Over the course of its 159-year history, Liechtensteinische Landesbank (LLB) has faced some of the direst financial crises in history and overcome them, famously stating it “has never made a loss”.
Now the institution talks about what’s on the horizon for private banking, how it dealt with the Covid-19 pandemic, what measures LLB took to overcome the economic fallout and how the region’s client base has reacted.
LLB is one of Europe’s oldest financial institutions. Having been in business since 1861, it offers clients comprehensive wealth management services as a universal bank, in private banking, asset management and fund services.
LLB has an established presence in the Middle East, opening its first offices in Abu Dhabi in 2005 and Dubai in 2008. Following the acquisition of a licence to operate as a financial advisory earlier this year, the private lender opened its Dubai International Financial Centre (DIFC) office in November 2019, with the intention of regional expansion. The bank’s investment portfolio offers UAE shares as well as Shariah-friendly products.
AB: Since its inception in 1861, Liechtensteinische Landesbank (LLB) has seen itself through some of the toughest financial crises in history dating as far back as the Great Depression and, more recently, the financial crisis of 2007-08 and “has never made a loss”. What are the key factors to making it through, and how has LLB drawn on its past experiences to combat the current situation?
LLB: Being one of the oldest financial institutions in Europe, we’ve stood for security and stability for nearly 160 years. One of the key factors for our economic success is our consistency regarding business strategy. This strategy is usually defined for a period of five years and we rarely deviate from it during this period of time. This gives us a long-term approach of our business and substantially contributes to our financial success.
Further, our overall strategy is based on four core elements: growth, profitability, innovation and excellence. In terms of profitability, we benefit from a stable stream of earnings arising from our well-diversified banking activities, spread over Retail and Commercial Banking, Asset Management and Private Banking. LLB Group’s earnings are stable – in spite of the difficult environment – and by mid-year, net fees and commissions income had remained at the same level as that of the previous year. Our growth is broadly based and, with a strong Tier 1 ratio of 20.4 percent (as of June 2020), we have strong foundations for further growth. With regard to innovation and excellence, we are continuously investing in our digital solutions offering. Thanks to our online services we were not only able to uphold our banking offering over the lockdown period but first and foremost managed to remain in close contact with our clients.
AB: What are the forthcoming private banking trends that you see resulting from the pandemic?
LLB: One lesson drawn from the pandemic is the fundamental importance of human relationships and interaction. During times of crisis and market turmoil, clients prefer to rely on their trusted relationship manager for professional advice. That’s why, at LLB we invest substantially in our employees – with continuous training, education and professional certification for our relationship managers. The outcome is an exceptionally high commitment from our employees, as can be seen in the results of our latest employee survey. Combined with a consistent business strategy and guiding principles based on values, it’s the LLB team that makes the difference. With the high expertise of our relationship and asset managers and standing for stability and security, we are a particularly attractive banking group in these challenging times.
Another lesson is the requirement for flexibility and adaptability of our approach to conducting business. Substantial investments are being made into digital solutions in order to be able to service our clients from any location without compromising on quality and data security.Finally, but not exhaustively, we can clearly see a renewed concern from clients in regard to investment risks management and an increasing desire to deal with highly reputed and well-capitalised institutions.
AB: LLB has had a presence in the UAE since 2005 and recently opened a new office in Dubai International Financial Centre (DIFC) in July 2019 with a view to extensively expanding its business across the Middle East. Has the COVID-19 pandemic affected the expansion or altered plans?
LLB: During and after the crisis, our main ambition remains to be the trusted financial partner for our clients – a challenge that the group is well-positioned for, with its focus on stability and security and with a long-term commitment to the region.
Even though our expansion in the region slowed over the past year on the back of the global pandemic, our aim is still to expand to new markets that are in line with our strategy. In doing so we are also looking to hire fresh talent to join our teams in the UAE. We are also in the process of developing new solutions in order to increase our product and services offering, specifically for our Middle East clients.
AB: LLB obtained a Category 4 Licence with the opening of the DIFC office, which comes with the advantage of being able to offer financial advisory services. How has the service been received by clients in the region?
LLB: Moving to DIFC has proven to be a great success. We have been able to not only attract additional clients but also relationship managers as a result of this move. DIFC’s environment and regulations exude security and stability, which our clients highly value. A clear and structured regulatory framework also attracts seasoned professionals who are eager to offer their clients a secure banking solution.
Offering financial advisory solutions to professional clients is at the heart of what we do – and with dedicated advisors in the Middle East leaning on a specialised in-house asset management team within the group, we are very well positioned and close to the international and local markets.
AB: Although LLB offers trading in UAE shares, its investment portfolio traditionally focuses on its base markets in Europe (Liechtenstein, Switzerland and Austria). Has the pandemic seen a shift in that focus?
LLB: LLB’s strategy with regard to equities investments does not only focus on Europe but globally. Our clients mostly rely on our capabilities with regard to international securities. Thus, in line with our strategy to offer geographical diversification to our UAE-based customers, we prefer to focus on international shares rather than local ones. Nevertheless, we do invest in regional economies through fixed-income securities and investment funds. Nonetheless, we offer access to UAE stocks to those clients who require it.
AB: Crisis sometimes create opportunities. How have existing clients reacted to the COVID-19 situation? Are they treading cautiously or looking ahead and taking the opportunity to invest? Which direction would LLB advise?
LLB: Over the first phase of the crisis we saw an increasing need for investment advice and current market data, which led to an overall higher volume of client contacts as many of them needed reassurance in regard to their investments and markets in general. As a result, we did notice that trading slumped for the first few months of the crisis (besides initial sales of risky positions), as clients were exuding caution. Trading picked up again by the end of spring, with clients seeking to ride the tidal wave of opportunity as brought forward by their relationship managers and advisors alike. The insights provided by our Asset Management team were highly appreciated by clients and relationship managers alike.
This publication is intended for information purposes only and does not constitute an offer or an invitation by, or on behalf of, Liechtensteinische Landesbank (DIFC Branch), Liechtensteinische Landesbank AG or any of its group affiliates to make any investments or obtain services. It may not be relied upon by or distributed to retail clients. Liechtensteinische Landesbank (DIFC Branch) is regulated by the DFSA and this advertorial is intended for Professional Clients (as defined by the DFSA). Nothing in this article shall indicate that any of the bank’s products or services are provided, offered or sold by the representative office or any of its employees.
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