Annual Reports

 
Other

DEUTSCHE BANK AKTIENGESELLSCHAFT 20-F 2010
e20vf
Table of Contents

As filed with the Securities and Exchange Commission on March 16, 2010

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 20-F
     
o   REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
or
     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
 
   
or
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
or
     
o   SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report                     
Commission file number 1-15242
Deutsche Bank Aktiengesellschaft
(Exact name of Registrant as specified in its charter)
Deutsche Bank Corporation
(Translation of Registrant’s name into English)
Federal Republic of Germany
(Jurisdiction of incorporation or organization)
Theodor-Heuss-Allee 70, 60486 Frankfurt am Main, Germany
(Address of Registrant’s principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act
See following page
Securities registered or to be registered pursuant to Section 12(g) of the Act.
NONE
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
NONE
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
         
Ordinary Shares, no par value       620,175,320
    (as of December 31, 2009)    
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes þ     No o
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes o     No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or non- accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
         
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
         
U.S. GAAP o
  International Financial Reporting Standards þ   Other o
 
  as issued by the International Accounting Standards Board    
Indicate by check mark which financial statement item the registrant has elected to follow
Item 17 o     Item 18 þ
If this is an annual report, indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes o     No þ
 
 

 


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Securities registered or to be registered pursuant to Section 12(b) of the Act (as of February 19, 2010).
         
    Name of each exchange on which
Title of each class   registered
Ordinary shares, no par value
  New York Stock Exchange
6.375% Noncumulative Trust Preferred Securities of Deutsche Bank Capital Funding Trust VIII
  New York Stock Exchange
6.375% Noncumulative Company Preferred Securities of Deutsche Bank Capital Funding Trust VIII*
       
Subordinated Guarantees of Deutsche Bank AG in connection with Capital Securities*
       
6.55% Trust Preferred Securities of Deutsche Bank Contingent Capital Trust II
  New York Stock Exchange
6.55% Company Preferred Securities of Deutsche Bank Contingent Capital Trust II*
       
Subordinated Guarantees of Deutsche Bank AG in connection with Capital Securities*
       
6.625% Noncumulative Trust Preferred Securities of Deutsche Bank Capital Funding Trust IX
  New York Stock Exchange
6.625% Noncumulative Company Preferred Securities of Deutsch Bank Capital Funding LLC IX*
       
Subordinated Guarantees of Deutsche Bank AG in connection with Capital Securities*
       
ELEMENTS(SM) Linked to the Morningstar® Wide Moat Focus(SM) Total Return Index due October 24, 2022
  NYSE Arca
ELEMENTS(SM) “Dogs of the Dow” Linked to the Dow Jones High Yield Select 10 Total Return Index due November 14, 2022
  NYSE Arca
7.350% Noncumulative Trust Preferred Securities of Deutsche Bank Capital Funding Trust X
  New York Stock Exchange
7.350% Noncumulative Company Preferred Securities of Deutsche Bank Capital Funding Trust X*
       
Subordinated Guarantees of Deutsche Bank AG in connection with Capital Securities*
       
7.60% Trust Preferred Securities of Deutsche Bank Contingent Capital Trust III
  New York Stock Exchange
7.60% Company Preferred Securities of Deutsche Bank Contingent Capital Trust III*
       
Subordinated Guarantees of Deutsche Bank AG in connection with Capital Securities*
       
DB Gold Double Long Exchange Traded notes due February 15, 2038
  NYSE Arca
DB Gold Double Short Exchange Traded notes due February 15, 2038
  NYSE Arca
DB Gold Short Exchange Traded notes due February 15, 2038
  NYSE Arca
DB Agriculture Short Exchange Traded Notes due April 1, 2038
  NYSE Arca
DB Agriculture Long Exchange Traded Notes due April 1, 2038
  NYSE Arca
DB Agriculture Double Short Exchange Traded Notes due April 1, 2038
  NYSE Arca
DB Agriculture Double Long Exchange Traded Notes due April 1, 2038
  NYSE Arca
DB Commodity Short Exchange Traded Notes due April 1, 2038
  NYSE Arca
DB Commodity Long Exchange Traded Notes due April 1, 2038
  NYSE Arca
DB Commodity Double Long Exchange Traded Notes due April 1, 2038
  NYSE Arca
DB Commodity Double Short Exchange Traded Notes due April 1, 2038
  NYSE Arca
8.05% Trust Preferred Securities of Deutsche Bank Contingent Capital Trust V
  New York Stock Exchange
8.05% Company Preferred Securities of Deutsche Bank Contingent Capital Trust V*
       
Subordinated Guarantees of Deutsche Bank AG in connection with Capital Securities*
       
PowerShares DB Crude Oil Short Exchange Traded Notes due June 1, 2038
  NYSE Arca
PowerShares DB Crude Oil Long Exchange Traded Notes due June 1, 2038
  NYSE Arca
PowerShares DB Crude Oil Double Short Exchange Traded Notes due June 1, 2038
  NYSE Arca
PowerShares DB Base Metals Short Exchange Traded Notes due June 1, 2038
  NYSE Arca
PowerShares DB Base Metals Long Exchange Traded Notes due June 1, 2038
  NYSE Arca
PowerShares DB Base Metals Double Short Exchange Traded Notes due June 1, 2038
  NYSE Arca
PowerShares DB Base Metals Double Long Exchange Traded Notes due June 1, 2038
  NYSE Arca
ELEMENTS Linked to the Benjamin Graham Large Cap Value Index — Total Return due August 14, 2023
  NYSE Arca
ELEMENTS Linked to the Benjamin Graham Small Cap Value Index — Total Return due August 14, 2023
  NYSE Arca
ELEMENTS Linked to the Benjamin Graham Total Market Value Index — Total Return due August 14, 2023
  NYSE Arca
 
*   For listing purpose only, not for trading.

 


 

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Deutsche Bank Aktiengesellschaft, which we also call Deutsche Bank AG, is a stock corporation organized under the laws of the Federal Republic of Germany. Unless otherwise specified or required by the context, in this document, references to “we”, “us”, and “our” are to Deutsche Bank Aktiengesellschaft and its consolidated subsidiaries.
Due to rounding, numbers presented throughout this document may not add up precisely to the totals we provide and percentages may not precisely reflect the absolute figures.
Our registered address is Theodor-Heuss-Allee 70, 60486 Frankfurt am Main, Germany, and our telephone number is +49-69-910-00.
Cautionary Statement Regarding Forward-Looking Statements
We make certain forward-looking statements in this document with respect to our financial condition and results of operations. In this document, forward-looking statements include, among others, statements relating to:
  the potential development, severity, duration and impact on us of the current economic and business conditions;
 
  the implementation of our strategic initiatives and other responses to the economic and business conditions;
 
  the development of aspects of our results of operations;
 
  our expectations of the impact of risks that affect our business, including the risks of continuing losses on our trading processes and credit exposures; and
 
  other statements relating to our future business development and economic performance.
In addition, we may from time to time make forward-looking statements in our periodic reports to the United States Securities and Exchange Commission on Form 6-K, annual and interim reports, invitations to Annual General Meetings and other information sent to shareholders, offering circulars and prospectuses, press releases and other written materials. Our Management Board, Supervisory Board, officers and employees may also make oral forward-looking statements to third parties, including financial analysts.
Forward-looking statements are statements that are not historical facts, including statements about our beliefs and expectations. We use words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “estimate”, “project”, “should”, “potential”, “reasonably possible”, “plan”, “aim” and similar expressions to identify forward-looking statements.
By their very nature, forward-looking statements involve risks and uncertainties, both general and specific. We base these statements on our current plans, estimates, projections and expectations. You should therefore not place too much reliance on them. Our forward-looking statements speak only as of the date we make them, and we undertake no obligation to update any of them in light of new information or future events.

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We caution you that a number of important factors could cause our actual results to differ materially from those we describe in any forward-looking statement. These factors include, among others, the following:
  the potential development, severity and duration of the current economic and business conditions;
 
  other changes in general economic and business conditions;
 
  changes and volatility in currency exchange rates, interest rates and asset prices;
 
  changes in governmental policy and regulation, including measures taken in response to current economic, business, political and social conditions;
 
  changes in our competitive environment;
 
  the success of our acquisitions, divestitures, mergers and strategic alliances;
 
  our success in implementing our strategic initiatives and other responses to the current economic and business conditions and realizing the benefits anticipated therefrom; and
 
  other factors, including those we refer to in “Item 3: Key Information — Risk Factors” and elsewhere in this document and others to which we do not refer.
Use of Non-GAAP Financial Measures
This document and other documents we have published or may publish contain non-GAAP financial measures. Non-GAAP financial measures are measures of our historical or future performance, financial position or cash flows that contain adjustments that exclude or include amounts that are included or excluded, as the case may be, from the most directly comparable measure calculated and presented in accordance with IFRS in our financial statements. We refer to the definitions of certain adjustments as “target definitions” because we have in the past used and may in the future use the non-GAAP financial measures based on them to measure our financial targets. Examples of our non-GAAP financial measures, and the most directly comparable IFRS financial measures, are as follows:
     
Non-GAAP Financial Measure
  Most Directly Comparable IFRS Financial Measure
IBIT attributable to Deutsche Bank shareholders (target definition)
  Income (loss) before income taxes
Average active equity
  Average shareholders’ equity
Pre-tax return on average active equity
  Pre-tax return on average shareholders’ equity
Pre-tax return on average active equity (target definition)
  Pre-tax return on average shareholders’ equity
Net income (loss) attributable to Deutsche Bank shareholders (basis for target definition EPS)
 
Net income (loss) attributable to Deutsche Bank shareholders
Total assets adjusted (pro forma US GAAP)
  Total assets
Total equity adjusted
  Total equity
Leverage ratio (target definition) (total equity adjusted to total assets adjusted)
  Leverage ratio (total equity to total assets)
Diluted earnings per share (target definition)
  Diluted earnings per share
For descriptions of these non-GAAP financial measures and the adjustments made to the most directly comparable IFRS financial measures to obtain them, please refer to pages S-17 through S-19 of the supplemental financial information, which are incorporated by reference herein, and the following paragraphs.


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Our target definition of IBIT attributable to Deutsche Bank shareholders excludes significant gains (such as gains from the sale of industrial holdings, businesses or premises) and charges (such as charges from restructuring, goodwill impairment or litigation) if we believe they are not indicative of the future performance of our core businesses.
When used with respect to future periods, our non-GAAP financial measures are also forward-looking statements. We cannot predict or quantify the levels of the most directly comparable IFRS financial measures (listed in the table above) that would correspond to these non-GAAP financial measures for future periods. This is because neither the magnitude of such IFRS financial measures, nor the magnitude of the adjustments to be used to calculate the related non-GAAP financial measures from such IFRS financial measures, can be predicted. Such adjustments, if any, will relate to specific, currently unknown, events and in most cases can be positive or negative, so that it is not possible to predict whether, for a future period, the non-GAAP financial measure will be greater than or less than the related IFRS financial measure.
Use of Internet Addresses
This document contains inactive textual addresses of Internet websites operated by us and third parties. Reference to such websites is made for informational purposes only, and information found at such websites is not incorporated by reference into this document.

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PART I
Item 1: Identity of Directors, Senior Management and Advisers
Not required because this document is filed as an annual report.
Item 2: Offer Statistics and Expected Timetable
Not required because this document is filed as an annual report.
Item 3: Key Information
Selected Financial Data
We have derived the data we present in the tables below from our audited consolidated financial statements for the years presented. You should read all of the data in the tables below together with the consolidated financial statements and notes included in “Item 18: Financial Statements” and the information we provide in “Item 5: Operating and Financial Review and Prospects.” Except where we have indicated otherwise, we have prepared all of the consolidated financial information in this document in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and as endorsed by the European Union (“EU”). Until December 31, 2006, we prepared our consolidated financial information in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All 2006 data included in this report, however, have been prepared in accordance with IFRS as issued by the IASB. Our group division and segment data come from our management reporting systems and are not in all cases prepared in accordance with IFRS. For a discussion of the major differences between our management reporting systems and our consolidated financial statements under IFRS, see “Item 5: Operating and Financial Review and Prospects — Results of Operations by Segment (2009 vs. 2008).”

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20-F     Item 3: Key Information
Income Statement Data
                                         
    20091     2009     2008     2007     2006  
    in U.S.$ m.     in € m.     in € m.     in € m.     in € m.  
Net interest income
    17,948       12,459       12,453       8,849       7,008  
 
                             
Provision for credit losses
    3,789       2,630       1,076       612       298  
 
                             
Net interest income after provision for credit losses
    14,160       9,829       11,377       8,237       6,710  
 
                             
Commissions and fee income
    12,837       8,911       9,741       12,282       11,192  
Net gains (losses) on financial assets/liabilities at fair value through profit or loss
    10,241       7,109       (9,992 )     7,175       8,892  
Other noninterest income
    (759 )     (527 )     1,411       2,523       1,476  
 
                             
Total net revenues
    40,268       27,952       13,613       30,829       28,568  
 
                             
Compensation and benefits
    16,293       11,310       9,606       13,122       12,498  
General and administrative expenses
    12,104       8,402       8,339       8,038       7,143  
Policyholder benefits and claims
    781       542       (252 )     193       67  
Impairment of intangible assets
    (193 )     (134 )     585       128       31  
Restructuring activities
                      (13 )     192  
 
                             
Total noninterest expenses
    28,985       20,120       18,278       21,468       19,931  
 
                             
Income (loss) before income taxes
    7,494       5,202       (5,741 )     8,749       8,339  
 
                             
Income tax expense (benefit)
    352       244       (1,845 )     2,239       2,260  
 
                             
Net income (loss)
    7,142       4,958       (3,896 )     6,510       6,079  
 
                             
Net income (loss) attributable to minority interest
    (22 )     (15 )     (61 )     36       9  
Net income (loss) attributable to Deutsche Bank shareholders
    7,164       4,973       (3,835 )     6,474       6,070  
 
    in U.S.$     in €     in €     in €     in €  
Basic earnings per share2
    11.41       7.92       (7.61 )     13.65       12.96  
Diluted earnings per share3
    10.93       7.59       (7.61 )     13.05       11.48  
Dividends paid per share4
    0.72       0.50       4.50       4.00       2.50  
 
1   Amounts in this column are unaudited. We have translated the amounts solely for your convenience at a rate of U.S.$ 1.4406 per €, the noon buying rate on December 31, 2009.
 
2   We calculate basic earnings per share for each period by dividing our net income (loss) by the weighted-average number of common shares outstanding.
 
3   We calculate diluted earnings per share for each period by dividing our net income (loss) by the weighted-average number of common shares outstanding after assumed conversions.
 
4   Dividends we declared and paid in the year.
Balance Sheet Data
                                         
    20091     2009     2008     2007     2006  
    in U.S.$ m.     in € m.     in € m.     in € m.     in € m.  
Total assets
    2,161,857       1,500,664       2,202,423       1,925,003       1,520,580  
Loans
    371,826       258,105       269,281       198,892       178,524  
Deposits
    495,883       344,220       395,553       457,946       411,916  
Long-term debt
    189,845       131,782       133,856       126,703       111,363  
Common shares
    2,289       1,589       1,461       1,358       1,343  
Total shareholders’ equity
    52,794       36,647       30,703       37,893       33,169  
Tier 1 capital
    49,565       34,406       31,094       28,320       23,539  
Regulatory capital
    54,641       37,929       37,396       38,049       34,309  
 
1   Amounts in this column are unaudited. We have translated the amounts solely for your convenience at a rate of U.S.$ 1.4406 per €, the noon buying rate on December 31, 2009.

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Certain Key Ratios and Figures
                         
    2009     2008     2007  
Share price at period-end
   49.42      27.83      89.40  
Share price high
   58.29      89.80      118.51  
Share price low
   15.38      18.59      81.33  
Book value per basic share outstanding1
   57.81      52.59      79.32  
Return on average shareholders’ equity (post-tax)2
    14.6 %     (11.1 )%     17.9 %
Pre-tax return on average shareholders’ equity3
    15.3 %     (16.5 )%     24.1 %
Pre-tax return on average active equity4
    15.1 %     (17.7 )%     29.0 %
Cost/income ratio5
    72.0 %     134.3 %     69.6 %
Compensation ratio6
    40.5 %     70.6 %     42.6 %
Noncompensation ratio7
    31.5 %     63.7 %     27.1 %
Employees at period-end (full-time equivalent):
                       
In Germany
    27,321       27,942       27,779  
Outside Germany
    49,732       52,514       50,512  
Branches at period-end:
                       
In Germany
    961       961       976  
Outside Germany
    1,003       989       887  
 
1   Shareholders’ equity divided by the number of basic shares outstanding (both at period-end).
 
2   Net income (loss) attributable to our shareholders as a percentage of average shareholders’ equity.
 
3   Income (loss) before income taxes attributable to our shareholders as a percentage of average shareholders’ equity.
 
4   Income (loss) before income taxes attributable to our shareholders as a percentage of average active equity.
 
5   Total noninterest expenses as a percentage of net interest income before provision for credit losses, plus noninterest income.
 
6   Compensation and benefits as a percentage of total net interest income before provision for credit losses, plus noninterest income.
 
7   Noncompensation noninterest expenses, which is defined as total noninterest expenses less compensation and benefits, as a percentage of total net interest income before provision for credit losses, plus noninterest income.
Dividends
The following table shows the dividend per share in euro and in U.S. dollars for the years ended December 31, 2009, 2008 and 2007. We declare our dividends at our Annual General Meeting following each year. Our dividends are based on the non-consolidated results of Deutsche Bank AG as prepared in accordance with German accounting principles. Because we declare our dividends in euro, the amount an investor actually receives in any other currency depends on the exchange rate between euro and that currency at the time the euros are converted into that currency.
Effective January 1, 2009, the German withholding tax applicable to dividends increased to 26.375% (consisting of a 25% withholding tax and an effective 1.375% surcharge) compared to 21.1% applicable for the years 2008 and 2007. For individual German tax residents, the withholding tax represents, generally, the full and final income tax applicable to the dividends. Dividend recipients who are tax residents of countries that have entered into a convention for avoiding double taxation may be eligible to receive a refund from the German tax authorities of a portion of the amount withheld and in addition may be entitled to receive a tax credit for the German withholding tax not refunded in accordance with their local tax law.
U.S. residents will be entitled to receive a refund equal to 11.375% of the dividends received after January 1, 2009 (compared to an entitlement to a refund of 6.1% of the dividends received in the years 2007 and 2008). For U.S. federal income tax purposes, the dividends we pay are not eligible for the dividends received deduction generally allowed for dividends received by U.S. corporations from other U.S. corporations.

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20-F     Item 3: Key Information
Dividends in the table below are presented before German withholding tax.
See “Item 10: Additional Information — Taxation” for more information on the tax treatment of our dividends.
                                 
                    Payout ratio2  
                    Basic     Diluted  
    Dividends     Dividends     earnings     earnings  
    per share1     per share     per share     per share  
2009 (proposed)
  $ 1.08      0.75       9 %     10 %
2008
  $ 0.70      0.50       N/M       N/M  
2007
  $ 6.57      4.50       33 %     34 %
 
N/M — Not meaningful
 
1   For your convenience, we present dividends in U.S. dollars for each year by translating the euro amounts at the noon buying rate described below under “Exchange Rate and Currency Information” on the last business day of that year.
 
2   We define our payout ratio as the dividends we paid per share in respect of each year as a percentage of our basic and diluted earnings per share for that year. For 2008, the payout ratio was not calculated due to the net loss.
Exchange Rate and Currency Information
Germany’s currency is the euro. For your convenience, we have translated some amounts denominated in euro appearing in this document into U.S. dollars. Unless otherwise stated, we have made these translations at U.S. $ 1.4406 per euro, the noon buying rate for euros on December 31, 2009. The “noon buying rate” is the rate the Federal Reserve Bank of New York announces for customs purposes as the buying rate for foreign currencies in the City of New York on a particular date. You should not construe any translations as a representation that the amounts could have been exchanged at the rate used on December 31, 2009 or any other date.
The noon buying rate for euros on December 31, 2009 may differ from the actual rates we used in the preparation of the financial information in this document. Accordingly, U.S. dollar amounts appearing in this document may differ from the actual U.S. dollar amounts that we originally translated into euros in the preparation of our financial statements.
Fluctuations in the exchange rate between the euro and the U.S. dollar will affect the U.S. dollar equivalent of the euro price of our shares quoted on the German stock exchanges and, as a result, are likely to affect the market price of our shares on the New York Stock Exchange. These fluctuations will also affect the U.S. dollar value of cash dividends we may pay on our shares in euros. Past fluctuations in foreign exchange rates may not be predictive of future fluctuations.

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The following table shows the period-end, average, high and low noon buying rates for the euro. In each case, the period-end rate is the noon buying rate announced on the last business day of the period.
                                 
in U.S.$ per €    Period-end     Average1     High     Low  
2010
                               
March (through March 9)
    1.3557             1.3668       1.3525  
February
    1.3570             1.3984       1.3489  
January
    1.3966             1.4563       1.3966  
2009
                               
December
    1.4406             1.5120       1.4276  
November
    1.5023             1.5083       1.4658  
October
    1.4800             1.5020       1.4537  
September
    1.4643             1.4783       1.4220  
2009
    1.4406       1.3963       1.5120       1.2555  
2008
    1.3919       1.4695       1.6010       1.2446  
2007
    1.4603       1.3797       1.4862       1.2904  
2006
    1.3197       1.2661       1.3327       1.1860  
2005
    1.1842       1.2400       1.3476       1.1667  
 
1   We calculated the average rates for each year using the average of the noon buying rates on the last business day of each month during the year. We did not calculate average exchange rates within months.
On March 9, 2010, the noon buying rate was U.S. $1.3557 per euro.
Long-term Credit Ratings
We believe that maintaining a strong credit quality is a key part of the value we offer to our clients, bondholders and shareholders. Below are our long-term credit ratings, which were not changed in 2009. On January 16, 2009, Fitch Ratings placed our long-term credit rating on rating watch negative, citing concern over our underlying profitability in a depressed market environment. The rating watch negative was removed on July 29, 2009 and the AA– rating was confirmed with a negative outlook attached to it as Fitch Ratings expected the global operating environment for banks to remain difficult well into 2010. On March 4, 2010, Moody’s Investors Service lowered our long-term rating from Aa1 to Aa3 (with outlook stable), citing our substantial reliance on capital market activities and the ensuing risk management challenges, the perceived delay in the acquisition of a majority holding in Deutsche Postbank AG and volatility of our non-investment banking businesses.
                         
