Corp Landesbank Berlin Holding

Landesbank Berlin Holding 

ANNUAL REPORT 2008

Group key figures at a glance 

Income statement 

2008 2007 1) 2006 1) 2005 1) 2004 1) 

Net interest income € million 1,247 815 743 890 915 

Allowance for losses on loans and advances € million 63 – 68 118 192 255 

Net commission income € million 302 297 368 322 308 

Net income from hedge accounting € million – 18 3 3 – 12 0 

Net gain from financial instruments 

recognised at fair value through profit or loss € million – 344 – 45 186 167 102 

Net income from financial assets € million – 308 – 4 50 61 50 

Net income from investments carried at equity € million – 18 12 – 4 – 1 – 

Other operating income € million 139 119 636 221 122 

Administrative expenses € million 940 965 1,115 1,130 1,140 

Operating result before restructuring € million – 3 300 749 326 102 

Restructuring expenditure and income (net) € million 12 6 35 – 50 – 27 

Operating profit / earnings before taxes € million 9 306 784 276 75 

Income tax expense € million – 20 76 97 – 4 – 33 

Consolidated net profit for the period / 

earnings after taxes € million 29 230 687 280 108 

Balance Sheet 

Total assets € million 145,371 142,163 141,625 144,403 130,302 

Shareholders’ equity including 

unappropriated surplus € million 1,945 2,847 2,624 1,901 1,957 

Dormant participations (nom.) € million 700 700 700 1,100 1,100 

Risk items in accordance with 

the German Banking Act 2) € million 41,150 50,491 44,901 40,924 41,691 

Key figures 

Cost-income ratio % 94.0 80.6 56.3 68.6 76.2 

Return on equity (before taxes) 3) % 0.4 10.8 35.3 13.0 3.7 

Overall capital ratio (German Banking Act) 4) % 16.41 15.04 10.6 11.6 11.1 

Tier 1 capital ratio (German Banking Act) 4) % 13.74 11.80 7.2 8.1 7.5 

Shares 

Earnings per share 5) € 0.02 0.21 0.67 0.28 0.09 

Market capitalisation (reporting date) € million 2,928 6,366 7,851 2,906 1,963 

Share price 1.1. – 31.12. 

(closing price on Frankfurt Stock Exchange) 

High € 6.32 8.18 7.96 3.51 2.08 

Low € 2.18 5.25 3.11 2.02 1.80 

Employee capacity (reporting date) number 5,999 5,965 5,960 7,336 7,782 

1) Figures for the previous year have been adjusted 

2) 2008 as per SolvV; 2007 as per KWG 

3) On the basis of equity according to IFRS 

4) From 2007 for the RVG Group, after approval of the financial statements 

5) Diluted = basic earnings

Ratings 

Unguaranteed liabilities 

Moody’s Fitch dbrs 

Long-term rating A1 AA – A (high) 

Short-term rating P-1 F1 + R-1 (middle) 

Outlook Stable Stable Stable 

Financial strength 

Financial strength D + D BBB + 

Guaranteed liabilities 

Long-term rating Aa1 AAA – 

Short-term rating P-1 F1 + – 

Outlook Stable Stable – 

Pfandbriefs 

Public-sector pfandbriefs Aaa AAA – 

Mortgage bonds Aaa – – 

Status: March 2009

Corporate Profile 

Landesbank Berlin Holding AG is a listed financial holding headquartered in the German capital. 

It is the parent company of its whollyowned subsidiary Landesbank Berlin AG. Landesbank Berlin 

is universal bank in which all the activities are bundled. The historic core of Landesbank Berlin AG 

is Berliner Sparkasse, founded in 1818. from the day of its foundation until the present, Berliner 

Sparkasse has continuously fulfilled a publicsector mandate in the service of the city. The Bank is 

the market leader in the Berlin banking centre and stands for client orientation, fairness, security 

and modernity. 

our business model is built on four pillars: Retail Banking and Regional corporate Banking, in 

which we hold an excellent position as an innovative, customeroriented bank; capital Markets, 

for which we offer selected activities and Real estate financing, which is focused on the requirements 

of investors and residential development companies throughout Germany. 

our Retail Banking clients have the comprehensive network of Berliner Sparkasse branches at their 

disposal. In addition, this full offering is rounded off by modern sales channels such as online banking, 

call centres and selfservice facilities. our banking products for pensions, asset accumulation, 

consumer and realestate financing as well as payment transactions and liquidity management enable 

us to provide our clients with an extensive offering. We cater for the investment and finance requirements 

of high networth retail banking clients in our Asset Management centres. 

