3 Board of Directors

3.1 Members

a) Name, nationality, education and professional career

(XLS:)

Name

Year of birth

Profession

Nationality

*

Chairman

**

Vice Chairman

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

Roland Oehri

1968

Fiduciary

FL

At the end of September 2012, there were changes in the LLB’s Board of Directors. Felix R. Ehrat and Konrad Schnyder decided to step down from the Board as of 24 September 2012. Their decisions, made independently of each other, were for professional as well as personal reasons. Despite their stepping down, the fact that there are still five remaining members ensures that the Board continues to meet statutory and legal requirements.

Hans-Werner Gassner
Portrait Dr. Hans-Werner Gassner (picture)

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 of Internal Audit at the Liechtensteinische Landesbank, 1990 – 1998
  • Head of Finances at the Liechtensteinische Landesbank, 1998 – 2000
  • Partner at APG Wirtschaftsprüfung AG, Vaduz, since April 2000
  • Proprietor of Adcom Treuunternehmen reg., Balzers, since April 2000
Markus Foser
Portrait lic. oec. publ. Markus Foser (picture)

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, Vaduz, since 2009
  • First Advisory Trust reg., Strategic Projects & Business Development, since 2012
Markus Büchel
Portrait Markus Büchel (picture)

Education:

  • Apprenticeship as a mechanical draughtsman, 1969 – 1973
  • Commercial college Buchs, 1973 – 1974
  • Mechanical engineer (Dipl. Ing. FH), Abendtechnikum 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 of Technical Services, 1991 – 1995
  • ThyssenKrupp Presta AG, Eschen, Head of Human Resources of the Presta Group, since 1995
Ingrid Hassler-Gerner
Portrait Ingrid Hassler-Gerner (picture)

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 of 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
Roland Oehri
Portrait Roland Oehri (picture)

Education:

  • Commercial apprenticeship, 1987
  • Federally qualified business economist FH, 1993
  • Liechtenstein trustee and fiduciary examinations, 1998

Professional career:

  • Investment advisor, Foreign Private Clients Department of VP Bank AG, Vaduz, 1993 – 1999
  • Head of Foreign Private Clients Department of VP Bank AG, Vaduz, 1999
  • Client advisor, Private Trust Banking, VP Bank AG, Vaduz, 2000
  • Client advisor and Head of 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

b) Executive / non-executive members

All members of the Board of Directors of the Liechtensteinische Landesbank are non-executive members. Pursuant to Art. 22 of the Liechtenstein banking law in connection with Art. 10 of the Law on the Liechtensteinische Landesbank, special bodies must be constituted for the direction, supervision and control of a bank, on the one hand, and for the Board of Management or Group Executive Board, on the other hand. No member of the Board of Directors is allowed to be a member of the Board of Management or Group Executive Board.

c) Independence

All members of the Board of Directors are independent within the context of the SIX Swiss Exchange «Directive Corporate Governance» (DCG) concerning corporate governance information. In 2012, as well as in the previous three business years, no member of the Board of Directors was a member of the Group Executive Board or the Board of Management of the Liechtensteinische Landesbank or a Group company. No member of the Board of Directors had significant business relationships with the Liechtensteinische Landesbank or with another Group company. In accordance with Art. 12 of the Liechtenstein law concerning the control and supervision of public companies, all contracts with members of the Board of Directors must be in writing and they must be approved by the Board of Directors. The same conditions apply as to contracts concluded with third parties.

3.2 Other activities and commitments

Since 1 January 2010, Ingrid Hassler-Gerner has been Chairwoman of the Board of the Liechtenstein Civil Service Pension Fund.

