SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank Additional Notes F-157
Annual Report 2010 on Form 20-F 36 – Regulatory Capital
36 –
Regulatory Capital
Capital Management
The Group’s Treasury function manages its capital at Group level and locally in each region, except that Postbank
manages its capital on a group level and locally on its own. The allocation of financial resources, in general, and
capital, in particular, favors business portfolios with the highest positive impact on the Group’s profitability and
shareholder value. As a result, Treasury periodically reallocates capital among business portfolios.
Treasury implements the Group’s capital strategy, which itself is developed by the Capital and Risk Committee
and approved by the Management Board, including the issuance and repurchase of shares. The Group is
committed to maintain its sound capitalization. Overall capital demand and supply are constantly monitored
and adjusted, if necessary, to meet the need for capital from various perspectives. These include shareholders’
equity based on IFRS accounting standards, active book equity, regulatory capital and economic capital. The
Group’s target for the Tier 1 capital ratio continues to be at 10 % or above.
The allocation of capital, determination of the Group’s funding plan and other resource issues are framed by
the Capital and Risk Committee.
Regional capital plans covering the capital needs of the Group’s branch offices and subsidiaries are prepared
on a semi-annual basis and presented to the Group Investment Committee. Most of the Group’s subsidiaries
are subject to legal and regulatory capital requirements. Local Asset and Liability Committees attend to those
needs under the stewardship of regional Treasury teams. Furthermore, they safeguard compliance with requirements
such as restrictions on dividends allowable for remittance to Deutsche Bank AG or on the ability of the
Group’s subsidiaries to make loans or advances to the parent bank. In developing, implementing and testing
the Group’s capital and liquidity, the Group takes such legal and regulatory requirements into account.
On October 6, 2010, the Group completed a capital increase from authorized capital against cash contributions.
In total, 308.6 million new registered no-par value shares (common shares) were issued, resulting in gross proceeds
of € 10.2 billion. The net proceeds of € 10.1 billion raised in the issuance (after expenses of approximately
€ 0.1 billion, net of tax) were primarily used to cover the capital consumption from the consolidation of the Postbank
Group, and, in addition, to support the existing capital base.
Treasury executes the repurchase of shares. As of January 1, 2010, the number of shares held in Treasury
from buybacks totaled 0.6 million. The 2009 Annual General Meeting granted the Group’s management board
the authority to buy back up to 62.1 million shares before the end of October 2010. During the period from
January 1, 2010 until the 2010 Annual General Meeting, 11.1 million shares were purchased. Thereof 10.6 million
were used for equity compensation purposes. As at the 2010 Annual General Meeting on May 27, 2010, the
number of shares held in Treasury from buybacks totaled 1.0 million. The 2010 Annual General Meeting
granted the Group’s management board the authority to buy back up to 62.1 million shares before the end of
November 2014. Thereof 31.0 million shares may be purchased by using derivatives. During the period from the
2010 Annual General Meeting until December 31, 2010, 18.8 million shares were purchased, thereof 0.5 million
via sold put options which were executed by the counterparty at maturity date. 9.8 million of the total 18.8 million
shares repurchased were used for equity compensation purposes in 2010 and 9.0 million shares were used to
increase the Group’s Treasury position for later use for future equity compensation. As at December 31, 2010,
the number of shares held in Treasury from buybacks totaled 10.0 million.