Information unaudited Information ungeprüftEconomic role and regional employer

The LLB Group has a special role to play in the domestic market of Liechtenstein: with sustainably positive business results, we contribute to the economic growth and stability of Liechtenstein as a financial center. We are also a key regional employer. We share our economic success with those around us.

In Liechtenstein, we believe we have an economic role to play in three areas: as a financial services provider, we are an important local partner for companies and people. At the same time, we have a special responsibility for the economic prosperity of Liechtenstein and its stability as a financial market. As one of the largest employers, we aspire to create secure jobs in an environment where people feel valued. We are also a sponsor and support projects and initiatives with a social impact.

General information

Our most important internal and external stakeholder groups have rated the issue of “economic role and regional employer” as material on account of the following impacts, risks and opportunities:

• We make positive impacts by supporting local (infrastructure) projects as well as companies and people in the domestic market of Liechtenstein with tailored finance solutions. By doing this, we promote sustainable local development, strengthen the local economy and help create jobs in the region. By taking seriously our economic role as a reliable partner of the Liechtenstein economy, we also help stabilise the financial market. We are of particular importance to the real estate market in Liechtenstein, where we lead the way in terms of mortgage business with a market share of around 50 per cent. We provide the sector with the financing it needs and help promote market stability at the same time. We expect these positive impacts will continue over the medium term.
• Negative impacts are possible if we are no longer able to adequately perform our role within the Liechtenstein real estate market. This may mean financing is no longer available for numerous projects. We do not, however, expect any such negative impacts in the short to medium term. Over the long term, numerous factors such as interest rate fluctuations, higher refinancing costs and increased competition will influence our ability to remain the countryʼs most important provider of real estate finance. As things currently stand, we do not believe the factors referred to will undermine our long-term position. Therefore, any impact on the Liechtenstein real estate market is unlikely.
• Risks exist in the form of fluctuations in economic activity and economic crises. These phenomena are cyclical in nature and generally unpredictable; the financial effects on the LLB Group can be significant. If we are unable to fulfil our role within the economy, the stability of Liechtenstein as a financial market will suffer. This would also constitute a financial risk for us, because we as a bank are reliant on a stable environment. Lastly, given our dependence on our employees, the core resource of our business, we are exposed to risk if we fail to implement the measures they expect from us. Possible consequences are a decline in employee satisfaction, high staff turnover and increased costs for filling vacated positions. The last of these presents a particular challenge in Liechtenstein, as the financial center – on account of its size and accessibility – is less attractive to potential candidates than other financial centers nearby. There are currently no negative financial effects on account of the risks described.
• The ongoing stability of the financial market in Liechtenstein and high levels of customer confidence give us an opportunity, as they present us with ideal conditions for achieving our economic objectives. We are not currently able to quantify the positive financial effects.

Any material impacts, risks and opportunities are reflected in the investment and corporate strategy of the LLB Group. Our aim is to minimise any negative impacts through our business activity, promote positive impacts, take advantage of opportunities and manage our risks effectively.

Management of impacts, risks and opportunities

The subtopics referred to at the outset (our role as a financial services provider, regional employer and sponsor) are of particular importance to our sustainability reporting. Later, we provide a separate description of how these sustainability aspects are managed.

Our role as a financial services provider

As Liechtensteinʼs longest-established bank, we are aware of our special responsibility for long-term action. Sustainable business management is part of our performance mandate and corporate identity. We have a legal obligation to our majority shareholder, the Principality of Liechtenstein, to promote Liechtensteinʼs economic development while at the same time taking ethical as well as environmental factors into account.

Strategy

The “Gesetz über die Liechtensteinische Landesbank” (Law on the Liechtensteinische Landesbank – LLBG) and the “Beteiligungsstrategie der Regierung des Fürstentums Liechtenstein für die Beteiligung an der Liechtensteinischen Landesbank AG” (Participation Strategy of the Government of the Principality of Liechtenstein for the Participation in Liechtensteinische Landesbank AG) define the general requirements for how we should behave in relation to the economy. In accordance with the investment strategy and art. 3 para. 2 LLBG, the LLB Group has the following purpose in particular:

• promoting economic development within the Principality of Liechtenstein, while observing sound banking and commercial principles;
• aiming to achieve reasonable profits, while remaining mindful of the need for economic responsibility;
• meeting public and private lending needs in an appropriate manner;
• helping domestic and foreign customers to make secure and profitable investments and looking after money.