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 Election and term of office

3.3.1 Principles governing election procedure

The Board of Directors of the Liechtensteinische Landesbank is – in accordance with the law and the company statutes – composed of five to seven members, who are elected individually by the General Meeting of Shareholders for a term of office of three years. Thereby, a year corresponds to the period from one General Meeting of Shareholders to the next. Members can be re-elected for a further two terms. After three terms of office, the Chairman of the Board of Directors can – in justified cases – be re-elected for an extraordinary term of office of at most two years. The Chairman of the Board of Directors is elected by the General Meeting of Shareholders. The Vice Chairman is elected from among the members of the Board of Directors by its members. New members of the Board of Directors elected as substitutes shall be elected for a full term of office of three years. The General Meeting of Shareholders can dismiss members of the Board of Directors on important grounds. The age limit is 70 years for members of the Board of Directors. Decisions about exceptions are made on an individual basis by the General Meeting of Shareholders.

Hans-Werner Gassner has been Chairman of the Board of Directors since 2006. Markus Foser has been Vice Chairman since 2009. Franz Lampert has been Secretary (recorder of the minutes) since February 2012.

3.3.2 First-time election and remaining term of office

(XLS:)

Name

First-time appointment

Elected until

Hans-Werner Gassner

2006

2015

Markus Foser

2009

2015

Markus Büchel

2009

2015

Ingrid Hassler-Gerner

2005

2014

Roland Oehri

2009

2015

At the 20th ordinary General Meeting of Shareholders of Liechtensteinische Landesbank AG on 4 May 2012, Chairman of the Board of Directors Hans-Werner Gassner was re-elected for a third term of office; Markus Foser, Markus Büchel and Roland Oehri were confirmed as Members of the Board of Directors for a further three years.

3.4 Internal organization

3.4.1 Separation of tasks of the Board of Directors

(XLS:)

Name

Function

Committee memberships

*

Chairman

Hans-Werner Gassner

Chairman

Group Nomination & Compensation Committee* Strategy Committee*

Markus Foser

Vice Chairman

Group Audit & Risk Committee
Group Nomination & Compensation Committee Strategy Committee

Markus Büchel

Member

Group Nomination & Compensation Committee Strategy Committee

Ingrid Hassler-Gerner

Member

Group Audit & Risk Committee

Roland Oehri

Member

Group Audit & Risk Committee*

3.4.2 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 committees. To support the Board of Directors in performing their tasks, the Board implemented two standing committees: the Group Audit & Risk Committee as well as the Group Nomination & Compensation Committee. In addition, there is a Strategy Committee formed on an ad hoc basis. The Board of Directors elects the committee members from among its members and appoints the chairman. Each committee is 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 work 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. To date, it has, however, not made use of that right. Consequently, the committees solely act in an advisory function.

The committee members must possess the expertise for the tasks and duties they have taken on. All committee members must be independent. The Board of Directors issued separate regulations for the two standing committees, which stipulate their duties and individual competencies.

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. It:

  • evaluates the financial reporting, the effectiveness of the internal control system and risk management as well as the provisions to ensure compliance with legal and internal regulations;
  • ensures the quality of Group Internal Audit and external auditors as well as their cooperation;
  • monitors the rectification of weak points and deficiencies identified by Group Internal Audit and external auditors.

The «Regulations concerning the Group Audit & Risk Committee of the LLB Group» lay down the organization and workings as well as the competencies and duties of the Group Audit & Risk Committee, in so far as these are not prescribed by law, the statutes or business regulations. Roland Oehri was Chairman of the Committee; Markus Foser, Ingrid Hassler-Gerner and Felix R. Ehrat were Members of the Committee; the latter was a Member until he stepped down on 24 September 2012.

The Group Audit & Risk Committee has the following tasks. In particular, it:

  • 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.

Group Nomination & Compensation Committee
The Group Nomination & Compensation Committee supports the Board of Directors in fulfilling the duties and responsibilities vested in it by banking law. It:

  • formulates the guidelines for succession planning as well as the nomination of members of the Board of Directors and members of the Group Executive Board;
  • formulates the compensation and remuneration standards for the parent bank and the LLB Group;
  • establishes the compensation of members of the Board of Directors and members of the Group Executive Board as well as of other employees, in so far as their compensation – in accordance with compensation and remuneration standards – has to be determined by the Board of Directors;
  • establishes the guidelines for personnel policy.

