SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank Notes to the Consolidated Financial Statements F-13
Annual Report 2010 on Form 20-F 01 – Significant Accounting Policies
Subsidiaries
The Group’s subsidiaries are those entities which it controls. The Group controls entities when it has the power
to govern the financial and operating policies of the entity, generally accompanying a shareholding, either
directly or indirectly, of more than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered in assessing whether the Group controls an
entity.
The Group sponsors the formation of SPEs and interacts with non-sponsored SPEs for a variety of reasons,
including allowing clients to hold investments in separate legal entities, allowing clients to invest jointly in
alternative assets, for asset securitization transactions, and for buying or selling credit protection. When
assessing whether to consolidate an SPE, the Group evaluates a range of factors, including whether (1) the
activities of the SPE are being conducted on behalf of the Group according to its specific business needs so
that the Group obtains the benefits from the SPE’s operations, (2) the Group has decision-making powers to
obtain the majority of the benefits, (3) the Group obtains the majority of the benefits of the activities of the
SPE, or (4) the Group retains the majority of the residual ownership risks related to the assets in order to
obtain the benefits from its activities. The Group consolidates an SPE if an assessment of the relevant factors
indicates that it controls the SPE.
Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer
consolidated from the date that control ceases.
The Group reassesses consolidation status at least at every quarterly reporting date. Therefore, any changes
in structure are considered when they occur. This includes changes to any contractual arrangements the
Group has, including those newly executed with the entity, and is not only limited to changes in ownership.
The Group reassesses its treatment of SPEs for consolidation when there is an overall change in the SPE’s
arrangements or when there has been a substantive change in the relationship between the Group and an
SPE. The circumstances that would indicate that a reassessment for consolidation is necessary include, but
are not limited to, the following:
— substantive changes in ownership of the SPE, such as the purchase of more than an insignificant additional
interest or disposal of more than an insignificant interest in the SPE;
— changes in contractual or governance arrangements of the SPE;
— additional activities undertaken in the structure, such as providing a liquidity facility beyond the terms
established originally or entering into a transaction with an SPE that was not contemplated originally; and
— changes in the financing structure of the entity.
In addition, when the Group concludes that the SPE might require additional support to continue in business,
and such support was not contemplated originally, and, if required, the Group would provide such support for
reputational or other reasons, the Group reassesses the need to consolidate the SPE.
The reassessment of control over the existing SPEs does not automatically lead to consolidation or deconsolidation.
In making such a reassessment, the Group may need to change its assumptions with respect to loss
probabilities, the likelihood of additional liquidity facilities being drawn in the future and the likelihood of future
actions being taken for reputational or other purposes. All currently available information, including current
market parameters and expectations (such as loss expectations on assets), which would incorporate any
market changes since inception of the SPE, is used in the reassessment of consolidation conclusions.