Business divisions

Operating income by business divisions

2008 – 2011, in percent

Operating income by business divisions (bar chart)

Domestic Market

The Domestic Market Business Division comprises the universal bank and asset management business in our home markets of Liechtenstein and Switzerland. In 2011, this segment earned 41.5 percent of the operating income (2010: 37.3 %; 2009: 36.8 %) and managed 30.4 percent of client assets (31 December 2010: 28.6 %; 31 December 2009: 28.3 %).

Our aim is to continually grow faster than the economy in our home markets. We will therefore expedite our activities in the private and corporate client business as well as the private banking sector. Furthermore, we are striving to become one of the leading providers in the private and corporate pension provisioning business.

Strategic priorities:

  • market penetration and safeguarding of the advisory services quality
  • market share gains in the private banking sector
  • expansion of the private and corporate pension provisioning business
  • expansion of our branch network
  • consolidation of the leading position in the mortgage loan business

Implementation of partial plans in 2011:

  • «Crescendo» growth initiative of Bank Linth: modernisation of the branch network and opening of the new branch offices in Erlenbach and Winterthur
  • mortgage loan business: new records
  • fund business: product innovations
  • onshore private banking: growth, new customer segmentation
  • advisory services quality: investments in the areas of credit management, financial planning and pension provisioning
  • cooperation: merger of the LLB and the Liechtenstein Post ATM networks

Challenges in 2011:

  • volatile stock markets, low interest rates, currency turbulence
  • passive investment behaviour of customers in view of the financial crisis and the crisis of confidence
  • intense competition in the mortgage loan business

International Market

The International Market Business Division is responsible for the international wealth management business of the LLB Group. In 2011, it earned 32.3 percent of the operating income (2010: 33.4 %; 2009: 36.2 %) and managed 29.7 percent of client assets (31 December 2010: 31.0 %; 31 December 2009: 33.4 %).

In the area of international wealth management we are focusing on the clearly defined core markets Germany, Austria and Italy as well as on the growth markets. In cooperation with our bank in Vienna, we are intensifying onshore private banking in Austria as well as cross-border private banking in Eastern Europe and Russia. From our representative offices in Abu Dhabi and Dubai we concentrate on our customers in the Near and Middle East.

Strategic priorities:

  • expanding our advisory team and improving their advisory competence
  • intensifying our presence in growth markets
  • focusing on clearly defined markets and customer relationships
  • investing in cross-border banking: expanding resources, know-how and range of services

Implementation of partial plans in 2011:

  • cross-border private banking: implementation of the cross-border regulation
  • Near and Middle East: enlargement of our advisory teams
  • Eastern Europe and Russia: growth
  • LLB (Österreich) AG: expansion
  • growth markets: development of new country specific products
  • client services: «Active Advisory», introduction of an active advisory approach
  • client portfolios: increased focus on clearly defined markets

Challenges in 2011:

  • volatile stock markets, low interest rates, currency turbulence
  • passive investment behaviour of customers in view of the financial crisis and the crisis of confidence
  • increasing regulation of cross-border private banking
  • shortage of qualified staff
  • strong competition and margin pressure

Institutional Market

The Institutional Market Business Division comprises the classic intermediary and fund business as well as the asset management business of the LLB Group. In 2011, it earned 26.2 percent of the operating income (2010: 29.3 %; 2009: 27.0 %) and managed 39.9 percent of client assets (31 December 2010: 40.4 %; 31 December 2009: 38.3 %).

In this important growth segment, the LLB Group has set itself the goal of consolidating its leading position in Liechtenstein. We are therefore continuously enlarging our range of services. With the introduction of the UCITS IV EU directive we are able to be more internationally active.

Strategic priorities:

  • expansion of both the private labelling services and investment opportunities for fund promoters
  • optimisation of processes
  • increase in market performance
  • development of new products and processes for complex financial instruments
  • above-average performance in fund products and in the asset management segment

Implementation of partial plans in 2011:

  • rise in fund management, fund administration and custodian bank mandates
  • launch of new inflation-protected funds and products for the growth markets
  • introduction of the Key Investor Information Document (KIID) for mutual funds; automatised generation of fact sheets
  • additional special mandates

Challenges in 2011:

  • volatile stock markets, low interest rates, currency turbulence
  • passive investment behaviour of customers in view of the financial crisis and the crisis of confidence
  • increasing regulation
  • market consolidation in the trust services business and in the business with external asset managers
  • shortage of qualified staff

Corporate Center

The Corporate Center coordinates the implementation of strategy within the LLB Group and supports the activities of the market-oriented Group companies and business divisions. The aim is to optimise bank processes and the Group-wide organisation of structures and processes. Moreover, the Corporate Center ensures the adherence to rules and regulations. The focus is thereby on striking the right balance between profitability and security as well as on benefits for our customers.

Our five priorities in 2011:

The Avaloq standard banking software has been in operation at LLB headquarters and LLB Switzerland since 1 January 2011. Bank Linth has been working with the latest version since as early as November 2010. Its use in the IT Service Center facilitates operative processes. Avaloq allows us to automatise key processes, from which we expect a productivity boost. The commitment of our staff ensured that implementing the change to Avaloq went smoothly for the most part. Now all banks within the LLB Group – with the exception of LLB Österreich – have the same IT environment. The basis has thus been created for exploiting synergies and potentials. As a result, we are even better equipped for further growth. The IT platform provides multi-client capability und allows for processing in several languages and various currencies.

In parallel with our introduction of Avaloq we mapped out, analysed and unified the banking processes in detail. The result of the project «Business Process Management» is a map of all processes within our Group. At the LLB parent bank, at Bank Linth and at LLB Switzerland, respectively, a project manager is responsible for coordinating, honing and expanding processes. The optimisation of these processes is now synchronised within the LLB Group; the basis for increasing efficiency has been laid.

Under these conditions, it is possible to establish Shared Service Centers. Payment services, securities administration and trading services for Liechtensteinische Landesbank AG and LLB (Switzerland) Ltd. have been centrally processed in Vaduz since 1 January 2011. By mid-2012, Bank Linth will have joined the competence centres in Vaduz. We expect to achieve synergy effects and annual savings of approximately CHF 3 million. Due to this process optimisation, 27 positions will be shed Group-wide.

The goal of the LLB Group is to increase efficiency, to generate new activity in the area of innovation and, as a result, to secure long-term competitiveness. With the «move!» programme we have explored various possibilities. On the basis of this analysis we will realise projects in 2012 in order to increase efficiency and to make savings. At the same time, we want to adapt to the continuously changing regulatory framework. In the coming business year, we will probably define three processes that revolve around the following projects: final withholding tax, the US tax law FATCA and the bank-internal control system (IKS).

Furthermore, in order to reduce costs the Liechtensteinische Landesbank has entered into cooperation with the VP Bank, Vaduz, in individual key processes. Both banks have founded a joint purchasing company for information services, Data Info Services AG, and cooperate in the areas of document printing and dispatch. At the end of 2012, the data processing centres of the LLB Group and the VP Bank Group will go into operation in the new LLB branch office in Eschen. This will mean synergies in the areas of security technology and energy efficiency. At the beginning of 2012, we entered into closer cooperation with the Liechtenstein Post and integrated the Post ATMs into the LLB ATM network.

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