We have business relationships with a number of the companies in which we own significant equity interests. We also have business relationships with a number of companies where members of our Board of Managing Directors also hold positions on boards of directors. Our business relationships with these companies cover many of the financial services we provide to our clients generally.
We believe that we conduct all of our business with these companies on terms equivalent to those that would exist if we did not have equity holdings in them or management members in common, and that we have conducted business with these companies on that basis in 2003 and prior years. None of these transactions is or was material to us.
Among our business with related party companies in 2003 there have been and currently are loans, guarantees and commitments. All of these lending-related credit exposures (excluding derivatives ), which totaled € 3.9 billion (of which € 2.4 billion related to our equity method investment in EUROHYPO AG) as of February 29, 2004- were made in the ordinary course of business;
- were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons; and
- did not involve more than the normal risk of collectability or present other unfavorable features.
We have not conducted material business with parties that fall outside of the definition of related parties, but with whom we or our related parties have a relationship that enables the parties to negotiate terms of material transactions that may not be available from other, more clearly independent, parties on an arm’s-length basis.
Aside from our other shareholdings, we hold acquired equity interests in some of our clients arising from our efforts to protect our then-outstanding lending exposures to them.
The table below shows information on loans to related party companies that we have classified as nonaccrual as of December 31, 2003. As such, these loans may exhibit more than normal risk of collectability or present other unfavorable features. We hold a significant portion of the outstanding equity interests in customers C, D and E noted below and account for these equity interests in our financial statements using the equity method of accounting (as described in Note linktype=to the consolidated financial statements). Our participating interests in customer A, B and F are 10% or more of their voting rights.
in € m. |
Amount outstanding as of February 29, 2004 | Largest amount outstanding January 1, 2003 to February 29, 2004 |
Nature of the loan and transaction in which incurred |
| Customer A | 45 | 45 |
Comprised of six loans totaling € 27 million payable on demand, each bearing interest at 4.33% per annum, two export financings totaling € 10 million, each bearing interest at 4.07% per annum, maturing on December 31, 2004, and one refinancing of a sale-leaseback transaction of € 8 million bearing interest at 3.46% per annum maturing on January 31, 2027. Interest accrual has been stopped. |
| Customer B | 97 | 97 |
Loans (primarily real estate finance and drawn guarantees). The company is in liquidation and the loans are payable on demand. Interest accrual has been stopped. |
| Customer C | 9 | 9 |
Comprised of two loans for which we have demanded repayment and stopped accruing interest. € 8 million relates to a sale-leaseback transaction. |
| Customer D | 89 | 114 |
Project finance loan maturing December 31, 2007. Interest accrual has been stopped. |
| Customer E | 18 | 21 |
Comprised of € 16 million commercial corporate loan rolled over at 90 day periods and € 2 million short-term cash loan. Interest accrual has been stopped for both. |
| Customer F | 4 | 4 |
Comprised of two loans payable on demand for which interest accrual has been stopped. |