    Dec 31, 2009     Dec 31, 2008     Dec 31, 2007  
Moody’s Investors Service, New York1
  Aa1     Aa1     Aa1  
Standard & Poor’s, New York2
    A+       A+     AA  
Fitch Ratings, New York3
  AA–     AA–     AA–  
 
1   Moody’s defines the Aa1 rating as denoting bonds that are judged to be high quality by all standards. Moody’s rates Aa bonds lower than the best bonds (which it rates Aaa) because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat greater than Aaa securities. The numerical modifier 1 indicates that Moody’s ranks the obligation in the upper end of the Aa category.
 
2   Standard and Poor’s defines its A rating as somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor’s capacity to meet its financial commitment on the obligation is still strong.
 
3   Fitch Ratings defines its AA rating as very high credit quality. Fitch Ratings uses the AA rating to denote a very low expectation of credit risk. According to Fitch Ratings, AA-ratings indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. Category AA is Fitch Ratings second-highest rating category; the minus indicates a ranking in the lower end of the AA category.
Other than the downgrade by Moody’s Investors Service mentioned above, as of the date of this document, there has been no change in any of the above ratings.

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20-F     Item 3: Key Information
Each rating reflects the view of the rating agency only at the time it gave us the rating, and you should evaluate each rating separately and look to the rating agencies for any explanations of the significance of their ratings. The rating agencies can change their ratings at any time if they believe that circumstances so warrant. You should not view these long-term credit ratings as recommendations to buy, hold or sell our securities.
Capitalization and Indebtedness
The following table sets forth our consolidated capitalization in accordance with IFRS as of December 31, 2009:
         
    in € m.  
Debt1,2:
       
Long-term debt
    131,782  
Trust preferred securities
    10,577  
Long-term debt at fair value through profit or loss
    15,395  
 
     
Total debt
    157,754  
 
     
 
       
Shareholders’ equity:
       
Common shares (no par value)
    1,589  
Additional paid-in capital
    14,830  
Retained earnings
    24,056  
Common shares in treasury, at cost
    (48 )
Net gains (losses) not recognized in the income statement, net of tax
       
Unrealized net (losses) on financial assets available for sale, net of applicable tax and other
    (186 )
Unrealized net (losses) on derivatives hedging variability of cash flows, net of tax
    (134 )
Foreign currency translation, net of tax
    (3,521 )
Unrealized net gains from equity method investments
    61  
 
     
Total shareholders’ equity
    36,647  
 
     
Minority interest
    1,322  
 
     
Total equity
    37,969  
 
     
Total capitalization
    195,723  
 
     
 
1   No third party has guaranteed any of our debt.
 
2   € 8,439 million (5 %) of our debt was secured as of December 31, 2009.
Reasons for the Offer and Use of Proceeds
Not required because this document is filed as an annual report.

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Risk Factors
An investment in our securities involves a number of risks. You should carefully consider the following information about the risks we face, together with the other information in this document, when you make investment decisions involving our securities. If one or more of these risks were to materialize, it could have a material adverse effect on our financial condition, results of operations, cash flows or prices of our securities.
We have been and expect to continue to be affected by the current global financial crisis and economic downturn.
As a global investment bank with a large private client franchise, our businesses are materially affected by conditions in the global financial markets and economic conditions generally. Since the second half of 2007, and particularly since September 2008, the financial services industry, including ourselves, and the global financial markets have been materially and adversely affected by significant declines in the values of nearly all classes of financial assets. The financial markets experienced unprecedented levels of volatility (rapid changes in price direction) and the breakdown of historically observed correlations (the extent to which prices move in tandem) across asset classes, compounded by extremely limited liquidity. This has materially and adversely affected the availability and performance of instruments used to hedge positions and manage risk. Furthermore, there has been a widespread loss of investor confidence, both in our industry and the broader markets.
Market conditions have also led to the failure or merger under distressed conditions of a number of prominent financial institutions. Furthermore, declining asset values, defaults on mortgages and consumer loans, and the lack of market and investor confidence, as well as other factors, have all combined to increase credit spreads, to cause ratings agencies to lower credit ratings and otherwise to increase the cost and decrease the availability of credit, despite very significant declines in central bank borrowing rates and other government actions.
As of the start of 2009, Europe, the United States and other important economies were contracting, with business activities across a wide range of industries and regions greatly reduced and unemployment increasing significantly. While financial market and economic conditions improved over the course of 2009, asset values, credit spreads and liquidity have not returned to pre-crisis levels, and conditions in the wider economy remain challenging. Although the economies of many developed countries returned to positive growth in the second half of 2009, the pace of recovery has remained relatively subdued. Economic headwinds persisted with unemployment increasing, weighing on household credit quality, and corporate defaults have been rising. The improvements in confidence and liquidity in financial markets and in economic conditions generally that have been seen since 2009 have been reliant in large part upon public sector stimulus measures, which will not be available indefinitely. Towards the end of 2009, large fiscal deficits and sharply rising public debt, mainly a reflection of the deep economic recession and the cost of financial sector support measures, led to growing concerns in financial markets over sovereign risk. These or other factors could render the improvements that have occurred fragile.

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20-F     Item 3: Key Information
These adverse financial market and economic conditions have negatively impacted many of our businesses, particularly in 2008, with some effects persisting into 2009. If such conditions do not continue to improve, or if they worsen, our results of operations may be materially and adversely affected. In particular, these conditions required us to write down the carrying values of some of our portfolios of assets, including leveraged loans and loan commitments. Furthermore, we incurred sizeable losses in our equity derivatives trading and equity and credit proprietary trading businesses in 2008. Despite initiatives to reduce our exposure to the affected asset classes or activities, such reduction has not always been possible due to illiquid trading markets for many assets. As a result, we have substantial remaining exposures and thus continue to be exposed to further deterioration in prices for the remaining positions. These write-downs and losses led us to incur a loss in 2008, as performance in our other businesses was not sufficient to offset them. In addition, while we were profitable in 2009, write-downs and losses in 2009, including large losses on our Leveraged Finance portfolio and on our exposures to monolines, materially and negatively affected our results. Our inability to offset the potential negative effects on our profitability through performance in our other businesses may continue in the future.
See “Item 5: Operating and Financial Review and Prospects — Results of Operations by Segment (2009 vs. 2008) — Corporate Banking & Securities Corporate Division” for information on the impact of the current financial market environment on a number of our key businesses.
Market declines and volatility can materially adversely affect our revenues and profits.
As a global investment bank, we have significant exposure to the financial markets and are more at risk from the adverse developments in the financial markets than institutions engaged predominantly in traditional banking activities. Market declines have caused and can continue to cause our revenues to decline, and, if we are unable to reduce our expenses at the same pace, can cause our profitability to erode or cause us to show material losses, as we did in 2008. Volatility can also adversely affect us, by causing the value of financial assets we hold to decline or the expense of hedging our risks to rise.
We have incurred and may continue to incur significant losses from our trading and investment activities due to market fluctuations.
We enter into and maintain large trading and investment positions in the fixed income, equity and currency markets, primarily through our Corporate Banking & Securities Corporate Division. We also from time to time make significant investments in individual companies, primarily through our Corporate Investments and Corporate Investment Bank Group Divisions. We also maintain smaller trading and investment positions in other assets. Many of these trading positions include derivative financial instruments.
In each of the product and business lines in which we enter into these kinds of positions, part of our business entails making assessments about the financial markets and trends in them. The revenues and profits we derive from many of our positions and our transactions in connection with them can be negatively impacted by market prices, which were both declining and volatile during the financial crisis. When we own assets, market price declines can expose us to losses. Many of the more sophisticated transactions we describe in our discussions of our Corporate Banking & Securities Corporate Division are designed to profit from price movements and differences among prices. If prices move in a way we have not anticipated, we may experience

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losses. Also, when markets are volatile, the assessments we have made may prove to lead to lower revenues or profits, or may lead to losses, on the related transactions and positions. In addition, we commit capital and take market risk to facilitate certain capital markets transactions; doing so can result in losses as well as income volatility.
Protracted market declines have reduced and may continue to reduce liquidity in the markets, making it harder to sell assets and possibly leading to material losses.
In some of our businesses, protracted market movements, particularly asset price declines, can reduce the level of activity in the market or reduce market liquidity. As we experienced during the current financial crisis, these developments can lead to material losses if we cannot close out deteriorating positions in a timely way. This may especially be the case for assets we hold for which there are not very liquid markets to begin with. Assets that are not traded on stock exchanges or other public trading markets, such as derivatives contracts between banks, may have values that we calculate using models other than publicly-quoted prices. Monitoring the deterioration of prices of assets like these is difficult and could lead to losses we did not anticipate.
We have incurred losses, and may incur further losses, as a result of changes in the fair value of our financial instruments.
A substantial proportion of the assets and liabilities on our balance sheet comprise financial instruments that we carry at fair value, with changes in fair value recognized in the income statement. Fair value is defined as the price at which an asset or liability could be exchanged in a current transaction between knowledgeable, willing parties, other than in a forced or liquidation sale. If the value of an asset carried at fair value declines (or the value of a liability carried at fair value increases) a corresponding write-down is recognized in the income statement. These write-downs have been and could continue to be significant.
Observable prices or inputs are not available for certain classes of financial instruments. Fair value is determined in these cases using valuation techniques we believe to be appropriate for the particular instrument. The application of valuation techniques to determine fair value involves estimation and management judgment, the extent of which will vary with the degree of complexity of the instrument and liquidity in the market. Management judgment is required in the selection and application of the appropriate parameters, assumptions and modeling techniques. If any of the assumptions change due to negative market conditions or for other reasons, subsequent valuations may result in significant changes in the fair values of our financial instruments, requiring us to record losses.
Our exposure and related write-downs are reported net of any fair value gains we may record in connection with hedging transactions related to the underlying assets. However, we may never realize these gains, and the fair value of the hedges may change in future periods for a number of reasons, including as a result of deterioration in the credit of our hedging counterparties. Such declines may be independent of the fair values of the underlying hedged assets and may result in future losses.

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20-F     Item 3: Key Information
Adverse economic conditions have caused and may continue to cause us to incur higher credit losses.
The adverse economic conditions experienced during the current financial crisis have caused and may continue to cause us to incur higher credit losses, with our provision for credit losses increasing from € 0.6 billion in 2007, to € 1.1 billion in 2008, to € 2.6 billion in 2009. Increased provisions occurred in both our Corporate and Investment Bank and Private Clients and Asset Management Group Divisions.
In the second half of 2008 and the first quarter of 2009, as permitted by recent amendments to IFRS, we reclassified certain financial assets out of financial assets carried at fair value through profit or loss or available for sale into loans. While such reclassified assets, which had a carrying value of € 33.6 billion as of December 31, 2009, are no longer subject to mark-to-market accounting, we continue to be exposed to the risk of impairment of such assets. In addition, we bear additional funding and capital costs with respect to them. Of our € 2.6 billion provision for credit losses in 2009, € 1.3 billion was attributable to these reclassified assets and related primarily to exposures in Leveraged Finance.
Even where losses are for our clients’ accounts, they may fail to repay us, leading to material losses for us, and our reputation can be harmed.
While our clients would be responsible for losses we incur in taking positions for their accounts, we may be exposed to additional credit risk as a result of their need to cover the losses where we do not hold adequate collateral or cannot realize it. Our business may also suffer if our clients lose money and we lose the confidence of clients in our products and services.
Our investment banking revenues may continue to decline as a result of adverse market or economic conditions.
Our investment banking revenues, in the form of financial advisory and underwriting fees, directly relate to the number and size of the transactions in which we participate and are susceptible to adverse effects from sustained market downturns, such as the one currently experienced. These fees and other income are generally linked to the value of the underlying transactions and therefore can decline with asset values, as they have during the current financial crisis. Our revenues and profitability could sustain further material adverse effects from a significant reduction in the number or size of debt and equity offerings and merger and acquisition transactions.
We may generate lower revenues from brokerage and other commission- and fee-based businesses.
Market downturns have led and may continue to lead to declines in the volume of transactions that we execute for our clients and, therefore, to declines in our noninterest income. In addition, because the fees that we charge for managing our clients’ portfolios are in many cases based on the value or performance of those portfolios, a market downturn that reduces the value of our clients’ portfolios or increases the amount of withdrawals reduces the revenues we receive from our asset management and private banking businesses. Even in the absence of a market downturn, below-market or negative performance by our investment funds may result in increased withdrawals and reduced inflows, which would reduce the revenue we receive from our asset management business.

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Our risk management policies, procedures and methods leave us exposed to unidentified or unanticipated risks, which could lead to material losses.
We have devoted significant resources to developing our risk management policies, procedures and assessment methods and intend to continue to do so in the future. Nonetheless, our risk management techniques and strategies have not been and may in the future not be fully effective in mitigating our risk exposure in all economic market environments or against all types of risk, including risks that we fail to identify or anticipate. Some of our quantitative tools and metrics for managing risk are based upon our use of observed historical market behavior. We apply statistical and other tools to these observations to arrive at quantifications of our risk exposures. In the volatile market environment of the financial crisis, these tools and metrics failed to predict some of the losses we experienced, particularly in 2008, and may continue to fail to predict future important risk exposures. In addition, our quantitative modeling does not take all risks into account and makes numerous assumptions regarding the overall environment, which may not be borne out by events. As a result, risk exposures have arisen and could continue to arise from factors we did not anticipate or correctly evaluate in our statistical models. This has limited and could continue to limit our ability to manage our risks. Our losses thus have been and may continue to be significantly greater than the historical measures indicate.
In addition, our more qualitative approach to managing those risks not taken into account by our quantitative methods could also prove insufficient, exposing us to material unanticipated losses. Also, if existing or potential customers or counterparties believe our risk management is inadequate, they could take their business elsewhere or seek to limit their transactions with us. This could harm our reputation as well as our revenues and profits. See “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk” for a more detailed discussion of the policies, procedures and methods we use to identify, monitor and manage our risks.
In its recent lowering of our long-term rating, Moody’s Investors Service noted the extent of our capital allocated to capital markets activities and the resulting challenges for our market risk management function to manage “tail risks” successfully.
Our nontraditional credit businesses materially add to our traditional banking credit risks.
As a bank and provider of financial services, we are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations. Many of the businesses we engage in beyond the traditional banking businesses of deposit-taking and lending also expose us to credit risk.
In particular, many of the businesses we have engaged in through our Corporate Banking & Securities Corporate Division entail credit transactions, frequently ancillary to other transactions. Nontraditional sources of credit risk can arise, for example, from holding securities of third parties; entering into swap or other derivative contracts under which counterparties have obligations to make payments to us; executing securities, futures, currency or commodity trades that fail to settle at the required time due to nondelivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries; and extending credit through other arrangements. Parties to these transactions, such as trading counterparties, may default on their obligations to us due to bankruptcy, political and economic events, lack of liquidity, operational failure or other reasons.

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20-F     Item 3: Key Information
Many of our derivative transactions are individually negotiated and non-standardized, which can make exiting, transferring or settling the position difficult. Certain credit derivatives require that we deliver to the counterparty the underlying security, loan or other obligation in order to receive payment. In a number of cases, we do not hold, and may not be able to obtain, the underlying security, loan or other obligation. This could cause us to forfeit the payments otherwise due to us or result in settlement delays, which could damage our reputation and ability to transact future business, as well as increased costs to us.
The exceptionally difficult market conditions since the second half of 2007 have severely adversely affected certain areas in which we do business that entail nontraditional credit risks, including the leveraged finance and structured credit markets, and may do so in the future.
We have a continuous demand for liquidity to fund our business activities. We may suffer during periods of market-wide or firm-specific liquidity constraints and are exposed to the risk that liquidity is not made available to us even if our underlying business remains strong.
We are exposed to liquidity risk, which is the risk arising from our potential inability to meet all payment obligations when they become due or only being able to meet them at excessive costs. Our liquidity may become impaired due to a reluctance of our counterparties or the market to finance our operations due to actual or perceived weaknesses in our businesses. Such impairments can also arise from circumstances unrelated to our businesses and outside our control, such as, but not limited to, disruptions in the financial markets, like those experienced during 2008 and early 2009, negative developments concerning other financial institutions perceived to be comparable to us, or negative views about the financial services industry in general, or disruptions in the markets for any specific class of assets. Negative perceptions concerning our business and prospects could develop as a result of large losses, changes of our credit ratings, a general decline in the level of business activity in the financial services sector, regulatory action, serious employee misconduct or illegal activity, as well as many other reasons.
As described in “Item 3: Key Information — Long-Term Credit Ratings”, since the start of the financial crisis the major credit rating agencies have lowered our credit ratings or placed them on review or watch. Ratings downgrades may impact the cost and availability of our funding, collateral requirements and the willingness of counterparties to do business with us.
We require capital to support our business activities and meet regulatory requirements.
Losses could diminish our capital, and market conditions may prevent us from raising additional capital or increase our cost of capital.
In the wake of the financial crisis in 2008 and early 2009, the price of our shares declined and the spreads on our credit default swaps widened. If the levels of market disruption and volatility experienced in 2008 and early 2009 recur, our ability to access the capital markets and obtain the necessary funding to support our business activities on acceptable terms may be adversely affected. Among other things, an inability to refinance assets on our balance sheet or maintain appropriate levels of capital to protect against deteriorations in their value could force us to liquidate assets we hold at depressed prices or on unfavorable terms, as well as forcing us to curtail business, such as extending new credit. This could have an adverse effect on our business, financial condition and results of operations.

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Also, regulatory reforms applicable to the financial services industry have been proposed that could subject us to more stringent regulatory capital requirements. Meeting any such requirements may require us to issue securities that qualify as regulatory capital or to liquidate assets or curtail business, which may have adverse effects on our business, financial condition and results of operations, particularly if any such proposal becomes effective at a time when financial markets are distressed, but also under normal market conditions.
We operate in an increasingly regulated and litigious environment, potentially exposing us to liability and other costs, the amounts of which may be difficult to estimate.
The financial services industry is among the most highly regulated industries. Our operations throughout the world are regulated and supervised by the central banks and regulatory authorities in the jurisdictions in which we operate. In recent years, regulation and supervision in a number of areas has increased, and regulators, counterparties and others have sought to subject financial services providers to increasing responsibilities and liabilities. This trend has accelerated markedly as a result of the financial crisis. As a result, we may be subject to an increasing incidence or amount of liability or regulatory sanctions and may be required to make greater expenditures and devote additional resources to address potential liability.
Due to the nature of our business, we and our subsidiaries are involved in litigation, arbitration and regulatory proceedings in jurisdictions around the world. Such matters are subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. We may settle litigation or regulatory proceedings prior to a final judgment or determination of liability. We may do so to avoid the cost, management efforts or negative business, regulatory or reputational consequences of continuing to contest liability, even when we believe we have valid defenses to liability. We may also do so when the potential consequences of failing to prevail would be disproportionate to the costs of settlement. Furthermore, we may, for similar reasons, reimburse counterparties for their losses even in situations where we do not believe that we are legally compelled to do so. The financial impact of legal risks might be considerable but may be hard or impossible to estimate and so to quantify, so that amounts eventually paid may exceed the amount of reserves set aside to cover such risks. See “Item 8: Financial Information — Legal Proceedings” and Note [27] to our consolidated financial statements for information on our legal, regulatory and arbitration proceedings.
Governmental and central bank action in response to the financial crisis significantly affects competition and may affect the legal or economic position of shareholders or other investors.
In response to the financial markets crisis, there has been significant intervention by governments and central banks into the financial services sector, including the taking of direct shareholdings in individual financial institutions, particularly in the U.S., the U.K. and Switzerland, and contributions of other forms of capital to, guarantees of debt of and purchases of distressed assets from financial institutions. In some instances, individual financial institutions have been nationalized. The eligibility to benefit from such measures is in some instances tied to certain commitments of the participating bank, such as lending to certain types of borrowers, adjustments to the bank’s business strategy, suspension of dividends and other profit distributions and limitations on the compensation of executives.

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20-F     Item 3: Key Information
Such interventions involve significant amounts of money and have significant effects on both institutions that participate in them and institutions that do not participate including with respect to access to funding and capital and recruiting and retention of talent. Institutions that do not receive such government support may be in a position to preserve greater autonomy in their strategy, lending and compensation policy but may suffer competitive disadvantages on their cost base, in particular their costs of funding and capital. They also may suffer a decline in depositor or investor confidence thus risking a loss of liquidity. Institutions that receive such government support may, as described above, have to make certain commitments and become subject to certain constraints.
Legislation enacted in Germany in response to the financial markets crisis provides among other things for the temporary suspension of otherwise applicable stock corporation and takeover law, in particular with respect to shareholder rights and for enhanced powers of the Federal Financial Supervisory Authority (BaFin) to suspend dividends and other distributions on financial instruments that qualify as own funds (Eigenmittel).
The implementation of any such measures with respect to our company could adversely affect the legal or economic position of our shareholders or other investors. The implementation of any such measures with respect to other companies could adversely affect the perception of the overall prospects for the financial services sector or for a particular type or types of financial instruments. In such case the price for our shares and other financial instruments could drop and our costs of funding and capital could rise.
Regulatory reforms proposed in response to the financial crisis may significantly affect our business model and the competitive environment.
In response to the financial markets crisis, governments, regulatory authorities and others have made and continue to make numerous proposals to reform the regulatory framework for the financial services industry to enhance its resilience against future crises. The wide range of current proposals includes, among others, proposals for: more stringent regulatory capital and liquidity standards; restrictions on compensation practices; charging special levies to fund governmental intervention in response to crises; expansion of the resolution powers of regulators; separation of certain businesses from deposit taking; breaking up financial institutions that are perceived to be too large for regulators to take the risk of their failure; and reforming market infrastructures. See “Item 4: Information on the Company — The Competitive Environment — Regulatory Reform.”
For some of these proposals, formal consultations and impact studies have begun, while other proposals are only in the political debating stage. It is presently unclear which of these proposals, if any, will become law and, if so, to what extent and on what terms. Therefore, we cannot assess their effects on us at this point. It is possible, however, that the future regulatory framework for financial institutions may change, perhaps significantly, which creates significant uncertainty for us and the financial industry in general. Effects of the regulatory changes on us may range from additional administrative costs to implement and comply with new rules to increased costs of funding and/or capital, up to restrictions on our growth and on the businesses we are permitted to conduct. Should proposals be adopted that require us to materially alter our business model, the resulting changes could have a material adverse effect on our business, results of operations and financial condition as well as on our prospects.

