3 Board of Directors

3.1 Members

a) Name, nationality, education and professional career

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Name

Year of birth

Profession

Nationality

Hans-Werner Gassner *

1958

Business consultant and
certified public accountant

FL

Markus Foser

1969

Business consultant

FL

Markus Büchel

1953

Human resources manager

FL

Ingrid Hassler-Gerner

1947

Asset manager

FL

Siegbert Anton Lampert

1965

Attorney-at-law and fiduciary

FL

Roland Oehri

1968

Fiduciary

FL

Konrad Schnyder

1956

Entrepreneur

CH

Hans-Werner Gassner

Dr. Hans-Werner Gassner (photo)

Education:

  • Licentiate in economics at the University of St. Gallen, 1983
  • Swiss federal diploma in accountancy, 1988
  • Dr. oec. HSG, 1989
  • Swiss Banking School, 1996

Professional career:

  • Accountant at Neutra Treuhand Group, 1984–1989
  • Head Internal Audit at the Liechtensteinische Landesbank, 1990–1998
  • Head Finances at the Liechtensteinische Landesbank, 1998–2000
  • Partner at Gassner & Partner Wirtschaftsprüfung und Beratung AG, Balzers, since April 2000
  • Proprietor of Adcom Treuunternehmen reg., Balzers, since April 2000

Markus Foser

lic. oec. publ. Markus Foser (photo)

Education:

  • Licentiate in economics at the University of Zurich, major in business IT, 1996
  • Swiss federal diploma in financial analysis and asset management, CEFA 2000

Professional career:

  • Equity research and fund management at the Liechtensteinische Landesbank, 1997–2002
  • Advisor to mainly institutional clients with derivatives and structured products at Bank Vontobel (Liechtenstein) AG, Vaduz, 2002–2003
  • Head of Fund & Investment Services (Asset Management) at swissfirst Bank (Liechtenstein) AG, Vaduz, 2004–2007
  • Member of the Executive Board of Banque Pasche (Liechtenstein) SA, Vaduz, responsible for Fund & Investment Services (Asset Management), 2008–2009
  • Proprietor of MAFOS Consult Anstalt, since 2009

Markus Büchel

Markus Büchel (photo)

Education:

  • Apprenticeship as a draughtsman, 1969–1973
  • Commercial college Buchs, 1973–1974
  • Mechanical engineer (Dipl. Ing. FH), Vaduz, 1974–1978

Professional career:

  • Hilti AG, Schaan, (various technical functions), 1973–1981
  • ThyssenKrupp Presta AG, Eschen, development/engineering (various functions), 1981–1991
  • ThyssenKrupp Presta AG, Eschen, Head Technical Services, 1991–1995
  • ThyssenKrupp Presta AG, Eschen, Head Human Resources Presta Group, since 1995

Ingrid Hassler-Gerner

Ingrid Hassler-Gerner (photo)

Education:

  • Commercial diploma, 1964
  • Liechtenstein University of Applied Sciences, legal studies in accordance with Art. 180a of person and company law, 2005–2006

Professional career:

  • Head Asset Management and Research, A.M.I.S., Schaan, 1976–1989
  • Managing Director, Pan Portfolio AG, Schaanwald, since 1989
  • Managing Director, PanFinanzPartner AG, Schaanwald, since 2005
  • Member of Parliament of the Principality of Liechtenstein, 1993–2005

 

Siegbert Anton Lampert

lic. iur. Siegbert Anton Lampert (photo)

Education:

  • Licentiate in law at the University of St. Gallen, 1991
  • Attorney-at-law, 1994
  • L.L.M., University of Miami, 1995

Professional career:

  • Partner in the law firm Lampert & Schächle Attorneys-at-Law, Vaduz, since 1996
  • Managing Director of EUROYAL Treuhand Anstalt, Vaduz, since 1996

 

  

Roland Oehri

Roland Oehri (photo)

Education:

