COMMERZBANK AKTIENGESELLSCHAFT

82
Commerzbank AG
Notes
General information
(1) Basis of preparation
The financial statements of Commerzbank Aktiengesellschaft as
of December 31, 2011 have been prepared in accordance with
the provisions of the German Commercial Code (Handelsgesetzbuch,
HGB) and the Regulation on the Accounting of Credit
Institutions and Financial Services Institutions (RechKredV) and
in accordance with the provisions of the German Stock Corporation
Act (Aktiengesetz, AktG).
The financial statements consist of the income statement, the
balance sheet and the notes. In addition, a management report
has been prepared in accordance with Art. 289 HGB.
Unless otherwise indicated, all amounts are shown in millions
of euro.
(2) Accounting and measurementpolicies
The cash reserve is stated at nominal value. Debt issued by
public-sector borrowers is shown net present value. Claims on
banks and customers are reported at their nominal value, less
any valuation allowances that have been recognised. Differences
between the acquisition cost and the nominal amount with
interest-like characteristics are reported in accrued and deferred
items and recognised successively over their entire lifetime in
net interest income.
Risks in the lending business are reflected by creating both
specific loan loss provisions and general loan loss provisions for
all on-balance-sheet claims and off-balance-sheet transactions
using internal parameters and models. A distinction is made
between significant and non-significant exposures. Provision is
also made for country risks in these calculations. The level of the
provision for each individual default risk is based on the
difference between the carrying amount of the claim and the net
present value of the expected future cash inflows on the claim,
calculated using the discounted cash flow method and allowing
for any collateral held. The regular reversal of loan loss
provisions as a result of an increase in net present value is
shown under interest income in the income statement.
Securities in the liquidity reserve are shown according to the
rules for current assets at the lower of acquisition cost or fair
value with the strict lower-of-cost-or-market principle applied,
unless they are reported as a hedge relationship. Securities held
as fixed assets are treated in accordance with the modified lower
of cost or market value principle.
Equity holdings and holdings in affiliated companies are
carried at amortised cost, in accordance with the rules for fixed
assets. If the impairment of a holding is expected to be
permanent, the carrying amount of the asset is written down. If
the reasons for an impairment cease to exist, the asset is written
up to a maximum of the amortised cost.
Write-downs and valuation allowances are shown net of
write-ups. If this relates to items in the trading portfolio, the
amount is shown in net income in the trading portfolio. In the
case of securities in the liquidity reserve, they are reported
under write-downs and valuation allowances on loans and
certain securities and allocations to provisions in lending
business. In the case of securities held as investments they are
reported under write-downs and valuation allowances on equity
holdings, holdings in affiliated companies and securities shown
as fixed assets.
The trading portfolio is measured at fair value minus a risk
charge in accordance with Art. 340e (3) HGB. The risk charge is
calculated on the basis of the regulatory value at risk for market
price risk. Own issues which have been bought back in the
trading portfolio are shown net where there is no longer a debt
outstanding.
Repurchase agreements are stated in accordance with the
current principles of Art. 340b HGB). In the case of securities
lending transactions, securities lent continue to be recognised
on the balance sheet of Commerzbank Aktiengesellschaft as long
as the title is retained.
Fixed assets are stated at acquisition or production cost, and,
if applicable, less depreciation. The underlying useful lives are
based on the general depreciation table published by the
financial authorities. If an asset is permanently impaired, it is
written down to the impaired value.
Capitalised in-house developed intangible assets are
recognised at the value of development costs incurred. Low value
assets are recognised in accordance with the relevant local tax
legislation simplification rules.
Liabilities are stated at their settlement amount. Differences
between the amount to be repaid and the amount paid are
recognised as accrued and deferred items and recognised
through income on a pro-rata basis. Non-current discounted
liabilities (zero bonds) are recognised at net present value.