include key works of European art stretching over five general good enjoyed its greatest popularity during the Period ( )

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1 Portrait

2 Unknown artist, detail from Large bulbous vase with cover, Imari decoration and bronze gilding, late 17th century A look inside the Princely Collections: The images in this publication represent a selection of pieces from an extensive porcelain collection that includes examples of the early European manufactories Meissen and Doccia-Ginori, as well as the Du Paquier porcelain manufactory founded in The collection also features Japanese and Chinese porcelain. Imari porcelain, which was traditionally made using a palette of cobalt blue, rust red and white, and often gilded, was named after a port of the same name located near Arita in Japan. For more than 400 years, the Princes of Liechtenstein have values that form the basis for a successful partnership been passionate art collectors. The Princely Collections with our clients: a long-term focus, skill and reliability. include key works of European art stretching over five centuries and are now among the world s major private Cover image: Unknown artist, detail from Four-sided art collections. The notion of promoting fine arts for the Imari bottle vase with cover, 18th century, Qianlong general good enjoyed its greatest popularity during the Period ( ) Baroque period. The House of Liechtenstein has pursued LIECHTENSTEIN. The Princely Collections, Vaduz Vienna this ideal consistently down the generations. We make deliberate use of the works of art in the Princely Collections to accompany what we do. For us, they embody those

3 Contents 5 We look forward to meeting you 6 Our company at a glance 8 Interview: We are extremely well positioned 10 Our understanding of private banking 14 Our unique investment expertise 18 How we practice sustainability 22 Foundation Board and Group Management 27 Data and facts 34 Risk note/disclaimer

4 We are convinced of the benefits of co-investing, and only entrust money to investment managers if they have substantial capital of their own invested in their strategies. H.S.H. Prince Philipp von und zu Liechtenstein, Chairman LGT

5 5 We look forward to meeting you Dear Client Welcome to LGT, the Private Banking and Asset Management Group of the Princely House of Liechtenstein. LGT is charac - te rized by the same values and convictions that have guided our family in building and managing our assets for almost 900 years: thinking and acting entrepreneurially, a long-term focus and disciplined risk management. Our clients benefit from the same expertise and investment principles that are applied in the management of our family s assets. The fact that you as a client, we as a family, and our employees invest in the same investment solutions, results in a natural alignment of interests. Our distinct ownership structure and clear focus on private banking and asset management ensure that we provide objective advice. Our international presence allows us to identify attractive investment opportunities worldwide and react quickly to changes in the market. Using in-depth analysis as a basis, we tailor your portfolio to your individual investment goals. H.S.H. Prince Philipp von und zu Liechtenstein (left) and H.S.H. Prince Max von und zu Liechtenstein (right) For our family, but also for many of our clients, wealth is not an end in itself, but rather a means to achieve broader objectives. We would like to use our commitment and expertise to help you succeed in this. We look forward to meeting you. H.S.H. Prince Philipp von und zu Liechtenstein Chairman LGT H.S.H. Prince Max von und zu Liechtenstein CEO LGT

6 6 Brief overview Our company at a glance LGT is the largest Private Banking and Asset Management Group in the world that is wholly owned and managed by an entrepreneurial family. For more than 80 years, our company has been owned by the Princely House of Liechtenstein, which is also one of our biggest clients. As their family office, we have comprehensive experience in managing sizeable family assets. This expertise also serves as the basis for our collaboration with clients. We combine tried-and-tested private banking and asset management services with a supplemental offering that is tailored to these services, for example in areas such as impact investing and philanthropy. Long-term strategy and holistic approach Thanks to our efficient management and organizational structures, we are able to make decisions quickly and independently. As a company and an investor, we take a longterm and holistic approach, and are actively involved at various levels in promoting the sustainable development of society and the environment. Investment expertise dedicated to serving our clients We combine an in-depth perspective of our clients needs with an active approach to portfolio management. Our investment organization operates in all key international investment and financial centers. This enables us to identify and realize attractive investment opportunities around the world. When it comes to structuring and managing portfolios, our clients benefit from the extensive capabilities of our specialists in traditional and alternative investments, as well as from our expertise in portfolio construction and the selection of leading external investment managers. LGT Group: financial highlights as at 31 December 2016 Assets under administration CHF million Total assets CHF million Equity capital CHF million Total operating income CHF million Group profit CHF million 230 Headcount Moody s/standard & Poor s ratings for LGT Bank Ltd., Vaduz Aa2/A+ Conservative balance sheet and financial stability LGT has a healthy balance sheet, a high level of liquidity and is well capitalized. Our equity capital is significantly above the minimum regulatory requirement and reflects the financial strength of our company, also in international comparison. Our range of services n Investment advisory n Portfolio management for private and institutional investors n Securities and foreign exchange trading n Financing and loans n Wealth planning n Philanthropy and impact investing

7 7 International presence with a local foothold Whether in Liechtenstein, Switzerland, Austria, the United Kingdom, Singapore, Hong Kong or Dubai: we have a foothold on the ground and will serve you locally. We offer our private clients five booking centers that they can take advantage of irrespective of their domicile. Group-wide, we employ over 2600 staff in over 20 locations in Europe, Asia, the Americas, Australia and the Middle East. Europe Principality of Liechtenstein, Vaduz Austria, Salzburg, Vienna Ireland, Dublin Switzerland, Basel, Berne, Chur, Davos, Geneva, Lugano, Pfäffikon, Zurich United Kingdom, Bristol, Jersey, London Asia Australia China, Beijing Hong Kong Japan, Tokyo Singapore Sydney America United States, New York Middle East Bahrain, Manama United Arab Emirates, Dubai A complete address list of all LGT locations can be seen at