  • Commercial apprenticeship, 1987
  • Licentiate in economics (HWV), 1993
  • Liechtenstein trustee and fiduciary examinations, 1998

Professional career:

  • Investment advisor, Foreign Private Clients Department of VP Bank AG, Vaduz, 1993–1999
  • Head Foreign Private Clients Department of VP Bank AG, Vaduz, 1999
  • Client advisor, Private Trust Banking, VP Bank AG, Vaduz, 2000
  • Client advisor and Head Intermediaries Department of Bank Wegelin (Liechtenstein) AG, Vaduz, subsequently swissfirst Bank (Liechtenstein) AG, Vaduz, 2000–2003
  • Vice President of LOPAG Louis Oehri & Partner Trust reg., Ruggell, 2004–2009
  • Partner and Managing Director of Sequoia Treuhand Trust reg., Ruggell, since 2006
  • Partner and Managing Director of Sequoia Capital Management AG, Ruggell, since 2007

Konrad Schnyder

Konrad Schnyder (photo)

Education:

  • Training as mechanical engineer, 1977
  • Technical businessman, 1979
  • SKU Swiss Management Course, 1992

Professional career:

  • Proprietor, Vice Chairman and Delegate of the Board of Directors of the Sersa Group of companies, since 1985
  • Member of the Board of Directors of Bank Linth LLB AG, Uznach, 1998–2008
  • Delegate of the Board of Directors of Euroswitch AG, Pfäffikon/SZ, since 2004
  • CEO Sersa Group Management AG, Pfäffikon/SZ, since 2001

 

In the year under report, the following members stood down:

Dr. Michael Ritter

Vice Chairman until 8 May 2009

Helmuth Elkuch

Member until 8 May 2009

Peter Harald Frommelt

Member until 8 May 2009

b) Executive/non-executive members

Pursuant to Art. 22 of the Liechtenstein banking law in connection with Art. 10 of the law concerning the Liechtensteinische Landesbank, special bodies must be constituted for the direction, supervision and control of a bank. A member of the Board of Directors may not at the same time be a member of the Board of Management. All members of the Board of Directors of Liechtensteinische Landesbank are therefore non-executive members.

c) Independence

All members of the Board of Directors are independent within the context of the SWX directives concerning corporate governance information. In the three years prior to the period under report, no member of the Board of Directors was a member of the Board of Management of the Liechtensteinische Landesbank or a Group company. No member of the Board of Directors has a significant business relationship with the Liechtensteinische Landesbank or with another Group company.

3.2 Other activities and commitments

Prior to his appointment to the Board of Directors of the Liechtensteinische Landesbank, Markus Büchel was active in various political committees on behalf of the Progressive Citizens Party (FBP); from 1987 to February 2009 as a member of the Ruggell Party Executive, from 2000 to February 2009 as a member of FBP National Executive, and from 2001 to 2009 as a member of the Landtag (Parliament) of the Principality of Liechtenstein – for six years as FBP Parliamentary Spokesman. From 2003 to 2009, he was a member of the Judicial Selection Committee.

Since 2007, Ingrid Hassler-Gerner has been a member of the Executive Board of the Liechtenstein Association of Independent Asset Managers (VuVL). Since 1 January 2010, she has been Chairwoman of the Foundation Board of the Liechtenstein Civil Service Pension Fund.

Siegbert Anton Lampert has served as a judge at the State Court of the Principality of Liechtenstein since the end of 2004.

Konrad Schnyder has been Chairman of the Board of Directors of Raility AG, Biel, since 2006, Delegate of the Board of Directors of Euroswitch AG, Pfäffikon/SZ since 2004, a member of the Board of Directors of Sustra Tiefbau + Strassen AG, Sursee, since 1998, a member of the Board of Directors of Dedalus Holding AG, Sursee, since 2005, Vice Chairman of the Association of Swiss Railway Trackwork Contractors (VSG), Zurich, since 2000, a member of the Supervisory Board of the Federation of Swiss Rail Engineering Companies (VSBTU), Baden, since 2001, and Delegate of the VSBTU to the European Federation of Railway Trackwork Contractors (EFRTC), Paris, since 2007.

