Domestic Market

Private and corporate client business

The global economy presented a fragile picture in 2011. The market environment was distinguished by intensive competition. Nevertheless, the LLB Group was able to slightly increase the number of its private and corporate clients and consolidate its strong position in the mortgage lending business. In spite of the fierce competitive pressure, we were able to maintain our interest rate margins in the lending business. The average collateral lending rates remained stable. Short-term fixed mortgages were the first choice of most clients. In granting loans, the Liechtensteinische Landesbank applies its well-proven lending principles. Of particular importance are the value of the collateral and the lender's ability to afford the loan.

In the year under report, the economic environment was challenging. The debt crisis in the euro area, the sharp increase in the value of the Swiss franc and the slow-down in foreign economic activity weighed upon our domestic markets. The development in Europe represents the main risk factor for the Liechtenstein and Swiss economic region because the EU is the most important trading partner for both countries. In 2011, the export industry was confronted with the effects of the exchange rate situation. On 6 September, the Swiss National Bank pegged the minimum exchange rate of the franc to the euro at 1.20. This measure led to a stabilization of the situation and enabled companies to conduct their planning with more security. During the first three quarters of 2011, exports expanded but they decreased substantially in the last quarter of the year.

Turnover in retail business also fell sharply with the strength of the Swiss franc prompting consumers to shop in the euro countries. The boom in the construction industry continued supported by historically low interest rates. Thanks to ongoing immigration, the demand for residential property in the east of Switzerland remained high. Following the expected liberalisation in this area, construction activity in Liechtenstein also continued at a high level. The unemployment rates in the LLB Group's home markets were below the Swiss average of 3.3 percent at the end of December 2011. In Liechtenstein, unemployment stood at 2.5 percent at the end of December, and in the east of Switzerland at 2.4 percent.

Corporate and private pension provisioning

The Liechtenstein pension provisioning sector maintained its dynamic growth – albeit at a somewhat slower pace – in 2011. The key products of the insurance companies are innovative insurance solutions, which are customized to suit the legal and taxation regulations of the target countries and which represent an important form of retirement planning. As an EEA member state and a customs treaty partner of Switzerland, Liechtenstein is the only country having access to both the Swiss and European markets. Its stable and liberal economic system encourages production innovation. For example, Liechtenstein is a good location for international pension funds. The Principality has been accumulating expertise in the area of mandatory corporate pension provisioning since 1989. In 2007, Liechtenstein implemented the EU pension fund directive in the form of a national pension fund law. Accordingly, the country is now in a good position to participate in this new growth market.

Liechtensteinische Landesbank AG has established itself as a competence centre for corporate and private pension planning in the Liechtenstein pension provisioning sector. Even after selling its 48-percent equity stake in Elips Life AG, a life insurance company, to Swiss Re in September 2011, it is continuing to cooperate with the company in the field of collective pension planning. The LLB is still expanding its private financial planning and corporate pension provisioning business operations.

At the same time, the LLB Liechtenstein Pension Foundation is continuing to grow. As at 31 December 2011, it provided services to 330 companies (300 in 2010, 288 in 2009) with 3'500 employees (2'981 in 2010, 2'679 in 2009). The total pension fund capital stood at CHF 291 million (CHF 243 million in 2010, CHF 212 million in 2009). The ALVOSO LLB Swiss pension fund had 261 companies (271 in 2010, 231 in 2009) with 1'281 employees (1'294 in 2010, 1'024 in 2009). The pension fund capital amounted to CHF 156 million (CHF 154 million in 2010, CHF 128 million in 2009).

The LLB Group's pension funds are still soundly financed despite the weak financial markets and volatile currencies. The LLB Pension Foundation for Liechtenstein maintained a stable position and is continuing to grow. The interest rate on the retirement capital of the persons insured stood at 2.0 percent. The annual pension payments amounted to around CHF 23 million. In terms of size and market share, Liechtenstein's newest pension foundation was the second largest among independent collective pension schemes. During 2011, we carried out a review of our basic conditions. Two points stood at the centre of attention. Firstly, the technical interest rate, which currently stands at 4.0 percent, and which in view of the demographic development will be reduced to 3.5 percent from 1 January 2012. Secondly, the stipulation of the pension conversion rate, which stands at 7.0 percent and which will be reduced to 6.8 percent from 1 January 2015. The LLB Liechtenstein Pension Foundation has a very good structural ratio: for each pensioner there are 100 active insured contributors.

Development of pension capital

2007 – 2011, in CHF millions

Development of pension capital (bar chart)


Key measures to penetrate the domestic market











Bank Linth

New products and services

Two inflation-linked funds
Introduction of individual clients segment
Special offers relating to 150th anniversary

«Really Simple» campaign (concept for simplifying banking services)

Client events

«Exklusiv im Hof» (client events in private banking business)
Women finance
Investment forum
In-house seminars at companies
Financial perspectives on the subject of corporate pension provisioning
Various events related to the Bank's 150th anniversary
LLB golf tournament Domat/Ems

Two investors' conferences in Pfäffikon and Bad Ragaz
7th Bank Linth Golf Invitation Tournament in Bad Ragaz
Four client events in private banking business




GEWA Hombrechtikon


New branch office in Eschen
Cooperation with the Liechtenstein Post regarding the joint use of ATMs from 2012

Opening of Erlenbach and Winterthur branch offices
Planning and/or commencement of new building/renovation of Pfäffikon, Kaltbrunn and Schmerikon branch offices

Corporate identity

Redesign of website
Image campaign 150th anniversary



The mortgage loans which a bank grants today will determine its balance sheet for the next twenty or thirty years. Sustainable risk management systems for mortgage lenders stood at the centre of developments in Switzerland in 2011. These must ensure that, in spite of low interest rate levels and tight margins, prudent and cautious lending policies are observed. In 2011, the Swiss Federal Financial Market Supervisory Authority (FINMA), the Swiss National Bank and the Liechtenstein Financial Market Supervisory Authority (FMA) carried out a detailed review of banks' mortgage lending business. The LLB Group adheres to a stringent lending policy. In 2011, it also followed the goal of strengthening its equity capital base. It has already largely implemented the equity capital and liquidity regulations specified in the new Basel III global standards.

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