CORPORATE BANKING & SECURITIES (CB&S)

2008 TO 2007 THREE MONTHS COMPARISON

Our SALES & TRADING businesses suffered from the sharp deterioration in market conditions, especially in late September following the bankruptcy filing by Lehman Brothers. As market conditions deteriorated, a number of market participants, including hedge funds, were forced to sell-down substantial positions in assets such as convertibles, investment-grade and high-yield bonds, default swaps and long-short equity strategies. These market conditions have continued in the fourth quarter of the year.

In this challenging environment, we marked down positions in our Credit Proprietary Trading and Equities Proprietary Trading (“EPT”) books to significantly lower levels. Proprietary positions have been reduced in size, particularly in EPT, although market liquidity was not sufficient for us to eliminate risk in all cases and we remain exposed to further deterioration in prices for these positions.

SALES & TRADING (DEBT AND OTHER PRODUCTS) generated revenues of € 924 million in the third quarter 2008 versus € 576 million in the third quarter 2007. If the reclassifications, in accordance with the amendments to IAS 39, had not been made, the income statement for the third quarter would have included negative fair value adjustments of € 527 million. The third quarter 2008 included trading losses of € 873 million in our Credit Proprietary Trading business. In addition, we had further mark-downs of € 705 million, which related to residential mortgage-backed securities (€ 202 million), commercial real estate loans (€ 163 million), further provisions against monoline insurers (€ 255 million) and impairment losses on available for sale positions (€ 85 million). The third quarter of 2007 included mark-downs of € 1.6 billion.

Revenues excluding mark-downs and proprietary trading losses remained robust given the difficult market environment. In our credit business, revenues have fallen year-on-year driven by a reduction in structured product activity. Revenues in foreign exchange, money markets and interest rate products were a record for a third quarter, due to both exceptionally strong client flows and favorable positioning.

SALES & TRADING (EQUITY) revenues were negative € 142 million in the third quarter 2008, a decrease of € 570 million versus the same quarter 2007. The decrease was primarily driven by losses in Equities Proprietary Trading of € 386 million. Revenues from equity derivatives were materially lower than in the third quarter 2007 due to lower customer activity in structured products and continued market dislocation in correlation and volatility. Performance was more robust in our other customer-facing equities businesses. Our prime brokerage business gained significant net new balances from hedge funds.

ORIGINATION AND ADVISORY generated revenues of negative € 99 million in the third quarter 2008 compared with positive € 148 million in the third quarter 2007. If the reclassifications, in accordance with the amendments to IAS 39, had not been made, the income statement for the third quarter would have included negative fair value adjustments of € 312 million, which were partly offset by a reduction of € 146 million in interest income on these assets transferred from Origination and Advisory to Loan Products. The reduction in revenues resulted from the continued weakness in the advisory and especially the financing markets. Volumes were significantly down versus the same period in 2007 as activity continued to be affected by credit market conditions. Although Advisory revenues decreased consistent with the decline in the overall market, we increased global market share of fees and saw our ranking rise to number five in the third quarter. We also achieved the number one position year-to-date in EMEA by fee market share, driven by our participation in major deals throughout 2008. In Origination (Equity), very challenging market conditions resulted in significantly reduced volumes with the market dominated by a few large transactions. In Origination (Debt), Investment Grade revenues decreased in a slowing market where the volatility hindered public bond execution. Overall, Origination (Debt) revenues were negatively impacted by limited new issuance in leveraged finance where very few large scale deals are possible. However, we continued to underwrite deals in the third quarter 2008 and the reduction of our leveraged finance commitment backlog is continuing with significant progress. We recorded mark-to-market losses, net of fees, of € 467 million against leveraged finance loans and loan commitments during the third quarter, compared to € 603 million in the prior year quarter. (Sources for all rankings, market volume and fee pool data: Thomson Reuters, Dealogic)

LOAN PRODUCTS revenues were € 500 million for the third quarter 2008, an increase of € 286 million, or 134 %, from the same period last year. The effect of the reclassifications in accordance with the amendments to IAS 39, “Reclassification of Financial Assets”, was to increase interest income by € 146 million on assets that were transferred from Origination and Advisory to Loan Products. The remaining increase was driven by net mark-to-market gains across the investment grade loan portfolio together with the associated hedges.

OTHER PRODUCTS revenues were negative € 167 million in the third quarter 2008, a decrease of € 66 million, or 65 %, compared to the prior year quarter. This mainly results from mark-to-market losses on investments held to back insurance policyholder claims in Abbey Life, which was acquired in the fourth quarter 2007. This effect is offset by policyholder benefits and claims in noninterest expenses and therefore has no overall impact on our net income.