The Government expects the value of the LLB Group as a business to grow sustainably. We must take deliberate account of the risks associated with the business activities of a universal bank and manage these accordingly. Our governing bodies are also obliged to consider in particular the bankʼs economic significance to the country and its reputation. In addition, we should be aware of the ethical and social responsibility towards employees, business partners, customers and Liechtenstein society when defining and implementing our corporate strategy.

Our corporate strategy ACT-26 is based on the guidelines set out in the ownership strategy at national level (see the Strategy and organisation section). It applies across the LLB Group and is available for public inspection. The corporate strategy is set by the Group Board of Directors; the Group Executive Board is entrusted with implementation at an operational level. In the course of an annual round of discussions, we give the Government an insight into how the investment and corporate strategy is being implemented. The Chairman of the Group Board of Directors and the Group CEO also inform the head of the Government about the strategic alignment of the LLB Group at least every six months.

Security and stability

We identify, assess and monitor the various risks to which a bank is exposed in the course of risk and financial management. We take particular account of credit, market and operational risks. Our aim is to manage these risks to profitable effect and, at the same time, to ensure the financial stability of the bank.

As a bank of systemic importance, we are subject to particularly stringent financial market regulation and high capital adequacy requirements. A solid equity position is also part of our identity. We comfortably exceed the core capital ratio (Tier 1 ratio) of 13.7 per cent, as stipulated by the Basel framework in the Principality of Liechtenstein. This means we are very well prepared for any fluctuations within the wider economy (see the Risk management section).

Under current law, every bank must be a member of a deposit guarantee scheme monitored by a national authority – in Liechtenstein this is the Finanzmarktaufsicht Liechtenstein (Liechtenstein Financial Market Authority – FMA). LLB AG has joined the Einlagensicherungs- und Anlegerentschädigungs-Stiftung SV (Deposit Guarantee and Investor Compensation Foundation – EAS). In the event of a compensation case, the 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 100ʼ000 and investor claims up to a maximum of CHF 30ʼ000. Eligible deposits are all kinds of account balances as well as call money and time deposits.

Policies

Specific details on the implementation of strategic projects are set out in various internal documents. The LLB Groupʼs Group directive “Geschäftsordnung” (Group directive “Rules of Procedure”) are of particular importance in this respect (responsibility: Group Legal & Regulatory). These provide the basis for various objectives, including:

• defining a clear and consistent corporate strategy;
• ensuring a customer-oriented and competitive corporate policy;
• defining a clear, effective and efficient management and organisational structure;
• defining medium-term objectives in relation to growth and both cost and capital efficiency;
• implementing an appropriate risk management system for business activity;
• ensuring financial security and stability through adequate capitalisation;
• sustainable increase in the consolidated value of the LLB Group;
• adopting a sustainable dividend policy.

The “Rules of Procedure”, together with the regulations issued by the Group Board of Directors, provide the corporate governance structure of our company. The focus is on roles and responsibilities, management and organisation as well as the principles of risk management. It therefore sets out the requirements for Group-wide management, collaboration and organisation, defines the duties and competencies of the Group Board of Directors, Group Executive Board and other Group functions, governs collaboration between bodies responsible for overall direction, management and control and contains requirements on the consistent management of Group companies.

Alongside the LLB Groupʼs business policy, the following policies are also important:

• Group regulation on “Capital management” (responsibility: Group Risk Management): This sets out the principles for capital management at the LLB Group and defines the roles and responsibilities in relation to the Internal Capital Adequacy Assessment Process (ICAAP). The aim is to strengthen resilience during periods of stress by implementing effective internal processes for ensuring adequate capitalisation – including comprehensive stress tests and capital planning processes. The regulation applies across the Group.
• Group regulation “Rahmen-Risikopolitik” (Group regulation on “Risk policy framework”; responsibility: Group Risk Management): This defines binding qualitative and quantitative standards for risk responsibility, risk management and risk control at the LLB Group. It also specifies an adequate organisational and methodological framework for the assessment and management of risks and describes the structure of the limits system. The risk policy framework represents the overarching framework for detailed regulations and supports a sustainable business policy focused on risk and reward. The aim is to achieve a comparative advantage by monitoring and managing, as well as diversifying and covering, the LLB Groupʼs exposure to risk. The regulation applies across the Group.
• Group regulation “Kreditrisikomanagement” (Group regulation on “Credit risk management”; responsibility: Group Risk Management): This defines the principles for credit risk management at the LLB Group. The avoidance of credit losses and the early identification of default risks are critically important in the context of credit risk management. In addition to a systematic approach to risk and returns management at the level of individual loans, the LLB Group also proactively manages its credit risks at the level of the credit portfolio. The main focus is on reducing overall risk through diversification and smoothing out expected returns. The regulation applies across the Group.
• Group regulation “Credit risk management” (Group regulation on “Credit risk management”; responsibility: Group Risk Management): This defines the principles for credit risk management at the LLB Group. The avoidance of credit losses and the early identification of default risks are critically important in the context of credit risk management. In addition to a systematic approach to risk and returns management at the level of individual loans, the LLB Group also proactively manages its credit risks at the level of the credit portfolio. The main focus is on reducing overall risk through diversification and smoothing out expected returns. The regulation applies across the Group.

