SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank
Annual Report 2010 on Form 20-F
Item 4: Information on the Company 31
In the German core market, we expanded our already strong position by attracting new customers and business
volume in a challenging market environment. On November 26, 2010, we announced that we would consolidate
Deutsche Postbank Group in December 2010, following the successful conclusion of the voluntary public takeover
offer (“PTO”) to the shareholders of Deutsche Postbank AG (“Postbank”). In settling the takeover offer on
December 3, 2010 (“closing date”) and together with Postbank shares held before the PTO, we gained a controlling
majority by directly holding 113.7 million Postbank shares, equal to 51.98 % of all voting rights in Postbank. Taking
into account certain financial instruments on Postbank shares held by us prior to the closing date, as of the
acquisition date the consolidation is based on a total equity interest in Postbank of 79.40 %.
Prior to obtaining control, we directly held a 29.95 % of the shares and voting rights of Postbank. Accordingly,
this investment was accounted for using the equity method. In addition, we had subscribed to a mandatory
exchangeable bond (“MEB”) issued by Deutsche Post AG. We acquired the MEB in February 2009 as part of a
wider acquisition agreement with Deutsche Post regarding Postbank shares. According to the acquisition
agreement, the MEB will be fully exchanged in 2012 for 60 million Postbank shares, or a 27.42 % stake. The
MEB constitutes an equity investment for accounting purposes and in substance gives current access to the
economic benefits associated with an ownership interest in the Postbank shares and therefore was included as
part of the equity method investment. Along with the MEB, we and Deutsche Post had also entered into put and
call options for another 26.4 million Postbank shares held by Deutsche Post (12.07 % stake) which are exercisable
between February 2012 and February 2013. Under the acquisition agreement, Deutsche Post was contractually
prevented from tendering the Postbank shares it holds in the event of a takeover offer for Postbank by us,
such as the PTO.
Through the acquisition of a majority shareholding in Postbank, we intend to strengthen and expand our leading
market position in our German home market, offering synergy potential and growth opportunities, in particular
with regard to the retail business of the Private Clients and Asset Management Group Division. By combining
the businesses we aim at increasing the share of retail banking earnings in our results and further strengthening
and diversifying the refinancing basis of the Group due to significantly increased volumes of retail customer
deposits. We expect that Postbank will continue to exist as a stand-alone stock corporation and to remain visible
in the market under its own brand. We expect that the integration of Postbank into the Corporate Division Private
& Business Clients will offer a significant potential for revenue and cost synergies.
In 2008 we implemented the cooperation with Postbank. Alongside standardized advisory services and sales
initiatives of our investment products through distribution channels of Postbank, this cooperation also extends to
IT and joint purchasing.
In our European core markets, we further increased our customer base and continued to steadily acquire new
business volume. To cope with the impacts from the financial crisis, we realigned our business strategy, focusing
on low risk products and advisory services for affluent customers. The strategic re-focusing yielded benefits in
2010, resulting in a stabilization of our loan portfolios and significantly improved risk levels.
The development of PBC in Asia has also maintained momentum. PBC further invested in its strategic partnership
with Hua Xia Bank in China and further increased its shareholding from 17.12 % to 19.99 % by participating a
private placement and subscribing for new shares up to a total amount of RMB 5.7 billion (approximately
€ 649 million). The transaction was signed in May 2010 and is pending approval from the Chinese regulators
expected for the end of the first quarter 2011.