In PROVISION FOR CREDIT LOSSES, CB&S recorded a net charge of € 66 million in the third quarter 2008 compared to a net release of € 17 million in the prior year quarter. The provision for credit losses related to assets which had been reclassified in accordance with IAS 39 amounted to € 72 million.

NONINTEREST EXPENSES were € 1.8 billion in the third quarter 2008, an increase of 21 %, or € 305 million, compared to the third quarter 2007. The increase primarily reflects a net release in the third quarter 2007 to partially reverse performance-related compensation accruals made during the first half of 2007.

INCOME (LOSS) BEFORE INCOME TAXES in CB&S was a loss of € 789 million in the third quarter 2008, compared to a loss of € 179 million in the prior year quarter.

2008 TO 2007 NINE MONTHS COMPARISON

In the first nine months of the year, SALES & TRADING (DEBT AND OTHER PRODUCTS) revenues were € 2.8 billion, a decrease of € 4.0 billion, or 58 %, versus the first nine months of 2007. The decline in revenues was primarily due to mark-downs on holdings of residential mortgage-backed securities and commercial real estate loans, further provisions against monoline insurers, and impairment losses on available for sale positions. Revenues included mark-downs of € 3.6 billion (first quarter € 885 million, second quarter € 2.1 billion and third quarter € 705 million), compared to € 1.6 billion in the prior year period. However, underlying customer activity remained strong. We experienced growth in revenues in foreign exchange, money markets and interest rates, which was partially offset by lower revenues in credit and residential mortgage-backed securities trading and proprietary trading losses.

In the first nine months of 2008, SALES & TRADING (EQUITY) generated revenues of € 1.4 billion, a decrease of € 2.1 billion, or 60 %, compared to the same period last year. In equity derivatives, revenues decreased year-on-year due to ongoing challenges in correlation trading and lower volumes in structured products. Revenues from cash equities trading grew in the Americas, but declined in Asia and Europe. Our prime brokerage business benefited from significant new securities balances from both existing and new clients, although revenue growth was hampered by the lower leverage employed by most hedge fund clients.

ORIGINATION AND ADVISORY generated negative revenues of € 878 million in the first nine months of 2008 compared to positive revenues of € 1.8 billion in the first nine months of 2007. The first nine months of 2008 included mark-to-market losses, net of fees, of € 2.4 billion against leveraged finance loans and loan commitments, compared to € 715 million in the prior year period. In addition, overall weakness in the advisory and financing markets led to a significant decrease in new business volume compared to the first nine months of 2007.

LOAN PRODUCTS revenues were € 1.1 billion in the first nine months of 2008, a € 304 million, or 41 %, increase on the same period last year. The increase was largely driven by net mark-to-market gains across the investment grade loan portfolio together with the associated hedges, and interest income on assets transferred from Origination and Advisory to Loan Products as a result of reclassifications in accordance with the amendments to IAS 39, “Reclassification of Financial Assets”.

OTHER PRODUCTS revenues were negative € 373 million in the first nine months of 2008, a decrease of € 111 million compared to the same period last year. This mainly results from mark-to-market losses on investments held to back insurance policyholder claims in Abbey Life. This effect is offset by policyholder benefits and claims in noninterest expenses and consequently has no impact on profitability.

CB&S recorded a net charge of € 44 million in PROVISION FOR CREDIT LOSSES in the first nine months of 2008, compared to a net release of € 80 million in the first nine months of 2007.

CB&S’s NONINTEREST EXPENSES of € 6.8 billion in the first nine months of 2008 were € 2.2 billion, or 25 %, lower than in the first nine months of the prior year. The decrease primarily reflects lower performance-related compensation in line with business results.

INCOME (LOSS) BEFORE INCOME TAXES in CB&S was a loss of € 2.7 billion in the first nine months of 2008, compared to income of € 3.8 billion in the first nine months of 2007.

AMENDMENTS TO IAS 39 AND IFRS 7, “RECLASSIFICATION OF FINANCIAL ASSETS”

The results in the current quarter were significantly impacted by the application of the amendments to IAS 39 and IFRS 7, “Reclassification of Financial Assets” which were approved by the IASB and endorsed by the EU in October 2008. These amendments align IFRS with U.S. GAAP by permitting certain reclassifications out of trading assets and financial assets available for sale after initial recognition.

We identified assets, eligible under the amendments, for which at July 1, 2008, we had a clear change of intent to hold for the foreseeable future rather than to exit or trade in the short term. In these instances, management believes the intrinsic value of the assets exceeds their estimated fair value, which has been significantly adversely impacted by the reduced liquidity in the financial markets. Management believes returns on these assets will be optimized by holding them for the foreseeable future rather than through exit in the short term. The reclassifications align more closely the accounting with the business intent.

