Non-Core Operations Unit

Good progress made in reducing risk

In brief

  • Large-scale reduction of non-strategic assets
  • Capital released for core business
  • Impairments and litigation-related charges impact results

The purpose of the Non-Core Operations Unit (NCOU) is to free up capital and protect shareholder value by reducing risks from non-core assets and business activities. The NCOU is a key element of Strategy 2015+, as providing transparency as well as strict capital and balance sheet management are critical to Deutsche Bank’s success in a continually evolving regulatory environment.

The NCOU was formed in the fourth quarter of 2012 with an initial risk-weighted asset (RWA, pro-forma Basel 3) equivalent of € 141 billion and total adjusted assets (TAAs) of € 120 billion. The NCOU’s portfolio comprises activities that are non-core to Deutsche Bank’s strategy, for example assets materially affected by business, legal or regulatory changes.

The NCOU’s strategic focus is on reducing capital demand to strengthen the Bank’s capital ratio through the divestment of non-core assets. Furthermore, reducing the balance sheet as defined under the Capital Requirements Directive IV (CRD IV) assists Deutsche Bank in meeting its leverage ratio targets.

Excerpt from segment reporting (Non-Core Operations Unit1)

Non-Core Operations Unit recorded a loss before income taxes of € 3.3 billion in 2013 (2012: loss of € 2.9 billion). Net revenues decreased 18 % in comparison to 2012 driven by lower portfolio revenues due to as asset reductions. Provision for credit losses increased 29 %, mainly due to specific credit events across portfolios including exposure to European commercial real estate. Noninterest expenses increased by € 47 million, or 1 %, compared to 2012. The movement includes higher litigation related costs offset by the non-recurrence of the impairment of intangible assets of € 421 million reported in the prior year.




in € m.



Net revenues


1 054

Total provision for credit losses



Noninterest expenses



Income before income taxes


(2 923)

Risk-weighted assets






1 Excerpt from segment reporting. For notes and other detailed information, see Financial Report 2013 (Management Report).

Total assets (adjusted)*

Total assets (adjusted) (pie chart)

Operating successfully in volatile markets

In 2013, the NCOU successfully accelerated de-risking despite increased market volatility. The NCOU achieved a reduction of € 40 billion (–42 % versus the year-end 2012) in TAAs and of € 48 billion (–45 %) in the CRD IV RWA equivalent, well in excess of the € 80 billion target for CRD IV RWAs and TAAs for 2013. This generated a regulatory capital accretion of approximately € 3.8 billion on a pre-tax basis excluding litigation-related costs, equivalent to an 88-basis-point Common Equity Tier 1 (CET 1) ratio benefit. As of December 31, 2013, TAAs stood at € 55 billion with associated CRD IV RWAs of € 58 billion.

The NCOU identified the positions with less favorable capital and risk return profiles and prioritized their disposal. Significant disposals of wholesale assets in the former CB&S business were supplemented by the winding down of credit derivative protection in the monoline portfolio and the sale of underlying bonds. The program also targeted Postbank’s legacy investment portfolio, including its structured credit portfolio, sovereign and corporate bond exposures in European countries strongly affected by the financial crisis, and two separate commercial real estate entities holding loan investment portfolios in the USA and UK.

Accelerated de-risking

Accelerated de-risking (bar chart)

The NCOU’s asset de-risking generated an aggregate net gain. Although the NCOU’s activities in 2013 were capital accretive, the financial performance of the division also reflected significant provisions, impairments and mark-to-market adjustments taken across the portfolios. Additionally, non-interest expenses were significantly impacted by litigation-related charges amounting to € 1.3 billion. Overall, this resulted in a loss of € 3.3 billion in 2013.

Furthermore, Deutsche Bank reached a settlement in 2013 with the Federal Housing Finance Agency (FHFA), the regulator and conservator of Fannie Mae and Freddie Mac, which resolves all past and future claims in connection with Deutsche Bank’s single largest residential mortgage-related litigation case. This charge was reflected in the NCOU’s financial results for the fourth quarter of 2013.

Disposal governance

The NCOU operates under clearly defined, and strictly adhered to, divestment rules. The objective of the NCOU is to de-risk assets by carrying out a broad array of transactions across all asset classes. It reduces the balance sheet through disposals to third-party investors. As part of this process, the NCOU aims to find optimal de-risking solutions for unwinding complex structures by working with multiple parties including other dealers, investors and financial institutions.


The Non-Core Operations Unit is expected to make a continued contribution to the process of enhancing the bank’s capital creation and deleveraging. Challenges remain for the successful execution of the de-risking strategy, including changes in the economic environment and market conditions, which may make the associated timeline for de-risking activities less certain.