The «Regulations Concerning the Nomination and Compensation Committee» of the LLB Group lay down the organization and workings as well as the competencies and tasks of the Nomination & Compensation Committee, in so far as these are not prescribed by law, the statutes or the rules of procedure. Hans-Werner Gassner was Chairman of the Committee; Markus Foser and Markus Büchel were Members of the Committee.

The Group Nomination & Compensation Committee has the following functions, in particular:

  • the 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 of Shareholders as well as the submission of election proposals to the Board of Directors for the attention of the General Meeting;
  • the formulation of succession 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;
  • the development of criteria for proposals concerning the selection and nomination of members of the Group Executive Board for the attention of the Board of Directors;
  • the formulation and annual review of the principles and regulations for the compensation of the members of the Board of Directors, the members of the Group Executive Board and the employees of the Liechtensteinische Landesbank for submission to the Board of Directors;
  • the formulation of proposals for the compensation of the members of the Board of Directors, the members of the Group Executive Board and the staff of Group Internal Audit for submission to the Board of Directors in accordance with existing principles and regulations;
  • the annual review of the compensation of the members of the Board of Directors and the members of the Group Executive Board for submission to the Board of Directors in accordance with existing principles and regulations.

Strategy Committee
It is the task of the Board of Directors to formulate and periodically evaluate the LLB Group’s strategy. It is supported by the Strategy Committee. The Chairman was Hans-Werner Gassner; Markus Foser and Markus Büchel were Members of the Committee; the latter as of 24 September 2012 after the stepping down of Konrad Schnyder from the Board of Directors.

Representation in foundations
Hans-Werner Gassner is Member of the Board of the «Future Foundation of Liechtensteinische Landesbank AG».

In 2012, two members of the Board of Directors were represented in the staff welfare foundations of Liechtensteinische Landesbank AG: Markus Büchel was Chairman of the Board of the Personnel Pension Fund Foundation and Member of the Board of the Supplementary Personnel Pension Fund Foundation, the Employer Foundation and the Employer Foundation of the LLB Group. Ingrid Hassler-Gerner was Member of the Board of the Personnel Pension Fund Foundation, Chairwoman of the Board of the Supplementary Personnel Pension Fund Foundation and the Employer Foundation as well as the Employer Foundation of the LLB Group.

3.4.3 Working methods of the Board of Directors and its committees

The Board of Directors of Liechtensteinische Landesbank AG convenes once a month for an ordinary meeting lasting at least half a day. During the 2012 business year, the Board held a total of 22 ordinary and extraordinary meetings, which included eight whole-day meetings, 13 meetings, each lasting a maximum of half a day, and a two-day seminar. The seminar was conducted by the Board of Directors in cooperation with the Group Executive Board following the ordinary meeting in July 2012. It focused exclusively on the new remuneration system and the project «Umgang mit Neukunden unter steuerlichen Aspekten» (Dealings with new clients and taxation issues). The extraordinary meetings primarily dealt with the following topics: new organizational structure, adaption of the rules of procedure, mission statement, a new remuneration system, US tax issues, the cost-saving and efficiency improvement programme as well as the pension plan changeover. All members of the Board of Directors were present at all meetings, with the exception of the following: Felix R. Ehrat and Konrad Schnyder were not present or only present for part of five and four meetings (of 17 to the end of August 2012), respectively. Markus Büchel and Ingrid Hassler-Gerner were each not able to attend one meeting.