8 8 Interview We are extremely well positioned What makes LGT a successful family-run business. Your Serene Highnesses, the Princely Family of Liechtenstein s genealogy can be traced all the way back to the 12th century. What does this signify for you? H.S.H. Prince Philipp: There is, of course, an awareness that you re part of a very long tradition with strong values that you want to foster and pass on to the next generation. This awareness sets some parameters, teaches you a certain sense of humility and helps you to discipline yourself. H.S.H. Prince Max: Our history is filled with many anecdotes that are inspiring, enlightening and sometimes just entertaining. On the one hand, this gives you an identity, on the other, it inspires the need to make a positive contribution to the family history. The following witticism is attributed to German Chancellor Bismarck: The first generation creates wealth, the second manages it, the third studies art history, and the fourth degenerates completely. How has the Princely Family succeeded in preserving its wealth for almost twenty generations? H.S.H. Prince Philipp: According to the House Law that our family established for itself centuries ago, as head of the family, the Prince watches over the reputation, esteem and welfare of the Princely House of Liechtenstein. Our family assets are held in a foundation and are administered by the Prince. He is the beneficiary, but he also has responsibilities toward the family, and it is his duty to preserve the assets and pass them on to the next generation. This structure ensures a high level of continuity. H.S.H. Prince Max: From today s perspective, the family or more specifically many of its members, have done many things right over the centuries. That being said, we also had a lot of luck. I think we will continue to need both in the future. The Princely Family has entrusted the management of a large part of its assets to LGT. What are the primary financial objectives for these assets? H.S.H. Prince Max: The goals are very similar to those of other families. Ultimately, the aim is to preserve and grow the capital. Of the three traditional investment objectives, namely returns, security and liquidity, we focus primarily on the first two. Because the investment horizon is very long, the liquidity aspect is a secondary priority. This is one of the reasons we re able to make investments in less liquid but attractive asset classes such as private equity. H.S.H. Prince Philipp: Another important factor is that we follow clearly defined investment principles: we are staunch believers in active investing, and we diversify consistently, in other words, globally and across all asset classes. Our goal is to mandate the leading investment managers in each asset class, irrespective of whether they work at LGT or for another company. And finally, we believe in co-investment, and only entrust money to investment managers if they have a substantial amount of their own capital invested in their strategy. How important is co-investment for LGT? H.S.H. Prince Philipp: The principle is very important, also for our clients. They have the option of investing in the same investment strategy as our family. Our internal investment managers also invest their own money in the portfolios they manage. This results in highly aligned interests between our clients, our employees and the owners of LGT, the Princely Family of Liechtenstein. Co-investment of this kind is quite rare in the world of finance. H.S.H. Prince Max: We offer our clients the same thing that we demand of our external investment managers. That is not only consistent, but also significant for our corporate culture. The concept of co-investment sends

9 9 H.S.H. Prince Philipp von und zu Liechtenstein, Chairman of LGT since H.S.H. Prince Max von und zu Liechtenstein, CEO of LGT since an important signal, both externally, but also within the organization. Our clients appreciate this opportunity to co-invest, which is why it s surprising that, to the best of my knowledge, we re the only private bank to put such a strong emphasis on this important approach. Looking back at last year, the acquisition of Londonbased Vestra Wealth and the announced acquisition of ABN AMRO s private banking business in Asia and the Middle East were two important milestones. What were the key considerations behind these decisions? H.S.H. Prince Max: For Vestra it was about closing an important gap in the geographical coverage of our Private Banking business. With the ABN AMRO transaction, we were able to significantly strengthen our business in the Asian growth market. With locations in Liechtenstein, Switzerland, Austria, Hong Kong, Singapore, Dubai and London, we now have strong private banking platforms in the most important financial centers in Europe, Asia and the Middle East. H.S.H. Prince Philipp: What was also very important is the fact that LGT Vestra s corporate culture is a perfect fit with LGT: it is owner-managed, has a long-term and entrepreneurial focus, and consistently puts the client at the center of what it does. The environment has changed substantially for the banking sector since the 2008 financial crisis. How do you plan to carry the LGT success story forward? H.S.H. Prince Max: The environment has become more complex, and the challenges have increased as a result. But I think this is actually an advantage for LGT, because as an organization, we have consistently focused on investment management for private and institutional clients. We believe that our long-term, risk-conscious and ambitious mindset and the clear focus on investment expertise and client service will enable us to successfully further develop our company in the future. H.S.H. Prince Philipp: An important factor for success is also our ownership structure. With the Princely Family as our owner, we can take a long-term approach and don t have to be constantly mindful of how the financial markets interpret our quarterly results. As the owner, we have a very different responsibility. We can t just move on to the next company if things aren t going smoothly or something goes wrong. The Princely House of Liechtenstein The line of descent of the Princely Family of Liechtenstein began with Heinrich I of Liechtenstein ( ), who obtained the Lordship of Nikolsburg in South Moravia as free property from King Ottokar of Bohemia. In 1699, Prince Johann Adam I acquired the Lordship of Schellenberg, followed by the county of Vaduz in In 1719, the territories were united and raised to the rank of the Imperial Principality of Liechtenstein. Today, the Principality of Liechtenstein is a constitutional monarchy and sovereign state at the heart of Europe. As the head of the Princely Family and also the head of state, the reigning prince exercises sovereign authority together with the people. The Princely Family plays an active political role and has numerous business activities. It is a keen advocate of art and science and champions welfare.