Otherwise, the members of the Board of Directors are not involved in the management or supervisory boards of important Liechtenstein, Swiss or foreign private or public law corporations, establishments or foundations, nor do they exercise any permanent management or consultancy functions for important Liechtenstein, Swiss or foreign interest groups, nor do they perform official functions or hold political office.

3.3 Cross or interlocking interests

This point has been deleted by the SIX Swiss Exchange.

3.4 Election and term of office

3.4.1 Principles governing election procedure

Pursuant to Article 12 of the law concerning the Liechtensteinische Landesbank, the Board of Directors of the Landesbank is composed of seven members, four of whom are appointed by the Landtag (Parliament) of the Principality of Liechtenstein, and three elected by the General Meeting of Shareholders. The Landtag elects the Chairman. The Board of Directors elects a Vice Chairman from among its members.

The members of the Board of Directors are elected for a term of office of three years, whereby a year corresponds to the period from one General Meeting to the next. Re-election is possible. Persons aged 70 or over may not be members of the Board of Directors. With the exception of the provision in Art. 14, para. 1, according to which four board members (including the Chairman) are to be appointed by the Landtag of the Principality of Liechtenstein, and three elected by the General Meeting of Shareholders, the Landesbank's Statutes – these can be seen at www.llb.li/statutes – do not stipulate any other conditions relating to the election procedure. In practice, however, the members of the Board of Directors are elected/appointed on a staggered and individual basis.

At the General Meeting of 8 May 2009, Dr. Michael Ritter (Vice Chairman), Helmuth Elkuch and Peter Harald Frommelt stepped down from the LLB Board of Directors after seven and eight years respectively. At its meeting on 25 March 2009, the Landtag appointed Markus Büchel, Markus Foser and Roland Oehri as their successors. In addition, Dr. Hans-Werner Gassner was confirmed by the Landtag for another period of office as Chairman of the Board of Directors. The appointed board members commenced their periods of office from the General Meeting held on 8 May 2009.

Dr. Hans-Werner Gassner is the Chairman of the Board of Directors. After Dr. Michael Ritter stood down, at its constitutive meeting on 14 May 2009, the Board of Directors appointed Markus Foser as the Vice Chairman. The Secretary (recorder of the minutes) is Patrick Helg (Head Internal Audit).

3.4.2 First-time election and remaining term of office

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Name

Elected by

First-time appointment

Elected until

Hans-Werner Gassner

Landtag

2006

2012

Markus Foser

Landtag

2009

2012

Markus Büchel

Landtag

2009

2012

Ingrid Hassler-Gerner

General Meeting

2005

2011

Siegbert Anton Lampert

General Meeting

2002

2011

Roland Oehri

Landtag

2009

2012

Konrad Schnyder

General Meeting

2008

2011

3.5 Internal organisation

3.5.1 Separation of tasks of the Board of Directors

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Name

Function

Committee memberships

*

Chairman.

Hans-Werner Gassner

Chairman

Appointments and Compensation Committee *
Strategy Committee *

Markus Foser

Vice Chairman

Group Audit & Risk Committee
Appointments and Compensation Committee
Strategy Committee

Markus Büchel

Member

 

Ingrid Hassler-Gerner

Member

Group Audit & Risk Committee

Siegbert Anton Lampert

Member

Appointments and Compensation Committee

Roland Oehri

Member

Group Audit & Risk Committee *

Konrad Schnyder

Member

Strategy Committee

Group Audit & Risk Committee

The Group Audit & Risk Committee supports the Board of Directors in fulfilling the duties and responsibilities vested in it by banking law with respect to the direction, supervision and control of the company. Following the retirement of Helmuth Elkuch and Peter Harald Frommelt from the Board of Directors, the Group Audit & Risk Committee is composed of Roland Oehri (new, Chairman), Markus Foser (new) and Ingrid Hassler-Gerner. On 1 December 2009, the revised regulations concerning the «Group Audit & Risk Committee of the LLB Group», which had been approved by the Board of Directors in November 2009, came into force. These regulations specify the organisation, the working methods, the terms of reference and the tasks of the Group Audit & Risk Committee, insofar as these are not stipulated by the law, statutes or business regulations.