The Board of Directors is convened by invitation of its Chairman and is presided over by him. 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 at least five business days prior to the date set for the meeting. Meetings of the Board of Directors can also be called with a shorter period of notice if there is a pressing matter. It is within the discretion of the Chairman to determine the urgency of that matter. If two members of the Board of Directors, the Group CEO and at least two members of the Group Executive Board submit a written request to the Chairman, he is required to convene an extraordinary meeting forthwith.

A quorum of the Board of Directors is constituted when at least half of its members are 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. Resolutions may be passed by circular in urgent cases. Unanimity is required for resolutions to be dealt with by circular. Resolutions shall be passed by a simple majority of votes. In the case of a tie, the Chairman shall have the casting vote. If, after a meeting of the Board of Directors has been convened, urgent matters arise, these can be discussed at the meeting and decisions on them taken, provided that the votes subsequently cast by members of the Board who are properly excused are considered as if they had been present at the meeting.

The members of the Board of Directors are obliged to inform the Chairman in cases of real or potential conflicts of interest. This is regardless of whether the real or potential conflicts of interest are of a general nature or related to a matter to be discussed at a meeting. The Board of Directors shall decide whether there are grounds for the member concerned to abstain from voting. In such a case, that member may neither participate in the discussion of the matter in question nor vote on it. He has the right to express his opinion before leaving the Committee.

The Board of Directors periodically evaluates its own performance and also that of the committees. This evaluation serves to determine whether the Board of Directors and the committees are functioning appropriately. The results of the self-evaluation are put down in writing. At the beginning of 2011, the Board of Directors evaluated its own performance as part of a self-assessment process, which also included the work of the Group Audit & Risk Committee and the Group Nomination & Compensation Committee. The self-assessment was performed using structured and anonymous questionnaires in order to ensure a high informative value of the results. The questionnaires were evaluated by the management consulting firm PricewaterhouseCoopers. The results of the self-evaluation demonstrated the high quality of work done by the Board of Directors and its committees.

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’s participants. The members of the Group Audit & Risk Committee, the external auditors, the Head of Group Internal Audit and the Chairmen of the Group Risk Committees can request the Chairman of the Group Audit & Risk Committee to convene extraordinary meetings. During the 2012 business year, seven ordinary meetings were held that lasted between four and eight hours. At one meeting, the Group Audit & Risk Committee exchanged experiences with the audit committee of another bank. Felix R. Ehrat was not present for four (or parts thereof) of five meetings (as of the end of August 2012). Ingrid Hassler-Gerner was unable to attend one meeting. Otherwise, all of the other Committee members were present. To deal with specific issues, the Group Audit & Risk Committee can also invite other persons, such as members of the Group Executive Board, the Chairmen of the Group Risk Committees, other staff of the LLB Group companies, representatives of the external auditors or external consultants. The Group CEO, the Group CFO and the Head of Group Internal Audit usually participate in the meetings in an advisory capacity. No external experts were called in during the 2012 business year.

The Group Nomination & Compensation Committee convenes as often as business requires, but at least once a year. In 2012, eleven meetings were held. They usually lasted two hours. All Committee members were present at all meetings. Topics discussed were the search for new members of the Board of Directors, appointments to the Group Executive Board, the new remuneration system as well as the remuneration of members of the Board of Directors and the Group Executive Board. The Group CEO did not attend the meetings. During the 2012 business year, two external experts were called in: one for the development of the new remuneration system and one for the search for new members of the Board of Directors.

In 2012, the Strategy Committee convened twice for the annual strategy evaluation. An external expert was called in for the preparation and execution of the evaluation (see chapter «Strategy and organization»).

Resolutions at the meetings are passed with an absolute majority of the members present. Only the members of the relevant committees 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’s participants and the members of 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 resolutions. Furthermore, they submit an annual activity report on the work of the committees to the full Board of Directors.