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Operational risks may disrupt our businesses.
We face operational risk arising from errors, inadvertent or intentional, made in the execution, confirmation or settlement of transactions or from transactions not being properly recorded, evaluated or accounted for. Derivative contracts are not always confirmed with the counterparties on a timely basis; while the transaction remains unconfirmed, we are subject to heightened credit and operational risk and in the event of a default may find it more difficult to enforce the contract. The current financial crisis, in which the risk of counterparty default has increased, has increased the possibility that this operational risk materializes.
Our businesses are highly dependent on our ability to process, on a daily basis, a large number of transactions across numerous and diverse markets in many currencies and certain of the transactions we process have become increasingly complex. Consequently, we rely heavily on our financial, accounting and other data processing systems. If any of these systems do not operate properly, or are disabled, we could suffer financial loss, a disruption of our businesses, liability to clients, regulatory intervention or reputational damage.
In addition, despite the contingency plans we have in place, our ability to conduct business may be adversely impacted by a disruption in the infrastructure that supports our businesses and the communities in which we are located. This may include a disruption due to terrorist activities, or disease pandemics, as well as disruption involving electrical, communications, transportation or other services used by us or third parties with whom we conduct business.
The size of our clearing operations exposes us to a heightened risk of material losses should these operations fail to function properly.
We have large clearing and settlement businesses. These give rise to the risk that we, our customers or other third parties could lose substantial sums if our systems fail to operate properly for even short periods. This will be the case even where the reason for the interruption is external to us. In such a case, we might suffer harm to our reputation even if no material amounts of money are lost. This could cause customers to take their business elsewhere, which could materially harm our revenues and our profits.
If we are unable to implement our strategic initiatives, we may incur losses or low profitability, and our share price may be materially and adversely affected.
In late 2009, we launched Phase 4 of our management agenda, which is focused on the next two years, and comprises the following key pillars: increasing profitability in our Corporate and Investment Bank Group Division with renewed risk and balance sheet discipline, focusing on core Private Clients and Asset Management businesses and home market leadership, focusing on Asia as a key driver of revenue growth and renewing emphasis on our performance culture. If we fail to implement these strategic initiatives or should the initiatives that are implemented fail to produce the anticipated benefits, we may incur losses, or low profitability, and our share price may be materially and adversely affected. A number of internal and external factors could prevent the implementation of these initiatives or the realization of their anticipated benefits, including the recurrence of extreme turbulence in the markets in which we are active, continued weakness of global, regional and national economic conditions, regulatory changes that increase our costs or restrict our activities and increased competition for business.

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20-F     Item 3: Key Information
We may have difficulty in identifying and executing acquisitions, and both making acquisitions and avoiding them could materially harm our results of operations and our share price.
We consider business combinations from time to time. Even though we review the companies we plan to acquire, it is generally not feasible for these reviews to be complete in all respects. As a result, we may assume unanticipated liabilities, or an acquisition may not perform as well as expected. Were we to announce or complete a significant business combination transaction, our share price could decline significantly if investors viewed the transaction as too costly or unlikely to improve our competitive position. In addition, we might have difficulty integrating any entity with which we combine our operations. Failure to complete announced business combinations or failure to integrate acquired businesses successfully into ours could materially adversely affect our profitability. It could also affect investors’ perception of our business prospects and management, and thus cause our share price to fall. It could also lead to departures of key employees, or lead to increased costs and reduced profitability if we felt compelled to offer them financial incentives to remain.
In February 2009, we acquired a stake of 22.9% in Deutsche Postbank AG and bonds of Postbank’s parent that are mandatorily exchangeable in 2012 into an additional 27.4% of Postbank’s shares. Together with a stake of approximately 2.1% held at that point in time as well as additional shares purchased after that transaction, we held an investment of 29.88% as of December 31, 2009. If we continue to hold the bonds when they are exchanged, we would own a majority of Postbank’s shares. Our current holding does not give us control of Postbank, which, like many financial institutions, has been affected by the financial crisis. While we are able to determine, in the implementation of our strategy, whether to hold the exchangeable bonds at the time of their mandatory exchange, and accordingly whether we will in fact acquire control of Postbank, we remain exposed to the risk of loss on our present investment in Postbank. Any such loss could be material.
We may have difficulties selling noncore assets at favorable prices, or at all.
We may seek to sell certain noncore assets. Unfavorable business or market conditions may make it difficult for us to sell such assets at favorable prices, or may preclude such a sale altogether.
Events at companies in which we have invested may make it harder to sell our holdings and result in material losses irrespective of market developments.
We have made significant investments in individual companies. Losses and risks at those companies may restrict our ability to sell our shareholdings and may reduce the value of our holdings considerably, potentially impacting our financial statements or earnings, even where general market conditions are favorable. Our larger, less liquid interests are particularly vulnerable given the size of these exposures.
Intense competition, in our home market of Germany as well as in international markets, could materially adversely impact our revenues and profitability.
Competition is intense in all of our primary business areas, in Germany as well as in international markets. If we are unable to respond to the competitive environment in these markets with attractive product and service offerings that are profitable for us, we may lose market share in important areas of our business or incur losses on some or all of our activities. In addition, downturns in the economies of these markets could add to the competitive pressure, through, for example, increased price pressure and lower business volumes for us.

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In recent years there has been substantial consolidation and convergence among financial services companies, culminating in unprecedented consolidations in the course of the financial crisis. This trend has significantly increased the capital base and geographic reach of some of our competitors and has hastened the globalization of the securities and other financial services markets. As a result, we must compete with financial institutions that may be larger and better capitalized than we are and that may have a stronger position in local markets. Also, as described above, governmental action in response to the financial crisis may place us at a competitive disadvantage.
Transactions with counterparties in countries designated by the U.S. State Department as state sponsors of terrorism may lead potential customers and investors to avoid doing business with us or investing in our securities.
We engage or have engaged in a limited amount of business with counterparties, including government owned or controlled counterparties, in certain countries which the U.S. State Department has designated as state sponsors of terrorism, including Iran. We also had a representative office in Tehran, Iran, which we discontinued at December 31, 2007. U.S. law generally prohibits U.S. persons from doing business with such countries. We are a German bank and our activities with respect to such countries have not involved any U.S. person in either a managerial or operational role and have been subject to policies and procedures designed to ensure compliance with United Nations, European Union and German embargoes. In 2007 and before, our Management Board decided that we will not engage in new business with counterparties in countries such as Iran, Syria, Sudan and North Korea and to exit existing business to the extent legally possible.
Our existing business with Iranian counterparties consists mostly of participations as lender and/or agent in a few large trade finance facilities arranged some years ago to finance the export contracts of exporters in Europe and Asia. The lifetime of most of these facilities is ten years or more and we are legally obligated to fulfill our contractual obligations. We do not believe our business activities with Iranian counterparties are material to our overall business, with our outstandings to Iranian borrowers representing substantially less than 0.1% of our total assets as of December 31, 2009 and our revenues from all such activities representing substantially less than 0.1% of our total revenues for the year ended December 31, 2009.
We are aware, through press reports and other means, of initiatives by governmental and non-governmental entities in the United States and elsewhere to adopt laws, regulations or policies prohibiting transactions with or investment in, or requiring divestment from, entities doing business with Iran. Such initiatives may result in our being unable to gain or retain entities subject to such prohibitions as customers or as investors in our securities. In addition, our reputation may suffer due to our association with Iran. Such a result could have significant adverse effects on our business or the price of our securities.

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20-F     Item 4: Information on the Company
Item 4: Information on the Company
History and Development of the Company
The legal and commercial name of our company is Deutsche Bank Aktiengesellschaft. It is a stock corporation organized under the laws of Germany.
Deutsche Bank Aktiengesellschaft originated from the reunification of Norddeutsche Bank Aktiengesellschaft, Hamburg, Rheinisch-Westfälische Bank Aktiengesellschaft, Düsseldorf, and Süddeutsche Bank Aktiengesellschaft, Munich. Pursuant to the Law on the Regional Scope of Credit Institutions, these were disincorporated in 1952 from Deutsche Bank, which had been founded in 1870. The merger and the name were entered in the Commercial Register of the District Court Frankfurt am Main on May 2, 1957.
We are registered under registration number HRB 30 000. Our registered address is Theodor-Heuss-Allee 70, 60486 Frankfurt am Main, Germany, and our telephone number is +49-69-910-00. Our agent in the United States is: Peter Sturzinger, Deutsche Bank Americas, c/o Office of the Secretary, 60 Wall Street, Mail Stop NYC60-4006, New York, NY 10005.
We have made the following significant capital expenditures or divestitures since January 1, 2009:
  In February 2009, Corporate Investments participated in a liquidity facility for Sicherungseinrichtungsgesellschaft deutscher Banken mbH (“SdB”), acquiring € 2.3 billion of ECB-eligible notes guaranteed by SoFFin (Sonderfonds Finanzmarktstabilisierung, established in October 2008 by the German government in the context of the financial crisis).
 
  The acquisition of a minority stake in Deutsche Postbank AG was closed in February 2009. As part of that transaction we issued 50,000,000 Deutsche Bank shares to Deutsche Post, the parent of Deutsche Postbank, to acquire a stake of 22.9% in Postbank. Together with a stake of approximately 2.1% held at that point in time as well as additional shares purchased after that transaction, we held an investment of 29.88% as of December 31, 2009. We also acquired a mandatorily-exchangeable bond issued by Deutsche Post, which will be exchanged for an additional 27.4% stake in Postbank in February 2012, and a call option to acquire an additional stake of 12.1% in Postbank exercisable between February 2012 and February 2013 (Deutsche Post has a corresponding put option on the same 12.1% stake).
 
  The remaining stake of 2.4% in Linde AG was sold via sell-down in the public markets in February, March and April 2009.
 
  The reduction of our holding in Daimler AG from 2.7% to 0.04 % took place via sell-down in the public markets in April through August 2009.
 
  The acquisition of Dresdner Bank’s Global Agency Securities Lending business from Commerzbank was signed in May 2009 and closed in November 2009.
 
  In December 2009, we signed a definitive agreement to acquire parts of ABN AMRO’s corporate and commercial banking activities in the Netherlands for € 700 million. The businesses to be acquired remain the same as those in the original agreement announced in July 2008, encompassing a network of 15 ABN AMRO branches: two corporate client units serving large corporate clients and 13 commercial advisory branches serving medium-sized clients in the Netherlands. In addition, as part of the transaction, we will acquire the Rotterdam-based bank, Hollandsche Bank Unie N.V., and the Dutch IFN Finance B.V., which provides factoring services. The transaction is subject to approval by De Nederlandsche Bank, the European Commission and other regulatory bodies and is expected to be completed in the second quarter 2010.

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  A framework agreement to acquire 100% of Sal. Oppenheim Group was signed in October 2009 and closes in the first quarter of 2010. On provisional values, the purchase price for the different entities acquired is expected to total approximately € 1.3 billion.
 
  In addition to the envisaged sale of BHF Asset Servicing GmbH, which was previously owned by Sal. Oppenheim, we also intend to resell parts of Sal. Oppenheim’s investment banking activities to third parties.
 
  Agreements to acquire an additional share of 3.4% in Hua Xia Bank Co. Ltd. from Sal. Oppenheim jr. & Cie. KGaA were signed in November 2009.
 
  At the end of 2009, the existing liquidity facility for Deutsche Pfandbriefbank AG (formerly Hypo Real Estate Bank AG) was fully repaid, at which point Corporate Investments participated in a new liquidity facility for Deutsche Pfandbriefbank AG by subscribing to € 9.2 billion of ECB-eligible notes fully guaranteed by SoFFin.
Since January 1, 2009, there have been no public takeover offers by third parties with respect to our shares.
Business Overview
Our Organization
Headquartered in Frankfurt am Main, Germany, we are the largest bank in Germany, and one of the largest financial institutions in Europe and the world, as measured by total assets of € 1,501 billion as of December 31, 2009. As of that date, we employed 77,053 people on a full-time equivalent basis and operated in 72 countries out of 1,964 branches worldwide, of which 49% were in Germany. We offer a wide variety of investment, financial and related products and services to private individuals, corporate entities and institutional clients around the world.
We are organized into three group divisions, two of which are further sub-divided into corporate divisions. As of December 31, 2009, our group divisions were:
  The Corporate and Investment Bank (CIB), comprising two corporate divisions:
 

  Corporate Banking & Securities (CB&S)

Global Transaction Banking (GTB)
  Private Clients and Asset Management (PCAM), comprising two corporate divisions:
 

  Asset and Wealth Management (AWM)

Private & Business Clients (PBC)
  Corporate Investments (CI)
These divisions are supported by infrastructure functions and our Corporate Center. In addition, we have a regional management function that covers regional responsibilities worldwide.

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20-F     Item 4: Information on the Company
We have operations or dealings with existing or potential customers in most countries in the world. These operations and dealings include:
  subsidiaries and branches in many countries;
 
  representative offices in many other countries; and
 
  one or more representatives assigned to serve customers in a large number of additional countries.
The following table shows our net revenues by geographical region, based on our management reporting systems.
                         
in € m.   2009     2008     2007  
Germany:
                       
CIB
    2,353       2,997       3,012  
PCAM
    4,769       5,208       5,514  
 
                 
Total Germany
    7,122       8,205       8,525  
 
                 
Europe, Middle East and Africa:
                       
CIB
    8,483       (629 )     7,713  
PCAM
    2,482       2,391       2,816  
 
                 
Total Europe, Middle East and Africa1
    10,964       1,762       10,530  
 
                 
Americas (primarily U.S.):
                       
CIB
    5,295       (838 )     4,628  
PCAM
    724       971       1,331  
 
                 
Total Americas
    6,020       133       5,959  
 
                 
Asia/Pacific:
                       
CIB
    2,672       1,671       3,823  
PCAM
    289       471       468  
 
                 
Total Asia/Pacific
    2,961       2,142       4,291  
 
                 
CI
    1,044       1,290       1,517  
Consolidation & Adjustments
    (159 )     82       7  
 
                 
Consolidated net revenues2
    27,952       13,613       30,829  
 
                 
 
1   For each of the years ended December 31, 2009 and 2007, the United Kingdom accounted for roughly 60% of these revenues. The United Kingdom reported negative revenues for the year ended December 31, 2008.
 
2   Consolidated net revenues comprise interest and similar income, interest expense and total noninterest income (including commissions and fee income). Revenues are attributed to countries based on the location in which our booking office is located. The location of a transaction on our books is sometimes different from the location of the headquarters or other offices of a customer and different from the location of our personnel who entered into or facilitated the transaction. Where we record a transaction involving our staff and customers and other third parties in different locations frequently depends on other considerations, such as the nature of the transaction, regulatory considerations and transaction processing considerations.
Management Structure
We operate the three group divisions and the infrastructure functions under the umbrella of a “virtual holding company”. We use this term to mean that, while we subject the group divisions and infrastructure areas to the overall supervision of our Management Board, which is supported by the Corporate Center, we do not have a separate legal entity holding these three group divisions but we nevertheless allocate substantial managerial autonomy to them. To support this structure, key governance bodies function as follows:
The Management Board has the overall responsibility for the management of Deutsche Bank, as provided by the German Stock Corporation Act. Its members are appointed and removed by the Supervisory Board, which is a separate corporate body. Our Management Board focuses on strategic management, corporate governance, resource allocation, risk management and control, assisted by Functional Committees.

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The Group Executive Committee was established in 2002. It comprises the members of the Management Board and senior representatives from the business divisions within our client-facing group divisions and from the management of our regions appointed by the Management Board. The Group Executive Committee is a body that is not required by the Stock Corporation Act. It serves as a tool to coordinate our businesses and regions. We believe this underscores our commitment to a virtual holding company structure.
Within each group division and region, coordination and management functions are handled by Operating Committees and Executive Committees, which helps ensure that the implementation of the strategy of individual businesses and the plans for the development of infrastructure areas are integrated with global business objectives.
Our Business Strategy
Our identity and mission. We are a leading global investment bank with a strong and growing private clients franchise. We consider these to be mutually reinforcing businesses, and taking full advantage of the synergy potential between these businesses is a strategic priority for us. We are a leader in Europe, with strong positions in North America, Asia, and key emerging markets.
We take it as our mission to be the leading global provider of financial solutions creating lasting value for our clients, our shareholders, our people and the communities in which we operate.
Our management agenda. Beginning in 2002, we initiated a multi-year and multi-phased agenda. The first phase of this agenda focused on management’s priorities to transform the bank. The second phase focused on a strategy of achieving sustainable profitable growth. The third phase focused on leveraging opportunities for our repositioned franchise to achieve accelerated growth.
With the onset of the financial crisis in 2008, the banking landscape changed, new long-term challenges have emerged and we recognized the underlying need to adapt our strategy and business model in order to capture the opportunities of a new era. Hence, we added a new, fourth chapter to our management agenda, as a continuation of the transformation we first launched in 2002. This new phase comprises the following key pillars:
  Increasing profitability in Corporate and Investment Banking (CIB) with renewed risk and balance sheet discipline
 
  Focusing on core Private Clients and Asset Management businesses and home market leadership
 
  Focusing on Asia as a key driver of revenue growth
 
  Renewing emphasis on our performance culture
Strategies in our CIB Businesses
In our Corporate Banking & Securities business, which comprises our Global Markets and Corporate Finance businesses, we are targeting increased profitability and earnings quality.
In Global Markets, our focus is on continued improvement of asset efficiency, while we aim to further build on the position we reached in recent years as one of the world’s leading investment banks (based on publicly

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20-F     Item 4: Information on the Company
available revenue information and client surveys in industry publications). In response to the financial crisis, we have taken steps to recalibrate and reduce the risk in our platform, adjusting our deployment of capital, our resource levels and our risk-weighted assets with an aim to achieve improved profitability, earnings quality and a truly diversified platform based on revenues by business area. Looking forward, we will focus on strengthening our global equity, commodity and electronic trading platforms. We will invest in cash equities and prime brokerage in North America and Asia as well as build out our listed / flow equity derivatives platform. In commodities, we will focus on a product and regional build out including physical oil, Eastern European power and gas, and metals in Asia while investing in core risk management capabilities. We also aim to develop a leading electronic cash equities trading product for existing and new clients, and intend to invest in foreign exchange / rates to maintain our market leading electronic trading position and protect market share.
In Corporate Finance, we have built a powerful European franchise, and our principal strategic objective is to build a top 5 position globally, as measured by fees. We aim to achieve this goal by building on our leading position in Europe, profitably growing market share and capitalizing on momentum in the Americas and Asia Pacific, and by making considered investments in specific industry groups and regions. In addition, following the financial crisis, we have recalibrated our activities in Commercial Real Estate, tightening risk and underwriting parameters, and in Leveraged Finance, setting strict limits on pipeline and concentration risk.
In Global Transaction Banking, we focus on maintaining profitable growth. Wherever GTB is present, we offer comprehensive services for domestic and cross-border trade, including structuring, financing and risk mitigation. We seek to develop flexible, innovative solutions in areas such as the credit card business and low-value cross-currency payments. GTB seeks to grow by capitalizing on recent investments, focusing on high growth, fee and margin products, and also by seizing the right acquisition opportunities, for example the acquisition of parts of ABN AMRO’s corporate and commercial banking activities in the Netherlands. With a definitive agreement signed in December 2009 and its expected closing in the second quarter 2010, this acquisition will strengthen GTB’s footprint in Europe by achieving deeper client coverage and complementary product offerings.
Strategies in our PCAM Businesses
Asset and Wealth Management is comprised of our Asset Management and Private Wealth Management businesses.
In Asset Management, we will focus on our core businesses and investment competencies, seek to leverage market-leading positions through strategic partnerships and continue driving efficiency and cost reductions. The significant re-engineering initiatives achieved in 2008 and 2009, including globalization of the DWS business, repositioning of the Asia/Pacific region, right-sizing our RREEF business, and complexity reductions across functions and products have restored operating leverage to our platform and positioned Asset Management to execute our strategy.

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In Private Wealth Management, we aim to strengthen our position in our home market by capitalizing on opportunities such as those offered by our acquisition of the Sal. Oppenheim Group. In addition, we seek to strengthen our onshore position in the U.S. market via organic growth opportunities; expedite additional growth in emerging markets with a focus on Asia Pacific; develop our integrated Ultra High Net Worth (UHNW) platform; and drive profitability through key cost initiatives.
In Private & Business Clients (PBC), we seek to continue to strengthen our leading position in our home market, which has already been advanced by our acquisitions of Berliner Bank and Norisbank in 2007 and 2006 respectively. In addition, we aim to further strengthen our advisory banking in mature markets in Europe. In Asia, we increased our stake in Hua Xia Bank to generate further profits from our Asian franchise, and we will also focus on branch expansion in India.
The recent strategic efficiency investments in our platform are designed to result in cost savings. In addition we have entered into an agreement for cooperation with Deutsche Postbank, and one with SAP to develop and implement a new core banking platform. This new core banking platform aims to achieve a high degree of process standardization, resulting in sustainable efficiency gains.
We recognize that Asia has become a key driver of revenue growth in our industry. We already have a substantial presence in Asia, and in the next two years we plan to invest in the region in order to strengthen our growth potential and propel us into even better competitive positions in CIB and GTB. At the same time, we seek to double the size of our Private Wealth Management business within the region.
Overall, we aim to reinvigorate our performance culture, recommitting to efficiency across our businesses with an intense focus on costs and infrastructure optimization. As part of this, and to ensure clear accountability, we plan to implement new performance metrics and a value-based management system aimed at delivering higher returns to shareholders. We will continue to invest in our corporate culture. Diversity will be integral from recruitment through to leadership. Talent management will be further embedded into our culture from career planning to compensation models.
Capital management strategy. Focused management of capital has been a critical part of all phases of our management agenda. In 2009, we increased our Tier 1 capital over the course of the year from € 31.1 billion to € 34.4 billion. At the end of 2009, our Tier 1 capital ratio, as measured under Basel II, stood at 12.6% as compared to 10.1% at the end of 2008.
Our Group Divisions
Corporate and Investment Bank Group Division
The Corporate and Investment Bank Group Division primarily serves large and medium-sized corporations, financial institutions and sovereign, public sector and multinational organizations. This group division generated 67% of our net revenues in 2009, 24% of our net revenues in 2008 and 62% of our net revenues in 2007 (on the basis of our management reporting systems).

