The stagnation in earnings in the Private Banking Division, which began in 2008, persisted in 2012. The low level of interest rates and the restrained investment propensity of clients played a major role in this development. At the same time, costs for investments rose, particularly in the IT infrastructure as well as legal and compliance areas. The significance of the traditional Western European core markets for the LLB Group is continuing to decline, whereas the growth markets are steadily becoming more important.
In Liechtenstein and in Switzerland business was burdened by the uncertainty surrounding the withholding tax agreement with Germany, which so far has not been implemented. The withholding tax concept envisages that citizens of the country concerned can subsequently make a one-time tax payment on their undeclared assets in Liechtensteiner or Swiss banks without having to disclose their identity to the tax authorities. Switzerland has concluded a tax agreement based on this model with the United Kingdom and Austria. Both these agreements came into force on 1 January 2013. An agreement between Liechtenstein and the United Kingdom regarding cooperation in tax matters has been in force since 1 January 2010. This includes the so-called «Liechtenstein Disclosure Facility». On 29 January 2013, Liechtenstein and Austria signed a withholding tax agreement which regularizes previously untaxed assets. This agreement comes into effect on 1 January 2014. In the medium to long term, the increased legal and planning certainty will have a positive effect on the LLB Group’s cross-border banking business.