We view structural change in the banking sector as an opportunity. The Avaloq IT platform that we newly installed and other measures will help us to increase efficiency within the LLB Group in 2012. Interest rates will remain low while stock markets will remain volatile. In order to be successful, we shall continue to look forward and invest in the future.
The main business segments of the LLB Group face far-reaching changes: cross-border private banking clients are discerning, and the necessity of regulatory adjustments continues to be coupled with volatile financial markets. We expect that monetary policy aimed at tackling the debt crisis in Europe will stay loose and that as a consequence interest rates will remain exceptionally low. We therefore assume continued margin pressure in both the asset management business and the credit business. At the same time, we want to actively shape structural change. In 2012, we will further modernise our infrastructure, intensify cooperation with our partners, optimise processes and automatise tasks. These measures are in addition to our investments in increasing market performance.
- The worldwide economic slow-down: the result will be low economic growth in Europe – a development that Liechtenstein and Switzerland too will not be able to escape. Growth in the emerging markets remains stable.
- Real estate markets in Liechtenstein and in eastern Switzerland are robust.
- The central banks SNB, EZB and Fed are pursuing an expansive monetary policy in the context of a restrictive fiscal policy in the euro area and the USA.
- This expansive monetary policy is not resulting in a resurgence of inflation.
- In the core currencies CHF, EUR and USD interest rates remain stubbornly low.
- Stock markets are volatile.
- The exchange rates remain unchanged: CHF 1.20 to CHF 1.30 per EUR; CHF 0.90 to CHF 1.00 per USD.
- Regulatory requirements are becoming more complex, e.g. as a result of Basel III, FATCA, AIFM and cross-border regulations.
Possible negative influences:
- a persisting euro crisis and a persisting financial and debt crisis
- a further appreciation of the Swiss franc vis-à-vis a weak euro and US dollar
- a collapse of large European banks in the wake of the euro crisis
- a recession in Europe and the USA
Objectives of the LLB Group in 2012
We have already laid the foundations for the realization of our development: with the implementation of Avaloq we will be able to significantly improve our efficiency. In mid-2012, the Shared Service Centers for Payment Services, Securities Administration and Trading Services will be operational Group-wide.
The analysis of the «move!» programme is to be followed by additional measures to expand productivity. In 2012, we will focus on the realization of various projects of the «move!» programme and the planned reorganisation of the LLB Group. We are investing in the renewal of the branch network in our home markets. Our priorities in this area are the construction projects in Eschen (Liechtenstein) as well as in the Swiss municipalities Pfäffikon/Schwyz, Kaltbrunn and Schmerikon. In our growth markets of Eastern Europe, the Near and Middle East we are increasing our market presence.
We continue to adhere to our three-pillar strategy while simultaneously concentrating on our core business activities. For this reason, LLB sold its 48-percent equity stake in the Elips Life AG life insurance company to the Swiss reinsurance company Swiss Re in September 2011. Moreover, we intend to sell our 67-percent equity stake in swisspartners Investment Network AG in the first half of 2012.
Market turbulence and the dynamics to which the international economic and regulatory framework conditions are subject as well as changes in cross-border private banking involve uncertainties. For this reason, instead of making an earnings forecast, we focus on the things we can influence. We will reduce costs with our Shared Service Centers and the «move!» programme. At the same time, we will align the organizational structure of the LLB Group more closely with clients and markets and create the prerequisites for heading into the future even stronger.
On account of the unsatisfactory business result in 2011, we will propose a marked reduction in the 2011 dividend to the General Meeting of Shareholders on 4 May 2012. In future, we want to be able to again offer our shareholders an attractive dividend yield, even in a challenging market environment.