entire - Deutsche Bank Annual Report 2012

Deutsche Bank 02 – Consolidated Financial Statements 177
Financial Report 2010 Notes to the Consolidated Financial Statements
01 – Significant Accounting Policies
Derecognition of Financial Liabilities
A financial liability is derecognized when the obligation under the liability is discharged or canceled or expires.
If an existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of the existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability, and the difference in the respective
carrying amounts is recognized in the consolidated statement of income.
Repurchase and Reverse Repurchase Agreements
Securities purchased under resale agreements (“reverse repurchase agreements”) and securities sold under
agreements to repurchase (“repurchase agreements”) are treated as collateralized financings and are recognized
initially at fair value, being the amount of cash disbursed and received, respectively. The party disbursing the
cash takes possession of the securities serving as collateral for the financing and having a market value equal
to, or in excess of the principal amount loaned. The securities received under reverse repurchase agreements
and securities delivered under repurchase agreements are not recognized on, or derecognized from, the balance
sheet, unless the risks and rewards of ownership are obtained or relinquished. Securities delivered under
repurchase agreements which are not derecognized from the balance sheet and where the counterparty has
the right by contract or custom to sell or repledge the collateral are disclosed as such on the face of the
consolidated balance sheet.
The Group has chosen to apply the fair value option to certain repurchase and reverse repurchase portfolios
that are managed on a fair value basis.
Interest earned on reverse repurchase agreements and interest incurred on repurchase agreements is reported
as interest income and interest expense, respectively.
Securities Borrowed and Securities Loaned
Securities borrowed transactions generally require the Group to deposit cash with the securities lender. In a
securities loaned transaction, the Group generally receives either cash collateral, in an amount equal to or in
excess of the market value of securities loaned, or securities. The Group monitors the fair value of securities
borrowed and securities loaned and additional collateral is disbursed or obtained, if necessary.
The amount of cash advanced or received is recorded as securities borrowed and securities loaned, respectively.
The securities borrowed are not themselves recognized in the financial statements. If they are sold to third parties,
the obligation to return the securities is recorded as a financial liability at fair value through profit or loss and
any subsequent gain or loss is included in the consolidated statement of income in net gain (loss) on financial
assets/liabilities at fair value through profit or loss. Securities lent to counterparties are also retained on the
consolidated balance sheet.
Fees received or paid are reported in interest income and interest expense, respectively. Securities lent to
counterparties which are not derecognized from the consolidated balance sheet and where the counterparty
has the right by contract or custom to sell or repledge the collateral are disclosed as such on the face of the
consolidated balance sheet.