The Group Audit & Risk Committee has the following tasks in particular:

  • monitors and evaluates the integrity of the financial reporting including the structure of the accounting systems, the financial controls and financial planning;
  • monitors and evaluates the internal controls in relation to financial reporting:
  • monitors and evaluates the effectiveness of the external auditors and their cooperation with Group Internal Audit;
  • evaluates the internal controls extending beyond the financial reporting system and Group Internal Audit;
  • monitors and evaluates the risk profile and the risk situation of the LLB Group.

Appointments and Compensation Committee

Following the retirement of Dr. Michael Ritter from the Board of Directors, the Appointments and Compensation Committee consists of Dr. Hans-Werner Gassner (Chairman), Markus Foser (new) and Siegbert Anton Lampert. This Committee has the following duties and responsibilities:

  • development of criteria for proposals concerning the selection and assessment of the members of the Board of Directors to be elected at the General Meeting, as well as the submission of election proposals to the Board of Directors for the attention of the General Meeting;
  • formulation of successor plans and their periodic review both in the event of the age related and the ad hoc stepping down of members of the Board of Directors;
  • development of criteria for proposals concerning the selection and appointment of members of the Board of Management for the attention of the Board of Directors;
  • formulation and annual review of the principles and regulations for the compensation of the members of the Board of Directors, the members of the Board of Management and the employees of the Liechtensteinische Landesbank for submission to the Board of Directors;
  • formulation of proposals for the compensation of members of the Board of Directors, the members of the Board of Management and the staff of the Internal Audit Department for submission to the Board of Directors in accordance with existing principles and regulations;
  • annual review of the compensation of the members of the Board of Directors and the members of the Board of Management for submission to the Board of Directors in accordance with existing principles and regulations.

Representation in staff welfare foundations

Markus Büchel is a member of the Board of the Staff Welfare Foundation, the Supplementary Pension Foundation and the Employer Foundation of Liechtensteinische Landesbank AG. Ingrid Hassler-Gerner is Vice Chairwoman of the Board of the Staff Welfare Foundation, a member of the Board of the Supplementary Pension Foundation and Chairwoman of the Employer Foundation of Liechtensteinische Landesbank AG.

3.5.2 Composition of all Board of Directors committees, their tasks and terms of reference

The Board of Directors may delegate a portion of its duties to specific committees. To support the Board of Directors in performing its tasks, the following standing committees exist: the Group Audit & Risk Committee, as well as the Appointments and Compensation Committee. In addition, there is a Strategy Committee formed on an ad hoc basis. The Board of Directors appoints the committee members and the Chairman from among its members. The committees must be composed of at least three members. As preparatory bodies, these committees deal in detail with the tasks assigned to them, submit the results of their activities to the Board of Directors, and make proposals if decisions are required. The Board of Directors is entitled to transfer decision-making authority to the committees. However, so far this has not occurred. Accordingly, the committees act solely in an advisory capacity.

The committee members must have the knowledge necessary for the scope of duties and tasks. All committee members must be independent. The Board of Directors has issued separate regulations for the standing committees, whose terms of reference and competences are described in the following.

