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<strong>Deutsche</strong> <strong>Bank</strong> 01 – Management <strong>Report</strong> 111<br />

Financial <strong>Report</strong> 2010 Risk <strong>Report</strong><br />

With the increasing importance of liquidity management in the financial industry, we maintain an active dialogue<br />

with central banks, supervisors, rating agencies and market participants on liquidity risk-related topics. We<br />

participate in a number of working groups regarding liquidity and support efforts to create industry-wide standards<br />

to evaluate and manage liquidity risk at financial institutions. In addition to our internal liquidity management<br />

systems, the liquidity exposure of German banks is regulated by the <strong>Bank</strong>ing Act and regulations issued by the<br />

BaFin. We are in compliance with all applicable liquidity regulations.<br />

Liquidity Risk at Postbank<br />

In general, Postbank’s Financial Markets division is responsible for the centralized operational management of<br />

liquidity risk. BHW Bausparkasse AG, the foreign subsidiaries in New York and Luxembourg, and the London<br />

branch manage their risks independently using uniform Postbank group-wide procedures and processes. In the<br />

event of a liquidity shock, the Liquidity Crisis Committee has clear responsibility and authority over all Postbank<br />

units responsible for portfolios as well as all portfolio units at the subsidiaries and foreign branches.<br />

Postbank’s overarching risk strategy encompasses its strategy for management of liquidity risk. The goal of<br />

liquidity management is to ensure that Postbank is solvent at all times, not only under normal conditions, but<br />

also in stress situations. Due to its strategic focus as a retail bank, Postbank enjoys a strong financing base in<br />

its customer business and is therefore relatively independent of the money and capital markets. To guard against<br />

unexpected cash outflows, an extensive portfolio consisting of unencumbered ECB-eligible securities is held<br />

that can be used to obtain liquidity rapidly. To ensure the additional diversification of its refinancing activities,<br />

Postbank has a Pfandbrief license allowing it to issue public sector Pfandbriefe and mortgage Pfandbriefe.<br />

At Postbank Market Risk Controlling assesses the liquidity status of the Postbank each business day on the<br />

basis of funding matrices and cash flow forecasts, with operational management of risk being performed on the<br />

basis of the liquidity status. Risk management is also based on a series of more far-reaching analyses of liquidity,<br />

in addition to regular Postbank’s Group-wide liquidity and issue planning and also includes regular stress testing.<br />

Based on the results of the stress tests, Postbank believes that its liquidity position remains solid. This is due<br />

not least to the further increase in customer deposits and Postbank’s extensive portfolio of ECB-eligible securities.

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