COMMERZBANK AKTIENGESELLSCHAFT

To our Shareholders Corporate Responsibility Management Report Risk Report Group Financial Statements Further Information 215 271
258 202 Statement of comprehensive income
260 204 Balance sheet
262 206 Statement of changes in equity
264 208 Cash flow statement
266 210 Notes
409 353 Auditors’ report
(4) Principles of consolidation
Subsidiaries are companies in which Commerzbank
Aktiengesellschaft directly or indirectly holds the majority of the
voting rights or where it has power to determine their financial
and operating policies in another way and thus exercise control
over them so as to obtain benefits from their activities.
Consolidation takes effect from the date on which the Group
acquires the majority of the voting rights or gains control over
the company concerned.
For the consolidation of capital, we remeasure the assets and
liabilities of subsidiaries completely every year, regardless of the
percentage share of equity at the time of acquisition. The assets
and liabilities remeasured at fair value are included in the
consolidated balance sheet net of deferred taxes; identified
hidden reserves and liabilities are accounted for in accordance
with the applicable standards in subsequent reporting periods.
Any difference over net assets on remeasurement is recognised
as goodwill.
Associated companies are entities over which Commerzbank
Aktiengesellschaft has a significant direct or indirect influence.
A significant influence is assumed to exist where the share of
voting rights is between 20% and 50%. Additional criteria for
judging whether there is significant influence include substantial
business transactions with the entity in question, membership of
a management or supervisory board, or involvement in setting
the entity’s business policies.
Jointly controlled entities are companies over which we
exercise joint control together with another company. Joint
control may arise as a result of each company holding equal
voting rights or based on contractual agreements.
Associated companies and jointly controlled entities are
ordinarily accounted for using the equity method and are
reported in the balance sheet under holdings in companies
accounted for using the equity method.
The acquisition cost of these investments including any
goodwill contained therein is determined at the time of their
initial consolidation, applying by analogy the same rules as for
subsidiaries. For material associated companies and jointly
controlled entities appropriate adjustments are made to the
carrying value in the accounts.
Holdings in subsidiaries not consolidated for reasons of
immateriality and holdings in associated companies and jointly
controlled entities which, because of their immateriality, are not
accounted for using the equity method are shown under
financial investments at their fair value or, if this cannot be
reliably established, at cost.
Subsidiaries are deconsolidated as of the date on which the
Bank loses its control over them. Equity accounting for holdings
in associated companies ends on the date that the share of
voting rights falls below 20% or other possibilities of exercising
significant influence over the associated company cease to
apply. Equity accounting for joint ventures ends on the date the
joint management of the venture comes to an end.
The obligation to consolidate special purpose entities under
certain circumstances derives from SIC 12. This stipulates that
consolidation is required if the special purpose entity is
controlled by the parent company. This may be the case if, in
substance,
• the activities of the special purpose entity are conducted on
behalf of the entity according to its specific business needs
so that the entity obtains benefits from the operations of the
special purpose entity;
• the entity has the decision-making powers to obtain the
majority of the benefits of the activities of the special purpose
entity or, by setting up an autopilot mechanism, the entity
had delegated these decision-making powers;
• the entity has rights to obtain the majority of the benefits of
the special purpose entity and therefore may be exposed to
risks incident to the activities of the special purpose entity;
• the entity retains the majority of the residual or ownership
risks related to the special purpose entity or its assets in
order to obtain benefits from its activities.
In the Commerzbank Group the obligation to consolidate special
purpose entities is examined by means of a process that
includes transactions where we form a special purpose entity
with or without the involvement of third parties, and transactions
in which we enter into contractual relations with an already
existing special purpose entity. The decision to consolidate is
regularly reviewed by us. All consolidated special purpose
entities and special purpose entities that have not been
consolidated for materiality reasons are listed in Note 106.
Group Financial Statements