Other Intangible Assets

The changes of other intangible assets by asset classes for the years ended December 31, 2014, and 2013, are as follows.

 

Purchased intangible assets

Internally generated intangible assets

Total other intangible assets

 

Unamortized

Amortized

Amortized

 

in € m.

Retail investment management agreements

Other

Total unamortized purchased intangible assets

Customer-related intangible assets

Value of business acquired

Contract-based intangible assets

Software and other

Total amortized purchased intangible assets

Software

 

1

The € 518 million were included in general and administrative expenses.

2

Of which € 79 million were included in impairment of intangible assets, consisting of impairments of customer-related intangible assets (€ 72 million) and beneficial contracts (€ 7 million). Furthermore, € 47 million of impairments related to purchased (€ 4 million) and self-developed software (€ 43 million) were recorded in general and administrative expenses.

3

The € 582 million were included in general and administrative expenses.

4

Of which € 146 million were included in impairment of intangible assets, consisting of impairments of contract-based intangible assets (€ 117 million) and trade names (€ 29 million). Furthermore, € 48 million of impairments related to self-developed software were recorded in general and administrative expenses.

5

€ 84 million were recorded as reversal of a prior year’s impairment and are included under impairment of intangible assets.

Cost of acquisition/manufacture:

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2013

878

440

1,318

1,519

848

686

938

3,991

2,261

7,570

Additions

0

0

0

24

0

0

41

65

663

728

Changes in the group of consolidated companies

0

0

0

(12)

0

0

11

(1)

0

(1)

Disposals

0

0

0

0

0

0

19

19

36

55

Reclassifications from (to) “held for sale”

0

0

0

(48)

0

0

(41)

(89)

(10)

(99)

Transfers

0

0

0

0

0

0

22

22

(68)

(46)

Exchange rate changes

(38)

1

(37)

(34)

(18)

(25)

(16)

(93)

(34)

(164)

Balance as of December 31, 2013

840

441

1,281

1,449

830

661

936

3,876

2,776

7,933

Additions

0

0

0

40

0

0

52

92

962

1,054

Changes in the group of consolidated companies

0

0

0

0

0

(14)

(2)

(16)

0

(16)

Disposals

0

0

0

9

0

0

12

21

99

120

Reclassifications from (to) “held for sale”

0

0

0

0

0

0

0

0

0

0

Transfers

0

0

0

(3)

0

(1)

17

13

(26)

(13)

Exchange rate changes

111

0

111

53

58

74

33

218

102

431

Balance as of December 31, 2014

951

441

1,392

1,530

888

720

1,024

4,162

3,715

9,269

Accumulated amortization and impairment:

 

 

 

 

 

 

 

 

 

 

Balance as of January 1, 2013

300

2

302

741

164

142

592

1,639

707

2,648

Amortization for the year

0

0

0

99

32

36

112

279

239

5181

Changes in the group of consolidated companies

0

0

0

(12)

0

0

6

(6)

0

(6)

Disposals

0

0

0

0

0

0

13

13

34

47

Reclassifications from (to) “held for sale”

0

0

0

(39)

0

0

(32)

(71)

(6)

(77)

Impairment losses

0

0

0

72

0

7

4

83

43

1262

Reversals of impairment losses

0

0

0

0

0

0

0

0

0

0

Transfers

0

0

0

0

0

0

10

10

(21)

(11)

Exchange rate changes

(13)

0

(13)

(25)

(2)

(5)

(12)

(44)

(19)

(76)

Balance as of December 31, 2013

287

2

289

836

194

180

667

1,877

909

3,075

Amortization for the year

0

0

0

99

35

35

78

247

335

5823

Changes in the group of consolidated companies

0

0

0

0

0

(6)

(2)

(8)

(1)

(9)

Disposals

0

0

0

8

0

0

12

20

97

117

Reclassifications from (to) “held for sale”

0

0

0

0

0

0

0

0

0

0

Impairment losses

0

0

0

0

0

117

29

146

48

1944

Reversals of impairment losses

84

0

84

0

0

0

0

0

0

845

Transfers

0

0

0

1

0

0

2

3

(8)

(5)

Exchange rate changes

37

1

38

49

14

17

19

99

63

200

Balance as of December 31, 2014

240

3

243

977

243

343

781

2,344

1,249

3,836

Carrying amount:

 

 

 

 

 

 

 

 

 

 

As of December 31, 2013

553

439

992

613

636

481

269

1,999

1,867

4,858

As of December 31, 2014

711

438

1,149

553

645

377

243

1,818

2,466

5,433

Amortizing Intangible Assets

In 2014, additions to internally generated intangible assets were € 962 million, which represent the capitalization of expenses incurred in conjunction with the Group’s activities related to the development of own-used software. Impairments of € 146 million recorded on purchased other intangible assets were largely attributable to Maher Terminals LLC (NCOU; thereof € 116 million on lease rights (‘contract-based’) and € 29 million on trade mark (‘software and others’)), following the continued negative outlook for container and business volumes (please refer to 'Changes in Goodwill’ in this Note for additional information on the valuation result of Maher Terminals LLC). The impairment of self-developed software of € 48 million was largely a result of the reassessment of current platform software under the OpEx Program.

