We supported municipalities, companies, small businesses and private persons to finance their plans for the future. The majority of the loans, i. e. 86.2 percent, were in 2012 credits secured by mortgages. Moreover, we granted operating loans and Lombard loans.
The LLB Group pursues a conservative credit policy in all Divisions and penetrated markets. Top priority is given to compliance with credit provisions according to applicable credit and lending guidelines and directives. «Exception to policy» cases are labelled as such and are of secondary importance.
The LLB Group's lending policy strictly follows market-economy principles. Every decision is individually tailored to fit the needs of each private or corporate client. Experienced specialists examine the creditworthiness of new borrowers and establish their risk category. We grant individual loans after appraising risks and profitability according to specific guidelines. We implement a risk-related pricing policy by allocating costs according to the costs-by-cause principle.
In 2012, the LLB Group adopted the new minimum requirements approved by the Swiss Federal Financial Market Supervisory Authority (FINMA) for mortgage financing. These were drawn up by the Swiss Bankers Association (SBVg) and entered into force on 1 July 2012:
- Borrowers must supply at least ten percent of the lending value of the residential property from their own funds, which may not be attained by pledging or advance withdrawal of Pillar 2 assets. These funds must account for at least 20 percent of the market value of the residential property.
- In each case, mortgages have to be amortised down to two thirds of the lending value within a maximum of 20 years.
- The annual calculated costs stemming from interest, amortisation and incidental expenses (affordability limits) must not exceed 33 percent of the sustainable and available annual income of the borrower.
Outside of the target markets of Liechtenstein and eastern Switzerland, the LLB Group provides mortgages in cases that involve an important client relationship or in cases in which such a relationship can be verifiably established within a reasonable period of time.
In 2012, Group Credit Management developed a new uniform methodology, which is used throughout the LLB Group, for ascertaining the collateral value of Lombard loans. Among other things, this particularly takes into account the liquidity, the counterparty risk and volatility of individual securities and, on top of that, the diversification of the assets provided as security and pledged by the borrower. There has been a marked cutback in credits against non-diversified securities collateral or single asset lending, which may only form an insignificant portion of a Lombard loan portfolio. Collateral guarantees outside of examined and approved existing markets are excluded from this.