10 10 Private Banking Our understanding of private banking The individual requirements and long-term financial goals of our clients are our core focus. We combine an in-depth understanding of the individual needs of our clients with our strong investment know-how. This enables us to develop the best possible solution for you. We pursue an active investment approach and have indispensable regional expertise in all key financial markets. Our comprehen sive range of wealth management services is specifically designed to support you in reaching your financial objectives. Individual investment strategy Thanks to our longstanding experience as the family office of the Princely Family, we have the expertise required to manage sizeable assets over generations. Using the investment experience we have acquired over many economic cycles and our expertise in global financial markets and various investment classes as a foundation, we develop your individual wealth management strategy together with you. Long-term focus Because time and discipline are the prerequisites for lasting success, our focus both as a company and as an investor is long-term. We have been serving many of our clients for several generations. We know that building wealth requires a structured and long-term approach. Experience shows that for investors, the best opportunities often arise in uncertain and volatile markets, and that investing over a number of cycles and a longer period of time pays off. We make use of the entire spectrum of traditional and alternative investments in order to We listen very carefully to our clients before developing an individual wealth management strategy together with them.

11 11 be ideally positioned during all market phases. We take a bestin-class approach, whereby we select the leading investment managers and solutions for each investment segment. Guidepost toward investment objectives Personal advice Our relationship managers dedicate a lot of time to ensuring they have an exact understanding of the personal situation, financial objectives as well as the individual risk profile and investment horizon of each client. Your relationship manager is your direct contact and as required, will bring in other experts from our international network. If you opt for a portfolio management mandate, we will invest your assets according to the strategy we have developed with you, which is tailored to your risk appetite and capacity. In personal discussions and with the help of detailed reports, we will inform you regularly about the performance of your portfolio. Comprehensive approach to assets LGT always takes a comprehensive approach to assets. This is why we also support our clients in their financial planning and offer them a range of financing solutions that are tailored to their financial situation. Continual review Customized implementation Client Individual solution In-depth analysis Appropriate strategy Our clearly structured advisory approach combines the expertise of our relationship managers with the know-how of our investment and portfolio specialists in the form of a clearly defined process. This ensures that our clients are given the best possible advice at all stages. Top ratings In 2016, LGT once again received accolades from a number of independent bodies and secured a top position among the wealth management elite. At the Global Private Banking Awards held by the Financial Times Group s magazines PWM (Professional Wealth Management) and The Banker, LGT was designated Best Private Bank for Growth Strategy and Best Private Bank for Socially Responsible Investing. In the overall rankings of the renowned Fuchsbriefe, the bank was awarded an outstanding second place standing from among all the banks tested. LGT also achieved an excellent result in this year s Handelsblatt Elite Report, receiving the highest score for wealth managers in German-speaking countries.

12 12 Investment strategy is the biggest contributor Defining the right strategy plays an important role in how a portfolio performs. At LGT, this responsibility lies with two longstanding finance professionals. Both studied economics and finance and follow financial markets avidly. They are almost the same age and have over 20 years of experience as analysts and portfolio managers. Before joining LGT, they worked for a number of different banks, insurance companies and fund managers. And both live and work in important financial centers, albeit in completely different time zones: Thomas Wille is head of the Investment Strategy team for the LGT banks in Europe and is based in Zurich, while his colleague Stephen Corry has the same role for LGT in Asia and is based in Hong Kong. Perhaps not spectacular, but important Together with their teams, Wille and Corry are responsible for formulating the investment strategy for LGT s private clients. In a nutshell, their work comes down to continuously analyzing economic, political and societal developments and how these interrelate, assessing their impact on financial markets. On that basis they allocate portfolios as optimally as possible to various asset classes such as equities or bonds. In doing so, they take a long-term perspective and aim to achieve the best possible balance between risk and return through portfolio diversification. Corry and Wille adjust the tactical asset allocation monthly in order to exploit short-term market volatility. For investors whose recipe for success consists of the daily identification of what they feel are promising stocks, and then buying and selling these quickly, this may not sound particularly spectacular. Stephen Corry sees it slightly differently: Picking individual stocks and bonds is important, but numerous studies show that investment strategy is the biggest contributor to long-term performance. Stephen Corry, Hong Kong: Markets are often unpredictable.

13 13 Monthly adjustment Both Corry and Wille use the long-term investment strategy of LGT Capital Partners, which is responsible for the bank s asset management business, as the basis for this process. However, because this strategy is directed primarily at big institutional investors, they adjust it specifically to the needs of their clientele. Private investors have very different needs and objectives, explains Thomas Wille, who says that this applies in particular to how they perceive gains and losses. If the overall market loses ten percent, an institutional investor is content if his loss amounts to only six percent. In contrast, according to Wille, most private investors focus on avoiding any losses whenever possible, even if this narrows their opportuni ties to generate returns. He says that private investors also tend, for example, to focus more on the domestic market as well as on companies and countries that they are familiar with. Taking the responsibility seriously Thomas Wille is aware of his responsibility as an investment strategist: Our decisions impact the portfolios of our clients who as a rule have worked hard for their money. Stephen Corry also knows that the decision of a client to trust LGT and engage in a long-term partnership with the bank depends to a high degree on the quality of their work. Our decisions impact the portfolios of our clients. Thomas Wille Thomas Wille, Zurich: Private investors tend to invest more in the domestic market. And this work has not gotten easier in recent years. Not only have financial markets become more volatile, they also react much more unpredictably than they used to. Such as when an event occurs and market participants expect a positive reaction in financial markets and instead, markets react negatively or vice versa. Wille cites the unexpected stock market rally on the news of the recent US election outcome as an example. For financial markets, the rise of social media means that the number of analyses and opinions has multiplied. In the end, although we have our own strong market view, we also have to question our opinions and gain distance to our analysis, says Thomas Wille. His colleague in Asia takes a similar view: In our role, it is best to remain humble. Markets are often mean-spirited and you are not always proven right, and that is why we have to be alert to a reality that things can turn out very differently from how we had initially expected them.