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The Corporate and Investment Bank Group Division’s operations are predominantly located in the world’s primary financial centers, including London, New York, Frankfurt, Tokyo, Singapore and Hong Kong.
The businesses that comprise the Corporate and Investment Bank Group Division seek to reach and sustain a leading global position in corporate and institutional banking services, as measured by financial performance, market share, reputation and customer franchise, while making optimal usage of, and achieving optimal return on, our capital. The division also continues to exploit business synergies with the Private Clients and Asset Management Group Division and the Corporate Investments Group Division. The Corporate and Investment Bank Group Division’s activities and strategy are primarily client-driven. Teams of specialists in each business division give clients access not only to their own products and services, but also to those of our other businesses.
At December 31, 2009, this group division included two corporate divisions, comprising the following business divisions:
  Corporate Banking & Securities Corporate Division
    Global Markets
 
    Corporate Finance
  Global Transaction Banking Corporate Division
    Trade Finance and Cash Management Corporates
 
    Trust & Securities Services and Cash Management Financial Institutions
Corporate Banking & Securities includes our debt and equity sales and trading businesses, which are housed in our Global Markets Business Division. Global Markets has eight primary business lines and four horizontally-integrated client-facing groups (Debt Capital Markets/Corporate Coverage, the Institutional Client Group, Research, and the Structuring Group), unified at a local level by strong regional management. Corporate Banking & Securities also includes the Corporate Finance Business Division, which focuses on providing advisory, equity and debt financing and structuring services to corporates and financial institutional clients and also includes our commercial real estate business. CIB’s client coverage functions are also a key part of the Corporate Finance Business Division.
Global Transaction Banking is closely aligned with Corporate Finance, but is a separately managed corporate division, providing trade finance, cash management and trust & securities services.
Corporate Banking & Securities and Global Transaction Banking are supported by the Loan Exposure Management Group (LEMG). LEMG has responsibility for a range of loan portfolios, actively managing the risk of these through the implementation of a structured hedging regime. LEMG manages the credit risk of loans and lending-related commitments related to both our investment-grade portfolio and our medium-sized German companies portfolio. LEMG has been given the mandate to price and manage risks in the leveraged syndication pipeline. This is distinct from the origination and syndication activities which occur within Leveraged Debt Capital Markets. LEMG has also been given the mandate to manage the risks associated with any new held-to-maturity leveraged lending, while existing legacy leveraged lending will remain in Corporate Finance.

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Corporate Banking & Securities Corporate Division
Corporate Division Overview
Corporate Banking & Securities is made up of the business divisions Global Markets and Corporate Finance. These businesses offer financial products worldwide ranging from the underwriting of stocks and bonds to the tailoring of structured solutions for complex financial requirements.
On April 1, 2009, management responsibility for The Cosmopolitan Resort and Casino property changed from Corporate Banking & Securities to the group division Corporate Investments.
In July 2007, we announced the acquisition of Abbey Life Assurance Company Limited, a U.K. company that consists primarily of unit-linked life and pension policies and annuities. The acquisition was completed in October 2007.
Products and Services
The Global Markets Business Division is responsible for origination, sales, financing, structuring and trading activities across a wide range of fixed income, equity, equity-linked, convertible bond, foreign exchange and commodities products. The division aims to deliver creative solutions to the capital-raising, investing, hedging and other financing needs of customers.
Within our Corporate Finance Business Division, our clients are offered mergers and acquisitions and general corporate finance advice, together with leveraged debt and equity origination services, and a variety of credit products and financial services. In addition, we provide a variety of financial services to the public sector. Corporate Finance also includes coverage functions related to corporate, financial and institutional clients globally.
Within Corporate Banking & Securities, we conduct trading on our own account, in addition to providing products and services to customers. Most of this trading is undertaken in the normal course of facilitating client business. For example, to facilitate customer flow business, traders will maintain long positions (accumulating securities) and short positions (selling securities we do not yet own) in a range of securities and derivative products, reducing the exposure to hedging transactions where appropriate. While these activities give rise to market and other risk, we do not view this as proprietary trading. However, we also undertake activities to exploit market opportunities outside of our main customer flow businesses, and this is what we term proprietary trading.
All our trading activities, including proprietary trading, are covered by our risk management procedures and controls which are described in detail in “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk — Market Risk”.
Distribution Channels and Marketing
In the Corporate Banking & Securities Corporate Division, the focus of our corporate and institutional coverage bankers and sales teams is on our client relationships. We have structured our client coverage model so as to provide varying levels of standardized or dedicated services to our customers depending on their needs and level of complexity.

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Global Transaction Banking Corporate Division
Corporate Division Overview
Global Transaction Banking delivers commercial banking products and services for corporate clients and financial institutions, including domestic and cross-border payments, professional risk mitigation and financing for international trade, as well as the provision of trust, agency, depositary, custody and related services. Our business divisions include:
  Trade Finance and Cash Management Corporates
 
  Trust & Securities Services and Cash Management Financial Institutions
In December 2009, we signed a definitive agreement to acquire parts of ABN AMRO’s corporate and commercial banking activities in the Netherlands. The businesses to be acquired remain the same as those in the original agreement announced in July 2008, encompassing a network of 15 ABN AMRO branches: two corporate client units serving large corporate clients and 13 commercial advisory branches serving medium-sized clients in the Netherlands. In addition, as part of the transaction, we will acquire the Rotterdam-based bank, Hollandsche Bank Unie N.V., and the Dutch IFN Finance B.V., which provides factoring services. The transaction is expected to be completed in the second quarter of 2010.
In November 2009, we closed the acquisition of Dresdner Bank’s Global Agency Securities Lending business from Commerzbank AG.
In October 2008, we closed the acquisition of the operating platform of Pago eTransaction GmbH into the Deutsche Card Services GmbH, based in Germany.
In January 2008, we acquired HedgeWorks LLC, a hedge fund administrator based in the United States.
In July 2007, we closed the acquisition of the institutional cross-border custody business of Türkiye Garanti Bankasi A.Ş.
Products and Services
Trade Finance offers local expertise, a range of international trade products and services, custom-made solutions for structured trade and the latest technology across our international network so that our clients can better manage the risks and other issues associated with their cross-border and domestic trades.
Cash Management caters to the needs of a diverse client base of corporates and financial institutions. With the provision of a comprehensive range of innovative and robust solutions, we handle the complexities of global and regional treasury functions including customer access, payment and collection services, liquidity management, information and account services and electronic bill presentation and payment solutions.
Trust & Securities Services provides a range of trust, payment, administration and related services for selected securities and financial transactions, as well as domestic securities custody in more than 30 markets.

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Distribution Channels and Marketing
The Global Transaction Banking Corporate Division develops and markets its own products and services in Europe, the Middle East, Asia and the Americas. The marketing is carried out in conjunction with the coverage functions both in this division and in the Corporate Banking & Securities Corporate Division.
Customers can be differentiated into two main groups: (i) financial institutions, such as banks, mutual funds and retirement funds, broker-dealers, fund managers and insurance companies, and (ii) multinational corporations, large local corporates and medium-sized companies, predominantly in Germany.
Private Clients and Asset Management Group Division
The Private Clients and Asset Management Group Division primarily serves retail and small corporate customers as well as affluent and wealthy clients and provides asset management services to retail and institutional clients. This group division generated 30% of our net revenues in 2009, 67% of our net revenues in 2008 and 33% of our net revenues in 2007 (on the basis of our management reporting systems).
At December 31, 2009, this group division included the following corporate divisions:
  Asset and Wealth Management (AWM)
 
  Private & Business Clients (PBC)
The Asset and Wealth Management (AWM) Corporate Division consists of the Asset Management Business Division (AM) and the Private Wealth Management Business Division (PWM). AWM Corporate Division’s operations are located in Europe, Middle East, Africa, the Americas and Asia.
The AWM Corporate Division is among the leading asset managers in the world as measured by total invested assets. The division serves a range of retail, private and institutional clients.
The Private & Business Clients (PBC) Corporate Division serves retail and affluent clients as well as small corporate customers in our key markets of Germany, Italy and Spain, as well as in Belgium, Portugal and Poland. This is complemented by our established market presence in India and China.
Asset and Wealth Management Corporate Division
Corporate Division Overview
Our AM Business Division is organized into four global business lines:
  Retail offers a range of products, including mutual funds and structured products, across many asset classes
 
  Alternative Investments manages real estate and infrastructure investments and private equity funds of funds
 
  Insurance provides specialist advisory and portfolio management services to insurers and re-insurers globally
 
  Institutional provides investment solutions across both traditional and alternative strategies to all other (non-insurance) institutional clients, such as pension funds, endowments and corporates

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Our PWM Business Division, which includes wealth management for high net worth clients and ultra high net worth individuals, their families and selected institutions, is organized into regional teams specialized in their respective regional markets.
In the second half of 2009, RREEF announced the decision to transition out of the property management business and assign these services to selected, specialized property management companies. RREEF will work closely with each third-party manager in our continuing role as asset manager for each of the properties, concentrating on the execution of asset business plans, investment strategies and risk management for our clients’ portfolios.
In October 2009, we announced the signing of a framework agreement with the owners of Sal. Oppenheim jr. & Cie. S.C.A., which allowed us to acquire 100% of Sal. Oppenheim Group and 94.9% of BHF Asset Servicing GmbH (“BAS”) at an expected purchase price of approximately € 1.3 billion. The previous shareholders in Sal. Oppenheim have the option of a long-term shareholding of up to 20% of the German subsidiary Sal. Oppenheim KGaA based in Cologne. This transaction will strengthen our position among high net worth private clients, especially in Germany, and the Asset Management business.
In June 2009, PWM DB (Suisse) S.A. integrated its wholly-owned subsidiary Rüd, Blass & Cie AG Bankgeschäft in Switzerland.
In May 2009, RREEF Private Equity exited its minority stake in Aldus Equity, an alternative asset management and advisory boutique specializing in customized private equity investing for institutional and high net worth investors previously acquired in July 2007.
During the first quarter 2009, management responsibility for certain assets changed from the corporate division AWM to the group division Corporate Investments. These assets included Maher Terminals, a consolidated infrastructure investment, and RREEF Global Opportunity Fund III, a consolidated real estate investment fund.
In Switzerland PWM enhanced its presence by opening a representative office in St. Moritz in January 2009 to complement offices in Zurich, Geneva and Lugano.
In December 2008 RREEF Alternative Investments acquired a significant minority interest in Rosen Real Estate Securities LLC (RRES), a long/short real estate investment advisor.
In November 2008, we acquired a 40% stake in UFG Invest, the Russian investment management company of UFG Asset Management, with an option to become a 100% owner in the future. The business will be branded Deutsche UFG Capital Management.
In June 2008, AM sold its Italian life insurance company DWS Vita SpA to Zurich Financial Services Group. The transaction includes an exclusive 7-year agreement for the distribution of life insurance products via our financial advisors network in Italy, Finanza & Futuro Banca SpA.

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Also in June 2008, AM sold DWS Investments Schweiz AG, consisting of the Swiss fund administration business, to State Street Bank.
On June 30, 2008, AM consolidated Maher Terminal LLC and Maher Terminals of Canada Corp., collectively and hereafter referred to as Maher Terminals, a privately held operator of port terminal facilities in North America acquired in July 2007. RREEF Infrastructure acquired all third party investors’ interests in the North Americas Infrastructure Fund, whose sole investment was Maher Terminals.
PWM increased its footprint in two large emerging markets with the opening of representative offices in St. Petersburg, Russia, in April 2008 and Kolkata, India, in February 2008.
Effective March 2008, AM completed the acquisition of a 60% interest in Far Eastern Alliance Asset Management Co. Limited, a Taiwanese investment management firm.
In January 2008, AM increased its stake in Harvest Fund Management by 10.5% to 30 %. Harvest is the third largest mutual fund manager in China, with a 6.0% market share (source: Z-Ben Advisors, September 2008).
In July 2007, AM completed the sale of its local Italian mutual fund business and established long-term distribution arrangements with our strategic partner, Anima S.G.R.p.A.
In June 2007, AM closed the sale of part of its Australian business to Aberdeen Asset Management. As a result of the repositioning, AM’s Australian operation migrated from being primarily a domestic manufacturing platform to become a distribution platform with specialist investment management capabilities.
Products and Services
AWM’s portfolio/fund management products include active fund management, passive/quantitative fund management, alternative investments, discretionary portfolio management and wealth advisory services.
AM focuses primarily on active investing. Its products and services encompass a broad range of investment strategies and asset classes, and cover many industries and geographic regions. AM’s product offering includes mutual funds, structured products, commingled funds and separately managed accounts.
AM’s global retail brand is DWS. The product range of DWS covers all regions and sectors as well as many forms and styles of investment. DWS Investments is one of Europe’s leading retail asset managers and is the largest retail mutual fund management group in Germany (as measured by publicly available invested asset data, including Deutsche Bank fund products). DWS also operates in the U.S. and key markets in Asia/Pacific.
In the Alternative Investments business line, real estate, infrastructure and private equity funds of funds investment management products and services are offered under the RREEF brand. RREEF is one of the world’s largest real estate investment organizations (as reflected by publicly available invested asset data).

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The Insurance platform provides clients with customized investment programs designed to address an insurer’s specific needs. It offers investment solutions across multiple asset classes, including traditional fixed income, equities, asset allocation services, and alternative asset classes such as hedge funds and real estate.
Institutional products and services are marketed under the DB Advisors brand. The Institutional business offers its clients access to AM’s full range of products and services, including both traditional and alternative investments. The single-manager/multi-manager hedge fund business operates within DB Advisors.
PWM provides a fully-integrated service offering for its clients based on dynamic strategic asset allocation including individual risk-management according to the clients’ risk/return profile.
PWM offers discretionary portfolio management, in which our portfolio managers have discretion to manage clients’ investments within the clients’ general guidelines. The portfolio managers invest client funds in various investment products, such as stocks, bonds, mutual funds, hedge funds and other alternative investments including derivatives, where appropriate. In addition, we offer wealth advisory services for actively-involved clients with customized investment advice via a unique combination of risk management and portfolio optimization.
PWM also provides brokerage services in which our relationship managers and client advisors provide investment advice to clients but we do not exercise investment discretion. An integrated approach to wealth management is the core of our advisory services. Our investment advice covers stocks, bonds, mutual funds, hedge funds and other alternative investments, including derivatives where appropriate. The relationship managers also advise their clients on the products of third parties in all asset classes. Furthermore, our solutions include wealth preservation strategies and succession planning, philanthropic advisory services, art advisory services, family office solutions and services for financial intermediaries.
PWM continued to expand its offering of alternative investments in 2009, especially with respect to innovative solutions within the private equity and hedge funds asset classes. Going forward, real estate offerings will be broadened. PWM generates foreign exchange products, as well as structured investment products in cooperation with the Global Markets Business Division.
PWM’s loan/deposit products include traditional and specialized deposit products (including current accounts, time deposits and savings accounts) and both standardized and specialized secured and unsecured lending. It also provides payment, account & remaining financial services, processing and disposition of cash and non-cash payments in local currency, international payments, letters of credit, guarantees, and other cash transactions.
AWM generates revenues from other products, including direct real estate investments included in our alternative investments business, rental revenues and gains and losses earned on real estate deal flows and revenues that are not part of our core business, specifically, the gain on sale of businesses.

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Distribution Channels and Marketing
AM markets our retail products in Germany and other Continental European countries generally through our established internal distribution channels in PWM and PBC. We also distribute our funds through other banks, insurance companies and independent investment advisors. We market our retail funds outside Europe via our own Asset and Wealth Management distribution channels and through third-party distributors. DWS Investments distributes its retail products to U.S. investors primarily through financial representatives at major national and regional wirehouses, independent and bank-based broker dealers, and independent financial advisors and registered investment advisors.
Products for institutional clients are distributed through the substantial sales and marketing network within AM and through third-party distribution channels. They are also distributed through our other businesses, notably the Corporate and Investment Bank Group Division.
Alternative investment products are distributed through our sales and marketing network within Asset and Wealth Management and through third-party distribution channels, predominantly to high net worth clients, institutions and retail customers worldwide.
Insurance asset management solutions are marketed and distributed by AM’s specialist insurance unit, which provides advisory and portfolio management services for insurers and re-insurers globally.
PWM pursues an integrated business model to cater to the complex needs of high net worth clients and ultra high net worth individuals, their families and selected institutions. The relationship managers work within target customer groups, assisting clients in developing individual investment strategies and creating enduring relationships with our clients.
In our PWM onshore business, wealthy customers are served via our relationship manager network in the respective countries. Where PBC has a presence, our customers also have access to our retail branch network and other general banking products. The offshore business encompasses all of our clients who establish accounts outside their countries of residence. These customers are able to use our offshore services to access financial products that may not be available in their countries of residence.
In addition, the client advisors of the U.S. Private Client Services business focus on traditional brokerage offering and asset allocation, including a wide range of third party products.
A major competitive advantage for PWM is the fact that it is a private bank within Deutsche Bank, with its leading investment banking, corporate banking and asset management activities. In order to make optimal use of the potential offered by cross-divisional cooperation, since 2007 PWM has established Key Client Teams in order to serve clients with very complex assets and highly sophisticated needs. PWM offers these clients the opportunity to make direct additional purchases, coinvest in its private equity activities or obtain direct access to its trading units. Many family-owned businesses are increasingly expecting wealth management and investment banking operations to work hand in hand. Cooperation with the corporate banking division also helps to identify potential PWM clients at a very early stage.

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Private & Business Clients Corporate Division
Corporate Division Overview
The Private & Business Clients Corporate Division operates under a single business model across Europe and selected Asian markets with a focused, sales-driven management structure predominantly under the Deutsche Bank brand. PBC serves retail and affluent clients as well as small and medium sized business customers.
In 2009, we continued our balanced growth in selected European and Asian markets, supported by a comprehensive efficiency program to optimize efficiency in our middle and back offices and increase sales efficiency.
In the German core market, we were able to expand our already strong position by attracting new customers and business volume in a challenging market environment. Furthermore, in the context of the acquisition of a minority interest in Deutsche Postbank AG, we signed a comprehensive business cooperation agreement with Postbank. The cooperation agreement encompasses financing and investment products, business banking and commercial loans as well as customer oriented services. Additionally, the agreement covers areas such as sourcing and IT infrastructure, and other fields of possible cooperation are continually reviewed by both institutions.
In our European core markets, we further increased our customer base and continued to steadily acquire new business volume. To cope with the impacts from the financial crisis, we aligned our business strategy, focusing on low risk products and advisory services for affluent customers.
The development of PBC in Asia has also maintained momentum. PBC further invested in its strategic partnership with Hua Xia Bank in China and further increased its shareholding from 13.7% to 17.1% by exercising the existing call option with Sal. Oppenheim, investing € 82 million. The transaction was signed in November 2009 and is pending approval from the Chinese regulators expected for the end of the first quarter of 2010. Additionally, as part of the strategic partnership, we and Hua Xia Bank have jointly developed and distributed credit cards in China since June 2007. Moreover, PBC has currently three branches in China and thirteen branches in India with the target of continuous expansions. Our 10% stake in Habubank in Vietnam, including a business cooperation arrangement, further demonstrates PBC’s confidence in the growth potential of Asia.
Products and Services
PBC offers a similar range of banking products and services throughout Europe and Asia, with some variations among countries that are driven by local market, regulatory and customer requirements.
In offering portfolio/fund management and brokerage services, we provide investment advice, brokerage services, discretionary portfolio management and securities custody services to our clients.
We provide loan and deposit services, with the most significant being property financing (including mortgages) and consumer and commercial loans, as well as traditional current accounts, savings accounts and time deposits. The property finance business, which includes mortgages and construction finance, is our most

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significant lending business. We provide property finance loans primarily for private purposes, such as home financing. Most of our mortgages have an original fixed interest period of five or ten years. Loan and deposit products also include the home loan and savings business in Germany, offered through our subsidiary Deutsche Bank Bauspar AG.
PBC’s payments, account & remaining financial services consist of administration of current accounts in local and foreign currency as well as settlement of domestic and cross-border payments on these accounts. They also include the purchase and sale of payment media and the sale of insurance products, home loan and savings contracts and credit cards. In 2009, we strengthened our focus on gathering deposits, resulting in a significant increase in assets under management.
Other products include primarily activities related to asset and liability management.
Distribution Channels and Marketing
To achieve a strong brand position internationally, we market our services consistently throughout the European and Asian countries in which PBC is active. In order to make banking products and services more attractive to clients, we seek to optimize the accessibility and availability of our services. To accomplish this, we look to self-service functions and technological advances to supplement our branch network with an array of access channels to PBC’s products and services. These channels consist of the following in-person and remote distribution points:
  Investment and Finance Centers. Investment and Finance Centers offer our entire range of products and advice. In 2009, several of our Investment and Finance Centers were refurbished according to innovative concepts which illustrate how we see branch banking in the future and which were introduced and tested in our flagship “Branch of the future — Q 110” in Berlin.
 
  Financial Agents. In most countries, we market our retail banking products and services through self-employed financial agents.
 
  Call Centers. Call centers provide clients with remote services supported by automated systems. Remote services include access to account information, securities brokerage and other basic banking transactions.
 
  Internet. On our website, we offer clients brokerage services, account information and product information on proprietary and third-party investment products. These offerings are complemented with services that provide information, analysis tools and content to support the client in making independent investment decisions.
 