3.5 Definition of areas of responsibility

The Board of Directors is responsible for the direction, supervision and control of the LLB Group. It is ultimately responsible for the success of the LLB Group as well as for attaining sustained value for both shareholders and employees. It makes decisions in consultation with the Group CEO concerning the LLB Group’s corporate strategy and assumes final responsibility for monitoring the conduct of business. Furthermore, the Board of Directors monitors compliance with applicable legal provisions and regulations. At the request of the Group CEO, the Board of Directors determines the financial and human resources required to implement corporate strategy.

The Board of Directors is responsible for all duties and competences and is vested with all powers not reserved to other corporate bodies by law, statutes or other internal regulations. It is responsible for determining the Company’s organization and for prescribing the required regulations as well as for issuing the necessary guidelines. In specific cases and subject to legal provisions, the Board of Directors can transfer any part of its powers to one or more of its members or to one or more third parties (non-members).

The Board of Directors has the following duties and responsibilities, in particular:

  • the definition of management policies;
  • the definition of the LLB Group’s management strategy, including its periodic monitoring;
  • the passing of resolutions regarding all proposals to the General Meeting of Shareholders;
  • the discussion of the reports submitted by Group Internal Audit and external auditors; approval of the reports concerning measures implemented on the basis of audit reports and their monitoring;
  • decisions regarding the LLB Group’s expansion into important new business operations as well as their withdrawal from existing important business operations;
  • decisions regarding the acquisition or sale of participations in other companies as well as the establishment or liquidation of LLB Group companies and the nomination of their Group Executive Boards;
  • decisions regarding the setting-up and closure of bank offices, branches and representative offices;
  • the stipulation of credit competences and the regulation of transactions for the account of corporate bodies and employees as well as resolutions regarding large commitments (including cluster risks);
  • decisions regarding the initiation of legal actions involving claims of over CHF 10 million as well as judicial and extrajudicial settlements involving amounts of over CHF 10 million;
  • the approval of all business matters and decisions that exceed the authority of the powers delegated by the Board of Directors;
  • decisions regarding the exercise of external mandates and activities by members of the Group Executive Board and Group Internal Audit.

Concerning the organization of business activities and the required concomitant issuing of rulings and directives, the Board of Directors is, in particular, responsible for:

  • the regular monitoring of corporate governance principles and management structures laid down in the rules of procedure;
  • the issuing of rulings and directives that are binding Groupwide, subject to respective applicable local laws;
  • the regularization and monitoring of internal control systems;
  • the appointment and dismissal of the Group CEO, the Vice Group CEO, all the other members of the Group Executive Board and the Head of Group Internal Audit as well as the provisions for deputies and the review of their performance, including succession planning;
  • the supervision of the Group CEO, the Vice Group CEO and the other members of the Group Executive Board regarding compliance with legal provisions, statutes and rulings and directives as well as the LLB Group’s economic development;
  • the appointment of committee members from among its members;
  • the regularization of the compensation and remuneration principles within the LLB Group.

Concerning the ultimate liability for the organization of accounting, financial control and financial planning, the Board of Directors has, in particular, the following responsibilities:

  • the approval of the applicable accounting standards;
  • the approval of medium-term planning and budgeting;
  • the preparation of the Annual Report and the Consolidated Annual Report;
  • the approval of the Consolidated Interim Report;
  • the ensuring of regular reporting on the course of business and extraordinary occurrences; this includes annotated reporting, on a quarterly basis, as regards the development of business, the earnings situation, balance sheet development, liquidity and equity requirements;
  • the stipulation of the competence to authorize expenditure.

Concerning the ultimate responsibility as regards risk management, the Board of Directors has, in particular, the following duties:

  • the issuing of regulations concerning the principles of risk management, determination of risk appetite, risk control as well as accountability and the processes for the approval of risk-related transactions, whereby interest, credit, liquidity, market price and operational risks as well as legal and reputational risks, in particular, are to be identified, controlled, reduced and monitored;
  • the evaluation of the effectiveness of the internal control system;
  • the stipulation of overall and individual limits at least once a year;
  • the discussion and approval of quarterly reports, including comments on the risk situation;
  • the ensuring of prompt information in the event of imminent risk threats and losses of considerable importance.

