Balance Sheet Management

We manage our balance sheet on a Group level and, where applicable, locally in each region. In the allocation of financial resources we favor business portfolios with the highest positive impact on our profitability and shareholder value. Our balance sheet management function within Finance has the mandate to monitor and analyze balance sheet developments and to track certain market observed balance sheet ratios. Based on this we trigger discussion and management action by the Capital and Risk Committee. While we monitor IFRS balance sheet developments, our balance sheet management is principally focused on U.S. GAAP pro-forma values as used in our leverage ratio target definition. As of June 30, 2010, we kept our leverage ratio according to our target definition at 23, unchanged to the year end 2009 level, and well below our leverage ratio target of 25, with the observed increase in our U.S. GAAP pro-forma assets being fully compensated by higher adjusted equity. The leverage ratio according to our target definition is calculated using adjusted total assets and total equity figures. Our leverage ratio calculated as the ratio of total assets under IFRS to total equity under IFRS was 45 at June 30, 2010, compared to 40 at the end of 2009, along with the increase in total assets under IFRS. For a tabular presentation of our leverage ratios and the adjustments taken for the U.S. GAAP pro-forma values please see chapter “Leverage Ratio (Target Definition)” in section “Other Information”.

Service Functions

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