The Group utilizes various lending-related commitments in order to meet the financing needs of its customers. The contractual amount of these commitments is the maximum amount at risk for the Group if the customer fails to meet its obligations. Off-balance sheet credit risk amounts are determined without consideration of the value of any related collateral and reflect the total potential loss on undrawn commitments. The table below summarizes our lending-related commitments:
| in € m. | Dec 31, 2003 | Dec 31, 2002 |
| Commitments to extend credit | ||
| Fixed rates1 | 22,318 | 21,724 |
| Variable rates2 | 66,566 | 81,802 |
| 1 | Includes commitments to extend commercial letters of credit and guarantees of € 2.3 billion and € 2.2 billion at December 31, 2003 and 2002, respectively. |
| 2 | Includes commitments to extend commercial letters of credit and guarantees of € 833 million and € 1.3 billion at December 31, 2003 and 2002, respectively. |
In addition, as of December 31, 2003, commitments to enter into reverse repurchase and repurchase agreements totaled € 39.3 billion and € 23.5 billion, respectively. Commitments to enter into reverse repurchase and repurchase agreements amounted to € 38.1 billion and € 21.8 billion, respectively, as of December 31, 2002.
As of December 31, 2003 and 2002 the Group had commitments to contribute capital to equity method and other investments totaling € 399 million and € 829 million, respectively.
In connection with building leases, Group companies entered into commitments to purchase premises at the termination of the underlying contracts. The total obligation, primarily based on the estimated market values at termination date in the years 2019, 2020 and 2026 amounts to € 234 million.
The Group also enters regularly into various guarantee and indemnification agreements in the normal course of business. Probable losses under financial guarantees are provided for as part of the allowance for credit losses on lending-related commitments as shown in Note 8. The principal guarantees and indemnifications that the Group enters into are the following:
Financial guarantees, standby letters of credit and performance guarantees, with a carrying amount of € 666 million and € 610 million and with maximum potential payments of € 23.8 billion and € 32.6 billion as of December 31, 2003 and 2002, respectively, generally require the Group to make payments to the guaranteed party based on another’s failure to meet its obligations or to perform under an obligating agreement. Most of these guarantees (€ 14.8 billion) mature within five years, for € 1.9 billion the duration is more than five years and € 7.1 billion have revolving terms. These guarantees are collateralized with cash, securities and other collateral of € 5.5 billion and € 5.4 billion as of December 31, 2003 and 2002, respectively.
Market value guarantees with a carrying amount of € 9 million as of December 31, 2002 consist of agreements to pay customers if the value of mutual fund units purchased fall below a certain amount. The maximum amount of potential payments as of December 31, 2002 was € 13.5 billion and represented the total volume guaranteed of the respective funds. These guarantees have revolving terms and generally are not collateralized. The mutual funds to which these guarantees relate are consolidated effective July 1, 2003 with the application of FIN 46. The Group now records a liability on the Consolidated Balance Sheet related to the assets of these mutual funds.
Upon exercise, written put options effectively require the Group to pay for a decline in market value related to the counterparty's underlying asset or liability. The carrying amount and maximum potential payments of written puts as of December 31, 2003 was € 4.9 billion and € 66.2 billion, respectively. The carrying amount and maximum potential payments of written puts as of December 31, 2002, was € 10.4 billion and € 64.5 billion, respectively. More than half of the puts (€ 35.1 billion) mature within one year, € 20.7 billion have remaining exercise periods of more than one and up to five years and € 10.4 billion have remaining terms of more than five years. Additionally, credit derivatives requiring payment by the Group in the event of default of debt obligations have a carrying and maximum potential payment amount of € 1 million and € 53 million, respectively, related to negative market values and € 588 million and € 2.3 billion, respectively, related to positive market values. Nearly all credit derivatives have remaining terms of one to five years. These contracts are typically uncollateralized.
Securities lending indemnifications require the Group to indemnify customers for the replacement costs or market value of securities loaned to third parties in the event the third parties fail to return the securities. These indemnifications had a maximum potential payment amount of € 45.3 billion and € 46.1 billion, at December 31, 2003 and 2002, respectively, with contract terms up to 6 months. The Group primarily receives cash as collateral in excess of the contract amounts. This collateral totaled € 45.9 billion and € 46.6 billion at December 31, 2003 and 2002, respectively.