SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank
Annual Report 2010 on Form 20-F
The Competitive Environment
Item 4: Information on the Company 35
The financial services industries, and all of our businesses, are intensely competitive, and we expect them to
remain so. Our main competitors are other commercial banks, savings banks, other public sector banks, brokers
and dealers, investment banking firms, insurance companies, investment advisors, mutual funds and hedge funds.
We compete with some of our competitors globally and with some others on a regional, product or niche basis.
We compete on the basis of a number of factors, including the quality of client relationships, transaction execution,
our products and services, innovation, reputation and price.
Competitor Landscape
Following the financial crisis in 2007 and 2008, many banks experienced strong recovery in 2009, driven by a
pick-up of investment banking volumes, at significantly higher margins relative to pre-crisis levels. In 2010,
however, these extraordinary conditions normalized, with many market participants seeing decreased margins
in investment banking. This was positively counterbalanced by the credit cycle recovery, particularly among
private clients.
Due to the substantial consolidation and merger activity in recent years, some banks have focused on the
integration of the acquisitions made in the crisis and thus, in 2010, there was only limited M&A activity in the
sector. In addition, global banks have largely digested the losses incurred by the market disruptions and markdowns
during the financial crisis. As a testament to the regained strength and improved outlook, many financial
institutions have either completed or started to repay the direct equity investments made by the respective
governments at the peak of the crisis.
The competitive environment in 2010 has also been characterized by the process of shaping the new regulatory
environment, which created a high degree of uncertainty for banks. In this context, the adoption of a revised
legal framework governing liquidity and capital levels (“Basel III”) has been an encouraging achievement, and
the sector is now aiming for consistent implementation. Lastly, the banking sector is still facing persisting investor
uncertainty driven by the ongoing uncertainty over the economic outlook, concerns regarding highly indebted
peripheral countries in the eurozone as well as concerns regarding currency stability.
In Germany, the retail banking market remains fragmented and our competitive environment remains influenced
by the three pillar system of private banks, public banks and cooperative banks. However, following recent and
ongoing consolidation activity, particularly among public regional commercial banks (“Landesbanken”) and
private banks, competitive intensity has increased. Our takeover of Deutsche Postbank AG as well as the merger
of the second and third largest private sector banks have affected the domestic competitive landscape and
further increased concentration.
Regulatory Reform
In response to the financial markets crisis, governments, regulatory authorities and others have made and
continue to make numerous proposals to reform the regulatory framework for the financial services industry to
enhance its resilience against future crises. The wide range of current proposals, of which some have already
been enacted, includes, among others:
— Revising regulatory capital standards to require more capital in some cases, such as on trading book positions,
in particular those resulting from securitization transactions, or for institutions that are of particular importance
for the smooth functioning of the financial system more generally;
— Tightening and modifying the definition of capital for regulatory purposes;
— Introducing a maximum ratio of capital to total assets (leverage ratio);