  Self-service Terminals. These terminals support our branch network and allow clients to withdraw and transfer funds, receive custody account statements and make appointments with our financial advisors.
In addition to our branch network and financial agents, we enter into country-specific distribution arrangements. In Germany, for example, we have a cooperation agreement with Deutsche Vermögensberatung AG (referred to as DVAG) whereby we distribute our mutual funds and other banking products through DVAG’s independent distribution network. We also work together with ADAC (Germany’s and Europe’s largest automobile club with more than 15 million members), with whom we have an exclusive sales cooperation agreement in place. In 2009, we started a cooperation with Vodafone enabling both parties to benefit from each other’s customer base. In order to complement our product range, we have signed distribution agreements, in

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which PBC distributes the products of reputable product suppliers. These include an agreement with Zurich Financial Services for insurance products, and a strategic alliance with nine fund companies for the distribution of their investment products.
Corporate Investments Group Division
The Corporate Investments Group Division manages our global principal investment activities. The principal investment activities include our industrial holdings, certain private equity and venture capital investments, private equity fund investments, certain corporate real estate investments, our minority stake in Deutsche Postbank AG, certain credit exposures and certain other non-strategic investments. Historically, its mission has been to provide financial, strategic, operational and managerial capital to enhance the values of the portfolio companies in which the group division has invested.
We believe that the group division enhances the bank’s portfolio management and risk management capability.
Corporate Investments held interests in a number of manufacturing and financial services corporations (our “Industrial Holdings”) which were to a large extent sold during the last years. The largest remaining positions of these Industrial Holdings by market value at December 31, 2009 were interests of 5.75% in Germany1 Acquisition Limited, a special purpose acquisition company, and 0.75% in European Aeronautic Defence and Space Company EADS N.V. via our 10% holding in Dedalus GmbH & Co. KGaA.
In 2009, we reduced our investment in Daimler AG from 2.7% to 0.04% and sold our remaining stake in Linde AG.
In 2008, we reduced our investment in Daimler AG from 4.4% to 2.7% and our investment in Linde AG from 5.2% to 2.4%. We sold our remaining stake in Allianz SE and our investment in Arcor AG & Co. KG.
In July 2008, we acquired a 7.6% stake in Germany1 Acquisition Ltd., a vehicle established for the purpose of acquiring ownership in companies in Germany, Austria and Switzerland.
In February 2007, we signed a contract to acquire a 10% stake in Dedalus GmbH & Co. KGaA, economically representing a 0.75% participation in European Aeronautic Defence and Space Company EADS N.V. The transaction closed in March 2007.
In 2007, we reduced our investment in Linde AG from 7.8% to 5.2% and our investment in Allianz SE from 2.2% to 1.7%.
On February 25, 2009, we completed the acquisition of a minority stake in Deutsche Postbank AG, one of Germany’s major financial service providers. As of that date, we also entered into a mandatorily-exchangeable bond as well as options to increase our stake in the future.

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In February 2009, Corporate Investments participated in a liquidity facility for Sicherungseinrichtungsgesellschaft deutscher Banken mbH (“SdB”) acquiring € 2.3 billion of ECB-eligible notes guaranteed by SoFFin.
In December 2009, the existing liquidity facility for Deutsche Pfandbriefbank AG (formerly Hypo Real Estate Bank AG) in which we participated in November 2008 with € 12.0 billion was fully repaid, at which point we participated in a new liquidity facility for Deutsche Pfandbriefbank AG by subscribing to € 9.2 billion of ECB-eligible notes fully guaranteed by SoFFin.
Corporate Investments also holds certain private equity type investments that have been transacted both on behalf of clients and for our own account, directly and through private equity funds, including venture capital opportunities and leveraged buy-out funds.
In 2009, Corporate Investments further reduced the legacy private equity on-balance sheet exposure by € 55 million due to various transactions.
On April 1, 2009, management responsibility for The Cosmopolitan Resort and Casino property changed from CB&S to Corporate Investments.
During the first quarter of 2009, management responsibility for certain assets changed from AWM to Corporate Investments. These assets included Maher Terminals, a consolidated infrastructure investment, and RREEF Global Opportunity Fund III, a consolidated real estate investment fund.
In 2008, we continued to reduce our private equity on-balance sheet exposure in Corporate Investments, with holdings declining by approximately € 200 million due to various transactions.
In 2007, we sold a portfolio of Latin America direct private equity investments and our investment in Odontoprev.
The Corporate Investments’ portfolio also covers certain real estate holdings, many of which we occupy.
In 2007, we sold and leased back the bank-occupied building 60 Wall Street in New York City. In addition, we disposed of our interest in the building at 31 West 52nd Street in New York City.
In 2007, we reduced our stake in HCL Technologies Limited from 2.4% to 1.2% in a partial sale.
Infrastructure and Regional Management
The infrastructure group consists of our centralized business support areas and our Corporate Center. These areas principally comprise control and service functions supporting the CIB, PCAM and CI businesses. The Corporate Center comprises those functions that directly support the Management Board in its management of the Group.

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This infrastructure group is organized to reflect the areas of responsibility of those Management Board members that are not in charge of a specific business line. The Infrastructure group is organized into COO functions (e.g., information technology, transactional and other business services, global sourcing, corporate real estate services and human resources), CFO functions (e.g., finance, tax, audit, insurance and group strategy & planning), CRO functions (e.g., risk management, treasury, legal and compliance), and CEO functions (e.g., communications & corporate social responsibility and economics).
The Regional Management function covers regional responsibilities worldwide. It focuses on governance, franchise development and performance development. Regional and country heads and management committees are established in the regions to enhance client-focused product coordination across businesses and to ensure compliance with regulatory and control requirements, both from a local and Group perspective. In addition the Regional Management function represents regional interests at the Group level and enhances cross-regional coordination.
All expenses and revenues incurred within the Infrastructure and Regional Management areas are fully allocated to the Group Divisions CIB, PCAM and CI.
The Competitive Environment
The financial services industries, and all of our businesses, are intensely competitive, and we expect them to remain so. Our main competitors are other commercial banks, savings banks, other public sector banks, brokers and dealers, investment banking firms, insurance companies, investment advisors, mutual funds and hedge funds. We compete with some of our competitors globally and with some others on a regional, product or niche basis. We compete on the basis of a number of factors, including the quality of client relationships, transaction execution, our products and services, innovation, reputation and price.
New Competitor Landscape
In 2008, the banking sector witnessed substantial consolidation and merger activity, some of which occurred against a backdrop of significant losses in certain financial institutions resulting from exposure to troubled assets. There was a decisive shift away from the large, independent, broker-dealer business model as some were acquired by large, integrated banks, others chose to become bank holding companies, and one collapsed in September 2008.
Following a period of acute stress in capital markets and interbank lending, remaining banks came under increasing pressure due to deteriorating asset values alongside a worsening credit environment as the financial crisis spread to the wider economy. As a result, central banks and governments intervened on an unprecedented scale, injecting liquidity into key markets and recapitalizing the most affected banks through direct equity investments. Many other banks were forced to raise capital from other sources in order to restore strategic flexibility. Banks that received direct capital assistance from governments or central banks were required in some instances to make commitments, such as to increase lending to certain categories of borrowers, adjust their strategies, suspend their dividends and other profit distributions and limit the compensation of their executives.

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In 2009, the post-crisis environment has presented opportunities for those banks that did not participate in consolidation activity and some have emerged stronger as a result of the crisis. The competitor landscape has been transformed as some global banks no longer exist while others are restricted to de-risking and retrenching to focus on their core businesses in core markets rather than on growth initiatives. Banks that did not receive direct capital assistance as described above in many cases were able to preserve greater autonomy in their strategy, lending and compensation strategies. To the extent these banks also have been able to maintain adequate capital and the ability to absorb deteriorating credit quality, they may have competitive advantages to gain market share in the changing landscape.
In Germany, the retail banking market remains fragmented and our competitive environment remains influenced by the three pillar system of private banks, public banks and cooperative banks. However, following recent consolidation activity, particularly among public regional commercial banks (“Landesbanken”) and private banks, competitive intensity has increased. The merger of the second and third largest private sector banks, together with an infusion of capital into the combined entity by the German government, will affect the domestic competitive landscape and further increase concentration.
Regulatory Reform
In response to the financial markets crisis, governments, regulatory authorities and others have made and continue to make numerous proposals to reform the regulatory framework for the financial services industry to enhance its resilience against future crises. The wide range of current proposals includes, among others,
  Revising regulatory capital standards to require more capital in some cases, such as on trading book positions, in particular those resulting from securitization transactions, or for institutions that are of particular importance for the smooth functioning of the financial system more generally;
 
  Tightening and modifying the definition of capital for regulatory purposes;
 
  Introducing a maximum ratio of capital to total assets (leverage ratio);
 
  Enhancing regulatory liquidity requirements;
 
  Placing limits and restrictions on compensation practices;
 
  Charging special levies and contributions to fund governmental intervention during the current crisis or in the event of future interventions;
 
  Expanding the powers of regulators to restructure financial institutions that are in distress;
 
  Separating certain businesses such as proprietary trading from deposit taking, in some cases requiring the split-up of institutions;
 
  Breaking up financial institutions that are perceived to be too large for regulators to take the risk of their failure;
 
  Encouraging banks to formulate “living wills” to prevent systemic impact from collapse; and
 
  Reforming market infrastructures.

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The extent of such intervention measures is unclear at this stage, as is the degree of international coordination and risk of competitive distortions. However, there is no doubt that there will be significant implications for the wider banking industry. These will include increased pressure on balance sheet size and profitability, an imperative to improve risk management procedures and disclosure of exposures, as well as the alignment between long-term performance and compensation structures. Capital, risk management and balance sheet utilization will therefore become increasingly important as competitive differentiators. Those banks which are well-capitalized and streamlined will be better-positioned to capture market share and extract sustainable growth opportunities from the changing landscape.
We recognize that our continued ability to compete effectively in our businesses depends on our ability to attract new employees and to retain and motivate our existing employees. We are firmly committed to aligning compensation with sustained firm-wide profitability, considering overall risk while attracting and retaining the best talent in a competitive labor market. We are also committed to full compliance with the recently announced G20 compensation guidelines for banks and other financial institutions designed to rein in risks by aligning rewards with long-term success. We continue to work on developing our methodology for reflecting risk in performance measurement, implementing deferred compensation mechanisms and establishing sound governance standards for the overall compensation process.
Climate Change
Climate change has become a topic of intense public discussion in recent years. This discussion also includes the financial services industry, in particular in connection with projects that are perceived as contributing to or mitigating climate change. Projects and products that are perceived as contributing to climate change or other negative environmental or social impacts, as well as their financing and other services for these projects, are being reviewed more critically by investors, customers, environmental authorities, non-governmental organizations and others. Where our own assessment of these issues so indicates, we may abstain from participating in such projects. By contrast, projects and products that aim to mitigate climate change are increasingly seeking financing and other financial services; these offer growth opportunities for many of our businesses. Moreover, we note that investors, customers and others increasingly take the overall approach of companies to climate change, including the direct and indirect carbon emissions of their operations, into consideration in their decisions, even where such emissions are minimal. We have undertaken a number of measures to reduce our carbon emissions over time, such as a comprehensive renovation of our world headquarters in Germany to bring the energy efficiency of these buildings to the highest possible level for similarly-situated office towers.
Competition in Our Businesses
Corporate and Investment Bank Group Division
Our investment banking operation competes in domestic and international markets in Europe, the Americas and Asia Pacific. Competitors include bank holding companies, investment advisors, brokers and dealers in securities and commodities, securities brokerage firms and certain commercial banks. Within Germany and other European countries, our competitors also include German private universal banks, public state banks and foreign banks.

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Private Clients and Asset Management Group Division
In the retail banking business we face intense competition from savings banks and cooperative banks, other universal banks, insurance companies, home loan and savings companies and other financial intermediaries. In Germany, savings and cooperative banks form our biggest group of competitors. These banks generally operate regionally. In other European countries, private universal banks and savings banks are our main competitors. The large Asian markets (India and China), where we have opened a limited number of retail branches, are dominated by local public and private sector banks. However, with deregulation, international financial institutions are likely to increase their investments in these markets and thereby intensify competition.
Our private wealth management business faces competition from the private banking and wealth management units of other global and regional financial service companies and from investment banks.
Our main competitors in the asset management business are asset management subsidiaries of major financial services companies and large stand-alone retail and institutional asset managers. Most of our main competitors are headquartered in Europe or the United States, though many operate globally.
Regulation and Supervision
Our operations throughout the world are regulated and supervised by the relevant authorities in each of the jurisdictions where we conduct business. Such regulation relates to licensing, capital adequacy, liquidity, risk concentration, conduct of business as well as organizational and reporting requirements. It affects the type and scope of the business we conduct in a country and how we structure specific operations. Currently and in reaction to the crisis in the financial markets, significant changes in the regulatory environment continue to be under consideration in the jurisdictions in which we operate. While the extent and nature of these changes cannot be predicted now, they may include an increase in regulatory oversight and enhanced prudential standards relating to capital, liquidity, employee compensation, limitations on activities, and other aspects of our operations that may have a material effect on our businesses and the services and products that we will be able to offer.
In the following sections, we present a description of the supervision of our business by the authorities in Germany, our home market, the European Economic Area, and in the U.S., which we view as the most significant for us. Beyond these regions, local country regulations generally have limited impact on our operations that are unconnected with these countries.
Regulation and Supervision in Germany — Basic Principles
We are authorized to conduct banking business and to provide financial services as set forth in the German Banking Act (Kreditwesengesetz). We are subject to comprehensive regulation and supervision by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, referred to as BaFin) and the Deutsche Bundesbank (referred to as Bundesbank), the German central bank.
The BaFin is a federal regulatory authority and reports to the German Federal Ministry of Finance. It supervises the operations of German banks to ensure that they are in compliance with the Banking Act and other applicable German laws and regulations. The Bundesbank supports the BaFin and closely cooperates with it.

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The cooperation includes the ongoing review and evaluation of reports submitted by us and of our audit reports as well as assessments of the adequacy of our capital base and risk management systems. The BaFin and the Bundesbank require German banks to file comprehensive information in order to monitor compliance with applicable legal requirements and to obtain information on the financial condition of banks.
Generally, supervision by the BaFin and the Bundesbank applies on an unconsolidated basis (company only) and on a consolidated basis (the company and the entities consolidated with it for German regulatory purposes). Parent banks of a consolidated group may waive the application of capital adequacy requirements, large exposure limits and certain organizational requirements on an unconsolidated basis if certain conditions are met. We meet these conditions and have waived application of these rules since January 1, 2007.
We are materially in compliance with the German laws that are applicable to our business.
The Banking Act
The Banking Act contains the principal rules for German banks, including the requirements for a banking license, and regulates the business activities of German banks. In particular it requires that an enterprise that engages in one or more of the activities defined in the Banking Act as “banking business” or “financial services” in Germany must be licensed as a “credit institution” (Kreditinstitut) or “financial services institution” (Finanzdienstleistungsinstitut), as the case may be. We are licensed as a credit institution.
The Banking Act and the rules and regulations adopted thereunder implement certain European Union directives relating to banks. These directives reflect recommendations of the Basel Committee on Banking Supervision and address issues such as accounting standards, regulatory capital, risk-based capital adequacy, consolidated supervision and the monitoring and control of large exposures. As a result of the increased risk sensitivity of the currently applicable capital framework, which is based upon the Basel II capital framework of 2004, capital requirements are more cyclical than in the past and may also increase compared to levels before application of the Basel II framework in times of economic downturn.
The German Securities Trading Act
Under the German Securities Trading Act (Wertpapierhandelsgesetz), the BaFin regulates and supervises securities trading in Germany. The Securities Trading Act prohibits, among other things, insider trading with respect to securities admitted to trading on, or included in the regulated market or the over-the-counter market at a German exchange, or admitted to trading on an organized market in another country that is a member state of the European Union or another contracting state of the Agreement on the European Economic Area.
The Securities Trading Act also contains rules of conduct. These rules of conduct apply to all businesses that provide securities services. Securities services include, in particular, the purchase and sale of securities or derivatives for others and the intermediation of transactions in securities or derivatives and certain types of investment advice. The BaFin has broad powers to investigate businesses providing securities services to monitor their compliance with the rules of conduct and the reporting requirements. In addition, the Securities Trading Act requires an independent auditor to perform an annual audit of the securities services provider’s compliance with its obligations under the Securities Trading Act.

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Capital Adequacy Requirements
The Banking Act and the Solvency Regulation issued by the BaFin thereunder reflect the capital adequacy rules of Basel II and require German banks to maintain an adequate level of regulatory capital in relation to their risk positions. Risk positions (commonly referred to as “risk-weighted assets” or “RWA”) comprise credit risks, market risks and operational risks (comprising, among other things, risks related to certain external factors, as well as to technical errors and errors of employees). Credit risks and operational risks must be covered with Tier 1 capital (“core capital”) and Tier 2 capital (“supplementary capital”) (together, “regulatory banking capital”). Market risk must be covered with regulatory banking capital (to the extent not required to cover credit and operational risk) and Tier 3 capital (together with regulatory banking capital, “own funds”). Under certain circumstances, the BaFin may impose capital requirements on individual banks which are more stringent than statutory requirements. For details of our regulatory capital see Note [36] to the consolidated financial statements.
Limitations on Large Exposures
The Banking Act and the Large Exposure Regulation (Großkredit- und Millionenkreditverordnung) limit a bank’s concentration of credit risks through restrictions on large exposures (Großkredite). All exposures to a single customer (and customers connected with it) are aggregated for these purposes.
An exposure incurred in the banking book that equals or exceeds 10% of the bank’s regulatory banking capital constitutes a banking book large exposure. A banking book and trading book exposure taken together that equals or exceeds 10% of the bank’s own funds constitutes an aggregate book large exposure. No large exposure may exceed 25% of the bank’s regulatory banking capital or own funds, as applicable. Where the exposure is to affiliates of the bank that are not consolidated for regulatory purposes the limit is 20%.
In addition, the total of all banking book large exposures must not exceed eight times the bank’s regulatory banking capital and the total of all aggregate book large exposures must not exceed eight times the bank’s own funds.
A bank may exceed these ceilings only with the approval of the BaFin and subject to increased capital requirements for the amount of the large exposure that exceeds the ceiling.
Furthermore, total trading book exposures to a single customer (and customers affiliated with it) must not exceed five times the bank’s own funds that are not required to meet the capital adequacy requirements with respect to the banking book. Total trading book exposures to a single customer (and customers affiliated with it) in excess of the aforementioned limit are not permitted.
Consolidated Regulation and Supervision
The Banking Act’s provisions on consolidated supervision require that each group of institutions (Institutsgruppe) taken as a whole complies with the requirements on capital adequacy and the limitations on large exposures described above. A group of institutions generally consists of a domestic bank or financial services institution, as the parent company, and all other banks, financial services institutions, investment management companies, financial enterprises, ancillary services enterprises or payment institutions in which the

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parent company holds more than 50% of the capital or voting rights or on which the parent company can otherwise exert a controlling influence. Special rules apply to joint venture arrangements that result in the joint management of another bank, financial services institution, investment company, financial enterprise, bank service enterprise or payment institution by a bank and one or more third parties.
Financial groups which offer services and products in various financial sectors (banking and securities business, insurance and reinsurance business) are subject to supplementary supervision as a financial conglomerate (Finanzkonglomerat) once certain thresholds have been exceeded. The supervision on the level of the conglomerate is exercised by the BaFin. It comprises requirements regarding own funds, risk concentration, risk management, transactions within the conglomerate and organizational matters. Following the acquisition of Abbey Life Assurance Company Limited, the BaFin determined in November 2007 that we are a financial conglomerate. The main effect of this determination is that since 2008 we have been reporting to the BaFin and the Bundesbank capital adequacy requirements and risk concentrations also on a conglomerate level. In addition, we are required to report significant conglomerate internal transactions as well as significant risk concentrations.
Liquidity Requirements
The Banking Act requires German banks and certain financial services institutions to invest their funds so as to maintain adequate liquidity at all times. The Liquidity Regulation (Liquiditätsverordnung) is based on a comparison of the remaining terms of certain assets and liabilities. It requires maintenance of a ratio (Liquiditätskennzahl or “liquidity ratio”) of liquid assets to liquidity reductions expected during the month following the date on which the ratio is determined of at least one. The Liquidity Regulation also allows banks and financial services institutions subject to it to use their own methodology and procedures to measure and manage liquidity risk if the BaFin has approved such methodology and procedures. The liquidity ratio and estimated liquidity ratios for the next eleven months must be reported to the BaFin on a monthly basis. The liquidity requirements do not apply on a consolidated basis. The BaFin may impose on individual banks liquidity requirements which are more stringent than the general statutory requirements if such bank’s continuous liquidity would otherwise not be ensured.
Financial Statements and Audits
As required by the German Commercial Code (Handelsgesetzbuch), we prepare our non-consolidated financial statements in accordance with German GAAP. Our consolidated financial statements are prepared in accordance with International Financial Reporting Standards, and our compliance with capital adequacy requirements and large exposure limits is determined solely based upon such consolidated financial statements.
Under German law, we are required to be audited annually by a certified public accountant (Wirtschaftsprüfer). The accountant is appointed at the shareholders’ meeting. However, the supervisory board mandates the accountant and supervises the audit. The BaFin must be informed of and may reject the accountant’s appointment. The Banking Act requires that a bank’s auditor informs the BaFin of any facts that come to the accountant’s attention which would lead it to refuse to certify or to limit its certification of the bank’s annual financial statements or which would adversely affect the financial position of the bank. The auditor is also required to notify the BaFin in the event of a material breach by management of the articles of

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association or of any other applicable law. The auditor is required to prepare a detailed and comprehensive annual audit report (Prüfungsbericht) for submission to the bank’s supervisory board, the BaFin and the Bundesbank.
Enforcement of Banking Regulations; Investigative Powers
Investigations and Official Audits
The BaFin conducts audits of banks on a random basis, as well as for cause. The BaFin is also responsible for auditing internal risk models used by a bank for regulatory purposes. It may revoke the approval to use such models or impose conditions on their continued use for regulatory purposes.
The BaFin may require a bank to furnish information and documents in order to ensure that the bank is complying with the Banking Act and applicable regulations. The BaFin may conduct investigations without having to state a reason therefor. Such investigations may also take place at a foreign entity that is part of a bank’s group for regulatory purposes. Investigations of foreign entities are limited to the extent that the law of the jurisdiction where the entity is located restricts such investigations. The BaFin may attend meetings of a bank’s supervisory board and shareholders’ meetings. It also has the authority to require that such meetings be convened.
Enforcement Powers
The BaFin has a wide range of enforcement powers in the event it discovers any irregularities. It may remove the bank’s managers from office, transfer their responsibilities in whole or in part to a special commissioner or prohibit them from exercising their current managerial capacities. The BaFin may also cause the removal of members of the supervisory board of a bank if they are not reliable, lack the necessary expertise or violate their duties.
If a bank’s own funds are inadequate, if a bank does not meet the liquidity requirements, or if, based upon the circumstances, the BaFin concludes that a bank will likely not be able to continuously fulfill the statutory capital or liquidity requirements, the BaFin may prohibit or restrict the bank from distributing profits or extending credit. In addition, subject to the same prerequisites, the BaFin may generally prohibit a bank from making payments on own funds instruments if such payments are not covered by the bank’s annual profit. These prohibitions also apply to the parent bank of a group of institutions in the event that the own funds of the group are inadequate on a consolidated basis. The BaFin may also order a bank to adopt measures to contain risks if such risks result from particular types of transactions or systems used by the bank.
If a bank is in danger of defaulting on its obligations to creditors, the BaFin may take emergency measures to avert default. These emergency measures may include:
  issuing instructions relating to the management of the bank;
 
  prohibiting the acceptance of deposits and the extension of credit;
 
  ordering that certain measures to reduce risks are taken;
 
  prohibiting or restricting the bank’s managers from carrying on their functions; and
 
  appointing supervisors.