14 14 Asset management Our unique investment expertise The appeal of LGT for private clients and institutional investors is based to a large extent on our expertise in the field of asset management. We invest with a global perspective and in close collaboration with leading investment specialists worldwide. In addition to our asset management headquarters in Switzerland, we have offices in the key financial centers London, New York, Hong Kong, Tokyo, Beijing, Dubai and Sydney, as well as in Dublin and Vaduz. Our approximately 350 asset management specialists provide the building blocks for creating diversified portfolios for institutional investors. They also construct such portfolios, and have comprehensive expertise in alternative investments. Over 450 pension funds, insurance companies, sovereign wealth funds and foundations from around the world, but also our owner, the Princely Family of Liechtenstein, have entrusted substantial assets to us for management. Just like these investors, our private clients also benefit from our specialized investment expertise, which we have been building since 1998, and which is unique in terms of its breadth, depth and configuration. Strategic investment We invest long-term and using disciplined risk management. When we develop investment strategies, we place great importance on carefully thought-out risk diversification, which our experts determine using tools such as scenario planning. This enables them to develop portfolios that are highly robust in a broad range of economic scenarios. We then tailor each portfolio specifically to the needs, investment horizon and risk appetite of the individual investor. Active advisory approach Our firm belief is that outstanding investment expertise is reflected in above-average results over the long-term. As an active investor, we focus on undervalued investments in attractive niche markets. This approach requires in-depth analytical skills and a comprehensive understanding of markets. Selecting leading portfolio managers When it comes to implementation, we work with leading investment managers, but also invest directly where we can take advantage of efficiency gains. For almost 20 years, we have been building a big global network of investment managers for alternative and traditional asset classes, and perfected our ability to identify and work with the global leaders among them. Outstanding investment expertise LGT regularly wins awards from independent bodies for its investment expertise. In 2016, some of the accolades we received include: the European Pension Awards Best Private Equity Provider for Pension Funds for the second consecutive year; the UK Pension Awards SRI/ESG (Socially Responsible Investments/Environmental, Social and Governance) Provider of the Year, also for the second year in a row; and for the third consecutive year, Private Equity Fund Manager of the Year at the Triple A Awards of The Asset, one of the leading trade publications in Asia. Further to this, the LGT Sustainable Equity Fund Global won Lipper Fund Awards as the best fund over three years for Switzerland and Austria, and the uro Fund Award over one, three and five years. The fund was also designated Best Global Equity Fund by Morningstar for Germany, Austria and Switzerland.

15 15 Scenario planning We have been employing scenario planning to define optimal strategic asset allocation i.e. the allocation of assets to various asset classes, countries and currencies for over 15 years. Put simply, we work together with internal and external experts from a broad range of fields to draw up three to five-year scenarios that map out possible political, social and economic developments. These scenarios serve as a basis for our own method of optimizing portfolios, which we call robust portfolio optimization. Leverage boom 15% Sluggish progress 10% 5% 0% -5% -10% Secular stagnation Deflationary depression Reflationary growth China hard landing Monetary debasement Expected return of optimized robust portfolio (best positioning taking all scenarios into account) Expected return of optimized portfolio for each scenario Our portfolio specialists identify the leading global investment managers.

16 16 Without insurance, nothing would function Climate scientist Hilary Paul is a portfolio manager for insurance-linked investments a relatively new, but emerging asset class. On 22 September 2016, a strong area of severe weather activity broke away from the coast of Africa and tracked westward out over the Atlantic Ocean. Due to the significant increase in storm activity in the days that followed, the Miami-based National Hurricane Center issued a first storm warning on 28 September. Hilary Paul remembers the day clearly: Thanks to our early warning systems and simulations, we saw that something very big could be brewing. Catastrophe risk portfolios Hilary Paul is a partner and portfolio manager in LGT Capital Partner s 17-member team responsible for insurance-linked investments. After completing her studies in the US and Switzerland and receiving her doctorate in climatology, Paul worked at a reinsurance company for several years as a risk analyst for natural catastrophes. Starting in 2007, she helped to build the team that was then acquired by LGT in As a portfolio manager, she provides insurance solutions to insurance and reinsurance companies for extreme natural disasters such as earthquakes and hurricanes, and bundles risks into diversified portfolios for investors. Investors receive a premium for assuming these risks, however, must bear the costs of insured loss events in return (see box). On 29 September, the storm reached a wind speed of 120 kilometers per hour, and had thus become a hurricane. It was given the name Matthew. In this region of the world, hurricanes typically occur in the fall, and move across the Caribbean and northward toward the US. If they reach the mainland, they frequently bring floods, devastation and death in their wake. On 1 October, Matthew reached a wind speed of 260 kilometers per hour, becoming a category five hurricane the highest category. Three days later, it ravaged the coasts of Haiti and Cuba. When selecting risks, Hilary Paul and LGT s Insurance Linked Strategies team look to ensure the greatest-possible diversification, both in terms of geography as well as the type of perils. This is to prevent a single major event from having an excessive adverse impact on the returns of a fund portfolio. The team also ensures that the agreed premium is attractive relative to the potential loss. To this end, they use various computer models to simulate the probability that an event will occur and the possible loss experience for the risks assumed. While it is relatively easy to calculate losses for a portfolio of third-party automobile insurance using statistical models, when evaluating catastrophe risks that occur only rarely in comparison, it is important to have a background in natural sciences and longstanding experience. Our industry is very long-term oriented and is a fairly small community. Business transactions and negotiations are therefore based heavily on trust, adds Hilary Paul. Our industry is very long-term oriented and is a fairly small community. Business transactions and negotiations are therefore based heavily on trust. Hilary Paul Which way will Matthew go? After passing over Cuba, Matthew once again reached the open sea. For everyone watching, the pressing question was: will the hurricane stay away from the mainland or head toward the densely-populated coast of Florida, Georgia and South Carolina? Hilary Paul and her team

