The Liechtenstein financial centre takes its responsibility as an integral part of the world economic system seriously. Since 2008 it has concluded two dozen OECD-compliant tax information exchange agreements and double taxation treaties – including one with Germany. In autumn 2011, the Peer Group of the OECD Global Forum completed the first phase of its review process. It gave Liechtenstein a good report card. In the banking area it assessed Liechtenstein as being fully compliant with all test criteria and in conformity with OECD standards. This means that Liechtenstein is regarded internationally as a modern, stable and reliable financial centre and no longer as an offshore financial location. At the end of 2012, a review of the practical implementation of OECD standards is to be conducted.
In 2011, the Liechtenstein banking centre was able to maintain its position. Even though the turbulence on the stock markets had a negative impact on the performance of their investments, on average banks voluntarily maintained more than twice the legally required equity capital. The banks' private banking business model proved to be stable and they were able to post new money inflows. The following trends were registered in the LLB Group's International Market: the inflow of assets from the emerging markets is increasing and is gaining in importance; in contrast, assets from the present core markets are set to decline in future.
The European Union and the United States are continuing to exert pressure on the Swiss and Liechtenstein financial centres. Switzerland has signed agreements regarding a flat compensation withholding tax with Germany and the United Kingdom. The regulation and harmonization of the financial markets is continuing unabated. Apart from modifications to new basic business conditions, additional structural changes appear to be unavoidable. The pressure to consolidate will continue to mount and consequently various forms of cooperation in the financial industry are to be expected.
As a result of the strong Swiss franc, international asset managers in both Switzerland and Liechtenstein find themselves in an ever widening cost/earnings gap. Earnings are largely booked in euros or US dollars, but costs are incurred in francs. On account of the low interest rate levels, earnings from interest differential business fell and, furthermore, the general uncertainty led to passive investment behaviour among clients.
In 2011, the stock markets were unpredictable; they remained highly volatile and closed the year under the 2010 level. Fixed interest investments provided no alternative, largely because of the market uncertainty concerning government bonds. Many clients either kept a high level of liquidity, channelled funds back into their companies or invested in traditional tangible assets such as real estate or gold. In 2011, the name of the game was the preservation and safeguarding of assets.
Development of assets under management
2007 – 2011, in CHF millions