entire - Deutsche Bank Annual Report 2012

Deutsche Bank 05 – Supplementary Information 405
Financial Report 2010 Glossary
Mezzanine
Flexible, mixed form of financing comprising
equity and debt capital. Here: long-term
subordinated financing instrument used to
finance growth while at the same time
strengthening the borrower’s economic
equity capital base.
Monoline Insurers
Insurers, which provide credit insurance to
debt issuers and other market participants.
Monte Carlo Simulation
Monte Carlo methods are used to value and
analyze (complex) instruments, portfolios
and investments by simulating the various
sources of uncertainty affecting their value,
and then determining their average value
over the range of resultant outcomes.
Mortgage-backed Securities (MBS)
Asset-backed securities, which are
backed by mortgage loans. Subcategories
are residential mortgage-backed securities
(RMBS) and commercial mortgagebacked
securities (CMBS).
N
Negative Goodwill
Recognized in a business combination as
a credit to the income statement for the
excess of the acquirer’s interest in the net
fair value of the acquiree’s identifiable
assets and liabilities over the consideration
transferred for the acquired interest.
Netting Agreements
Bilateral agreements between the Group
and its counterparties with regard to the
included transactions which ensure that, if
solvency or bankruptcy proceedings are
initiated, only a single net amount is owed
by one party to the other from the netting of
all claims and liabilities.
Non-compensation Ratio
Non-compensation noninterest expenses,
which are defined as total noninterest expenses
less compensation and benefits, as
a percentage of total net revenues, which is
defined as net interest income before provision
for credit losses plus noninterest income.
Noncontrolling Interest
Previously referred to as minority interest,
representing the equity in a subsidiary not
attributable, directly or indirectly, to a parent.
O
Operational Risk
Potential for incurring losses in relation to
employees, contractual specifications and
documentation, technology, infrastructure
failure and disasters, external influences
and customer relationships. This definition
includes legal and regulatory risk, but excludes
business and reputational risk.
Option
Right to purchase (call option) or sell (put
option) a specific underlying (e.g. security or
foreign exchange) from or to a counterparty
(option seller) at a predetermined price on
or before a specific future date.
OTC Derivatives
Nonstandardized financial instruments
( derivatives) not traded on a stock exchange,
but directly between market participants
(over the counter).
P
Portfolio
In general: part or all of one or all categories
of assets (e.g. securities, loans, equity
investments or real estate). Portfolios are
formed primarily to diversify risk. Here:
combination of similar transactions, especially
in securities and/or derivatives,
under price risk considerations.
Pre-tax Return on Average Active Equity
Income before income tax expense attributable
to Deutsche Bank shareholders (annualized),
which is defined as income before
income taxes less noncontrolling interests,
as a percentage of average active equity.
Prime
Used as a term to categorize U.S. mortgages
representing high quality loans.
Prime Brokerage
Suite of products including clearing and
settlement, custody, reporting, and financing
of positions for institutional investors.
Private Banking
Business with investment-oriented and high
net worth clients.
Private Equity
Equity investment in non-listed companies.
Examples are venture capital and buyout
funds.
Probability of Default (PD)
The likelihood or probability of default (PD)
of a counterparty is assessed over the next
twelve months time horizon and expressed
as a percentage. The Group does not rate
through the cycle. PD is the primary measure
of creditworthiness of a counterparty.
The numerical probabilities of default are
mapped into a 26-grade rating scale that is
similar to rating scales widely used by
international rating agencies.
Projected Unit Credit Method
The actuarial method, prescribed by IAS 19,
used to determine the actuarial present
value of an entity’s defined benefit obligations
and the related service cost. This
method takes into account benefits accrued
for employee service up to the reporting
date and allows for expected rates of salary
and pension increases.