17 17 were also concerned. The size of the losses for client portfolios depended on the path the hurricane would take. We were in constant, intensive contact with insurance companies and brokers, and we simulated Matthew s possible progression and the effects on portfolios using our models, recalls the portfolio manager. We were in constant, intensive contact with insurance companies and brokers, and we simulated Matthew s possible progression and the effects on portfolios using our models. Hilary Paul Thankfully, the largely feared worst-case scenario did not materialize. Matthew moved northward over the ocean, parallel to the coast of Florida. Greatly weakened, it crossed South Carolina on 8 October before dissipating completely on 9 October. Yet, the hurricane caused a high number of fatalities and billions in damages, particularly in Haiti. It became clear relatively quickly, however, that the client portfolios managed by Hilary Paul s team would suffer only minimal losses. She was of course relieved, but at the same time, the enormous suffering that had occurred left its mark: Death and devastation are always a part of catastrophe insurance. But this kind of insurance is necessary and worthwhile, because it at least covers the material damages and makes it possible to rebuild. Our society couldn t function without this kind of insurance. Insurance-linked investments By transferring major risks arising from natural disasters to investors in exchange for a premium, insurance companies relieve their balance sheets of expensive, mandatory regulatory equity capital. Insurance-linked investments are attractive for investors because returns depend only on whether or not the insured loss event actually takes place. Because such events, for example earthquakes and hurricanes, occur separately from developments in financial markets, insurancelinked investment solutions are an excellent way to improve the diversification of a traditional portfolio consisting of equities and bonds. Keeping an eye on the weather: Pierre-Sylvain Chaumet, Hilary Paul and Klaus Sapelza (from left to right), members of LGT s Insurance Linked Strategies team.

18 18 Commitment How we practice sustainability Responsible and long-term thinking and actions are firmly embedded in our corporate culture. To us, sustainability means acting with a sense of social responsibility and a long-term perspective. Our aim is to create and preserve enduring values for our clients, our company and society. When it comes to our employees, it is very important to us that we foster not only their professional expertise, but also their personal development. avoided investments which pose significant environmental and social risks as well as risks to the way in which the company is managed. We also align ourselves with the UN Principles for Responsible Investments (UN PRI), which we signed up to in Since 2009, we have been offering our clients a range of sustainable funds. For these funds, we analyze both environ mental, social and governance (ESG) criteria, and key financial data. We take our responsibility a step further by making impact investments in social enterprises that have developed scalable solutions to improve the quality of life of disadvantaged people. Responsibility as an investor As a portfolio manager for private and institutional investors, we also implement the sustainability approach in our core business. For instance, we do not invest in any companies involved in the production, storage and supply of controversial weapons. Since as early as 2003, we have consistently Commitment to the environment and climate For us, our responsibility for protecting the climate means keeping the carbon footprint of our whole company as small as possible and using natural resources extremely carefully. We contribute to the achievement of the United Nations 2030 Agenda for Sustainable Development. We also adhere to the

19 19 CO 2 emissions in portfolios We want our clients to know the level of climate and environmental risks contained in their portfolios. Among other factors, we therefore calculate the environmental footprint of their investment decisions and compare the results to an appropriate benchmark. Getting involved through LGT s Employee Volunteering Program: employees on their way to a mountain pasture near Triesenberg in Liechtenstein, where they will remove invasive neophytes. Ten Principles of the UN Global Compact and require our suppliers to do the same. Since 2010, we have been compensating for our CO 2 emissions group-wide, and in 2016, we joined the Montreal Carbon Pledge. As a member of the Swiss Climate Foundation, we have been supporting SMEs that make a contribution to climate protection since a positive social impact, but also generate financial returns, LGT Venture Philanthropy supports non-profit organizations that are financed through donations. Our clients have the opportunity to participate in these commitments. Improving quality of life Widespread poverty remains one of the world s greatest challenges. On the initiative of H.S.H. Prince Max von und zu Liechtenstein, LGT strives to improve the quality of life of disadvantaged people through impact investing and philanthropy. Social organizations and enterprises that offer an effective solution to a social or environmental problem are the primary focus. They receive support in the form of donations and investments, as well as through the transfer of knowledge and access to networks. While impact investing consists of investing in companies that not only have Sustainability Report Every two years, LGT publishes a Sustainability Report, which sets out in detail the sustainability goals we pursue and the specific measures we have taken during the period under review. The report can be downloaded from our website or ordered online.