Measures

As a financial service provider, we offer our customers innovative banking products. In terms of lending, we support private customers and companies with tailored finance. In particular, we provide funding for regional projects and small and medium-sized enterprises (SMEs). We also offer conventional payment services and reliable account management services. These measures are part of our statutory mandate and therefore not associated with any specific timescales.

Our range also includes a series of environmentally friendly and socially responsible solutions. These include a wide selection of funds, as well as asset management and investment advice mandates, which invest in accordance with appropriate criteria, and also finance models aimed at promoting sustainable building (see the Climate change mitigation section).

Targets and key figures

Our corporate strategy ACT-26 has defined specific quantitative targets for each core area (growth, efficiency, sustainability). These are Group targets, and no distinction is made between the subsidiaries. The requirements are to be achieved over the course of the current strategy period, so in the 2022 to 2026 financial years.

In order to ensure we can grow sustainably, the strategy envisages a minimum 3 per cent annual increase in net new money and net new loans. The core capital ratio (Tier 1 ratio), an important indicator for the resilience of the LLB Group, should be above 16 per cent, which is significantly above the regulatory requirement. In each case, the previous year is the baseline year. In 2026, the cost-income ratio should not exceed 65 per cent. The main stakeholders are involved in the formulation of quantitative targets through our strategy process. The key figures referred to are contained in the LLB Groupʼs consolidated financial statement.

We measure our contribution to the economy through further key figures, for which we have not defined any specific targets. These include the total direct taxes we pay and any dividends paid out. In the reporting year, this amount is CHF 59.3 million (2023: CHF 45.2 million). The lending volume in Liechtenstein provides an indication of our commitment to local companies and private individuals. As at 31 December 2024, this amounts to CHF 8ʼ859 million (31.12.2023: CHF 8ʼ259 million), which represents an increase of 7.3 per cent.

Our role as a regional employer

We are one of the largest employers in Liechtenstein. As befits this status, and in order to remain attractive for potential candidates, we place particular emphasis on creating a modern working environment.

Strategy

The “Beteiligungsstrategie der Regierung des Fürstentums Liechtenstein für die Beteiligung an der Liechtensteinischen Landesbank AG” (Participation Strategy of the Government of the Principality of Liechtenstein for the Participation in Liechtensteinische Landesbank AG) also defines the guidelines for our role as a regional employer. Therefore, the various bodies within the LLB Group have to consider their ethical and social responsibility towards employees when implementing the corporate strategy, in particular:

• ensuring gender equality;
• promoting both the health and physical and mental well-being of employees;
• ensuring employees are safe at work;
• establishing and safeguarding our position as an attractive employer;
• continuous advancement and professional education for employees;
• promotion of employee satisfaction.

The HR strategy at the LLB Group reflects the requirements of the investment strategy and sets additional priorities. It concentrates on building up staffing levels in accordance with the strategy and making sure employeesʼ competencies are aligned with new areas (e.g. digital transformation, agility). The strategy relies on systematic development of the technical and sales skills of employees with customer contact, which is seen as a way of helping us stand out in the market. The strategy also places considerable emphasis on social responsibility and diversity, with a view to making us more attractive as an employer for all generations and promoting gender balance in the workplace. Another important element is the LLB Groupʼs diversity strategy (see the Diversity and equal opportunities section).