Under the terms of the amendments, we made the reclassifications with effect from July 1, 2008, at fair value on that date. All reclassifications were to loans.

The impacts of these reclassifications for CIB are summarized in the following table. The consequential impacts on credit market risk disclosures provided in this management report are discussed in the appropriate sections.

Of the amount reclassified to loans, € 7.1 billion related to funded leveraged finance loans which were entered into as part of an originate to distribute strategy. € 9.5 billion related to assets contained within consolidated asset backed commercial paper conduits. The remainder relates primarily to assets which were acquired or originated with the intent to trade or exit through securitization.

UPDATE ON KEY CREDIT MARKET EXPOSURES

Ongoing market dislocations and illiquidity in the credit markets may continue to impact the exposure to fair value changes in our profit and loss account (“P&L”) on the remaining risk positions classified as trading assets (including protection purchased from monoline insurers) of those CB&S businesses that have been heavily impacted by the global credit crisis. These businesses are primarily those relating to credit structuring, residential mortgages, commercial real estate and leveraged finance. The following paragraphs summarize what we consider to be the most significant positions exposed to fair value movements through the P&L as of the end of the third quarter of 2008. Assets reclassified to loans under the amendments to IAS 39 have been excluded from the analysis as they no longer create fair value movements through the P&L.

CDO TRADING AND ORIGINATION BUSINESSES: The following table outlines the overall U.S. subprime residential mortgage-related exposures in our CDO trading businesses as of September 30, 2008 and June 30, 2008.

The table above excludes both new exposures entered into in 2008, which were transacted at market rates and have a fair value of € 938 million, and loans accounted for on an amortized cost basis of € 9.7 billion. Included in the loans accounted for on an amortized cost basis are assets that were reclassified from trading to loans and receivables under the provisions of the amended IAS 39, “Reclassification of Financial Assets”, with an effective transfer date of July 1, 2008. The impact of the transfer was to reduce our trading loans subject to fair value movements through the P&L as of September 30, 2008 by € 8.1 billion (gross) and to increase our loans accounted for on an amortized cost basis by a corresponding amount.

During the second and third quarter of 2008, we entered into transactions with three Special Purpose Entities to derecognize certain, predominantly U.S. leveraged loans and commercial real estate loans that were held at fair value through profit or loss. Please refer to Special Purpose Entities and Off-Balance Sheet Arrangements for more information.

GLOBAL TRANSACTION BANKING (GTB)

2008 TO 2007 THREE MONTHS COMPARISON

GTB generated third quarter NET REVENUES of € 692 million, an increase of € 31 million, or 5 %, versus the same period last year. The increase was mainly related to Trade Finance and was driven by higher volumes in the documentary business and a stronger guarantee business in Asia/Pacific and Europe. Cash Management also generated higher revenues, resulting from significantly increased transaction volumes in both the Euro and U.S. dollar clearing business.

In PROVISION FOR CREDIT LOSSES, no charge was recorded in the third quarter 2008, compared to a net release of € 2 million in the same quarter of the previous year.

NONINTEREST EXPENSES were € 410 million in the third quarter 2008, up € 11 million, or 3 %, compared to the same quarter last year. This development was mainly driven by an increase in staff levels as well as higher transaction-related costs.

INCOME BEFORE INCOME TAXES was a record third quarter of € 281 million, an increase of € 18 million, or 7 %, compared to the prior year quarter.

2008 TO 2007 NINE MONTHS COMPARISON

GTB’s NET REVENUES for the first nine months of 2008 were € 2.0 billion, an increase of € 95 million, or 5 %, compared to the first nine months of 2007. This increase was predominantly attributable to the Trade Finance and Cash Management businesses. The revenue increase in Trade Finance was mainly due to higher volumes in the documentary business as well as a stronger guarantee business in Asia/Pacific, Europe, and the Americas. Higher Cash Management-related revenues were mainly driven by increased transaction volumes in the Euro clearing business.

In PROVISION FOR CREDIT LOSSES, a net charge of € 2 million was recorded in the first nine months of 2008, compared to a net release of € 1 million in the first nine months of 2007.

NONINTEREST EXPENSES were € 1.2 billion in the first nine months of 2008, in line with the prior year period. Higher costs from increased staff numbers in order to support further business growth were effectively offset by cost containment measures, efficiency improvements and lower performance-related compensation.

INCOME BEFORE INCOME TAXES rose by € 91 million, or 13 %, versus the first nine months of 2007 to € 815 million.