The Liechtenstein financial market is developing in positive fashion despite the recent turbulence in the North American and Swiss banking sectors. This is the conclusion reached by the committee responsible for monitoring and strengthening financial market stability in Liechtenstein.
On March 27, the Financial Stability Council (FSC) of Liechtenstein discussed in some detail the recent events on the North American banking market as well as the takeover of Credit Suisse by UBS. According to a press release issued by the FSC, the risk of price corrections on the international markets remains high.
For Liechtenstein, the most recent data as at the end of 2022 indicates a positive trend despite this challenging environment. The consolidated profits generated by domestic banks in 2022 grew by around +8 percent to 641 million Swiss francs in comparison with the previous year. Following three years of market-related decline, assets under management rose again in the final quarter of 2022. After an interest-related decline in the second and third quarters, the CET1 capital ratio ultimately rose from 18.9 percent to 19.7 percent in the fourth quarter of the year.
Against this backdrop, the financial market risks in Liechtenstein continue to be categorized as limited. As the press release explains further, “in light of global developments it remains important to develop targeted measures in an attempt to counteract the evident vulnerabilities”.
These vulnerabilities include risks on the real estate and mortgage markets, the FSC writes. As part of a working group comprising the FSC alongside the Liechtenstein Bankers Association (LBA) and the three systemically important banks, risk mitigation approaches are currently being developed. These are expected to be published over the coming months.