Banking in Liechtenstein
Liechtenstein is famously a safe haven for banking. Our excellent global reputation and expertise in private wealth management is built on more than 150 years of banking experience. Below are just a few of the reasons why banking in Liechtenstein is the best choice when it comes to your financial future.
A Triple-A Country Rating
In 2016 Standard & Poor’s, the foremost credit ratings provider, reaffirmed Liechtenstein’s AAA country rating.
A credit rating is a measure of the creditworthiness of an individual or entity. It indicates their ability to pay back a debt and the likelihood that they will default. A triple-A rating is the highest rating credit agencies issue.
S&P reaffirmed Liechtenstein’s exceptional rating because of the country’s stable politics and economy and its Swiss franc currency. Moreover the government and the banks do not engage in high-risk investment activity or credit businesses.
The Best Capitalization in Europe
Liechtenstein’s banks have an average tier 1 capital ratio of 21.3%, meaning they are the best-capitalized banks in Europe and worldwide.
The tier 1 capital ratio is the ratio of a bank’s core equity capital to its risk-weighted assets. Essentially, it is the ratio of equity to debt. A high tier 1 capital ratio is meant to protect the bank from unexpected losses and ensures that the bank is not over leveraged (too much in debt).
Liechtenstein banks voluntarily hold more than double the equity required under Basel III and CRD IV. In addition, no bank in Liechtenstein has had to seek state aid since the start of the financial crisis.
A Low Country Risk
The Standard & Poor’s Banking Industry Country Risk Assessment (BICRA) places the Liechtenstein banking sector in group 2, meaning Liechtenstein is among the countries with the lowest risk in their banking sectors.
The BICRA methodology is based on a country’s economic risk and industry risk, with higher risk components weighing more. Economic risk encompasses economic resilience, economic imbalances, and credit risk in the economy. Industry risk encompasses the country’s institutional framework (such as banking regulation and governance transparency), competitive dynamics, and system-wide funding.
As Liechtenstein is a stable country in many ways, it achieved an excellent BICRA score.
A Focus on Private Banking
Liechtenstein offers a stable banking center focused on prudent business strategies and personalized wealth management. The country’s practical experience of more than 150 years and expertise in professional advisory services creates a focused banking center that eschews risky investments and credit businesses.
International Cooperation in Tax Matters
In 2017 Liechtenstein was one of the early adopters and creators of the legal basis for the agreements regarding the automatic exchange of tax information with other EU member states.
The Organisation for Economic Co-operation and Development recognized the country’s efforts and rated Liechtenstein largely compliant, meaning Liechtenstein has not only legally implemented the OECD standards but also applied them in practice.
Market Access to Switzerland and the EEA
Liechtenstein belongs to the customs and currency union of Switzerland as well as to the European Economic Area.
Liechtenstein’s currency is the Swiss franc, a historically and famously stable currency. This together with the free movement of goods and services within the EEA means that Liechtenstein has access to over 500 million potential customers.