3.5.3 Work methods of the Board of Directors and its committees

In general, the Board of Directors convenes an ordinary meeting each month (with the exception of July). A meeting must last at least half a day. During the 2009 business year, the Board held thirteen meetings. Six meetings lasted half a day, four meetings lasted a day and a two-day seminar was held. In addition, two extraordinary meetings were convened. On 14 May 2009, the Board of Directors convened for its constitutive meeting. The second full-day meeting was devoted to the LLB's international private banking strategy. In November 2009, the Board of Directors, following the ordinary meeting, held a seminar together with the Board of Management to discuss and decide on the Group's strategy for the Swiss market.

In September, a full-day seminar was held to deal with international financial reporting standards (IFRS), which are very important for the LLB Group. In October, the Board of Directors attended a full-day training course on the subjects of risk management and legal compliance at the LLB, as well as the duties and responsibilities of the Board of Directors in relation to the internal control system.

All board members were present at all the meetings. The Board is convened by invitation of its Chairman and is presided over by him, or if he is absent, by its Vice Chairman. Together with the written invitation, the members of the Board of Directors also receive the agenda for the meeting, the minutes of the last meeting and other important documentation required for the meeting. A quorum of the Board of Directors is constituted when at least half of its members is present. The Board of Directors passes its resolutions by a simple majority of the votes present. In the event of a tie, the Chairman has the casting vote. Members of the Board of Directors are obliged to abstain from voting when matters are dealt with, which affect their own interests or those of persons or legal entities with whom they are closely associated. In general, the Chairman of the Board of Management attends the meetings of the Board of Directors. The other members of the Board of Management attend meetings of the Board of Directors when matters in volving them are dealt with. No external experts were called in during the 2009 business year.

The members of the Group Audit & Risk Committee meet at least four times a year. These ordinary meetings are convened by the Chairman. An agenda is compiled prior to each meeting which is sent together with the necessary information to the meeting participants. The members of the Group Audit & Risk Committee, the external auditors, the head of Group Internal Audit and the Chairman of the Group Risk Committee can request the Chairman of the Group Audit & Risk Committee to convene an extraordinary meeting. In 2009, seven ordinary meetings were held, four with the former composition of the committee and three with the new composition. The meetings lasted between three and six and a half hours. All committee members were present at all the meetings. To deal with specific issues, the Group Audit & Risk Committee can invite other persons such as members of the Group Executive Management, the Chairman of the Group Risk Committee, other staff of the LLB Group companies, representatives of the external auditors or external consultants. Generally, the Chairman of the Board of Management and the Head of Internal Audit participate in the meetings in an advisory capacity. One external expert was called in during the 2009 business year to revise the regulations of the Group Audit & Risk Committee of the LLB Group.

The Appointments and Compensation Committee meets as often as business requires, but at least once a year. In 2009, three meetings were held, one with the former composition of the committee and two with the new composition. The meetings lasted between one and a half and two and a half hours. All committee members were present at all the meetings. The Chairman of the Board of Management did not participate. During the 2009 business year, no external experts were called in.

The Strategy Committee convened five times in 2009 for whole-day meetings, at which all committee members were present. The members of the Board of Management also participated in the meetings. The subjects of the meetings were the refinement of the international private banking strategy and the formulation of the Group's strategy for the Swiss market. During the 2009 business year, no external experts were called in.

Resolutions at the meetings are passed with a simple majority of the members present. Only the members of the relevant committee are eligible to vote. In the case of a tie, the Chairman has the casting vote. The subjects dealt with and resolutions passed are recorded in the corresponding minutes. The minutes are circulated to the meeting participants and the Board of Directors. The Chairmen of the committees inform the full Board of Directors about the agenda dealt with at the last committee meeting, and submit proposals for those points requiring decisions. Furthermore, they submit an activity report to the full Board of Directors once a year on the work of the committees.

