entire - Deutsche Bank Annual Report 2012

Deutsche Bank 02 – Consolidated Financial Statements 197
Financial Report 2010 Notes to the Consolidated Financial Statements
03 – Recently Adopted and New Accounting Pronouncements
IAS 24
In November 2009, the IASB issued a revised version of IAS 24, “Related Party Disclosures” (“IAS 24 R”).
IAS 24 R provides a partial exemption from the disclosure requirements for government-related entities.
Additionally, the definition of a related party is amended to clarify that an associate includes subsidiaries of an
associate and a joint venture includes subsidiaries of the joint venture. Following this clarification, the Group
expects the number of related parties to increase. The revised standard is effective for annual periods beginning
on or after January 1, 2011, with earlier application permitted. The adoption of the revised standard will not have
a material impact on the Group’s consolidated financial statements.
IFRS 7
In October 2010, the IASB issued amendments to IFRS 7, “Disclosures – Transfers of Financial Assets”.
The amendments comprise additional disclosures on transfer transactions of financial assets (for example,
securitizations), including possible effects of any risks that may remain with the transferor of the assets. Additional
disclosures are also required if a disproportionate amount of transfer transactions are undertaken around the
end of a reporting period. The amendments are effective for annual periods beginning on or after July 1, 2011,
with earlier application permitted. While approved by the IASB, the amendments have yet to be endorsed by
the EU. The Group is currently evaluating the potential impact that the adoption of the amended disclosure
requirements will have on the disclosures in its consolidated financial statements.
IFRS 9
In November 2009, the IASB issued IFRS 9, “Financial Instruments”, as a first step in its project to replace IAS 39,
“Financial Instruments: Recognition and Measurement”. IFRS 9 introduces new requirements for how an entity
should classify and measure financial assets that are in the scope of IAS 39. The standard requires all financial
assets to be classified on the basis of the entity’s business model for managing the financial assets, and the
contractual cash flow characteristics of the financial asset. A financial asset is measured at amortized cost if
two criteria are met: (a) the objective of the business model is to hold the financial asset for the collection of the
contractual cash flows, and (b) the contractual cash flows under the instrument solely represent payments of
principal and interest. If a financial asset meets the criteria to be measured at amortized cost, it can be designated
at fair value through profit or loss under the fair value option, if doing so would significantly reduce or eliminate
an accounting mismatch. If a financial asset does not meet the business model and contractual terms criteria
to be measured at amortized cost, then it is subsequently measured at fair value. IFRS 9 also removes the
requirement to separate embedded derivatives from financial asset hosts. It requires a hybrid contract with a
financial asset host to be classified in its entirety at either amortized cost or fair value. IFRS 9 requires
reclassifications when the entity’s business model changes, which is expected to be an infrequent occurrence;
in this case, the entity is required to reclassify affected financial assets prospectively. There is specific guidance
for contractually linked instruments that create concentrations of credit risk, which is often the case with investment
tranches in a securitization. In addition to assessing the instrument itself against the IFRS 9 classification
criteria, management should also ‘look through’ to the underlying pool of instruments that generate cash flows
to assess their characteristics. To qualify for amortized cost, the investment must have equal or lower credit
risk than the weighted-average credit risk in the underlying pool of instruments, and those instruments must
meet certain criteria. If a ‘look through’ is impracticable, the tranche must be classified at fair value through
profit or loss. Under IFRS 9, all equity investments should be measured at fair value. However, management
has an option to present in other comprehensive income unrealized and realized fair value gains and losses on
equity investments that are not held for trading. Such designation is available on initial recognition on an
instrument-by-instrument basis and is irrevocable. There is no subsequent recycling of fair value gains and
losses to profit or loss; however, dividends from such investments will continue to be recognized in profit or loss.