein’s standards in combating money laundering and financing of terrorism in their last report. After carrying out the National Risk Assessments (NRA I) in 2016/2017 and updating them (NRA II) in 2020, Liechtenstein completed the Moneyval country examination in autumn 2021 in order to assess the effectiveness of the measures in preventing money laundering and terrorist financing. In its last report published on 29 June 2022, Moneyval attested to Liechtenstein’s high level of effectiveness in identifying and combating money laundering and terrorist financing risks and commended the country for having a comprehensive and convergent understanding of its key risks in this area. Liechtenstein was awarded the rating “substantial” in five of eleven effectiveness ratings. In terms of technical compliance with the 40 FATF recommendations, Liechtenstein was also given very good marks.
MiFID II / Liechtenstein
The Liechtenstein banking centre and thus also LLB implemented the Markets in Financial Instruments Directive II (MiFID II). It simplifies cross-border financial services and allows investment firms, banks and stock markets to offer their services in other EU / EEA member states. Furthermore, they are required to conduct precise client and product analyses as well as disclose information on compensations and commissions. The accompanying Regulation (MiFIR), which has been in force since January 2018, brought significant changes compared to the previously applicable laws. These include the strengthening of investor protection and improving the integrity and transparency of the financial markets. High-frequency trading is subject to regulation and supervisory oversight; position limits in commodities trading are strict. Throughout the EU, consultations at bank branches and consultations by telephone must record and document in a comprehensive manner why a financial product was recommended and how it matches the client’s risk profile.
FinSA / Switzerland
In November 2019, Switzerland decided to follow a balanced and modern overall approach to investor protection with the adoption of the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA). The two acts, which have been in force since January 2020, aim to create a level playing field for financial intermediaries and to improve client protection. The FinSA contains rules of conduct towards clients that financial service providers must comply with. It also provides for prospectus requirements and requires a basic information sheet for financial instruments that is easy to understand. The FinIA essentially standardises the authorisation rules for financial service providers.
Rules of the game in the EU payment systems market
For LLB, the harmonisation and the digitalisation of the European payment systems market are important topics. As an EEA country, Liechtenstein adopted the second EU Payment Services Directive (PSD2) in 2019. The revised Payment Services Act came into force on 1 October 2019. The PSD2 introduces new information and liability rules for payment service providers that are aimed at improving customer protection. It also requires strong customer authentication and limits the scope of previous exemptions. In this connection, two new types of financial intermediary, namely the payment initiation service provider and the account information service provider, have been created. At LLB, the adjustments required to implement the PSD2 have been made.
EU Mortgage Credit Directive
The Directive 2014/17/EU on credit agreements for consumers relating to residential immovable property has been in force in the EU member states since 2014. It has created a single legal framework for the granting of mortgage credit agreements to consumers in the internal European market. As a member of the EEA, Liechtenstein was obliged to transpose this directive into national law. This happened with the Mortgage and Real Estate Credit Act, which has been in effect since 1 April 2021. The directive serves to protect consumers taking out loans to buy residential property. Under the directive, the banks are subject to various obligations when granting a loan. These include, in particular, (pre-)contractual information requirements, creditworthiness assessment requirements and qualification requirements for bank employees involved in granting loans.
LLB has implemented the rules and incorporated them into the relevant processes, with the consultation process having been particularly affected.
Capital adequacy requirements
Revision of EU banking regulation
The new EU banking package, which was published by European legislators on 20 May 2019, has implemented further key elements of the Basel III framework, which was essentially completed at the end of 2017, at European level through amendments to the Capital Requirements Regulation II (CRR II) and Capital Requirements Directive V (CRD V). The CRR II has been applicable in the EU since June 2021, while the CRD V had to be implemented by the EU member states by 28 December 2020. In Liechtenstein, the CRR II and the CRD V came into force on 1 May 2022.
Transparency Regulation and Taxonomy (Regulation in the sustainability sector)
The EU Sustainable Finance Action Plan adopted by the European Commission in March 2018 aims, among other things, to improve the financial sector’s contribution to sustainable and inclusive growth by financing society’s long-term needs, as well as to strengthen financial stability by requiring environmental, social and governance (ESG) factors to be taken into account in investment decisions. This affects LLB AG and LLB Österreich, as well as other institutions in Liechtenstein and Switzerland. The background to this is the progressive tightening of requirements in the European Economic Area (EEA), efforts to secure EU market access for Swiss financial service providers and the growing expectations of all market participants. The LLB Group is following developments closely and taking the steps that are necessary to meet the new requirements.
Deposit guarantee schemes and investor compensation (DGSD)
The DGSD requires EEA member states to recognise at least one national guarantee scheme that is responsible for the implementation of the deposit guarantee scheme at banks. All banks must belong to a deposit guarantee scheme which is supervised by a national authority. In Liechtenstein, this function is assumed by the Financial Market Authority. The new Deposit Guarantee and Investor Compensation Act (DGICA) entered into force in 2019.
In the event of a compensation case, the Deposit Guarantee and Investor Compensation Foundation PCC (EAS) would ensure that the financial consequences for depositors and investors are at least mitigated by covering depositor claims from eligible deposits up to CHF 100’000 and investor claims up to a maximum of CHF 30’000. Eligible deposits are all kinds of account balances as well as call money and time deposits.
Recovery and resolution planning (RRA)
With the Bank Recovery and Resolution Directive (BRRD), European legislators have introduced minimum requirements for the recovery and resolution of credit institutions. The BRRD was transposed in Liechtenstein through the Recovery and Resolution Act (RRA). Through it, a statutory mechanism is available to counteract the “too big to fail” risk of large, systemically important banks in a crisis.
Systemically important banks in Liechtenstein, of which LLB AG is one, are required to draw up a recovery plan. The recovery plan contains an outline of the measures and escalation processes available to the institution in the event of a financial crisis. Model analyses show that these measures are suitable for restoring the financial soundness of the institution in crisis scenarios.
On 1 January 2017, the Liechtenstein Financial Market Authority (FMA) created an operationally independent organisational unit acting as a resolution authority. Its primary objectives are to avoid significant adverse effects on the stability of the Liechtenstein financial market and to protect client funds and client assets in the event of the failure of an institution. Minimum requirements for own funds and eligible liabilities (MREL) are set by the regulator in order to strengthen the capital available for write-down or conversion in the event of resolution (bail-in capital). This should increase the resolution capacity and reduce the risk of having to resort to public funds for resolving banks. Within the framework of the BRRD II, which is part of the current EU banking package, the regulations on resolution and MREL are being updated and expanded. The implementation of the BRRD II and the definition of the MREL is expected in Liechtenstein by mid-2023 (RRA II).