entire - Deutsche Bank Annual Report 2012

Deutsche Bank 01 – Management Report 37
Financial Report 2010 Operating and Financial Review
Repackaging and Investment Products
Repackaging is a similar concept to securitization. The primary difference is that the components of the
repackaging SPE are generally securities and derivatives, rather than non-security financial assets, which are
then “repackaged” into a different product to meet specific individual investor needs. We consolidate these
SPEs when we have the majority of risks and rewards. Investment products offer clients the ability to become
exposed to specific portfolios of assets and risks through purchasing our structured notes. We hedge this
exposure by purchasing interests in SPEs that match the return specified in the notes. We consolidate the SPEs
when we hold the controlling interest or have the majority of risks and rewards. In 2010, consolidated assets
increased by € 1.7 billion as a result of new business during the period.
Mutual Funds
We offer clients mutual fund and mutual fund-related products which pay returns linked to the performance of
the assets held in the funds. We provide a guarantee feature to certain funds in which we guarantee certain
levels of the net asset value to be returned to investors at certain dates. The risk for us as guarantor is that we
have to compensate the investors if the market values of such products at their respective guarantee dates are
lower than the guaranteed levels. For our investment management service in relation to such products, we earn
management fees and, on occasion, performance-based fees. We are not contractually obliged to support these
funds and have not done so during 2010. In 2009, we made a decision to support the funds’ target yields by
injecting cash of € 16 million.
During 2010 the amount of assets held in consolidated funds decreased by € 1.2 billion. This movement was
predominantly due to cash outflows during the period.
Structured Transactions
We enter into certain structures which offer clients funding opportunities at favorable rates. The funding is
predominantly provided on a collateralized basis. These structures are individually tailored to the needs of our
clients. We consolidate these SPEs when we hold the controlling interest or we have the majority of the risks
and rewards through a residual interest holding and/or a related liquidity facility. The composition of the SPEs
that we consolidate is influenced by the execution of new transactions and the maturing, restructuring and
exercise of early termination options with respect to existing transactions.
Operating Entities
We establish SPEs to conduct some of our operating business when we benefit from the use of an SPE. These
include direct holdings in certain proprietary investments and the issuance of credit default swaps where our
exposure has been limited to our investment in the SPE. We consolidate these entities when we hold the controlling
interest or are exposed to the majority of risks and rewards of the SPE. In 2009, our exposure to Maher
Terminals LLC and Maher Terminals of Canada Corp. was reclassified from Repackaging and Investment
Products to Operating Entities. During 2010 the amount of assets held in Operating entities increased by
€ 2.9 billion. This movement was predominantly due to the consolidation of Postbank SPEs of € 1.4 billion and
€ 1.1 billion following the completion of the Cosmopolitan of Las Vegas.