The Group CEO is the highest authority within the LLB Group management and is liable to account. He is, in particular, entirely responsible for the development of the corporate strategy of the LLB Group and the Divisions as approved by the Board of Directors and – in coordination with the Group Executive Board – for the implementation of this strategy. The Group CEO represents the Group Executive Board vis-à-vis the Board of Directors.

The Group CEO:

  • ensures coherent management and development of the LLB Group as well as the implementation of the strategy that is stipulated and periodically monitored by the Board of Directors;
  • sets objectives for business activities and the course of business;
  • ensures high-quality and timely decision-making;
  • ensures that the objectives set by the members of the Group Executive Board comply with management objectives;
  • submits recommendations to the Board of Directors concerning remuneration and compensation principles within the LLB Group;
  • monitors the implementation of any decisions that are made;
  • monitors the implementation of the resolutions made by the Board of Directors and its committees;
  • is responsible – in coordination with the Chairman of the Board of Directors – for concrete succession planning within the Group Executive Board;
  • represents the LLB Group in external communication.

The Group Executive Board, in cooperation with the Group CEO, is responsible for the management of the LLB Group.

In addition to the principles set forth in the statutes, the Group Executive Board is responsible, in particular, for:

  • ensuring that resolutions made by the Board of Directors and its committees are implemented;
  • submitting suggestions concerning the organization of business activity 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 Group Executive Board, in particular with respect to:
    • the definition and periodic review of the LLB Group’s corporate strategy as well as the allocation of resources to implement the strategy and attain corporate objectives;
    • participations, Group companies, business offices, branches and representative offices;
    • medium-term planning;
    • annual expenditure and income budget;
    • financial reporting and the Annual Report;
  • implementing efficient processes and procedures as well as an effective internal control system to avoid and reduce risks of all kinds;
  • appointing persons (excluding staff of Group Internal Audit) to sign on behalf of the Liechtensteinische Landesbank as authorized signatories;
  • reporting regularly to the Board of Directors, its committees and, in particular, to the Chairman regarding the course of business and any extraordinary occurrences;
  • issuing the rulings and directives necessary for the conduct of business by the LLB Group;
  • coordinating the product offerings of the LLB Group as well as specifying the pricing policy and the terms and conditions for the products and services offered;
  • deciding on the conclusion of cooperation and partnership agreements as well as the membership of professional associations;
  • authorizing investments for personnel expenses and general and administrative expenses of up to CHF 1 million in specific cases and investments of up to CHF 3 million (with prior notification of the Chairman of the Board of Directors) which are not included in the budget adopted by the Board of Directors. In such a case, the Chairman decides about any matters to be presented to the Board of Directors;
  • continuously monitoring the developments within the Divisions and business operations as well as initiating problem solving measures;
  • continuously monitoring financial reporting;
  • implementing risk management principles and control principles as well as the key rulings and directives concerning risk management;
  • establishing compliance functions and implementing appropriate internal systems and processes for safeguarding compliance within the LLB Group;
  • setting objectives for business activities and the course of business as it executes the strategy approved by the Board of Directors; ensuring that decision-making is timely and of a high quality as well as monitoring the implementation of the decisions made;
  • ensuring that their objectives comply with general business targets and with the course of business of the LLB Group.

3.6 Information and control instruments vis-à-vis the Group Executive Board

The Chairman of the Board of Directors is informed about the agenda of Group Executive Board meetings and receives the minutes. He participates in its meetings in an advisory capacity as required. The purpose of this is for both parties to update each other on important topics and form their opinions.

Principally, the Board of Directors is kept informed about the activities of the Group Executive Board by the Chairman of the Group Executive Board. He ensures that the Chairman of the Board of Directors and the Board of Directors are informed in a timely and appropriate fashion. The Group CEO regularly reports to the Board of Directors about current business developments and important business issues, including all matters that fall within the remit of the Board of Directors.

