17 – Equity Method Investments


Investments in associates and jointly controlled entities are accounted for using the equity method of accounting.

As of December 31, 2011 the following investees were significant, representing 75 % of the carrying value of equity method investments.

Investment1

Ownership percentage

1

All significant equity method investments are investments in associates.

2

Equity method accounting based on subordinated financing arrangement.

3

The Group has significant influence over the investee through board seats or other measures.

Actavis Equity S.à r.l., Munsbach2

0.00 %

BrisConnections Investment Trust, Kedron

35.59 %

Huamao Property Holdings Ltd., George Town3

0.00 %

Hua Xia Bank Company Limited, Beijing3

19.99 %

Rongde Asset Management Company Limited, Beijing

40.70 %

Station Holdco LLC, Wilmington

25.00 %

Summarized aggregated financial information of significant equity method investees follows.

in € m.

Dec 31, 2011

Dec 31, 2010

Total assets

147,793

131,002

Total liabilities

137,862

128,745

Revenues

5,478

4,988

Net income (loss)

696

(709)

The following are the components of the net income (loss) from all equity method investments.

in € m.

2011

2010

2009

Net income (loss) from equity method investments:

 

 

 

Pro-rata share of investees’ net income (loss)

222

457

189

Net gains (losses) on disposal of equity method investments

29

14

21

Impairments

(515)

(2,475)

(151)

Total net income (loss) from equity method investments

(264)

(2,004)

59

2011 included an impairment of € 457 million related to Actavis Group, a generic pharmaceutical group.

In 2010 a charge of approximately € 2.3 billion attributable to the equity method investment in Deutsche Postbank AG prior to consolidation was included. On December 3, 2010, Deutsche Bank gained a controlling majority in Postbank shares and commenced consolidation of the Postbank Group as of that date. As a consequence the Group ceased equity method accounting for its investment in Postbank. Further detail is included in Note 04 “Acquisitions and Dispositions”.

There was no unrecognized share of losses of an investee, neither for the period, nor cumulatively.

Equity method investments for which there were published price quotations had a carrying value of € 2.2 billion and a fair value of € 2.1 billion as of December 31, 2011, and a carrying value of € 280 million and a fair value of € 561 million as of December 31, 2010. In 2011 Hua Xia Bank is included for the first time.

The investees have no significant contingent liabilities to which the Group is exposed.

In 2011 and 2010, none of the Group’s investees experienced any significant restrictions to transfer funds in the form of cash dividends, or repayment of loans or advances.

Hua Xia Bank. On May 6, 2010, Deutsche Bank announced that it had signed a binding agreement to subscribe for newly issued shares in Hua Xia Bank Co. Ltd. (“Hua Xia Bank”) for a total subscription price of RMB 5.6 billion (€ 587 million). Deutsche Bank’s subscription was part of a private placement of Hua Xia Bank shares to its three largest shareholders with an overall issuance value of up to RMB 20.8 billion (€ 2.2 billion). Upon final settlement of the transaction, which was effective with the registration of the new shares on April 26, 2011, this investment increased Deutsche Bank’s equity stake in Hua Xia Bank from 17.12 % to 19.99 % of issued capital.

The purchase of the newly issued shares was subject to substantive regulatory approvals to be granted by various Chinese regulatory agencies. The last substantive regulatory approval, which resulted in Deutsche Bank having a claim to receive the additional shares and the associated voting rights, was received on February 11, 2011.

Upon this date, the new shares to be issued have been taken into consideration when assessing Deutsche Bank’s level of influence in accordance with IAS 28, “Investments in Associates”, because they represent potential voting rights.

As of February 11, 2011, Deutsche Bank’s influence was represented by the existing voting rights of 17.12 % and the potential voting rights of 2.87 %. The resulting 19.99 % of the voting power is considered to evidence significant influence because it is materially equal to the 20 % of the voting power upon which significant influence is generally presumed to exist. Furthermore, Deutsche Bank’s significant influence is evidenced by the fact that Deutsche Bank has successfully negotiated its stake increase with Hua Xia Bank’s management and the other stakeholders and is represented on four of six of Hua Xia Bank Board Committees.

The equity method of accounting has been applied from February 11, 2011.

Upon reclassifying the investment from Financial assets available for sale to Equity method investments in the first quarter 2011, Deutsche Bank used the remeasurement approach by analogy to IFRS 3R, “Business Combinations”. As a result unrealized net gains of € 263 million previously recorded in Other comprehensive income were reclassified into Net gains (losses) on financial assets available for sale in the income statement.

The reclassification of the investment and the increase of the equity stake resulted in an increase of the balance sheet position Equity method investments by € 2.0 billion as of December 31, 2011.

Station Holdco LLC. On June 17, 2011, the Las Vegas based hotel and casino operator, Station Casinos, completed its plan of reorganization and emerged from bankruptcy. As a result of the restructuring Deutsche Bank owns 25 % of the non-voting equity in the restructured entity Station Holdco LLC and has the right to appoint a director or directors to two of its eight board seats. Consequently, the equity method of accounting has been applied since June 17, 2011.

Key figures comparison

Compare key figures of the past years. more

Signs and Symbols
  • Save section as pdf file
  • Save table as xls file
  • Print page
  • Add file to file library
  • Glossary
  • Link to a page outside of this report
  • Link to a page within this report
  • Compare to 2009
  • Corresponding page at the PDF version of this report
Help

Explanations to make the best possible use of the information provided and the various service features can be found here.

Deutsche Bank Annual Report 2011

Feedback