entire - Deutsche Bank Annual Report 2012

Deutsche Bank 05 – Supplementary Information 406
Financial Report 2010 Glossary
R
Rating
The result of the objective assessment of
the future economic situation – namely the
default probability – of counterparties based
on present characteristics and assumptions.
The methodology for the rating assignment
strongly depends on the customer type and
the available data. A broad range of methodologies
for the assessment of the credit
risk is applied, such as expert systems and
econometric approaches.
Regulatory Capital
Capital recognized for regulatory purposes
according to the Basel Capital Adequacy
Accord of 2004 for banks. Capital according
to Basel II consists of:
– Tier 1 capital: primarily share capital,
reserves and certain trust preferred securities,
– Tier 2 capital: primarily participatory capital,
cumulative preference shares, longterm
subordinated debt and unrealized
gains on listed securities,
– Tier 3 capital: mainly short-term subordinated
debt and excess Tier 2 capital.
Tier 2 capital is limited to 100 % of Tier 1
capital and the amount of long-term subordinated
debt that can be recognized as
Tier 2 capital is limited to 50 % of Tier 1
capital.
Regulatory Capital Ratio
Key figure for banks expressed as a percentage
ratio of regulatory capital to the
overall regulatory risk position, comprised of
credit, market and operational risks
according to Basel II. The minimum capital
ratio to be complied with is 8 %. At least half
of the regulatory capital principally has to be
Tier 1 capital which leads to a minimum
Tier 1 ratio of 4 %.
Regulatory Trading Book and Banking Book
The regulatory trading book is defined in
Section 1a of the German Banking Act. It
consists of financial instruments and commodities
held with trading intent or held for
the purpose of hedging the market risk of
other trading book positions; repurchase
transactions, lending transactions and similar
transactions which relate to trading book
positions; name-to-follow transactions; and
receivables directly related to trading book
positions. Financial instruments and commodities
assigned to the trading book must
be tradable or able to be hedged. The regulatory
banking book comprises all positions
that are not assigned to the trading book.
Repo (Repurchase Agreement)
An agreement to repurchase securities sold
(genuine repurchase agreement where the
asset remains the seller’s property). From
the buyer’s viewpoint, the transaction is a
reverse repo.
Reputational Risk
Risk that publicity concerning a transaction,
counterparty or business practice involving
a client will negatively impact the public’s
trust in the Group.
Residential Mortgage-backed Securities
(RMBS)
Mortgage-backed securities (MBS), which
are backed by residential mortgage loans.
Return on Average
Total Shareholders’ Equity (RoE)
In general: ratio showing the income situation
of a company, setting profit (net income)
in relation to capital employed. Here: net
income as a percentage of average capital
employed over the year.
Risk-weighted Assets (RWA)
Risk-weighted assets are positions that
carry credit, market and/or operational
risk, weighted according to regulatory
requirements. RWAs are regulatory capital
requirements multiplied by 12.5, or in other
words, capital requirements equal 8 % of
RWA.
S
Sarbanes-Oxley Act (SOx)
U.S. capital market law passed in 2002 to
strengthen corporate governance and
restore investor confidence in response to a
number of major corporate and accounting
scandals. Legislation establishes new or
enhanced standards ranging from additional
Corporate Board responsibilities to criminal
penalties for all companies that have listed
their shares on a U.S. stock exchange.
Securitization
Creation of tradable securities from loan
claims, deposit positions (i.e. future cash
flows) and ownership rights in the wider
sense. Examples of securitized rights are
asset-backed securities and mortgagebacked
securities (MBS). Rights are often
evidenced through so-called SPEs (special
purpose entities), companies whose sole
purpose is to issue these securities and
whose assets are the ownership interests in
the company.
Seed Investments
Money used for initial research and/or
operation of an investment fund.
Segment Information
Disclosure of a company’s assets, income
and other information, broken down by activity
(division) and geographical area (region).
Shareholder Value
Management concept that focuses strategic
and operational decision-making on the
steady growth of a company’s value. The
guiding principle is that only returns above
the cost of capital add value for shareholders.
Step Acquisition
In a step acquisition, an acquirer obtains
control of an acquiree in which it held an
equity interest immediately before the
acquisition date (also known as business
combination achieved in stages). In these
transactions, the acquirer remeasures its
previously held equity interest at fair value
and recognizes the resulting gain or loss, if
any, in the income statement.