SEC Form 20-F - Deutsche Bank Annual Report 2012

Deutsche Bank
Annual Report 2010 on Form 20-F
Item 4: Information on the Company 46
Under U.S. law, our activities and those of our subsidiaries are generally limited to the business of banking, managing
or controlling banks, and, so long as we remain a financial holding company under U.S. law, nonbanking
activities in the United States that are financial in nature, or incidental or complementary to such financial activity,
including securities, merchant banking, insurance and other financial activities, but subject to certain limitations on
the conduct of such activities and to prior regulatory approval in some cases, including under Dodd-Frank, where
a bank holding company such as Deutsche Bank seeks to acquire shares of a company engaged in financial
activities in the United States with assets exceeding U.S.$ 10 billion. As a non-U.S. bank, we are generally authorized
under U.S law and regulations to acquire a non-U.S. company engaged in nonfinancial activities provided
that the company’s U.S. operations do not exceed certain thresholds and certain other conditions are met.
Our status as a financial holding company, and our resulting ability to engage in a broader range of nonbanking
activities, is dependent on Deutsche Bank AG and our two insured U.S. depository institutions remaining “well
capitalized” and “well managed” (as defined by Federal Reserve Board regulations) and upon our insured U.S.
depository institutions meeting certain requirements under the Community Reinvestment Act. In order to meet the
“well capitalized” test, we and our U.S. depository institutions are required to maintain a Tier 1 risk-based capital
ratio of at least 6 % and a total risk-based capital ratio of at least 10 %.
Pursuant to current Federal Reserve Board policy, Taunus Corporation, as the top-tier U.S. bank holding company
subsidiary of Deutsche Bank AG, is not required to comply with capital adequacy guidelines generally made applicable
to U.S. banking organizations, as long as Deutsche Bank AG remains a financial holding company that
the Federal Reserve Board continues to regard as well capitalized and well managed. Because Taunus Corporation
is able to fund its subsidiaries via its parent, it does not maintain stand-alone capital. However, beginning five
years after enactment of Dodd-Frank, the Federal Reserve Board will apply minimum capital requirements to all
U.S. bank holding companies and companies designated as systemically important nonbank financial companies,
including intermediate bank holding company subsidiaries of non-U.S. banks (such as Taunus Corporation). The
exact requirements that will apply to Taunus Corporation are currently unknown; however, the Federal Reserve
Board is expected to require a minimum Tier 1 risk-based capital ratio and total risk-based capital ratio based on
then applicable Basel standards as implemented in the United States. If Deutsche Bank has not reorganized its
holdings through Taunus Corporation by the time Taunus becomes subject to the minimum capital requirement,
Taunus Corporation would need to reorganize its U.S. activities and/or materially increase its capital. The extent of
such reorganization and recapitalization, and the adverse effects that they would have on our financial condition
and operations cannot be estimated at this time.
State-chartered banks (such as DBTCA) and state-licensed branches and agencies of foreign banks (such as our
New York branch) may not, with certain exceptions that require prior regulatory approval, engage as a principal in
any type of activity not permissible for their federally chartered or licensed counterparts. United States federal
banking laws also subject state branches and agencies to the same single-borrower lending limits that apply to
federal branches or agencies, which are substantially similar to the lending limits applicable to national banks.
These single-borrower lending limits are based on the worldwide capital of the entire foreign bank (i.e., Deutsche
Bank AG in the case of our New York branch).
The Federal Reserve Board may terminate the activities of any U.S. office of a foreign bank if it determines that
the foreign bank is not subject to comprehensive supervision on a consolidated basis in its home country or that
there is reasonable cause to believe that such foreign bank or its affiliate has violated the law or engaged in an
unsafe or unsound banking practice in the United States.