3.6 Definition of areas of responsibility

The Board of Directors is responsible for the direction, supervision and control of the company. It is responsible for all duties and is vested with all powers not reserved to other corporate bodies by the law, the statutes or other internal regulations. In addition to the duties and responsibilities specified in the statutes, the Board of Directors has the following non-transferable duties and responsibilities:

  • the formulation and periodic review of medium and long-term corporate strategy and the allocation of resources to attain the objectives specified in the corporate strategy;
  • the approval of the annual budget;
  • the definition of management policy;
  • the appointment of
    • the members of the committees from among its members;
    • the Chairman and other members of the Board of Management;
    • the staff of the Internal Audit Department;
  • the discussion of the reports submitted by Internal Audit and the external auditors as well as the approval of measures implemented on the basis of audit reports;
  • the duty to keep itself regularly informed about the course of business and special occurrences, in particular by:
    • discussing and approving the quarterly reports with comments on the development of business, earnings situation, balance sheet development, liquidity, equity requirements and risk situation;
    • ensuring prompt information in the event of imminent risk threats;
  • the issuing of guidelines and regulations concerning the principles of risk management as well as the accountabilities and the processes for the approval of risk-related transactions, whereby in particular market, credit, default, process, liquidity and reputation risks as well as operational and legal risks are to be identified, limited and monitored;
  • the decision regarding the acquisition or sale of participations in other companies as well as the establishment or liquidation of subsidiaries and the appointment of board members, who are employees of the Liechtensteinische Landesbank;
  • the decision regarding the setting up and closure of bank offices, branches and representative offices;
  • the decision regarding the initiation of legal actions as well as judicial and extrajudicial settlements involving amounts of over CHF 10 million;
  • the stipulation of credit competences and decisions regarding large commitments (including cluster risks) and loans to corporate bodies, as well as the issuing of regulations regarding transactions for the account of corporate bodies and employees;
  • the stipulation, at least once a year, of overall commitment and individual limits;
  • the approval of the annual report and decisions regarding all other proposals to the General Meeting;
  • the formulation of the principles governing the compensation system including stipulation of the salaries of the members of the Board of Management and the staff of the Internal Audit Department;
  • the stipulation of competence to authorise expenditure
  • and decisions concerning business dealings that exceed specified limits;
  • the decision regarding the exercising of external mandates and activities by members of the Board of Management and the Internal Audit Department.

The Board of Management is the supreme governing body of the company and it represents the company vis à vis external parties, provided the Board of Directors does not appoint a special delegation for specific cases. In addition to the duties and responsibilities specified in the statutes, the Board of Management is responsible, in particular, for the following:

  • ensuring that the resolutions of the Board of Directors and its committees are implemented;
  • submitting suggestions concerning the organisation of business operations in general, and proposals for specific business matters, to the Board of Directors and the responsible committees, provided these matters exceed the scope of authority of the Board of Management, in particular with respect to:
    • the formulation and periodic review of medium and long-term corporate strategy and the allocation of resources to attain the corporate objectives;
    • participations, subsidiaries, business offices, branches and representative offices;
    • annual income and expenditure budget;
    • preparation of the annual report;
  • implementing of efficient processes and procedures as well as an effective internal control system to avoid and limit risks of all kind;
  • appointing persons (excluding staff of the Internal Audit Department) to sign on behalf of the Liechtensteinische Landesbank as authorised signatories, bank officers, assistant directors, deputy directors and directors in accordance with legal provisions;
  • regular reporting to the Board of Directors, the responsible committees and above all to the Chairman regarding the development of business, extraordinary occurrences, as well as the presentation of the draft annual report;
  • issuing of the rulings and directives necessary for the conduct of business by the Liechtensteinische Landesbank, its branches and representative offices;
  • deciding on cross-business unit transactions or business transactions which exceed the joint authority vested in the head of a business unit and the Chairman of the Board of Management;
  • coordinating the management and administration of subsidiaries and participations;
  • stipulating take up limits for securities and value rights within the scope of primary market transactions;
  • coordinating the product offer of Liechtensteinische Landesbank and specifying the pricing policy as well as conditions for the offered products and services;
  • deciding on or issuing rulings governing the exercise of external mandates and activities by employees, where this is not reserved to the authority of the Board of Directors;
  • performing representation duties as a full corporate body and/or as individual members of the Board of Management;
  • signing of cooperation and partnership agreements as well as membership of professional bodies and associations;
  • deciding on the acquisition and sale of properties within the scope of the general power to authorise expenditure.