20 20 The social entrepreneur James Ashwell gave up his well-paying job as a strategy consultant to dedicate him - self to caring for his mother, who was suffering from dementia. This period had a profound influence on him. He went on to found Unforgettable, a social enterprise that makes hard to find products and services for dementia accessible to both people suffering from the disease and their caregivers by means of a website. Sometimes a single phone call can change a person s entire life: James Ashwell was only 24 years old when his brother informed him of the sudden death of their father. That same day, he left his office in London, where he was pursuing a career at a leading international consultancy firm, and returned to Birmingham to care for his mother Fay. She suffered from frontotemporal dementia, a rare form of dementia that usually occurs between the ages of 50 and 60. At home, he realized that his mother s illness was much more advanced than he and his three siblings had believed. My father probably didn t want us to worry too much, so he kept quiet about her condition, speculates James Ashwell. He never returned to his office in London. A growing number of people affected According to the World Health Organization (WHO), around 48 million people around the world suffer from a form of dementia. Due to rising life expectancy, the WHO expects this number to increase to up to 150 million by Happy moments despite the illness: Fay Ashwell with her son James

21 The disease manifests itself gradually and is usually not recognized immediately for what it is. Memory loss is often the first sign. People suffering from dementia become forgetful and have more and more difficulty remembering things. Changes in personality and behavior can also emerge. As a teenager, I often blamed hormones or tiredness for her increasingly chaotic behavior, says Ashwell. For the next five years, the young man from England and his siblings devoted themselves to looking after their mother. He found a job in Birmingham and moved back into the family home together with his brother Mark. I had a thousand questions, Ashwell recalls. From one day to the next, I was confronted with a completely new situation. Dementia poses great challenges both for those affected and their caregivers. Ashwell says: The first years were hell, particularly her sleepwalking. He recalls how in his desperation, he tied a string to the knob of his mother s bedroom door and wrapped the other end around his finger so that he would notice if she left her room during the night. As her con - dition worsened, she also lost all sense of time. Sometimes she would pack her suitcase in the middle of the night for a holiday she thought she was going on, he says. The lack of sleep that came as a result was exhausting for everyone. three years. Looking back, Ashwell says: Despite the serious disease, we were able to enjoy beautiful moments with our mother right until the end. On 17 February 2011, she died peacefully in her sleep at age 67. We took every day as it came, and tried to make the most of that day. James Ashwell After her death, it was clear to Ashwell that he had to bring together all the products for people with dementia that he had painstakingly searched for by putting them on an online platform. He founded Unforgettable to this end. I realized that there are countless products that can be enormously helpful in coping with everyday life, says the successful entrepreneur. For example, clocks that help with time orientation, so that people with dementia can better remember the date and time, or shoe insoles with integrated GPS trackers that make it possible for a person to be located if they get lost while sleepwalking or out of doors. As a teenager, I often blamed hormones or tiredness for her increasingly chaotic behavior. James Ashwell Making everyday life easier He and his brother did what most family members would do in that situation: We took every day as it came, and tried to make the most of that day. They wanted to see their mother happy. Sometimes all it took was something small, for example a trip to a garden center or coloring in coloring books. He was also continuously looking for products that could make everyday life easier. For example, as the dementia progressed, the risk of his mother cutting herself increased. The solution to the problem came in the form of gloves that are normally used for processing chickens. Thanks to the gloves, his mother was able to continue pursuing one of her favorite hobbies, cooking, for another Not dealing with the disease on your own At unforgettable.org, you can find all the products and information that I wished I had known about while I was caring for my mother, says Ashwell. The website also offers an online forum, where people affected by dementia can exchange information. Unforgettable s message is clear: Caring for someone with dementia is very challenging, but you are not alone. The site aims to be a place where those suffering from dementia, their relatives, and caregivers can find support. I am a firm believer that life can be very fulfilling even with dementia. And I want to make a contribution to that. LGT uses impact investments to support companies that have a positive social or environmental effect. Unforgettable has been one of these companies since

22 22 Organizational structure Foundation Board and Group Management LGT has a lean and efficient organizational structure. This allows us to make decisions quickly and independently. Roles and responsibilities at LGT Group Foundation are defined in a transparent corporate governance structure. The Foundation Board, of which H.S.H. Prince Philipp von und zu Liechtenstein is the Chairman, is the supervisory body for the Group. The heads of the Private Banking, Asset Management and Financial Services business units and the Chief Financial Officer (CFO), together with the Group CEO, H.S.H. Prince Max von und zu Liechtenstein, make up the Group Management, the Senior Management Board. LGT Group Foundation H.S.H. Prince Philipp von und zu Liechtenstein Group Internal Audit LGT Group CEO H.S.H. Prince Max von und zu Liechtenstein Human Resources Marketing & Communications Impact Investing & Philanthropy CFO Olivier de Perregaux Compliance, Controlling & Accounting, Legal & Tax, Risk Controlling/Corporate Finance Private Banking Thomas Piske Asset Management (LGT Capital Partners) Dr. Roberto Paganoni Operations & Technology (LGT Financial Services) Dr. André Lagger Foundation Board H.S.H. Prince Philipp von und zu Liechtenstein, Chairman 1 Dr. Rodolfo Bogni 1, 2 Juan Bosch 2 K.B. Chandrasekar 3, 4 1, 2, 4 Dr. Phillip Colebatch Mark Jordy 3 Prof. Dr. Conrad Meyer 3, 4 Internal Audit Daniel Hauser, Head Group Internal Audit External Audit PricewaterhouseCoopers AG, Zurich 1 Member of the HR and Nomination Committee 2 Member of the HR and Compensation Committee 3 Member of the Audit Committee 4 Member of the Risk Committee