Policies

We have set out our general strategic requirements in various internal documents such as the Code of Conduct (see the Corporate governance and integrity section), in the Group directive “Weiterbildung” (Group directive on “Professional education”) and in the LLB Groupʼs Arbeitszeitreglement (working hours regulations – see the Diversity and equal opportunities section).

The Group Human Resources (HR) department is responsible for implementation at an operational level. It provides the Group Executive Board with a report, during the financial year, on LLBʼs role as an employer. Further directives apply at the level of our subsidiaries; the HR managers at the respective company are responsible for implementation.

Measures

In order to attract qualified employees and retain them over the long term, we are continuously implementing measures to improve the working environment. Here, we focus in particular on health promotion in the workplace, raising job quality and flexibility of working hours and location. We also invest in the training and professional education of our employees. Specific measures include:

• Health promotion in the workplace: our wide range of health-related offers include weekly yoga lessons, a back fitness programme or free psychological counselling sessions.
• Flexible working hours and environment: most employees work under the trust-based working hours model: this allows them to set their exact working hours, in consultation with their line manager. We also have modern home office rules, allowing people to work from home.
• Professional training and education: we offer various opportunities in terms of professional training and education. These range from traditional apprenticeships and the young talents programme for students to ongoing professional education opportunities for employees.

To assess employee satisfaction levels and identity any room for improvement, we conduct comprehensive employee surveys at LLB Group companies. The results feed into decisions taken at corporate level. This helps us reduce the risk of increased costs for filling vacated positions due to high staff turnover.

The last survey in 2023 raised the following core issues: “Work and leisure”, “Internal communication” and “Workplace and equipment”. In the reporting year, we picked up on the results in voluntary employee workshops and looked at them in more depth to get a better idea of the concerns expressed. In autumn 2024, we informed employees of the first follow-up measures, which were already being implemented or will be in 2025. These include:

• Work and leisure: better integration of existing options (part-time working, purchasing additional leave, working from home, advice on stress prevention) as well as examples of best practice, provided by managers, on how to better prioritise things and increase efficiency;
• Internal communication: new, user-friendly intranet (implemented), digital town hall meetings and better communication from managers (at the planning stage);
• Workplace and equipment: procurement of new laptops and screens, introduction of MS Teams, improvement of network performance and optimisation of IT support.

Our Personnel Pension Fund Foundation strengthens our position as an attractive employer. This pension fund and its defined contribution scheme offer all insured persons a benefit plan that goes beyond the requirements of the law. In addition, we as the employer cover at least two-thirds of the contributions. Securing pension provision is the top priority, and this is monitored by the Board of Trustees on an ongoing basis. To achieve this objective in the long term, the technical parameters are set deliberately and carefully.

Measures to ensure gender equality are another important factor. Further information can be found in the Diversity and equal opportunities section.

Targets and key figures

Employee turnover is a core indicator of the effectiveness of our measures. Analyses in relation to this help us learn about the reasons and motivation for people changing jobs. This enables us to take the necessary steps to further improve our terms of employment and also reduce staff turnover and the associated costs. The staff turnover rate at the LLB Group amounts to 8.5 per cent in the reporting year (2023: 10.9 %). This rate is collected monthly, and a qualitative evaluation of the reasons for departure is performed quarterly. We have not defined any quantitative targets for employee turnover.

The results of employee surveys provide another indicator of the effectiveness of our measures. In the last survey in mid-2023, we achieved an extremely high response rate of 91 per cent and very good scores for the five target values (“Attractive employer”, “Commitment”, “No resignation”, “Satisfaction” and “Would recommend to others”). Weaknesses were identified under the subtopics of “Work and leisure”, “Internal communication” and “Workplace and equipment”.

The employee survey provides the basic data for the “Swiss Arbeitgeber Award” (Swiss Employersʼ Award – SAA). Thanks to the scores achieved, we came out on top in January 2024 in the SAA category for firms with more than 1ʼ000 employees. A total of 141 companies from Switzerland and Liechtenstein participated across four categories based on size. From the LLB Groupʼs perspective, the “Swiss Arbeitgeber Award” offers a good national comparison with a wide variety of sectors and companies and provides valuable feedback for measures we might adopt to further increase employee satisfaction.

Finally, another indicator is the “Friendly Work Space” label from Health Promotion Switzerland, which was achieved in 2020. In 2021 and 2022, we followed this initial success through with action and were awarded recertification in summer 2023. “Friendly Work Space” assesses the quality of occupational health management (OHM) using six quality criteria (“OHM and corporate policy”, “Human resources management and organisation of work”, “Planning”, “Social responsibility”, “Implementation of OHM” and “Overall evaluation”). These criteria help companies assess how well they are doing with OHM, and also help us to review and further develop health-related measures.

