Part of the Consolidated Financial Statements as of 31 December 2009; audited by KPMG AG Wirtschaftsprüfungsgesellschaft.

[1] Significant Accounting Policies


Basis of Accounting

Deutsche Bank Aktiengesellschaft (“Deutsche Bank” or the “Parent”) is a stock corporation organized under the laws of the Federal Republic of Germany. Deutsche Bank together with all entities in which Deutsche Bank has a controlling financial interest (the “Group”) is a global provider of a full range of corporate and investment banking, private clients and asset management products and services. For a discussion of the Group’s business segment information, see Note [4].

The accompanying consolidated financial statements are stated in euros, the presentation currency of the Group. All financial information presented in million euros has been rounded to the nearest million. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and endorsed by the European Union (“EU”). The Group’s application of IFRS results in no differences between IFRS as issued by the IASB and IFRS as endorsed by the EU. In accordance with IFRS 4, “Insurance Contracts”, the Group has applied its previous accounting practices (U.S. GAAP) for the measurement of insurance contracts.

Risk disclosures under IFRS 7, “Financial Instruments: Disclosures” about the nature and extent of risks arising from financial instruments are incorporated herein by reference to the portions marked by a bracket in the margins of the Risk Report.

The preparation of financial statements under IFRS requires management to make estimates and assumptions for certain categories of assets and liabilities. Areas where this is required include the fair value of certain financial assets and liabilities, the allowance for loan losses, the impairment of assets other than loans, goodwill and other intangibles, the recognition and measurement of deferred tax assets, provisions for uncertain income tax positions, legal and regulatory contingencies, reserves for insurance and investment contracts, reserves for pensions and similar obligations. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from management’s estimates. Refer to Note [2] for a description of the critical accounting estimates and judgments used in the preparation of the financial statements.

The Group applies estimates in determining the allowance for loan losses in its homogeneous loan portfolio which use statistical models based on historical experience. On a regular basis the Group performs procedures to align input parameters and model assumptions with historically evidenced loss levels which led to a lower level of provisions for credit losses of € 145.8 million for the 2009 reporting period.

In preparation of the 2009 and 2008 financial statements, the Group made a number of minor adjustments, with immaterial effect, to prior year footnote disclosures. The Group has assessed the impact of errors on current and prior periods and concluded that the following described adjustments are required to comparative amounts or the earliest opening balance sheet. The Group also voluntarily elected to change its accounting policy for the recognition of actuarial gains and losses related to post-employment benefits.

 

Balance (as reported)

Change in accounting policy

Adjustments

Balance (adjusted)

in Mio €

 

Defined benefit plan 
accounting

LCH  Offsetting

Interest

Income tax liabilities

Financial guarantees

Clearing
and settle-
ment fees

 

Dec 31, 2007

 

 

 

 

 

 

 

 

Income Statement

 

 

 

 

 

 

 

 

Interest and similar income

67,706

 

 

(3,031)

 

 

 

64,675

Interest expense

58,857

 

 

(3,031)

 

 

 

55,826

Commissions and fee income

12,289

 

 

 

 

 

(7)

12,282

Other income

1,286

 

 

 

 

91

 

1,377

General and administrative expenses

7,954

 

 

 

 

91

(7)

8,037

Balance Sheet

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

Financial assets at fair value through profit or loss

1,474,103

 

(96,092)

 

 

 

 

1,378,011

Deferred tax assets

4,772

5

 

 

 

 

 

4,777

Other assets

182,897

741

 

 

 

 

 

183,638

Liabilities:

 

 

 

 

 

 

 

 

Financial liabilities at fair value through profit or loss

966,177

 

(96,092)

 

 

 

 

870,085

Other liabilities

171,509

(65)

 

 

 

 

 

171,444

Liabilities for current tax

4,515

 

 

 

(294)

 

 

4,221

Deferred tax liabilities

2,124

256

 

 

 

 

 

2,380

Equity:

 

 

 

 

 

 

 

 

Retained earnings

25,116

570

 

 

365

 

 

26,051

Net gains (losses) not recognized in the income statement:

 

 

 

 

 

 

 

 

Foreign currency translation, net of tax

(2,450)

(15)

 

 

(71)

 

 

(2,536)

 

 

 

 

 

 

 

 

 

2008

 

 

 

 

 

 

 

 

Commissions and fee income

9,749

 

 

 

 

 

(8)

9,741

Other income

568

 

 

 

 

131

 

699

General and administrative expenses

8,216

 

 

 

 

131

(8)

8,339

Employee Benefits: Defined Benefit Accounting

In the fourth quarter 2008, the Group changed its accounting policy for the recognition of actuarial gains and losses related to post-employment benefits for defined benefit plans. The Group has elected to voluntarily change its accounting policy from the corridor approach to immediate recognition of actuarial gains and losses in shareholders’ equity in the period in which they arise. In accordance with IFRS, the change was applied retrospectively. The change in accounting policy is considered to provide more relevant information about the Group’s financial position, as it recognizes economic events in the period in which they occur. The retrospective adjustments had an impact on the consolidated balance sheet and the consolidated statement of recognized income and expense but not on the consolidated statement of income or consolidated cash flow statement.

Offsetting

In the second quarter 2008, the Group concluded that it meets the criteria required to offset the positive and negative market values of OTC interest rate swaps transacted with the London Clearing House (“LCH”). Under IFRS, positions are netted by currency and across maturities. The application of offsetting had no net impact on the consolidated income statement or shareholder’s equity.

The presentation of interest and similar income and interest expense was adjusted with no impact on net interest income or on shareholders’ equity.

Adjustment of Current Tax Liability

In the fourth quarter 2008, the Group determined that it had continued to report tax liabilities for periods prior to 2006 which were not required. Current tax liabilities were retrospectively adjusted by the amounts in the table above, with related adjustments to opening retained earnings and opening foreign currency translation reserves where appropriate.

Financial Guarantees

In the second quarter 2009 retrospective adjustments were made in the income statement to present premiums paid for financial guarantees as expenses instead of offsetting them against revenues because they are not directly related to a revenue generating activity. The adjustment did not have any impact on net income or shareholders’ equity but resulted in an increase of both noninterest income and noninterest expenses.

Significant Accounting Policies

The following is a description of the significant accounting policies of the Group. Other than as previously and otherwise described, these policies have been consistently applied for 2007, 2008 and 2009.

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