The Group CEO generally attends the meetings of the Board of Directors in an advisory capacity, informs it about the development of business as well as extraordinary occurrences and provides additional information on request. The Group CFO regularly informs the Board of Directors about finances and risk management as well as about the proper implementation of the Bank’s risk policy. The other members of the Group Executive Board attend meetings when matters involving them are dealt with. The Group CEO and the Group CFO usually participate in the meetings of the Group Audit & Risk Committee in an advisory capacity.

Every member of the Board of Directors can request information about all matters relating to the LLB Group. Outside of meetings, every member of the Board of Directors can also request information about the course of business from members of the Group Executive Board and, with the approval of the Chairman of the Board of Directors, also about individual business transactions.

Internal supervision and control
The LLB Group has standardized bank management systems that generate quantitative and qualitative data in a summarized form for the Group Executive Board. This enables the Board of Directors to inform itself about significant business developments, such as business performance, earnings situation, budget utilisation, balance sheet development, liquidity, risk situation and the fulfilment of equity requirements. Every quarter of a year, the Board of Directors discusses and approves the annotated reports on finances and risk management.

In exercising its supervision and control functions, the Board of Directors is also assisted by Group Internal Audit, which is subordinate directly to the Board. Group Internal Audit provides independent, objective and systematic reporting services regarding:

  • processes for defining the strategy and risk appetite as well as the general compliance with the approved strategy;
  • the effectiveness of governance processes;
  • the effectiveness of the risk management, including the evaluation of whether risk identification and management are adequate;
  • the effectiveness of internal controls, in particular, whether these are adequate in relation to the risks taken;
  • if necessary, the effectiveness and sustainability of measures for reducing and minimizing risks;
  • the reliability and completeness of financial and operational information (that means, whether activities are correctly and fully documented) as well as the quality of the underlying data and models;
  • compliance with legal and regulatory requirements as well as with internal rulings and directives and agreements.

The powers and duties of Group Internal Audit are stipulated in a special set of regulations. The annual auditing activity is carried out on the basis of the evaluation of risks and controls and is guided by a long-term auditing plan. To avoid duplication of work and to optimize 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, Group Internal Audit regularly monitors the rectification of deficiencies and the implementation of its recommendations; it submits reports about this procedure to the Group Audit & Risk Committee.

Risk management
The proactive approach towards risks is an integral part of the LLB Group’s corporate strategy and ensures the Group’s risk-bearing capacity. The LLB Group attaches great importance to proactive and comprehensive opportunity / risk management. As part of the risk policy, the Board of Directors issues guidelines and regulations concerning the principles of risk management. In this way, the Board of Directors sets qualitative and quantitative standards for risk responsibility, risk management, risk reduction and risk control.

In 2012, we revised our risk policy guidelines and adapted them to market conditions, the new regulatory requirements as well as the new corporate structure, which is based on business divisions. Furthermore, we updated the detailed qualitative and quantitative standards for risk responsibility, risk management and risk control. At the same time, we defined adequate organizational and methodical parameters for specifying and managing risks. With the «Internal Capital Adequacy Assessment Process» (ICAAP), which is reviewed annually, we ensure that there is always adequate capital to cover all essential risks.

The risk management specialists strive to create and maintain a Group-wide 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 Group Risk Committees to a quarterly discussion of the risk status. Their reports are summarized every six months in an overall risk report of the LLB Group, which is discussed by the Board of Directors. Further details concerning risk management can be found in the Notes to the consolidated financial statement of the LLB Group in chapter Risk Management.

Compliance
All employees of the LLB Group are obliged to comply with all legal, regulatory and internal regulations as well as observe common market standards and professional codes of conduct. The compliance functions within the LLB Group annually report to the Board of Directors about their activities, findings and the measures taken.

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