In Regional corporate Banking, our clients include small and mediumsized enterprises, associations 

and foundations, publicsector companies and regional and local authorities as well as a large 

number of other small companies from around the region. Their requirements in respect of finance, 

investment and service issues require competent and customised support. This is ensured by experienced 

advisers in the Landesbank Berlin Regional corporate Banking departments as well as the 

Berliner Sparkasse Regional corporate Banking centres. In addition, our business clients also have 

a stateoftheart, efficient sales channel in BusinessLine. The Regional corporate Banking range of 

services is rounded off by the competence centres for International Banking, Leasing and factoring, 

Startups and Business Succession as well as electronic Banking. 

In capital Markets business, Landesbank Berlin attends particularly to financial institutions and 

institutional investors. We focus on selected activities in which we have leading expertise. The bank 

is also established as a renowned, expert provider of innovative capital market products for private 

investors as well. Due to our trading activities we are a recognised business partner. We maintain a 

global network of local trading partners and thereby offer direct market access to all relevant trading 

centres. In LBBInvest, the bank has a fund provider for private and institutional customers that has 

established itself among the leaders of German investment companies. 

In the Real estate financing business area, we focus on the requirements of experienced private 

and commercial investors of good credit standing and development companies in selected growth 

regions in Germany. Streamlined structures and short decisionmaking paths guarantee flexibility, 

speed and excellent service for stable and profitable customer relations.

Contents 

Management 2 

Letter to Shareholders 3 

Report of the Supervisory Board 

of Landesbank Berlin Holding AG 5 

Corporate Governance Report 9 

Executive Bodies of Landesbank Berlin Holding AG 

and Landesbank Berlin AG 14 

About the company 26 

Strategic divisions 27 

Retail Banking 28 

Regional Corporate Banking 32 

Capital Markets 36 

Real Estate Financing 39 

Employees 42 

Share Price of Landesbank Berlin Holding AG 43 

Group management report 45 

Overview of the 2008 financial year 46 

Development of business – 

January to December 2008 60 

Events after December 31, 2008 73 

Final statement on the dependent company 

report in accordance with Article 312 of the 

German Stock Corporation Act 73 

Risk report 74 

Report on expected developments / Outlook 103 

Annual Financial Statements for the Group 107 

Income Statement 108 

Quarterly Development of the 

LBB Holding Group 109 

Balance Sheet 110 

Statement of Changes in Equity 111 

Consolidated Cash Flow Statement 112 

Notes 114 

Executive Bodies of Landesbank Berlin Holding AG 191 

Responsibility Statement 192 

Auditors’ report 193 

Important Addresses 194

3 Letter to Shareholders 

Management 

5 Report of the Supervisory Board of Landesbank Berlin Holding AG 

9 Corporate Governance Report 


14 

and Landesbank Berlin AG

Letter to Shareholders 

Dear shareholders, 

Landesbank Berlin Holding AG closed the difficult banking year of 2008 with small but positive earnings. In 

view of the extremely challenging market conditions, this is comparatively good news. However, at the same 

time we state clearly that we have higher expectations of ourselves and will put all our efforts into continuing 

to fulfil this demand in the coming years. 

Up till and including August 2008, Landesbank Berlin Holding AG was well set to achieve its target for operating 

profit. However, in the third quarter of 2008 the situation on the international financial markets deteriorated 

drastically, with the effect that extensive guarantee and stabilisation measures were initiated for the financial 

systems by national governments. The collapse of certain major banks and insurance companies, particularly 

in the USA, led to a general re-evaluation of default risks on the capital market, which could be observed 

in the development of risk premiums for all borrowers, and later also for states. Resulting impairments on 

investments resulted in a significant negative impact on income statements across the entire financial sector. 

The Landesbank Berlin Holding AG Group did not remain unaffected by these extreme strains on the capital 

market. 

We have already reported on part of this negative impact on earnings in the presentation of the result on 

30 September. For the year as a whole, the negative impact from the financial crisis at Landesbank Berlin 

amounted to over € 600 million. 

In this environment, Landesbank Berlin Holding AG still managed to achieve earnings for the year before taxes 

totalling € 9 million. This was possible because – although Capital Markets business suffered considerably 

from the market conditions – good success continued to be achieved in retail banking, regional corporate 

banking and real estate financing business. It was clearly shown that the Group-owned Berliner Sparkasse, 

Landesbank Berlin AG and Berlin Hyp operate in a customer-oriented, customer-focused and successful 

way, even, and in fact particularly, in the crisis. 

Management 

3

4 

Letter to Shareholders 

Dear shareholder, the starting point for the Bank’s medium-term development is a good one. We have a 

diversified business model, which proves itself to be stable and viable even in difficult times. Growth in loans 

and deposits by private customers, the increased number of corporate clients, the good new business volume 

and the considerably increased loans portfolio in real estate financing, as well as successful business with 

institutional customers, all prove that Landesbank Berlin is developing successfully, even in a difficult environment. 

We deal with costs, risks and liquidity in a responsible and prudent manner, thus ensuring that we 

remain a reliable business partner for our customers. 

All of this – together with a respectable start to the current year – gives us grounds for cautious optimism. 

