SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank
Annual Report 2010 on Form 20-F
Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk 133
Market Risk
— In 2010, we continued to increase the number and specialization of our Market Risk Management staff.
— The economic capital usage for trading market risk totaled € 6.4 billion at year-end 2010 compared with
€ 4.6 billion at year-end 2009. The increase reflected methodology changes and more conservative liquidity
assumptions. This was partially offset by a reduction in our legacy (trading) credit exposure.
— The decrease in average value-at-risk in 2010 was driven primarily by reduced risk taking and lower historical
volatilities. In addition our trading business continued to recalibrate the business model towards taking less
risk in illiquid or complex exposures.
Operational Risk
— Operational risk economic capital usage increased by € 189 million, or 5 %, to € 3.7 billion as of December
31, 2010. The increase is fully explained by acquisitions.
Liquidity Risk
— Liquidity Reserves (excluding Postbank) exceeded € 145 billion as of December 31, 2010.
— 2010 issuance activities amounted to € 22.9 billion as compared to a planned € 19 billion
(excluding Postbank).
— The Postbank acquisition added significant stable funding sources.
Capital Management
— We successfully completed the capital increase in October 2010 with net proceeds of € 10.1 billion.
— The Core Tier 1 capital ratio, which excludes hybrid instruments, was 8.7 % at the end of 2010, at the same
level as at the end of 2009.
— Tier 1 capital ratio was 12.3 % at the end of 2010, compared to 12.6 % at the end of 2009, and substantially
above our published target level of at least 10.0 %.
— Risk-weighted assets were up by € 73 billion to € 346 billion at the end of 2010, mainly due to the consolidation
of Postbank.
Balance Sheet Management
— As of December 31, 2010, our leverage ratio according to our target definition was 23 at the same level as
at the end of 2009, and below our leverage ratio target of 25. The impact from our acquisitions on our total
assets was fully compensated for by the impact of our rights issue on the applicable equity.
Risk and Capital Management
The wide variety of our businesses requires us to identify, measure, aggregate and manage our risks effectively,
and to allocate our capital among our businesses appropriately. We manage risk and capital through a framework
of principles, organizational structures as well as measurement and proactive monitoring processes that
are closely aligned with the activities of our group divisions. The importance of strong risk and capital management
and the continuous need to refine these practices became particularly evident during the financial market
crisis. While we continuously strive to improve our risk and capital management, we may be unable to anticipate
all market developments, in particular those of an extreme nature.