23 23 Senior Management Board H.S.H. Prince Max von und zu Liechtenstein (1969), CEO of LGT since He began his professional career in 1993 as an Investment Analyst and Associate at J.P. Morgan Partners in New York. In 1998, he returned to Europe to work for the private equity group Industri Kapital (today IK Investment Partners). In 2000, he rejoined J.P. Morgan Partners, first as a Director in London, and from 2003 onwards as head of the company s German office. He holds a degree in Business Studies from the European Business School and completed an MBA at Harvard Business School. Dr. Roberto Paganoni (1961) is a founding partner and has been CEO of LGT Capital Partners since From 1989 to 1997, he worked as an advisor for McKinsey & Company in Düsseldorf, Brussels and Zurich. Roberto Paganoni gained a Diploma in Mechanical Engineering from RWTH Aachen University before completing a Master of Business Administration and Doctor of Business Administration at the University of St.Gallen. He is of Dutch/Italian nationality, a Board Member of the Swiss Private Equity & Corporate Finance Association (SECA) as well as a lecturer at the University of St.Gallen. Thomas Piske (1958) has been CEO LGT Private Banking since After completing his studies in economics at the University of Innsbruck, he joined LGT Bank in Liechtenstein Ltd. in Vaduz in In 1998, he became a member of the general management and in 2001 was appointed president of the general management of LGT Bank in Liechtenstein as well as CEO Private Banking Europe. Thomas Piske is an Austrian national. He was Chairman of the Liechtenstein Bankers Association between 2004 and Dr. André Lagger (1962) has been CEO of LGT Financial Services since 2001 and CEO of the Operations & Technology business unit since He studied Business Administration and Economics at the University of Berne before obtaining his doctorate from the same institution. Between 1994 and 1997, he worked for UBS AG in London and in Zurich. From 1997 to 1998, he was Head of Corporate Controlling at Liechtenstein Global Trust AG in Zurich and CFO of LGT Capital Management in Vaduz from 1998 to André Lagger is a Swiss national. Olivier de Perregaux (1965) has been CFO of LGT since After completing a Master of Economics degree at the University of St.Gallen, he worked as a consultant for McKinsey & Company in Zurich and New York between 1988 and From 1997 to 1999 he was Senior Transaction Manager and Head of Strategic Marketing for Center Solutions at Zurich Financial Services in Zurich. Olivier de Perregaux is a Swiss national.

24

25 Unknown artist, detail from Imari plate, 18th century

26 We are relentless in our efforts to further improve our investment expertise and the quality of our services. H.S.H. Prince Max von und zu Liechtenstein, CEO LGT

27 Data and facts annual results and outlook 29 Financial highlights 30 Consolidated income statement 31 Consolidated balance sheet 32 Assets under administration 33 Capital resources 34 Risk note/disclaimer

28 28 Data and facts 2016 annual results and outlook The 2016 financial year was characterized by economic and political uncertainties, which was reflected in subdued client activity. Despite this environment, LGT continued on its growth path. Total operating income increased 5 percent compared to the previous year to CHF 1.2 billion. Net interest and similar income increased to CHF million thanks to efficient balance sheet management, and income from services rose to CHF million as a result of the larger asset base. At CHF million, income from trading activities and other operating income was lower than in 2015, reflecting a one-off contribution from a real estate sale recognized in the previous year s result. Total operating expenses increased 2 percent in 2016 to CHF million. Personnel expenses rose 6 percent to CHF million, reflecting higher staff levels and performance-related compensation in accordance with the success of the business, as well as a positive effect from pension plan adjustments. Business and office expenses rose 20 percent to CHF million, which is mainly attributable to further business expansion. The cost-income ratio was 74.2 percent as per year-end 2016, compared to 71.2 percent at the end of Overall, Group profit rose 9 percent in 2016 to CHF million. LGT is very well capitalized and has a high level of liquidity. The tier 1 capital ratio was 20.2 percent as at 31 December 2016, compared to 20.1 percent for the previous year. Continued strong net new asset growth In 2016, LGT reported record net asset inflows totaling CHF 11.7 billion, which corresponds to a 9 percent growth of assets under management at year-end All regions and both of the Group s business areas contributed to this positive result. Consistent implementation of growth strategy LGT continued to consistently implement its international growth strategy in With the London-based wealth management boutique LGT Vestra, LGT now has a notable foothold in the important British market. The acquisition of the ABN AMRO private banking business in Asia and the Middle East announced in the fourth quarter of 2016 will significantly further strengthen LGT s position in these attractive growth markets. The transaction is envisaged to be completed in the second quarter of 2017, subject to regulatory approval. On 3 March 2017, LGT announced that it will acquire the London and Paris-based private debt manager European Capital Fund Management, including a team of more than 20 specialists. With this transaction, which is also expected to close in the second quarter of 2017, the Group will com plement the private markets offering and enhance one of the core competencies of its asset management division, LGT Capital Partners. Outlook Despite ongoing market uncertainties, LGT is optimistic for the further development of its business in 2017 and beyond. The good result achieved in the 2016 financial year, and the continued strong new asset growth in particular, are evidence of the high level of trust that our clients place in us. Honoring this trust by providing our clients with investment expertise and a stable platform in this challenging environment is our number one priority. We want to continue on the path we have set out by strengthening our client offering further. We thank our clients for the trust they place in us and our employees for their strong commitment throughout the reporting year. Assets under management rose 18 percent, from CHF billion as per year-end 2015 to CHF billion. This includes CHF 8.0 billion in assets under management from the acquisition of a majority stake in LGT Vestra completed in the first half of The related income and expenses are reflected in LGT s financial statements starting from the second half of 2016.