Changes in amortizing other intangible assets recognized during 2013 mainly included additions of € 663 million to internally generated intangible assets. Impairments of € 83 million recorded on purchased other intangible assets were largely attributable to the commercial banking activities in the Netherlands (GTB), which had seen similar charges already in 2012. The impairment on self-developed software of € 43 million was largely a result of the reassessment of current platform software under the OpEx Program.

In 2012, impairments recorded on customer-related intangible assets totaling € 86 million included € 73 million in connection with measures initiated in the fourth quarter 2012 to turnaround the acquired commercial banking activities in the Netherlands (GTB) and € 13 million related to the realignment of PBC’s Consumer Banking proposition. The impairment of self-developed software of € 95 million was mainly the result of changes in the planned deployment of an IT system in Deutsche AWM.

Other intangible assets with finite useful lives are generally amortized over their useful lives based on the straight-line method (except for the VOBA, as explained in Note 41 “Insurance and Investment Contracts”).

Useful lives of other amortized intangible assets by asset class

 

Useful lives in years

Internally generated intangible assets:

 

Software

up to 10

Purchased intangible assets:

 

Customer-related intangible assets

up to 25

Contract-based intangible assets

up to 23

Value of business acquired

up to 30

Other

up to 80

Unamortized Intangible Assets

Within this asset class, the Group recognizes certain contract-based and marketing-related intangible assets, which are deemed to have an indefinite useful life.

In particular, the asset class comprises the below detailed investment management agreements related to retail mutual funds and certain trademarks. Due to the specific nature of these intangible assets, market prices are ordinarily not observable and, therefore, the Group values such assets based on the income approach, using a post-tax DCF-methodology.

Retail investment management agreements: These assets, amounting to € 711 million, relate to the Group’s U.S. retail mutual fund business and are allocated to the Deutsche AWM CGU. Retail investment management agreements are contracts that give DWS Investments the exclusive right to manage a variety of mutual funds for a specified period. Since these contracts are easily renewable, the cost of renewal is minimal, and they have a long history of renewal, these agreements are not expected to have a foreseeable limit on the contract period. Therefore, the rights to manage the associated assets under management are expected to generate cash flows for an indefinite period of time. This intangible asset was recorded at fair value based upon a valuation provided by a third party at the date of the Group’s acquisition of Zurich Scudder Investments, Inc. in 2002.

The recoverable amount of the asset of € 711 million was calculated as fair value less costs of disposal using the multi-period excess earnings method and the fair value measurement was categorized as level 3 in the fair value hierarchy. The key assumptions in determining the fair value less costs of disposal include the asset mix, the flows forecast and the effective fee rate. The discount rates (cost of equity) applied in the calculation were 10.7 % in 2014 and 11.4 % in 2013. Therefore, in 2014, a reversal of impairment of € 84 million was recognized and recorded in impairment of intangible assets in the income statement, mainly due to a positive flows forecast on the back of a strengthening franchise, a favorable asset mix and a decrease in the discount rate. In 2013, neither an impairment nor write-up was recorded, as the valuation remained steady to prior year. In 2012, a loss of € 202 million was recognized in the income statement as impairment of intangible assets. The impairment loss was predominantly due to declines in the expected development of invested asset flows, considering historical growth trends and impacts from the strategic review of the business conducted in 2012 as well as the competitive environment.

Trademarks: The other unamortized intangible assets include the Postbank (allocated to CGU PBC) and the Sal. Oppenheim (allocated to CGU Deutsche AWM) trademarks, which were acquired in 2010. The Postbank trademark was initially recognized in 2010 at € 382 million. In finalizing the purchase price allocation in 2011, the fair value of the Postbank trademark increased to € 411 million. The Sal. Oppenheim trademark was recognized at € 27 million. Since both trademarks are expected to generate cash flows for an indefinite period of time, they are classified as unamortized intangible assets. Both trademarks were recorded at fair value at the acquisition date, based on third party valuations. The recoverable amounts were calculated as the fair value less costs of disposal of the trademarks based on the income approach using the relief-from-royalty method. Since acquisition, there have been no impairments.