Regulatory framework and developments

Throughout the world, the financial services industry is undergoing a period of profound change. Liechtenstein and Switzerland are facing up to the international challenges and taking appropriate steps for the future.

Consequences of the economic and financial crises

Increased investor protection

The Liechtenstein banks are members of the «Deposit Guarantee and Investor Protection Foundation of the Liechtenstein Bankers Association». In the event of the insolvency or bankruptcy of a member bank, this foundation has the obligation of compensating its clients up to a legally stipulated maximum amount. The legal ruling, which was revised by the government in March 2009, stipulates that deposits up to an amount of CHF 100'000.– (formerly CHF 30'000.–) are guaranteed. Accordingly, Liechtenstein offers the same level of investor protection as Switzerland. Moreover, the legal position of Liechtenstein bank clients in the event of bankruptcy has been improved.

Risk management

In the year under report, the Liechtenstein Financial Market Authority (FMA) dealt with the fundamentals of a risk-adequate equity capital base, and the risk management strategies and processes, which are specified in Art. 25, paras. 1 and 2 of the Equity Ordinance. These standards are to be applied from 1 January 2010.

In general, the independent auditors appointed in accordance with banking law inform the FMA once a year in an audit report about compliance with the regulations. The auditors are obligated to notify the FMA periodically about any special points they establish.

Corporate governance for public companies

At the end of 2009, a framework law concerning public companies was implemented in Liechtenstein, and a revision of the law on Liechtensteinische Landesbank was initiated. These revised laws came into force on 1 January 2010 and, among other things, they increase our bank's flexibility. For example, the consent of the Liechtenstein government is no longer necessary when the bank wishes to acquire equity stakes in other companies. Furthermore, in future all members of the Board of Directors will be elected by the General Meeting of Shareholders (for detailed information, see «Corporate governance»).