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If these measures are inadequate, the BaFin may revoke the bank’s license and, if appropriate, order the closure of the bank.
To avoid the insolvency of a bank, the BaFin may prohibit payments and disposals of assets, close the bank’s customer services, and prohibit the bank from accepting any payments other than payments of debts owed to the bank. Only the BaFin may file an application for the initiation of insolvency proceedings against a bank.
Violations of the Banking Act may result in criminal and administrative penalties.
Deposit Protection in Germany
The Deposit Guarantee Act
The Law on Deposit Insurance and Investor Compensation (Einlagensicherungs- und Anlegerentschädigungsgesetz, the Deposit Guarantee Act) provides for a mandatory deposit insurance system in Germany. It requires that each German bank participate in one of the licensed government-controlled investor compensation institutions (Entschädigungseinrichtungen). Entschädigungseinrichtung deutscher Banken GmbH acts as the investor compensation institution for private sector banks such as us, collects and administers the contributions of the member banks, and settles the compensation claims of investors in accordance with the Deposit Guarantee Act.
Investor compensation institutions are liable only for obligations resulting from deposits and securities transactions that are denominated in euro or the currency of a contracting state to the Agreement on the European Economic Area. They are not liable for obligations represented by instruments in bearer form or negotiable by endorsement. Claims of certain entities, such as banks, financial institutions (Finanzinstitute), insurance companies, investment funds, the Federal Republic of Germany, the German federal states, municipalities and medium-sized and large corporations, are not protected. The maximum liability of an investor compensation institution to any one creditor is limited to an amount of € 50,000 for deposits, rising to € 100,000 from December 31, 2010 onwards, and to 90% of any one creditor’s aggregate claims arising from securities transactions up to an amount of € 20,000.
Banks are obliged to make annual contributions to the investor compensation institution in which they participate. An investor compensation institution must levy special contributions on the banks participating therein or take up loans, whenever it is necessary to settle compensation claims by such institution in accordance with the Deposit Guarantee Act. There is no absolute limit on such special contributions. The investor compensation institution may exempt a bank from special contributions in whole or in part if full payments of such contributions are likely to render such bank unable to repay its deposits or perform its obligations under securities transactions. The amount of such contribution will then be added proportionately to the special contributions levied on the other participating banks. Following the increase of the protected amounts of customer claims in 2009, our contributions increased and may increase further to accommodate the increased maximum liability of our investor compensation institution from December 31, 2010 onwards.

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Voluntary Deposit Protection System
Liabilities to creditors that are not covered under the Deposit Guarantee Act may be covered by one of the various protection funds set up by the banking industry on a voluntary basis. We take part in the Deposit Protection Fund of the Association of German Banks (Einlagensicherungsfonds des Bundesverbandes deutscher Banken e.V.). The Deposit Protection Fund covers liabilities to customers up to an amount equal to 30% of the bank’s core capital and supplementary capital (to the extent that supplementary capital does not exceed 25% of core capital). Liabilities to other banks and other specified institutions, obligations of banks represented by instruments in bearer form and covered bonds in registered form (Namenspfandbriefe) are not covered. To the extent the Deposit Protection Fund makes payments to customers of a bank, it will be subrogated to their claims against the bank.
Banks that participate in the Deposit Protection Fund make regular contributions to the fund based on their liabilities to customers, and may be required to make special contributions up to the amount of their regular contributions to the extent requested by the Deposit Protection Fund to enable it to fulfill its purpose. If one or more German banks are in financial difficulties, we may therefore participate in their restructuring even where we have no business relationship or strategic interest, in order to avoid making special contributions to the Deposit Protection Fund in case of an insolvency of such bank or banks, or we may be required to make such special contributions. Following financial difficulties of various German banks the regular contributions to the Deposit Protection Fund were doubled from 2009 onwards.
Regulation and Supervision in the European Economic Area
Since 1989 the European Union has enacted a number of directives to create a single European Union-wide market with almost no internal barriers on banking and financial services. The Agreement on the European Economic Area extends this single market to Iceland, Liechtenstein and Norway. Within this market our branches generally operate under the so-called “European Passport.” Under the European Passport, our branches are subject to regulation and supervision primarily by the BaFin. The authorities of the host country are responsible for the regulation and supervision of the liquidity requirements and the financial markets of the host country. They also retain responsibility with regard to the provision of securities services within the territory of the host country.
Regulation and Supervision in the United States
Our operations are subject to extensive federal and state banking and securities regulation and supervision in the United States. We engage in U.S. banking activities directly through our New York branch. We also control U.S. banking subsidiaries, including Deutsche Bank Trust Company Americas (“DBTCA”), and U.S. broker-dealers, such as Deutsche Bank Securities Inc., U.S. nondepositary trust companies and nonbanking subsidiaries.
Regulatory Authorities
Deutsche Bank AG and Taunus Corporation, its wholly owned subsidiary, are bank holding companies under the U.S. Bank Holding Company Act of 1956, as amended (the Bank Holding Company Act), by virtue of, among other things, our ownership of DBTCA. As a result, we and our U.S. operations are subject to regulation, supervision and examination by the Federal Reserve Board as our U.S. “umbrella supervisor”.

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DBTCA is a New York state-chartered bank whose deposits are insured by the Federal Deposit Insurance Corporation (the FDIC). DBTCA is subject to regulation, supervision and examination by the Federal Reserve Board and the New York State Banking Department and to relevant FDIC regulation. Deutsche Bank Trust Company Delaware is a Delaware state-chartered bank which is subject to regulation, supervision and examination by the FDIC and the Office of the State Bank Commissioner of Delaware. Our New York branch is supervised by the Federal Reserve Board and the New York State Banking Department. Our federally-chartered nondeposit trust companies are subject to regulation, supervision and examination by the Office of the Comptroller of the Currency. Certain of our subsidiaries are also subject to regulation, supervision and examination by state banking regulators of certain states in which we conduct banking operations, including New Jersey and New Hampshire.
Restrictions on Activities
As described below, federal and state banking laws and regulations restrict our ability to engage, directly or indirectly through subsidiaries, in activities in the United States.
We are required to obtain the prior approval of the Federal Reserve Board before directly or indirectly acquiring the ownership or control of more than 5% of any class of voting shares of U.S. banks, certain other depository institutions, and bank or depository institution holding companies. Under applicable U.S. federal banking law, our U.S. banking operations are also restricted from engaging in certain “tying” arrangements involving products and services.
Our two U.S. FDIC-insured bank subsidiaries are subject to requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be made and the interest that may be charged thereon, and limitations on the types of investments that may be made and the types of services that may be offered.
Under U.S. law, our activities and those of our subsidiaries are generally limited to the business of banking, managing or controlling banks, and, so long as we remain a financial holding company under U.S. law, nonbanking activities in the United States that are financial in nature, or incidental or complementary to such financial activity, including securities, merchant banking, insurance and other financial activities, but subject to certain limitations on the conduct of such activities and to prior regulatory approval in some cases. As a non-U.S. bank, we are generally authorized under U.S law and regulations to acquire a non-U.S. company engaged in nonfinancial activities provided that the company’s U.S. operations do not exceed certain thresholds and certain other conditions are met.
Our status as a financial holding company, and our resulting ability to engage in a broader range of nonbanking activities, is dependent on Deutsche Bank AG and our two insured U.S. depository institutions remaining “well capitalized” and “well managed” (as defined by Federal Reserve Board regulations) and upon our insured U.S. depository institutions meeting certain requirements under the Community Reinvestment Act. In order to meet the “well capitalized” test, we and our U.S. depository institutions are required to maintain a Tier 1 risk-based capital ratio of at least 6% and a total risk-based capital ratio of at least 10% .

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Pursuant to Federal Reserve Board policy, Taunus Corporation, as the top-tier U.S. bank holding company subsidiary of Deutsche Bank AG, is not required to comply with capital adequacy guidelines generally made applicable to U.S. banking organizations, as long as Deutsche Bank AG remains a financial holding company that the Federal Reserve Board continues to regard as well capitalized and well managed. Because Taunus Corporation is able to fund its subsidiaries via its parent, it does not maintain stand-alone capital. Therefore, should Deutsche Bank AG cease to be well capitalized or well managed, and should Taunus Corporation thereby (or otherwise because of a change in Federal Reserve Board policy) become subject to U.S. capital guidelines, Deutsche Bank AG would have to restructure its U.S. activities and/or materially increase the capital of Taunus Corporation. The extent of such restructuring and recapitalization, and the adverse effects that they would have on the financial condition and operations of Deutsche Bank cannot be estimated at this time.
State-chartered banks (such as DBTCA) and state-licensed branches and agencies of foreign banks (such as our New York branch) may not, with certain exceptions that require prior regulatory approval, engage as a principal in any type of activity not permissible for their federally chartered or licensed counterparts. United States federal banking laws also subject state branches and agencies to the same single-borrower lending limits that apply to federal branches or agencies, which are substantially similar to the lending limits applicable to national banks. These single-borrower lending limits are based on the worldwide capital of the entire foreign bank (i.e., Deutsche Bank AG in the case of our New York branch).
The Federal Reserve Board may terminate the activities of any U.S. office of a foreign bank if it determines that the foreign bank is not subject to comprehensive supervision on a consolidated basis in its home country or that there is reasonable cause to believe that such foreign bank or its affiliate has violated the law or engaged in an unsafe or unsound banking practice in the United States.
There are various qualitative and quantitative restrictions on the extent to which we and our nonbank subsidiaries can borrow or otherwise obtain credit from our U.S. banking subsidiaries or engage in certain other transactions involving those subsidiaries. In general, these transactions must be on terms that would ordinarily be offered to unaffiliated entities, must be secured by designated amounts of specified collateral and are subject to volume limitations. These restrictions also apply to certain transactions of our New York Branch with our U.S. broker-dealer and certain of our other affiliates.
A major focus of U.S. governmental policy relating to financial institutions is aimed at preventing money laundering and terrorist financing and compliance with economic sanctions. Failure of an institution to have policies and procedures and controls in place to prevent, detect and report money laundering and terrorist financing could in some cases have serious legal, financial and reputational consequences for the institution.
Our New York Branch
Our New York branch is licensed by the New York Superintendent of Banks to conduct a commercial banking business and is required to maintain eligible high-quality assets with banks in the State of New York. Should our New York Branch cease to be “well-rated” by the New York State Superintendent of Banks, we may need to maintain substantial additional amounts of eligible assets (up to a maximum of U.S.$ 100 million of assets

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pledged). The Superintendent of Banks may also establish asset maintenance requirements for branches of foreign banks. Currently, no such requirement has been imposed upon our New York branch.
The New York State Banking Law authorizes the Superintendent of Banks to take possession of the business and property of a New York branch of a foreign bank under circumstances involving violation of law, conduct of business in an unsafe manner, impairment of capital, suspension of payment of obligations, or initiation of liquidation proceedings against the foreign bank at its domicile or elsewhere. In liquidating or dealing with a branch’s business after taking possession of a branch, only the claims of creditors which arose out of transactions with a branch are to be accepted by the Superintendent of Banks for payment out of the business and property of the foreign bank in the State of New York, without prejudice to the rights of the holders of such claims to be satisfied out of other assets of the foreign bank. After such claims are paid, the Superintendent of Banks will turn over the remaining assets, if any, to the foreign bank or its duly appointed liquidator or receiver.
Deutsche Bank Trust Company Americas
The Federal Deposit Insurance Corporation Improvement Act of 1991 (referred to as FDICIA) provides for extensive regulation of depository institutions (such as DBTCA and its direct and indirect parent companies), including requiring federal banking regulators to take “prompt corrective action” with respect to FDIC-insured banks that do not meet minimum capital requirements. As an insured bank’s capital level declines and the bank falls into lower categories (or if it is placed in a lower category by the discretionary action of its supervisor), greater limits are placed on its activities and federal banking regulators are authorized (and, in many cases, required) to take increasingly more stringent supervisory actions, which could ultimately include the appointment of a conservator or receiver for the bank (even if it is solvent). In addition, FDICIA generally prohibits an FDIC-insured bank from making any capital distribution (including payment of a dividend) or payment of a management fee to its holding company if the bank would thereafter be undercapitalized. If an insured bank becomes “undercapitalized”, it is required to submit to federal regulators a capital restoration plan guaranteed by the bank’s holding company. Since the enactment of FDICIA, both of our U.S. insured banks have been categorized as “well capitalized,” the highest capital category under applicable regulations.
DBTCA, like other FDIC-insured banks, is required to pay assessments to the FDIC for deposit insurance under the FDIC’s Deposit Insurance Fund (calculated using the FDIC’s risk-based assessment system). As a result of losses incurred by the Deposit Insurance Fund on account of current financial market conditions, the amount of these assessments has been increasing. The FDIC authorized the imposition of special assessments of five basis points on each FDIC-insured institution’s assets minus its Tier 1 capital (subject to a cap of 10 basis points of an institution’s domestic deposits). The first special assessment was calculated based on asset levels at June 30, 2009, and was collected on September 30, 2009. Instead of imposing additional special assessments, the FDIC issued a regulation that required FDIC-insured institutions to prepay on December 30, 2009, their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012, with institutions accounting for the prepayment as a prepaid expense (an asset).
The FDIC’s basic amount of deposit insurance was temporarily increased from U.S. $100,000 to U.S. $250,000 per depositor through December 31, 2013. DBTCA and its sister bank, Deutsche Bank Trust Company Delaware, participated in the FDIC’s Temporary Liquidity Guarantee Program, and particularly, the Transaction

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Account Guarantee Program (“TAGP”) thereunder, pursuant to which the FDIC fully guaranteed (for a fee) certain noninterest-bearing transaction accounts. The TAGP was originally scheduled to expire on June 30, 2009, but has been twice extended for six months, and is now scheduled to expire on June 30, 2010. Both DBTCA and Deutsche Bank Trust Company Delaware are participating in the TAGP as extended.
Other
In the United States, our U.S.-registered broker-dealers are regulated by the Securities and Exchange Commission. Broker-dealers are subject to regulations that cover all aspects of the securities business, including sales methods, trade practices among broker-dealers, use and safekeeping of customers’ funds and securities, capital structure, recordkeeping, the financing of customers’ purchases and the conduct of directors, officers and employees.
In addition, our principal U.S. SEC-registered broker dealer subsidiary, Deutsche Bank Securities Inc., is a member of the New York Stock Exchange and is regulated by the Financial Industry Regulatory Authority (“FINRA”) and the individual state securities authorities in the states in which it operates. The U.S. government agencies and self-regulatory organizations, as well as state securities authorities in the United States having jurisdiction over our U.S. broker-dealer affiliates, are empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer or its directors, officers or employees.
In June 2009, the U.S. Government released a regulatory reform proposal that includes measures to enhance the supervision of financial institutions, establish comprehensive supervision of financial markets (including requiring certain derivatives contracts to be traded on an exchange or centrally cleared), protect consumers and investors from financial abuse, provide government with the tools to manage a financial crisis (including enhanced resolution authority), and raise international regulatory standards and enhance international cooperation. Although the applicability of certain of these proposals to international banks is unclear, if enacted, these proposals, and other proposals announced more recently, could have a significant financial impact on our businesses and on the resources needed to enhance our regulatory and compliance systems and maintain them on an ongoing basis.
Organizational Structure
We operate our business along the structure of our three group divisions. Deutsche Bank AG is the direct or indirect holding company for our subsidiaries. The following table sets forth the significant subsidiaries we own, directly or indirectly. We used the three-part test for significance set out in Section 1-02 (w) of Regulation S-X under the U.S. Securities Exchange Act of 1934. We do not have any other subsidiaries we believe are material based on other, less quantifiable, factors. We have provided information on Taunus Corporation’s principal subsidiaries, to give an idea of their businesses. We have also included Deutsche Bank Luxembourg S.A., Deutsche Bank Privat- und Geschäftskunden Aktiengesellschaft as well as DB Capital Markets (Deutschland) GmbH and DB Valoren S.á.r.l. and their principal subsidiaries.

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We own 100% of the equity and voting interests in these significant subsidiaries.
         
Subsidiary   Place of Incorporation
Taunus Corporation1
  Delaware, United States
Deutsche Bank Trust Company Americas2
  New York, United States
Deutsche Bank Securities Inc.3
  Delaware, United States
Deutsche Bank Luxembourg S.A.4
  Luxembourg
Deutsche Bank Privat- und Geschäftskunden Aktiengesellschaft5
  Frankfurt am Main, Germany
DB Capital Markets (Deutschland) GmbH6
  Frankfurt am Main, Germany
DWS Investment GmbH7
  Frankfurt am Main, Germany
DB Valoren S.á.r.l.8
  Luxembourg
DB Equity S.á.r.l.9
  Luxembourg
 
1   This company is a holding company for most of our subsidiaries in the United States.
 
2   This company is a subsidiary of Taunus Corporation. Deutsche Bank Trust Company Americas is a New York State-chartered bank which originates loans and other forms of credit, accepts deposits, arranges financings and provides numerous other commercial banking and financial services.
 
3   Deutsche Bank Securities Inc. is a U.S. SEC-registered broker dealer and is a member of the New York Stock Exchange and regulated by the Financial Industry Regulatory Authority. It is also regulated by the individual state securities authorities in the states in which it operates.
 
4   The primary business of this company comprises treasury and global market activities, especially as a major supplier of Euro liquidity for Deutsche Bank Group, the international loan business with a specific focus on continental Europe, and private banking.
 
5   The company serves private individuals, affluent clients and small business clients with banking products.
 
6   This company is a German limited liability company and operates as a holding company for a number of European subsidiaries, mainly institutional and mutual fund management companies located in Germany, Luxembourg, Austria, Switzerland, Italy, Poland, and Cyprus.
 
7   This company, in which DB Capital Markets (Deutschland) GmbH indirectly owns 100 % of the equity and voting interests, is a limited liability company that operates as a mutual fund manager.
 
8   This company is a holding company for our subgroups in Australia, New Zealand, and Singapore. It is also the holding company for DB Equity S.á.r.l.
 
9   This company is the holding company for our minority stake in Deutsche Postbank AG.
Property and Equipment
As of December 31, 2009, we operated in 72 countries out of 1,964 branches around the world, of which 49% were in Germany. We lease a majority of our offices and branches under long-term agreements.
As of December 31, 2009, we had premises and equipment with a total book value of approximately € 2.8 billion. Included in this amount were land and buildings with a carrying value of approximately € 880 million. As of December 31, 2008, we had premises and equipment with a total book value of approximately € 3.7 billion. Included in this amount were land and buildings with a carrying value of approximately € 911 million.
We continue to review our property requirements worldwide taking into account cost containment measures as well as growth initiatives in selected businesses.
Information Required by Industry Guide 3
Please see pages S-1 through S-16 of the supplemental financial information, which pages are incorporated by reference herein, for information required by Industry Guide 3.
Item 4A: Unresolved Staff Comments
We have not received written comments from the Securities and Exchange Commission regarding our periodic reports under the Exchange Act, as of any day 180 days or more before the end of the fiscal year to which this annual report relates, which remain unresolved.

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Item 5: Operating and Financial Review and Prospects
Overview
The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes to them included in “Item 18: Financial Statements” of this document, on which we have based this discussion and analysis. Our consolidated financial statements for the years ended December 31, 2009, 2008 and 2007 have been audited by KPMG AG Wirtschaftsprüfungsgesellschaft, as described in the “Report of Independent Registered Public Accounting Firm” on page F-4.
We have prepared our consolidated financial statements in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”) and as endorsed by the European Union (“EU”). Until December 31, 2006, we prepared our consolidated financial information in accordance with generally accepted accounting principles in the United States. The effective date of our transition to IFRS was January 1, 2006.
Significant Accounting Policies and Critical Accounting Estimates
Our significant accounting policies are essential to understanding our reported results of operations and financial condition. Certain of these accounting policies require critical accounting estimates that involve complex and subjective judgments and the use of assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Such critical accounting estimates could change from period to period and have a material impact on our financial condition, changes in financial condition or results of operations. Critical accounting estimates could also involve estimates where management could have reasonably used another estimate in the current accounting period. Actual results may differ from these estimates if conditions or underlying circumstances were to change. See Notes [1] and [2] to the consolidated financial statements for a discussion on our significant accounting policies and critical accounting estimates.
We have identified the following significant accounting policies that involve critical accounting estimates:
  Fair value estimates
 
  Impairment of financial assets
 
  Impairment of non-financial assets
 
  Deferred tax-assets
 
  Legal and regulatory contingencies and tax risks
Recently Adopted Accounting Pronouncements and New Accounting Pronouncements
See Note [3] to the consolidated financial statements for a discussion on our recently adopted and new accounting pronouncements.

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Operating Results (2009 vs. 2008)
You should read the following discussion and analysis in conjunction with our consolidated financial statements.
Executive Summary
In 2009, the worldwide economy was significantly impacted by the global recession. The collapse in world trade affected especially Germany. Government stimulus measures worldwide prevented a further downturn. In the banking industry losses from traditional lending business reached record levels in 2009 in both Europe and the U.S., while investment banking revenues improved significantly versus 2008. In this environment, we generated a net income of € 5.0 billion and made the strength of our capital base a top priority, raising our Tier 1 capital ratio to 12.6%. In addition, we reduced our risk-weighted assets to € 273 billion and improved our leverage ratio. We also reoriented our platforms in some core businesses and closed our dedicated credit proprietary platform.
We recorded income before income taxes of € 5.2 billion for 2009, compared with a loss before income taxes of € 5.7 billion for 2008. Net revenues of € 28.0 billion in 2009 were significantly above the € 13.6 billion reported for 2008. Our pre-tax return on average active equity was 15% in 2009, versus negative 18% in 2008. Our pre-tax return on average shareholders’ equity was 15% in 2009 and negative 16% in 2008. Our net income was € 5.0 billion in 2009, compared with a net loss of € 3.9 billion in 2008. Diluted earnings per share were € 7.59 in 2009 and negative € 7.61 in 2008.
CIB’s net revenues increased from € 3.2 billion in 2008 to € 18.8 billion in 2009. Overall Sales & Trading net revenues for 2009 were € 12.5 billion, compared with negative € 514 million in 2008. This primarily reflects significantly lower mark-downs on credit-related exposures in 2009, and the non-recurrence of losses in Credit Trading, Equity Derivatives and Equity Proprietary Trading incurred in 2008. Origination and Advisory revenues were € 2.2 billion in 2009, an increase of € 2.0 billion versus 2008, mainly reflecting the non-recurrence of significant net mark-downs of € 1.7 billion on leveraged loans and loan commitments in the prior year. PCAM’s net revenues were € 8.3 billion in 2009, a decrease of € 777 million compared to 2008. The decrease included lower asset-based fees as a consequence of lower asset valuations during the first nine months of 2009, higher impairments related to real estate asset management in AWM and lower brokerage revenues in PBC as a consequence of the continued wariness on the part of retail investors. In CI, net revenues in 2009 included gains of € 1.0 billion related to our minority stake in Deutsche Postbank AG. Revenues in Consolidation & Adjustments (C&A) reflected gains of approximately € 460 million from derivative contracts used to hedge effects on shareholders’ equity, resulting from obligations under share-based compensation plans.
Our noninterest expenses were € 20.1 billion in 2009, versus € 18.3 billion in 2008. The development was mainly driven by increased variable compensation as a result of the improved operating performance. It was also impacted by the bank payroll tax announced in the U.K. However, this increase was partially counter-balanced by the impact of changes to the bank’s compensation structure, mainly reflecting an increase in the relative share of deferred compensation compared with prior periods.

