Credit management

The LLB Group pursues a conservative credit risk policy. It includes the individual and differentiated evaluation of loan applications, the conservative assessment of collateral values, the individual calculation of affordability as well as compliance with standard equity requirements. The differentiated control processes help us to reliably fulfil our performance mandate (see chapter “Responsibilities for society and the environment”) and to take appropriate account of risks.

We accompany private individuals, companies, small businesses and public institutions to finance their plans for the future. At CHF 11.1 billion, the majority of the loans, namely 86 per cent (2017: 87 %), comprised credits secured by mortgages. The volume of loans has grown continually over the past few years. At the end of 2016, we booked CHF 11.5 billion in loans; by the end of 2017, this figure had already risen to CHF 12.1 billion. At the end of 2018, the volume of loans had increased to CHF 12.9 billion. The LLB Group extends mortgages primarily within the market regions of Liechtenstein, north-eastern Switzerland and the region of Zurich.

Standardised control mechanisms

For real estate financing, we observe the Ordinance on Banks and Investment Firms (FL-BankV), which governs risk management in accordance with Art. 7a and Art. 21c ff of the Liechtenstein Banking Act. For financing in Switzerland, we observe the minimum requirements for mortgage financing drawn up by the Swiss Bankers Association (SBA) and approved by the Swiss Financial Market Supervisory Authority (FINMA). We also apply the EU guidelines on assessing, evaluating and processing mortgage secured loans.

We have developed a Group-wide uniform methodology for determining the collateral value of our Lombard loans. Credits against non-diversified securities or single asset lending may only form an insignificant portion of a Lombard loan portfolio.

Independent credit management

Within the LLB Group, credit competences are assigned according to the knowledge and experience of the decision-makers and the appropriate level and credit type. The authority to grant credit has been given to Group Credit Management and the Credit Committees, with the exception of standard business transactions. Credit decisions are thus made independently of market pressures and market targets. In this way, we are able to avoid conflicts of interest and objectively and independently assess risk in individual cases.