Capital management
The LLB Group has in place sound, effective and complete strategies and processes to assess and maintain on an ongoing basis adequate equity capital. The internal capital adequacy assessment process (ICAAP) is an important risk management instrument for the LLB Group. The ICAAP is documented in the internal regulations and guidelines and is reviewed and revised annually, taking into account overall bank stress tests.
A good equity base not only protects its reputation, but is also part of the financial management and credibility of a bank. Having a sufficiently high-quality equity base at its disposal is part of the LLB Group’s identity. The LLB Group’s financial strength shall remain, as far as possible, unaffected by fluctuations in the capital markets.
Solid equity base
LLB is considered to be of systemic importance to the Liechtenstein economy and subject to a regulatory minimum capital adequacy ratio of 13 per cent. We are targeting a Tier 1 ratio of over 14 per cent as a strategic objective.
As at the end of 2018, the LLB Group had CHF 2.0 billion in equity capital (31.12.2017: CHF 1.9 billion). At 19.0 per cent (31.12.2017: 21.6 %), LLB’s Tier 1 ratio is well above the regulatory requirement.
The LLB Group continues to enjoy a high level of financial stability and security on account of its solid equity base, which consists entirely of hard core capital. The comfortable capital situation gives it leeway to make acquisitions (see chapter “Strategy and organisation”).
Rating confirms financial strength
Rating agency Moody’s assigned a deposit rating of Aa2 to Liechtensteinische Landesbank once again in April 2018, and its rating is proof of our prudent finance and risk management. The rating underlines LLB’s stability and financial strength. LLB is among the top range of Liechtenstein and Swiss banks and ranks well above the average of European financial institutions.
Moody’s acknowledged the solid financial fundamentals, in particular the excellent capital base as well as the good liquidity and refinancing situation. Moody’s rating provides investors and market participants with additional transparency.