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In 2009, provision for credit losses was € 2.6 billion, versus € 1.1 billion in 2008. The increase was due to the overall deteriorating credit environment, including its impact on required positions for assets reclassified in accordance with IAS 39.
Trends and Uncertainties
The significant increase in net revenues in 2009 compared to 2008 was driven by the non-recurrence of certain mark-downs and of certain trading losses, which mainly occurred in the second half 2008 in CB&S. The increase also reflected a stronger performance in “flow” trading products, also benefiting from favorable market conditions. These factors reflect a successful reorientation of the sales and trading platform towards customer business and liquid “flow” products. 2009 revenues additionally benefited from favorable market conditions, including both margins and volumes, particularly in the first half of the year, together with record full-year revenues in Commodities and Emerging Market Debt trading. Provided that market conditions normalize with margin stabilization at levels which remain higher than in the pre-crisis period and that global growth continues, we see potential for revenue growth.
Revenues in PCAM’s investment management businesses continued to suffer in 2009 from prevailing weak market conditions (mainly in the first nine months 2009). Any ongoing lack of investor confidence is likely to cause this trend to continue.
In CI, revenues will continue to be impacted by the share price and the results of Deutsche Postbank AG. In C&A, we do not expect further significant gains from derivative contracts used to hedge effects on shareholders’ equity resulting from obligations under our share-based compensation plans going forward.
The increase in provision for credit losses in 2009 compared to 2008 resulted primarily from assets reclassified in accordance with IAS 39, relating predominantly to exposures in Leveraged Finance. The remaining increase reflects charges taken in CIB on a number of our counterparty exposures in the Americas and in Europe on the back of an overall deteriorating credit environment, and in PCAM, predominantly reflecting a more challenging credit environment in Spain and Poland. Based on macroeconomic outlook, increasing insolvencies and unemployment rates could negatively impact our loan loss provisions. This effect could be mitigated by a non-recurrence of significant provisions for credit losses for assets reclassified according to IAS 39.
The increase in compensation and benefits in 2009 compared to 2008 mainly reflected higher performance-related compensation in line with improved results. It also contained expenses in respect of the bank payroll tax announced by the U.K. government. These increasing factors were partly offset by the effects from an increase of the proportion of deferred compensation compared with prior periods as a consequence of changes to our compensation structure. The development of compensation expenses will continue to depend significantly on the operating performance of our businesses, the governance of bank executive compensation and future amortization of deferred compensation.
Severance charges increased in 2009, mainly resulting from repositioning and efficiency programs in PCAM. Similar measures, which aim to reduce complexity in our operations, standardize processes across businesses and expand the offshoring of functions, are expected to continue in 2010.

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20-F     Item 5: Operating and Financial Review and Prospects
The increase in general and administrative expenses in 2009 compared to 2008 included charges of € 316 million from a legal settlement with Huntsman Corp. and of € 200 million related to our offer to repurchase certain products from private investors, partly offset by the non-recurrence of significant specific items recorded in 2008. Excluding these factors, general and administrative expenses decreased in 2009, following cost saving initiatives, which are expected to contribute to a further decline in general and administrative expenses going forward.
The actual effective tax rate of 4.7 % in 2009 was impacted by numerous factors, including a strong performance of certain U.S. entities, together with improved income projections that resulted in the recognition of previously unrecognized deferred tax assets. The resolution of tax audits relating to prior years also had a positive impact on the effective tax rate in the reporting period. The future actual effective tax rate could continue to be influenced by the potential occurrence of specific factors.
Financial Results
The following table presents our condensed consolidated statement of income for 2009, 2008 and 2007.
                                                         
                            2009 increase (decrease)     2008 increase (decrease)  
in € m.                           from 2008     from 2007  
(unless stated otherwise)   2009     2008     2007     in € m.     in %     in € m.     in %  
Net interest income
    12,459       12,453       8,849       6       0       3,604       41  
Provision for credit losses
    2,630       1,076       612       1,554       144       464       76  
 
                                         
Net interest income after provision for credit losses
    9,829       11,377       8,237       (1,548 )     (14 )     3,140       38  
 
                                         
Commissions and fee income
    8,911       9,741       12,282       (830 )     (9 )     (2,541 )     (21 )
Net gains (losses) on financial assets/liabilities at fair value through profit or loss
    7,109       (9,992 )     7,175       17,101       N/M       (17,167 )     N/M  
Net gains (losses) on financial assets available for sale
    (403 )     666       793       (1,069 )     N/M       (127 )     (16 )
Net income (loss) from equity method investments
    59       46       353       13       28       (307 )     (87 )
Other income (loss)
    (183 )     699       1,377       (882 )     N/M       (678 )     (49 )
 
                                         
Total noninterest income
    15,493       1,160       21,980       14,333       N/M       (20,820 )     (95 )
 
                                         
Total net revenues
    25,322       12,537       30,217       12,785       102       (17,680 )     (59 )
 
                                         
Compensation and benefits
    11,310       9,606       13,122       1,704       18       (3,516 )     (27 )
General and administrative expenses
    8,402       8,339       8,038       63       1       301       4  
Policyholder benefits and claims
    542       (252 )     193       794       N/M       (445 )     N/M  
Impairment of intangible assets
    (134 )     585       128       (719 )     N/M       457       N/M  
Restructuring activities
                (13 )           N/M       13       N/M  
 
                                         
Total noninterest expenses
    20,120       18,278       21,468       1,842       10       (3,190 )     (15 )
 
                                         
Income (loss) before income taxes
    5,202       (5,741 )     8,749       10,943       N/M       (14,490 )     N/M  
 
                                         
Income tax expense (benefit)
    244       (1,845 )     2,239       2,089       N/M       (4,084 )     N/M  
 
                                         
Net income (loss)
    4,958       (3,896 )     6,510       8,854       N/M       (10,406 )     N/M  
 
                                         
Net income (loss) attributable to minority interest
    (15 )     (61 )     36       46       (75 )     (97 )     N/M  
Net income (loss) attributable to Deutsche Bank shareholders
    4,973       (3,835 )     6,474       8,808       N/M       (10,309 )     N/M  
 
N/M — Not meaningful

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Net Interest Income
The following table sets forth data related to our Net interest income.
                                                         
                            2009 increase (decrease)     2008 increase (decrease)  
in € m.                           from 2008     from 2007  
(unless stated otherwise)   2009     2008     2007     in € m.     in %     in € m.     in %  
Total interest and similar income
    26,953       54,549       64,675       (27,596 )     (51 )     (10,126 )     (16 )
Total interest expenses
    14,494       42,096       55,826       (27,602 )     (66 )     (13,730 )     (25 )
 
                                         
Net interest income
    12,459       12,453       8,849       6       0       3,604       41  
 
                                         
Average interest-earning assets1
    879,601       1,216,666       1,226,191       (337,065 )     (28 )     (9,525 )     (1 )
Average interest-bearing liabilities1
    853,383       1,179,631       1,150,051       (326,248 )     (28 )     29,580       3  
Gross interest yield2
    3.06 %     4.48 %     5.27 %     (1.42 ) ppt     (32 )     (0.79 ) ppt     (15 )
Gross interest rate paid3
    1.70 %     3.57 %     4.85 %     (1.87 ) ppt     (52 )     (1.28 ) ppt     (26 )
Net interest spread4
    1.37 %     0.91 %     0.42 %     0.46  ppt     51       0.49  ppt     117  
Net interest margin5
    1.42 %     1.02 %     0.72 %     0.40  ppt     39       0.30  ppt     42  
 
ppt — Percentage points
 
1   Average balances for each year are calculated in general based upon month-end balances.
 
2   Gross interest yield is the average interest rate earned on our average interest-earning assets.
 
3   Gross interest rate paid is the average interest rate paid on our average interest-bearing liabilities.
 
4   Net interest spread is the difference between the average interest rate earned on average interest-earning assets and the average interest rate paid on average interest-bearing liabilities.
 
5   Net interest margin is net interest income expressed as a percentage of average interest-earning assets.
Net interest income in 2009 was € 12.5 billion, virtually unchanged compared to 2008. Interest income and interest expenses decreased significantly by € 27.6 billion each, mainly reflecting decreasing interest rate levels as a result of further rate cuts by central banks in 2009, in response to the credit crunch, and targeted asset reductions. Average interest earning assets, mainly trading assets, were reduced more significantly than average interest-bearing liabilities. The resulting decline in net interest income was offset by the positive effects from lower funding rates compared to 2008. These developments resulted in a widening of our net interest spread by 46 basis points and of our net interest margin by 40 basis points.
The development of our net interest income is also impacted by the accounting treatment of some of our hedging-related derivative transactions. We enter into nontrading derivative transactions primarily as economic hedges of the interest rate risks of our nontrading interest-earning assets and interest-bearing liabilities. Some of these derivatives qualify as hedges for accounting purposes while others do not. When derivative transactions qualify as hedges of interest rate risks for accounting purposes, the interest arising from the derivatives is reported in interest income and expense, where it offsets interest flows from the hedged items. When derivatives do not qualify for hedge accounting treatment, the interest flows that arise from those derivatives will appear in trading income.

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20-F     Item 5: Operating and Financial Review and Prospects
Net Gains (Losses) on Financial Assets/Liabilities at Fair Value through Profit or Loss
The following table sets forth data related to our Net gains (losses) on financial assets/liabilities at fair value through profit or loss.
                                                         
                            2009 increase (decrease)     2008 increase (decrease)  
in € m.                           from 2008     from 2007  
(unless stated otherwise)   2009     2008     2007     in € m.     in %     in € m.     in %  
CIB — Sales & Trading (equity)
    1,125       (1,513 )     3,335       2,638       N/M       (4,848 )     N/M  
CIB — Sales & Trading (debt and other products)
    4,375       (6,647 )     3,858       11,022       N/M       (10,505 )     N/M  
Other
    1,609       (1,832 )     (18 )     3,441       N/M       (1,814 )     N/M  
 
                                         
Total net gains (losses) on financial assets/liabilities at fair value through profit or loss
    7,109       (9,992 )     7,175       17,101       N/M       (17,167 )     N/M  
 
                                         
 
N/M — Not meaningful
Net gains (losses) on financial assets/liabilities at fair value through profit or loss from Sales & Trading (debt and other products) were gains of € 4.4 billion in 2009, compared to losses of € 6.6 billion in 2008. This development was mainly driven by significant losses in our credit trading businesses and mark-downs relating to provisions against monoline insurers, residential mortgage-backed securities and commercial real estate loans recorded in 2008. In addition, the result in 2009 included a strong performance in ‘flow’ trading products. In Sales & Trading (equity), net gains (losses) on financial assets/liabilities at fair value through profit or loss were gains of € 1.1 billion in 2009, compared to losses of € 1.5 billion in 2008, mainly due to the non-recurrence of losses recognized in Equity Derivatives and Equity Proprietary Trading in 2008. In Other products, net gains of € 1.6 billion on financial assets/liabilities at fair value through profit or loss in 2009 were mainly related to our minority stake in Deutsche Postbank AG recognized in CI and to gains from derivative contracts used to hedge effects on shareholders’ equity, resulting from obligations under share-based compensation plans recorded in C&A. Net losses of € 1.8 billion from Other products in 2008 included net mark-downs of € 1.7 billion on leveraged finance loans and loan commitments.
Net Interest Income and Net Gains (Losses) on Financial Assets/Liabilities at Fair Value through Profit or Loss
Our trading and risk management businesses include significant activities in interest rate instruments and related derivatives. Under IFRS, interest and similar income earned from trading instruments and financial instruments designated at fair value through profit or loss (e.g. coupon and dividend income), and the costs of funding net trading positions are part of net interest income. Our trading activities can periodically shift income between net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss depending on a variety of factors, including risk management strategies.

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In order to provide a more business-focused discussion, the following table presents net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss by group division and by product within the Corporate and Investment Bank.
                                                         
                            2009 increase (decrease)     2008 increase (decrease)  
in € m.                           from 2008     from 2007  
(unless stated otherwise)   2009     2008     2007     in € m.     in %     in € m.     in %  
Net interest income
    12,459       12,453       8,849       6       0       3,604       41  
Total net gains (losses) on financial assets/liabilities at fair value through profit or loss
    7,109       (9,992 )     7,175       17,101       N/M       (17,167 )     N/M  
 
                                         
Total net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss
    19,568       2,461       16,024       17,107       N/M       (13,563 )     (85 )
 
                                         
 
                                                       
Breakdown by Group Division/CIB product:1
                                                       
Sales & Trading (equity)
    2,047       (1,895 )     3,117       3,942       N/M       (5,012 )     N/M  
Sales & Trading (debt and other products)
    9,735       317       7,483       9,418       N/M       (7,166 )     (96 )
Total Sales & Trading
    11,782       (1,578 )     10,600       13,360       N/M       (12,178 )     N/M  
Loan products2
    767       1,014       499       (247 )     (24 )     515       103  
Transaction services
    1,177       1,358       1,297       (180 )     (13 )     61       5  
Remaining products3
    239       (1,821 )     (118 )     2,060       N/M       (1,703 )     N/M  
Total Corporate and Investment Bank
    13,966       (1,027 )     12,278       14,993       N/M       (13,305 )     N/M  
Private Clients and Asset Management
    4,160       3,871       3,529       290       7       342       10  
Corporate Investments
    793       (172 )     157       965       N/M       (329 )     N/M  
Consolidation & Adjustments
    649       (211 )     61       859       N/M       (272 )     N/M  
 
                                         
Total net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss
    19,568       2,461       16,024       17,107       N/M       (13,563 )     (85 )
 
                                         
 
N/M — Not meaningful
 
1   This breakdown reflects net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss only. For a discussion of the group divisions’ total revenues by product please refer to “Results of Operations by Segment”.
 
2   Includes the net interest spread on loans as well as the fair value changes of credit default swaps and loans designated at fair value through profit or loss.
 
3   Includes net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss of origination, advisory and other products.
Corporate and Investment Bank (CIB). Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss from Sales & Trading were € 11.8 billion in 2009, compared to negative € 1.6 billion in 2008. The main drivers for the increase were the non-recurrence of losses in Equity Derivatives, Equity Proprietary Trading and Credit Trading, as well as significantly lower mark-downs on credit-related exposures. In addition, the result in 2009 included a strong performance in ‘flow’ trading products. The decrease in Loan products was driven by lower interest income and gains (losses) on financial assets/liabilities at fair value through profit or loss in the commercial real estate business, partly offset by mark-to-market gains in 2009, versus losses in 2008, on the fair value loan and hedge portfolio. In Transaction services, combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss decreased by € 180 million, primarily attributable to the low interest rate environment and lower depository receipts. The improvement of € 2.1 billion in Remaining products resulted mainly from significantly lower net mark-downs on leveraged loans and loan commitments in 2009 compared to 2008. In addition mark-to-market gains in 2009, versus mark-to-market losses in 2008, on investments held to back insurance policyholder claims in Abbey Life (offset in Policyholder benefits and claims in Noninterest expenses) contributed to the increase.

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20-F     Item 5: Operating and Financial Review and Prospects
Private Clients and Asset Management (PCAM). Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 4.2 billion in 2009, an increase of € 290 million, or 7 %, compared to 2008. The increase included higher net interest income from Loan products, mainly in PBC from increased loan margins, and from Other products, mainly driven by PBC’s asset and liability management function.
Corporate Investments (CI). Combined net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss were € 793 million in 2009, compared to negative € 172 million in 2008. The development primarily reflects gains related to our minority stake in Deutsche Postbank AG recognized during 2009.
Consolidation & Adjustments. Combined net interest income and net gains (losses) on financial assets/ liabilities at fair value through profit or loss were € 649 million in 2009, compared to negative € 211 million in 2008. The 2009 result included gains from derivative contracts used to hedge effects on shareholders’ equity, resulting from obligations under share-based compensation plans, and higher net interest income on non-divisionalized assets/liabilities, including taxes, compared to 2008.
Provision for Credit Losses
Provision for credit losses was € 2.6 billion in 2009, versus € 1.1 billion in 2008. The provision in CIB was € 1.8 billion, versus
€ 408 million in the prior year, primarily reflecting a significant increase in the provision for assets reclassified in accordance with IAS 39, relating predominantly to exposures in Leveraged Finance. The remaining increase reflects impairment charges taken on a number of our counterparty exposures in the Americas and in Europe on the back of an overall deteriorating credit environment. The provision in PCAM was € 806 million, versus € 668 million in the prior year, predominantly reflecting a more challenging credit environment in Spain and Poland. Provision for credit losses in 2009 was positively impacted by changes in certain parameter and model assumptions, which reduced the provision by € 87 million in CIB and by € 146 million in PCAM.
For further information on the provision for loan losses see “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk — Credit Risk — Movements in the Allowance for Loan Losses”.

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Remaining Noninterest Income
The following table sets forth information on our Remaining noninterest income.
                                                         
                            2009 increase (decrease)     2008 increase (decrease)  
in € m.                           from 2008     from 2007  
(unless stated otherwise)   2009     2008     2007     in € m.     in %     in € m.     in %  
Commissions and fee income1
    8,911       9,741       12,282       (830 )     (9 )     (2,541 )     (21 )
Net gains (losses) on financial assets available for sale
    (403 )     666       793       (1,069 )     N/M       (127 )     (16 )
Net income (loss) from equity method investments
    59       46       353       13       28       (307 )     (87 )
Other income (loss)
    (183 )     699       1,377       (882 )     N/M       (678 )     (49 )
 
                                         
Total remaining noninterest income
    8,384       11,152       14,805       (2,768 )     (25 )     (3,653 )     (25 )
 
                                         
 
N/M — Not meaningful
 
  Includes:
                                                         
    2009     2008     2007     in € m.     in %     in € m.     in %  
Commissions and fees from fiduciary activities:
                                                       
Commissions for administration
    392       384       427       8       2       (43 )     (10 )
Commissions for assets under management
    2,319       2,815       3,376       (496 )     (18 )     (561 )     (17 )
Commissions for other securities business
    214       215       162       (1 )     (0 )     53       33  
 
                                         
Total
    2,925       3,414       3,965       (489 )     (14 )     (551 )     (14 )
 
                                         
Commissions, broker’s fees, mark-ups on securities underwriting and other securities activities:
                                                       
Underwriting and advisory fees
    1,767       1,341       2,515       426       32       (1,174 )     (47 )
Brokerage fees
    1,682       2,449       2,975       (767 )     (31 )     (526 )     (18 )
 
                                         
Total
    3,449       3,790       5,490       (341 )     (9 )     (1,700 )     (31 )
 
                                         
Fees for other customer services
    2,537       2,537       2,827       0       0       (289 )     (10 )
 
                                         
Total commissions and fee income
    8,911       9,741       12,282       (830 )     (9 )     (2,541 )     (21 )
 
                                         
Commissions and fee income. Total commissions and fee income was € 8.9 billion in 2009, a decrease of € 830 million, or 9 %, compared to 2008. Commissions and fees from fiduciary activities decreased € 489 million compared to the prior year, driven by lower assets under management in AM, as a consequence of the prevailing weak market conditions (mainly in the first nine months of 2009). Underwriting and advisory fees improved by € 426 million, or 32 %, mainly from increased primary issuances as market activity increased across all regions, partly offset by decreased fees from advisory as a result of continued low volumes of market activity. Brokerage fees decreased by € 767 million, or 31 %, primarily driven by lower customer demand in 2009 following the market turbulence in 2008. Fees for other customer services were unchanged compared to 2008.
Net gains (losses) on financial assets available for sale. Net losses on financial assets available for sale were € 403 million in 2009, versus net gains of € 666 million in 2008. The losses in 2009 were primarily attributable to impairment charges related to investments in CB&S and to AM’s real estate business. The net gains in 2008 were mainly driven by gains of € 1.3 billion from the sale of industrial holdings in CI, partly offset by impairment charges in CIB’s sales and trading areas, including a € 490 million impairment loss on available for sale positions.
Net income (loss) from equity method investments. Net income from equity method investments was € 59 million and € 46 million in 2009 and 2008, respectively. In 2009, income from our investment in Deutsche Postbank AG, recorded in CI, was partly offset by impairment charges on certain equity method investments in our commercial real estate business in CB&S. There were no significant individual items included in 2008.

