Amendments to IAS 39 and IFRS 7, “Reclassification of Financial Assets”

 (unaudited)

During the second half of 2008 and the first quarter 2009 the Group reclassified certain trading assets and financial assets available for sale to loans and receivables. No reclassifications were made during the first half 2010.

The Group identified assets, eligible under the amendments, for which at the reclassification date it had a clear change of intent and ability to hold for the foreseeable future rather than to exit or trade in the short term. The reclassifications were made at the fair value of the assets at the reclassification date. The disclosures below detail the impact of the reclassifications to the Group.

The carrying values and the fair values of assets reclassified in 2008 and 2009 are shown in the table below.

 

Cumulative reclassifications
through Jun 30, 2010

Cumulative reclassifications
through Jun 30, 2009

 

Carrying value at reclassifi-
cation date

Jun 30, 2010

Carrying value at reclassifi-
cation date

Jun 30, 2009

in € m.

Carrying value
 

Fair value

Carrying value

Fair value

1

The decline of the carrying values since reclassification was mainly attributable to repayments, credit loss provisions and sales.

Trading assets reclassified to loans

26,594

24,223

21,738

26,594

25,502

21,638

Financial assets available for sale reclassified to loans

11,354

9,683

8,726

11,354

10,335

8,245

Total financial assets reclassified to loans

37,948

33,9061

30,464

37,948

35,837

29,883

The following table shows the ranges of effective interest rates based on weighted-average rates by business and the expected recoverable cash flows estimated at reclassification date.

 

Cumulative reclassifications
through Jun 30, 2010

Cumulative reclassifications
through Jun 30, 2009

in € bn.
(unless stated otherwise)

Trading assets reclassified to loans

Financial assets available for sale reclassi-
fied to loans

Trading assets reclassified to loans

Financial assets available for sale reclassi-
fied to loans

Effective interest rates at reclassification date:

 

 

 

 

upper end of range

13.1 %

9.9 %

13.1 %

9.9 %

lower end of range

2.8 %

3.9 %

2.8 %

3.9 %

Expected recoverable cash flows at reclassification date

39.6

17.6

39.6

17.6

The unrealized fair value gains (losses) and net gains (losses) not recognized in the income statement if the reclassifications had not been made are shown in the table below.

 

Three months ended

Six months ended

in € m.

Jun 30, 2010

Jun 30, 2009

Jun 30, 2010

Jun 30, 2009

Unrealized fair value gains (losses) on the reclassified trading assets, gross of provisions for credit losses

(26)

(377)

196

(1,421)

Impairment (losses) reversal on the reclassified financial assets available for sale which were impaired

11

83

3

(23)

Movement in net gains (losses) not recognized in the income statement representing additional unrealized fair value gains (losses) on the reclassified financial assets available for sale which were not impaired

44

357

169

(48)

After reclassification, the pre-tax contribution of all reclassified assets to the income statement was as follows.

 

Three months ended

Six months ended

in € m.

Jun 30, 2010

Jun 30, 2009

Jun 30, 2010

Jun 30, 2009

1

There was no net gain or loss on sales of loans which have settled in the six months ended June 30, 2010. The net amount comprises a gain amounting to € 2 million booked in other income and a loss of € 2 million booked to credit provisions.

Interest income

313

310

633

698

Provision for credit losses

(51)

(423)

(154)

(578)

Other income1

9

2

Income before income taxes on reclassified trading assets

271

(113)

481

120

Interest income

38

57

75

124

Provision for credit losses

(85)

(148)

Income before income taxes on reclassified financial assets available for sale

38

(28)

75

(24)

Prior to their reclassification, assets reclassified from trading in the first half 2009 contributed fair value losses of € 48 million to the income statement for the first half 2009.

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