29 29 Financial highlights Assets under administration CHF m Net new assets CHF m of which net new money CHF m of which through acquisition CHF m Total operating income CHF m Group profit CHF m Appropriation of Foundation earnings and dividends CHF m Group equity capital CHF m Total assets CHF m Ratios Tier 1 % Cost/income ratio % Liquidity Coverage Ratio % Headcount at 31 December Rating 3 Moody s Aa2 Aa2 A1 A1 Aa3 Standard & Poor s A+ A+ A+ A+ A+ 1 Proposed 2 Adjusted for reclassified special mandate 3 LGT Bank Ltd., Vaduz

30 30 Data and facts Consolidated income statement Consolidated income statement (TCHF) Change absolute % Net interest and similar income Income from services Income from trading activities Other operating income Total operating income Personnel expenses Business and office expenses Other operating expenses Total operating expenses Operating profit before tax Tax expense Net profit before minority interests Minority interests Net profit

31 31 Consolidated balance sheet Consolidated balance sheet (TCHF) Change absolute % Assets Cash in hand, balances with central banks Loans and advances to banks Loans and advances to customers Securities held for trading purposes Derivative financial instruments Financial assets designated at fair value Available-for-sale securities Investments in associates Property and equipment Intangible assets Prepayments and accrued income Deferred tax assets Other assets Total assets Liabilities Amounts due to banks Amounts due to customers Derivative financial instruments Financial liabilities designated at fair value Certificated debt Accruals and deferred income Current tax liabilities Deferred tax liabilities Other liabilities Provisions Total liabilities Equity capital Foundation capital Retained earnings Foreign currency translation Other reserves Total equity capital and reserves attributable to LGT s equity holder Non-controlling interests Total equity capital Total liabilities and equity capital

32 32 Data and facts Assets under administration Assets under administration (CHF m) Assets under administration which are stated according to the provisions of the Liechtenstein banking law are as follows: Assets in own-managed funds Assets under management Other assets under administration Total assets under administration (including double counting) of which double counting Net new assets of which net new money of which through acquisition Assets in own-managed funds This item covers the assets of all the actively marketed investment funds of LGT. Assets under management The calculation of assets with management mandates takes into account client deposits as well as the fair value of securities, loan-stock rights, precious metals and fiduciary investments placed with third-party banks. The information covers both assets deposited with Group companies and assets deposited with third-party banks for which Group companies hold a discretionary mandate. Double counting This item covers investment fund units from own-managed funds as well as certain assets that are included in assets under management. Custodian assets Custodian assets are excluded from assets under administration. Other assets under administration The calculation of other assets under administration takes into account client deposits as well as the fair value of securities, loan-stock rights, precious metals and fiduciary investments placed with third-party banks. The information covers assets for which a management or advisory mandate is exercised.

33 33 Capital resources Capital adequacy and the use of capital are monitored by the Group and by individual operating units. Starting from 1 February 2015, the calculation of regulatory capital incorporates the capital requirements following the Capital Requirements Regulation No. 575/2013 (CRR) and the Capital Requirements Directive No. 2013/36/EU (CRD 4) as implemented into Liechtenstein law. The minimum capital requirement is 8 percent of risk-weighted assets which consists at least of 4.5 percent common equity tier 1 (CET 1) capital and 1.5 percent additional tier 1 capital. In addition, LGT has to fulfill 5 percent buffer requirements (2.5 percent capital conservation buffer and 2.5 percent systemic risk buffer). The whole buffer requirement must be fulfilled with CET 1 capital. to reflect their relative risk. Assets are weighted according to broad categories of notional risk, first being multiplied by a conversion factor and then being assigned a risk weighting according to the amount of capital deemed to be necessary for them. Off-balance sheet commitments and default risk positions are also multiplied and risk-weighted. Market risk is calculated with the standard approach. All results are based on the full application of the final CRR and CRD 4 framework in the European Union and thus without consideration of applicable transitional rules. The Group and its individually regulated operations have complied with all externally imposed capital requirements throughout the period. Capital ratios measure capital adequacy by comparing the Group s eligible capital with balance sheet assets, off-balance sheet commitments and market positions at weighted amounts The following table analyzes the Group s capital resources as defined for regulatory purposes: Capital resources (TCHF) Capital resources thereof non-controlling interests Other adjustments Intangible assets CET 1 capital additive tier 1 instruments 0 0 Tier 1 capital tier 2 items 0 23 Own funds Required capital (TCHF) Approach Credit risk Standard Market risk Standard Operational risk Basic indicator Credit valuation adjustment risk Standard Total Capital adequacy ratio % 20.1% : CET 1 capital ratio: 20.2%; Tier 1 capital ratio: 20.2%; Total capital ratio: 20.2%

34 34 LGT Bank Ltd. Herrengasse 12, FL-9490 Vaduz Phone , LGT Bank AG Zweigniederlassung Österreich Bankgasse 9, A-1010 Vienna Phone lgt.austria@lgt.com LGT Bank (Switzerland) Ltd. Lange Gasse 15, P.O. Box CH-4002 Basel Phone lgt.ch@lgt.com LGT Bank AG, Dublin Branch Third Floor, 30 Herbert Street Dublin 2, Ireland Phone lgt.eire@lgt.com LGT Vestra LLP 14 Cornhill, London, EC3V 3NR Phone info@lgtvestra.com LGT Bank (Singapore) Ltd. 3 Temasek Avenue #30-01 Centennial Tower Singapore Phone , lgt.sg@lgt.com LGT Bank (Hong Kong) 4203 Two Exchange Square 8 Connaught Place Central G.P.O. Box 13398, Hong Kong Phone , info@lgt.com Media Relations Christof Buri Phone christof.buri@lgt.com Risk note/disclaimer This publication is for your information only and is not intended as an offer, solicitation of an offer, public advertisement or recommendation to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any undertaking or guarantee as to it being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published, information shall therefore not be understood to imply that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-making in relation to financial, legal, tax or other consulting matters, nor should any investment or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. The risk of price and foreign currency losses and fluctuations in return as a result of unfavorable exchange rate movements cannot be ruled out. There is a possibility that investors will not recover the full amount they initially invested. We disclaim without qualification all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obligated to find out about any restrictions that may apply and to comply with them.

35 Unknown artist, detail from Imari baluster vase, early 18th century