3.7 Information and control instruments vis à vis the Board of Management

The Chairman of the Board of Directors participates once a month in the meetings of the Board of Management in an advisory capacity.

In general, the Board of Directors is kept informed by the Chairman of the Board of Management. The Chairman of the Board of Management generally attends the meetings of the Board of Directors in an advisory capacity. He informs the Board of Directors about the development of business, about extraordinary occurrences and answers any questions the members of the Board of Directors have. The other members of the Board of Management attend meetings of the Board of Directors when matters involving them are dealt with. The Chairman of the Board of Management usually also participates in the meetings of the Group Audit & Risk Committee.

Every member of the Board of Directors can request information about all matters relating to the Liechtensteinische Landesbank at the meetings. Outside board meetings, every member of the Board of Directors can request to see the minutes of the Board of Management meetings, information about the development of business from members of the Board of Management and, with the approval of the Chairman of the Board of Directors, also about individual business transactions.

The Chairman of the Board of Management informs the Chairman of the Board of Directors – if necessary, outside board meetings – about the development of business and extraordinary occurrences. The Chairman of the Board of Directors is responsible for informing the full Board of Directors about extraordinary occurrences.

Monthly reports concerning the course of business are submitted to the Board of Directors. The management information system (MIS) used for this purpose supplies both quantitative and qualitative historical and future-related data. It enables the Board of Directors to be kept informed in concentrated form about the most important business developments, earnings situation, balance sheet structure, liquidity and risk situations.

In exercising its supervision and control functions, the Board of Directors is also assisted by the Internal Audit Department, which is subordinate directly to the Board. As an independent body, it examines in particular the risk management, as well as the effectiveness of the internal control and steering system and the management processes. The powers and duties of the Internal Audit are stipulated in a special set of regulations (terms of reference). The annual auditing activity is defined in accordance with the risk and controlling criteria and is guided by a long-term auditing plan. To avoid duplication of work and to optimise controls, the auditing plans are coordinated with the statutory auditors. The short-term auditing plan and the personnel requirement plan are reviewed by the Group Audit & Risk Committee and submitted to the Board of Directors for approval. In addition, Internal Audit regularly monitors whether the deficiencies found have been rectified and whether its recommendations have been implemented, and submits reports about this to the Group Audit & Risk Committee.

At the LLB Group great importance is attached to proactive, comprehensive opportunity/risk management. The Board of Directors has issued guidelines and regulations concerning the principles of risk management, as well as the responsibilities and procedure for approval of business transactions involving various levels of risk. The risk management specialists strive to create and maintain a uniform risk culture and risk approach. This establishes the fundamentals for an appropriate risk/return profile and an optimum allocation of capital. The Group Audit & Risk Committee invites the Chairmen of the following Group Risk Committees to a quarterly discussion of the status reports: the Group Risk Management Committee, the Group Credit Risk Committee and the Group Operational Committee. Their reports are summarised every six months in an overall risk report of the LLB Group, which is dealt with by the Board of Directors. Further details concerning risk management can be seen in Notes to the consolidated financial statement of the LLB Group.

All employees of the LLB Group are obliged to comply with all legal, regulatory and internal regulations. In doing so, they are supported by the Group Compliance Staff Department, whose tasks and principles are specified in a set of internal regulations. Its responsibilities include the systematic training of LLB staff and the issuing of detailed compliance directives, as well as the management of effective control and monitoring instruments. The Board of Directors, with the assistance of the Group Audit & Risk Committee, is responsible for the supervision and control of the compliance function. At least once a year, the Board of Directors reviews whether the compliance standards applicable to it and the company are sufficiently well known and whether they are permanently observed.