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20-F     Item 5: Operating and Financial Review and Prospects
Other income. Total Other income (loss) was a loss of € 183 million in 2009. The decrease of € 882 million compared to 2008 reflected primarily an impairment charge of € 575 million on The Cosmopolitan Resort and Casino property in 2009 and a lower result from derivatives qualifying for hedge accounting in 2009 compared to 2008.
Noninterest Expenses
The following table sets forth information on our noninterest expenses.
                                                         
                            2009 increase (decrease)     2008 increase (decrease)  
in € m.                           from 2008     from 2007  
(unless stated otherwise)   2009     2008     2007     in € m.     in %     in € m.     in %  
Compensation and benefits
    11,310       9,606       13,122       1,704       18       (3,516 )     (27 )
General and administrative expenses1
    8,402       8,339       8,038       63       1       301       4  
Policyholder benefits and claims
    542       (252 )     193       794       N/M       (445 )     N/M  
Impairment of intangible assets
    (134 )     585       128       (719 )     N/M       457       N/M  
Restructuring activities
                (13 )           N/M       13       N/M  
 
                                         
Total noninterest expenses
    20,120       18,278       21,468       1,842       10       (3,190 )     (15 )
 
                                         
 
N/M — Not meaningful
 
1   Includes:
                                                         
    2009     2008     2007     in € m.     in %     in € m.     in %  
IT costs
    1,759       1,818       1,863       (59 )     (3 )     (45 )     (2 )
Occupancy, furniture and equipment expenses
    1,457       1,434       1,347       23       2       87       6  
Professional service fees
    1,088       1,164       1,257       (76 )     (7 )     (93 )     (7 )
Communication and data services
    672       698       678       (26 )     (4 )     20       3  
Travel and representation expenses
    408       504       554       (96 )     (19 )     (50 )     (9 )
Payment, clearing and custodian services
    406       415       436       (9 )     (2 )     (21 )     (5 )
Marketing expenses
    278       373       411       (95 )     (25 )     (38 )     (9 )
Other expenses
    2,334       1,933       1,492       401       21       441       30  
 
                                         
Total general and administrative expenses
    8,402       8,339       8,038       63       1       301       4  
 
                                         
Compensation and benefits. The increase of € 1.7 billion, or 18 %, in 2009 compared to 2008 reflected a higher variable compensation as a result of improved operating performance. It was also impacted by € 225 million in respect of the bank payroll tax announced by the U.K. government. However, this increase was partially offset by the positive impact of changes to our compensation structure, mainly reflecting an increased proportion of deferred compensation compared with prior periods, in line with the requirements of the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin, German Financial Supervisory Authority) and the guidelines agreed at the G-20 meeting in Pittsburgh in the U.S., in September 2009.
General and administrative expenses. General and administrative expenses increased by € 63 million in 2009 compared to 2008. The development in both years was impacted by specific significant charges. Such charges were higher in 2009 than in 2008. In 2009, these included € 316 million from a legal settlement with Huntsman Corp. and € 200 million related to our offer to repurchase certain products from private investors, both reflected in Other expenses. In 2008, a provision of € 98 million related to the obligation to repurchase Auction Rate Preferred (“ARP”) securities/ Auction Rate Securities (“ARS”) at par from retail clients following a settlement in the U.S. was recorded in Other expenses. Without these specific charges, General and administrative expenses were down in 2009 compared to 2008, mainly from lower expenses for marketing, travel, professional services and IT.

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Policyholder benefits and claims. The charge of € 542 million in the current year, compared to a credit of € 252 million in 2008, resulted primarily from the aforementioned effects from Abbey Life. These insurance-related charges are offset by related net gains on financial assets/liabilities at fair value through profit or loss.
Impairment of intangible assets. Included in 2009 was the reversal of an impairment charge on intangible assets of € 291 million in AM, related to DWS Investments in the U.S. (formerly DWS Scudder), which had been taken in the fourth quarter 2008. Also included were goodwill impairment charges of € 151 million in 2009 and of € 270 million in 2008, which were related to a consolidated RREEF infrastructure investment.
Income Tax Expense
A tax expense of € 244 million was recorded in 2009, compared to an income tax benefit of € 1.8 billion in the prior year. The tax expense in 2009 benefited from the recognition of deferred tax assets in the U.S., which reflects strong current performance and improved income projections of Deutsche Bank entities within that tax jurisdiction, specific tax items including the resolution of tax audits relating to prior years, and tax exempt income. The net tax benefit in 2008 was mainly driven by the geographic mix of income/loss and the valuation of unused tax losses. The effective tax rates were 4.7 % in 2009 and 32.1 % in 2008.
Results of Operations by Segment (2009 vs. 2008)
The following is a discussion of the results of our business segments. See Note [4] to the consolidated financial statements for information regarding
  our organizational structure;
 
  effects of significant acquisitions and divestitures on segmental results;
 
  changes in the format of our segment disclosure;
 
  the framework of our management reporting systems;
 
  consolidating and other adjustments to the total results of operations of our business segments;
 
  definitions of non-GAAP financial measures that are used with respect to each segment, and
 
  the rationale for including or excluding items in deriving the measures.

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20-F     Item 5: Operating and Financial Review and Prospects
The criterion for segmentation into divisions is our organizational structure as it existed at December 31, 2009. Segment results were prepared in accordance with our management reporting systems.
                                                 
    Corporate     Private                            
2009   and     Clients and             Total              
in € m.   Investment     Asset     Corporate     Management     Consolidation &     Total  
(unless stated otherwise)   Bank     Management     Investments     Reporting     Adjustments     Consolidated  
Net revenues
    18,804       8,264       1,044       28,112       (159 )     27,952  
 
                                   
Provision for credit losses
    1,816       806       8       2,630       (0 )     2,630  
 
                                   
Total noninterest expenses
    12,678       6,804       581       20,063       57       20,120  
 
                                   
therein:
                                               
Policyholder benefits and claims
    541                   541       2       542  
Impairment of intangible assets
    5       (291 )     151       (134 )           (134 )
Restructuring activities
                                   
 
                                   
Minority interest
    (2 )     (7 )     (1 )     (10 )     10        
 
                                   
Income (loss) before income taxes
    4,312       660       456       5,428       (226 )     5,202 1
 
                                   
Cost/income ratio
    67 %     82 %     56 %     71 %     N/M       72 %
Assets2
    1,343,824       174,738       28,456       1,491,108       9,556       1,500,664  
Average active equity3
    19,041       8,408       4,323       31,772       2,840       34,613  
Pre-tax return on average active equity4
    23 %     8 %     11 %     17 %     N/M       15 %
 
N/M — Not meaningful
 
1   Includes a gain from the sale of industrial holdings (Daimler AG) of € 236 million, a reversal of impairment of intangible assets (Asset Management) of € 291 million (the related impairment had been recorded in 2008), an impairment charge of € 278 million on industrial holdings and an impairment of intangible assets (Corporate Investments) of € 151 million which are excluded from the Group’s target definition.
 
2   The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on group division level. The same approach holds true for the sum of group divisions compared to ‘Total Consolidated’.
 
3   For management reporting purposes goodwill and other intangible assets with indefinite lives are explicitly assigned to the respective divisions. Average active equity is first allocated to divisions according to goodwill and intangible assets; remaining average active equity is allocated to divisions in proportion to the economic capital calculated for them.
 
4   For the calculation of pre-tax return on average active equity please refer to Note [4]. For ‘Total consolidated’, pre-tax return on average shareholders’ equity is 15% .
                                                 
    Corporate     Private                            
2008   and     Clients and             Total              
in € m.   Investment     Asset     Corporate     Management     Consolidation &     Total  
(unless stated otherwise)   Bank     Management     Investments     Reporting     Adjustments     Consolidated  
Net revenues
    3,201       9,041       1,290       13,532       82       13,613  
 
                                   
Provision for credit losses
    408       668       (1 )     1,075       1       1,076  
 
                                   
Total noninterest expenses
    10,213       7,972       95       18,279       (0 )     18,278  
 
                                   
therein:
                                               
Policyholder benefits and claims
    (273 )     18             (256 )     4       (252 )
Impairment of intangible assets
    5       580             585             585  
Restructuring activities
                                   
 
                                   
Minority interest
    (48 )     (20 )     2       (66 )     66        
 
                                   
Income (loss) before income taxes
    (7,371 )     420       1,194       (5,756 )     15       (5,741) 1
 
                                   
Cost/income ratio
    N/M       88 %     7 %     135 %     N/M       134 %
Assets2
    2,047,181       188,785       18,297       2,189,313       13,110       2,202,423  
Average active equity3
    20,262       8,315       403       28,979       3,100       32,079  
Pre-tax return on average active equity4
    (36) %     5 %     N/M       (20) %     N/M       (18) %
 
N/M — Not meaningful
 
1   Includes gains from the sale of industrial holdings (Daimler AG, Allianz SE and Linde AG) of € 1,228 million, a gain from the sale of the investment in Arcor AG & Co. KG of € 97 million and an impairment of intangible assets (Asset Management) of € 572 million, which are excluded from the Group’s target definition.
 
2   The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on group division level. The same approach holds true for the sum of group divisions compared to ‘Total Consolidated’.
 
3   For management reporting purposes goodwill and other intangible assets with indefinite lives are explicitly assigned to the respective divisions. Average active equity is first allocated to divisions according to goodwill and intangible assets; remaining average active equity is allocated to divisions in proportion to the economic capital calculated for them.
 
4   For the calculation of pre-tax return on average active equity please refer to Note [4]. For ‘Total consolidated’, pre-tax return on average shareholders’ equity is (17) %.

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            Private                            
2007   Corporate     Clients and             Total              
in € m.   and     Asset     Corporate     Management     Consolidation &     Total  
(unless stated otherwise)   Investment Bank     Management     Investments     Reporting     Adjustments     Consolidated  
Net revenues
    19,176       10,129       1,517       30,822       7       30,829  
 
                                   
Provision for credit losses
    109       501       3       613       (1 )     612  
 
                                   
Total noninterest expenses
    13,886       7,560       220       21,667       (199 )     21,468  
 
                                   
therein:
                                               
Policyholder benefits and claims
    116       73             188       5       193  
Impairment of intangible assets
          74       54       128             128  
Restructuring activities
    (4 )     (9 )           (13 )           (13 )
 
                                   
Minority interest
    34       8       (5 )     37       (37 )      
 
                                   
Income (loss) before income taxes
    5,147       2,059       1,299       8,505       243       8,749 1
 
                                   
Cost/income ratio
    72 %     75 %     15 %     70 %     N/M       70 %
Assets2
    1,800,027       156,767       13,005       1,916,304       8,699       1,925,003  
Average active equity3
    20,714       8,539       473       29,725       368       30,093  
Pre-tax return on average active equity4
    25 %     24 %     N/M       29 %     N/M       29 %
 
N/M — Not meaningful
 
1   Includes gains from the sale of industrial holdings (Fiat S.p.A., Linde AG and Allianz SE) of € 514 million, income from equity method investments (Deutsche Interhotel Holding GmbH & Co. KG) of € 178 million, net of goodwill impairment charge of € 54 million, a gain from the sale of premises (sale/leaseback transaction of 60 Wall Street) of € 317 million and an impairment of intangible assets (Asset Management) of € 74 million, which are excluded from the Group’s target definition.
 
2   The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on group division level. The same approach holds true for the sum of group divisions compared to ‘Total Consolidated’.
 
3   For management reporting purposes goodwill and other intangible assets with indefinite lives are explicitly assigned to the respective divisions. Average active equity is first allocated to divisions according to goodwill and intangible assets; remaining average active equity is allocated to divisions in proportion to the economic capital calculated for them.
 
4   For the calculation of pre-tax return on average active equity please refer to Note [4]. For ‘Total consolidated’, pre-tax return on average shareholders’ equity is 24% .

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20-F     Item 5: Operating and Financial Review and Prospects
Group Divisions
Corporate and Investment Bank Group Division
The following table sets forth the results of our Corporate and Investment Bank Group Division (CIB) for the years ended December 31, 2009, 2008 and 2007, in accordance with our management reporting systems.
                         
in € m.                  
(unless stated otherwise)   2009     2008     2007  
Net revenues:
                       
Sales & Trading (equity)
    2,734       (631 )     4,612  
Sales & Trading (debt and other products)
    9,795       116       8,401  
Origination (equity)
    663       334       860  
Origination (debt)
    1,132       (713 )     714  
Advisory
    402       589       1,089  
Loan products
    1,623       1,393       1,067  
Transaction services
    2,606       2,774       2,585  
Other products
    (151 )     (661 )     (151 )
 
                 
Total net revenues
    18,804       3,201       19,176  
 
                 
therein:
                       
Net interest income and net gains (losses) on financial assets/liabilities at fair value through profit or loss
    13,966       (1,027 )     12,278  
 
                 
Provision for credit losses
    1,816       408       109  
 
                 
Total noninterest expenses
    12,678       10,213       13,886  
therein:
                       
Policyholder benefits and claims
    541       (273 )     116  
Impairment of intangible assets
    5       5        
Restructuring activities
                (4 )
 
                 
Minority interest
    (2 )     (48 )     34  
 
                 
Income (loss) before income taxes
    4,312       (7,371 )     5,147  
 
                 
Cost/income ratio
    67 %     N/M       72 %
Assets
    1,343,824       2,047,181       1,800,027  
Average active equity1
    19,041       20,262       20,714  
Pre-tax return on average active equity
    23 %     (36) %     25 %
 
N/M — Not meaningful
 
1   See Note [4] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.
The following paragraphs discuss the contribution of the individual corporate divisions to the overall results of the Corporate and Investment Bank Group Division.

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Corporate Banking & Securities Corporate Division
The following table sets forth the results of our Corporate Banking & Securities Corporate Division (CB&S) for the years ended December 31, 2009, 2008 and 2007, in accordance with our management reporting systems.
                         
in € m.                  
(unless stated otherwise)   2009     2008     2007  
Net revenues:
                       
Sales & Trading (equity)
    2,734       (631 )     4,612  
Sales & Trading (debt and other products)
    9,795       116       8,401  
Origination (equity)
    663       334       860  
Origination (debt)
    1,132       (713 )     714  
Advisory
    402       589       1,089  
Loan products
    1,623       1,393       1,067  
Other products
    (151 )     (661 )     (151 )
 
                 
Total net revenues
    16,197       428       16,591  
 
                 
Provision for credit losses
    1,789       402       102  
 
                 
Total noninterest expenses
    10,874       8,550       12,253  
therein:
                       
Policyholder benefits and claims
    541       (273 )     116  
Impairment of intangible assets
    5       5        
Restructuring activities
                (4 )
 
                 
Minority interest
    (2 )     (48 )     34  
 
                 
Income (loss) before income taxes
    3,537       (8,476 )     4,202  
 
                 
Cost/income ratio
    67 %     N/M       74 %
Assets
    1,308,220       2,011,983       1,785,876  
Average active equity1
    17,881       19,181       19,619  
Pre-tax return on average active equity
    20 %     (44) %     21 %
 
N/M — Not meaningful
 
1   See Note [4] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.
Comparison between 2009 and 2008
Net revenues in 2009 were € 16.2 billion, after mark-downs of € 925 million, versus € 428 million, after mark-downs of € 7.5 billion, in 2008. This development was due predominantly to strong performance in ‘flow’ trading products and the non-recurrence of trading losses recognized in the final quarter of 2008. Both factors reflected a successful reorientation of the sales and trading platform towards customer business and liquid, ‘flow’ products. 2009 revenues additionally benefited from favorable market conditions, including both margins and volumes, particularly in the first half of the year, together with record full-year revenues in Commodities and Emerging Market Debt trading.
Sales & Trading (debt and other products) revenues for the year were € 9.8 billion, compared to € 116 million in 2008. This increase primarily reflects significantly lower mark-downs of € 1.0 billion for the year, compared to € 5.8 billion in 2008, and the non-recurrence of Credit Trading losses of € 3.2 billion, mainly incurred in the fourth quarter of 2008. All ‘flow’ products benefited from wider bid-offer spreads and increased client volumes. Foreign Exchange and Money Markets reported strong revenues, although lower than the record levels seen in 2008. Rates and Emerging Markets generated record revenues, reflecting favorable market conditions. Commodities also had record revenues in 2009. Credit Trading had strong performance following a success-

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ful reorientation towards more liquid, client-driven business, which included the closure of our dedicated credit proprietary trading platform.
Sales & Trading (equity) revenues were € 2.7 billion, compared to negative € 631 million in 2008. The increase was driven by the non-recurrence of losses in Equity Derivatives of € 1.4 billion and in Equity Proprietary Trading of € 742 million, mainly in the fourth quarter 2008. In addition, there was a strong performance across all products, especially Equity Trading. Equity Derivatives performance improved significantly after the first quarter 2009 following the reorientation of the business. Equity Proprietary Trading performed well throughout 2009 with substantially lower risk than in 2008.
Origination and Advisory revenues were € 2.2 billion, an increase of € 2.0 billion versus 2008. This increase was mainly in debt origination, and reflected the non-recurrence of net mark-downs of € 1.7 billion on leveraged loans and loan commitments in the prior year, compared with net mark-ups of € 103 million in the current year. Equity origination revenues grew substantially by € 328 million to € 663 million as market activity increased across all regions. Advisory revenues decreased by € 187 million, or 32 %, as global volumes declined from the prior year and were at the lowest level since 2004.
Loan products net revenues were € 1.6 billion, an increase of € 230 million, or 17 %, versus 2008, mainly driven by mark-to-market gains on the investment grade fair value loan and hedge portfolio in the current year, compared with unrealized net mark-to-market losses in 2008.
Other products revenues were negative € 151 million, an increase of € 511 million over 2008. This development was driven by mark-to-market gains on investments held to back insurance policyholder claims in Abbey Life, partly offset by an impairment charge of € 500 million relating to The Cosmopolitan Resort and Casino property and losses on private equity investments recorded in the first quarter 2009.
The provision for credit losses was € 1.8 billion, versus € 402 million in 2008. The increase primarily reflected provisions for credit losses related to Leveraged Finance assets which had been reclassified in accordance with the amendments to IAS 39, together with additional provisions as a result of deteriorating credit conditions, predominantly in Europe and the Americas.
Noninterest expenses increased € 2.3 billion, or 27 %, to € 10.9 billion. The increase mainly reflects higher performance-related compensation in line with improved results and effects from Abbey Life. In addition, noninterest expenses included charges of € 200 million related to the bank’s offer to repurchase certain products from private investors in the third quarter 2009, and of € 316 million related to a legal settlement with Huntsman Corp. recorded in the second quarter 2009. These were partly offset by savings from cost containment measures and lower staff levels.

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Amendments to IAS 39 and IFRS 7, “Reclassification of Financial Assets”
Under the amendments to IAS 39 and IFRS 7 issued in October 2008, certain financial assets were reclassified in the second half of 2008 and the first quarter of 2009 from the financial assets at fair value through profit or loss and the available for sale classifications into the loans classification. The reclassifications were made in instances where management believed that the expected repayment of the assets exceeded their estimated fair values, which reflected the significantly reduced liquidity in the financial markets, and that returns on these assets would be optimized by holding them for the foreseeable future. Where this clear change of intent existed and was supported by an ability to hold and fund the underlying positions, we concluded that the reclassifications aligned the accounting more closely with the business intent. Assets that were reclassified in the third quarter 2008 were reclassified with effect from July 1, 2008 at the fair value as of that date. Where the business decision to reclassify was made by November 1, 2008 and these assets met the reclassification rules and the Group’s internal reclassification criteria, the reclassifications were made with effect from October 1, 2008 at the fair value of that date. Business decisions to reclassify assets after November 1, 2008 were made on a prospective basis at fair value on the date reclassification was approved.
The tables below show the net contribution of the reclassification accounting for CB&S. The tables show that the reclassifications resulted in € 273 million losses to the income statement and € 1.2 billion gains foregone in net gains (losses) not recognized in the income statement for 2009. For the full year 2008, the reclassifications resulted in € 3.3 billion gains to the income statement and € 1.8 billion gains to net gains (losses) not recognized in the income statement. The consequential effect on credit market risk disclosures is provided in “Update on Key Credit Market Exposures”.
                                 
2009 impact of the reclassifications   Dec 31, 2009     Year ended Dec 31, 2009  
                            Impact on net  
                    Impact on     gains (losses) not  
          income before     recognized in the  
    Carrying value     Fair value     income taxes     income statement  
    in € bn.     in € bn.     in € m.     in € m.  
Sales & Trading — Debt
                               
Trading assets reclassified to loans
    18.2       15.9       407        
Financial assets available for sale reclassified to loans
    9.3       8.2       (16 )     (1,102 )
Origination and Advisory
                               
Trading assets reclassified to loans
    6.1       5.7       (664 )      
Loan products
                               
Financial assets available for sale reclassified to loans
                      (114 )1
 
                       
Total
    33.6       29.8       (273) 2     (1,216 )
 
                       
of which related to reclassifications made in 2008
    30.7       27.1       (472 )     (1,216 )
of which related to reclassifications made in 2009
    2.9       2.7       199        
 
1   The negative amount shown as the annual movement in net gains (losses) not recognized in the income statement is due to an instrument being impaired in the year. The decrease in fair value since reclassification that would have been recorded in equity would then be removed from equity and recognized through the income statement.
 
2   In addition to the impact in CB&S, income before income taxes increased by € 18 million in PBC.

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Table of Contents

20-F     Item 5: Operating and Financial Review and Prospects
                                 
2008 impact of the reclassifications   Dec 31, 2008     Year ended Dec 31, 2008  
                            Impact on net  
                    Impact on     gains (losses) not  
                    income before     recognized in the  
    Carrying value     Fair value     income taxes     income statement  
    in € bn.     in € bn.     in € m.     in € m.  
Sales & Trading — Debt
                               
Trading assets reclassified to loans
    16.2       14.3       2,073        
Financial assets available for sale reclassified to loans
    10.5       8.5       121       1,712  
Origination and Advisory
                               
Trading assets reclassified to loans
    7.4       6.4       1,101        
Loan products
                               
Financial assets available for sale reclassified to loans
    0.3       0.1             114  
 
                       
Total
    34.4       29.3       3,295 1     1,826  
 
                       
 
1   In addition to the impact in CB&S, income before income taxes increased by € 32 million in PBC.
The assets reclassified included funded leveraged finance loans with a fair value on the date of reclassification of € 7.5 billion which were entered into as part of an “originate to distribute” strategy. Assets with a fair value on the date of reclassification of € 9.4 billion were contained within consolidated asset backed commercial paper conduits at reclassification date. Commercial real estate loans were reclassified with a fair value on the date of reclassification of € 9.1 billion. These loans were intended for securitization at their origination or purchase date. The remaining reclassified assets, which comprised other assets principally acquired or originated for the purpose of securitization, had a fair value of € 11.9 billion on the reclassification date.
Update on Key Credit Market Exposures
The following is an update on the development of certain key credit positions (including protection purchased from monoline insurers) of those CB&S businesses on which we have previously provided additional risk disclosures.
Mortgage Related Exposure: We have mortgage related exposures through a number of our businesses, including our CDO trading and origination and U.S. and European mortgage businesses. The following table presents the mortgage related exposure from the businesses described, net of hedges and other protection purchased.
                 
Mortgage related exposure in our CDO trading and origination,