Further key figures on the focus areas of “flexible working hours and environment” and “professional training and education” can be found in the Diversity and equal opportunities section.

Our role as a sponsor

As a sponsor, we support various organisations and projects, which differ in terms of content and form, in the areas of sport, culture and competence. In doing so, we make a contribution to society and promote sustainable development in Liechtenstein and other target markets.

Strategy

We strive to pass on some of our economic success to others. Our sponsoring and events strategy is aimed at promoting projects that add value. We observe thereby the following principles:

• We want our four values (integrity, respectfulness, excellence and passion) to be experienced on an emotional and professional level through our activities.
• We strengthen and enable platforms and partnerships which fit us best.
• We explain clearly what the LLB Group stands for using thematic areas.
• We coordinate partnerships and our own events Group-wide using a management tool.

Policies

The issue of sponsoring is also dealt with in the Group directive on “Group Marketing”. This sets out the responsibilities, the processes and the cost allocation by Group Marketing (GMD) at Group level and at the level of the parent bank and LLB Group companies. It ensures that

• the strategies, principles and processes agreed by GMD are implemented and complied with;
• resources are used efficiently and effectively in line with marketing objectives;
• a consistent image is ensured in accordance with the LLB Groupʼs corporate design principles;
• all measures in the area of branding and market development, including advertising, events and sponsoring, are recorded in a Group-wide marketing master plan and implementation is taken care of by the GMD competence center;
• all points of contact are aligned, and the independent points of contact continue to develop further.

The Group directive also sets out the general responsibilities and the process relating to the sponsoring activities of the LLB Group. The Group Marketing business area has overall responsibility for coordinating our sponsoring activities.

All requests are recorded centrally via the Sponsoring Tool. We then check whether the request is compatible with the LLB brand. In doing so, we consider a total of seven principles (partnership, values, target market and target groups, sustainability, proximity, topic pyramids, process). In a further step, we determine the potential benefits of the partnership – again on the basis of seven principles (sector exclusivity, what we get in return, capitalisation, refinancing, synergies, integrative organisation, efficiency and contribution margin). All principles are set out within our sponsoring and events strategy and define the amount of discretion we have when making decisions.

Measures

We have implemented numerous measures in Liechtenstein as part of our sponsoring activity. For example, we have been supporting future talent at FC Vaduz for years now. As a partner to the Liechtenstein Olympic Committee, we are the main sponsor of the “LLB Nacht des Sports” (Night of Sports), at which the “LLB Sport Award” is also presented. We are also a presenting partner at the “Olympic Day”, a sporting event held annually for all fourth- and fifth-grade school classes in Liechtenstein. In the reporting year, we also put on the Business Day for Women again in Vaduz, as planned. The theme for the 2024 event was “Women in trades and technology”, and the “LLB Business Day Award” was presented. Metalwork technician Roberta Hoch-Bargetze walked away with the prize thanks to her impressive CV.

The “Finanzcoach” (Finance Coach) course for children and young people was launched at the Eschen branch in summer 2023. The initiative is designed to teach them how to handle money and show them how finance and economics relate to our everyday lives. The course modules have been prepared to suit the respective age groups together with the Liechtenstein Bankers Association and are delivered by LLB employees in their role as Finance Coaches. The programme was run again in 2024.

We are constantly reviewing our sponsoring activities in order to decide whether they are still compatible with the basic principles of our sponsoring and events strategy and whether we should continue with them accordingly.

Our subsidiaries are also involved in sponsoring. LLB Schweiz supports a range of organisations, with a similar focus on the three thematic areas of sports, culture and competence. LLB Österreich makes donations to numerous organisations engaged in the areas of art, culture and community service.

Targets and key figures

In the reporting year LLB contributions amount to CHF 328ʼ700 (2023: CHF 342ʼ000) in Liechtenstein and LLB Schweiz contributions amount to around CHF 350ʼ500 (2023: CHF 350ʼ000). LLB Österreich spent around EUR 88ʼ400 (2023: EUR 71ʼ300) on donations, membership fees and sponsoring. We have not defined any quantitative requirements or targets in the area of sponsoring.