However, in view of the continued extremely difficult global economic situation and the fact that there is not 

yet a foreseeable end to the financial crisis, forecasts of the result for the whole year cannot currently be 

prepared with the necessary level of reliability. 

Nonetheless, with all due caution we are confident that Landesbank Berlin Holding AG will overcome the 

crisis and put to use the experience it gains in continuing to develop its performance. 

With kind regards 

The Board of Management 

Hans-Jörg Vetter Dr. Thomas Veit

Report of the Supervisory Board of Landesbank Berlin Holding AG 

During the 2008 financial year, the Supervisory Board kept itself well informed of current events and significant 

transactions in six plenary sessions, including one telephone conference, and six committee meetings, of 

which two were telephone conferences. It reviewed the situation and business performance of the Bank 

regularly, comprehensively and with appropriate urgency both in writing and verbally, and continuously 

monitored and satisfied itself that Landesbank Berlin Holding AG (Holding) and its subsidiaries were being 

managed properly by the Board of Management. 

The Supervisory Board was informed by the Board of Management about the intended business policy and 

other fundamental issues of corporate planning, including in particular financial, investment and personnel 

planning, the risk situation and compliance. It then advised the Board of Management on all aspects associated 

with these matters and gave recommendations where appropriate. Current issues were discussed on 

an individual basis by the Chairman of the Board of Management and the Chairman of the Supervisory Board. 

In view of the largely identical topics, the Supervisory Board members of Holding and Landesbank Berlin AG 

(LBB) both met regularly in joint meetings – as did the two Accounting, Personnel and Strategy Committees. 

Focus of the work of the Supervisory Board 

The subject of all meetings was information provided by the Board of Management on the current business 

performance and the earnings of the strategic divisions, as well as detailed discussions of the current situation 

of Holding, with a particular focus on the crisis on the international financial and Capital Markets. As a result 

of the dramatic escalation of the crisis in September 2008, the Supervisory Board and the relevant committee 

were informed on an ongoing basis about the impact of the crisis on the Holding, pending decisions and the 

market environment, and discussed the situation in detail in the meetings. 

In addition to reporting on the 2007 financial year, the separate accounts meetings focused primarily on 

advising on and auditing the annual and consolidated financial statements and the Holding management and 

Group management reports as at 31 December 2007, as well as the proposal for the appropriation of the 

2007 unappropriated surplus. 

Management 

Letter to Shareholders | Report of the Supervisory Board 

5

6 


Other topics of the Supervisory Board meetings included the resolution on the focus of the audit for the 

annual financial statements for the 2008 financial year, and discussing the interim reports and the risk strategy. 

There was also consultation on medium-term planning for the period 2009 to 2013, information on the 

earnings outlook for the Group, and the impact of the financial market crisis on the Holding. 

Outside the Supervisory Board meetings, one resolution was passed by way of circulation procedures during 

the 2008 financial year. One member of the Supervisory Board attended fewer than half of the meetings of 

the Supervisory Board due to other urgent commitments during the course of the year. 

Committees of the Supervisory Board 

In the 2008 financial year, the work of the Supervisory Board was supported by the Accounting, Personnel 

and Strategy Committee (APS Committee) formed by members of the Supervisory Board. During the past 

financial year, the APS Committee dealt principally with questions of accounting, risk management and 

compliance as well as personnel matters relating to the Board of Management. The APS Committee met 

six times during the reporting year to prepare the content of individual agenda items for the respective 

plenary session and intensively examine strategic issues and transactions of particular significance. One 

resolution was passed by way of circulation. The focus of the two telephone conferences of the APS 

Committee included a discussion of the interim report dated 30 September 2008 with the Board of Management 

before publication. 

The Mediation Committee formed in accordance with Article 27 (3) of the Mitbestimmungsgesetz (MitbestG – 

German Codetermination Act) of 1976 did not meet in the 2008 financial year. 

The Supervisory Board received regular and comprehensive reports on the work of the APS Committee in 

its plenary sessions. All members of the APS Committee took part in at least half the meetings. 

Corporate governance 

The implementation of the provisions of the German Corporate Governance Code (GCGC) was discussed 

by the Supervisory Board in several meetings. In early 2008, the Supervisory Board subjected its work to 

another efficiency review. In cooperation with the Board of Management, the findings of this efficiency review 

form the basis for the further optimisation of the work of the Supervisory Board. In December 2008, the 

Board of Management and the Supervisory Board issued the annual German Corporate Governance Code 

(GCGC) declaration of conformity on the version of the Code dated 6 June 2008. Details of this can be found 

in the Company’s Corporate Governance Report. As the Supervisory Boards of Holding and LBB are largely 

made up of the same people, a joint report is issued. There were no conflicts of interest in the Board of 

Management or the Supervisory Board in the year under review. 

The declaration of conformity of Landesbank Berlin Holding AG can be accessed on the Company’s 

homepage at www.lbb-holding.de. 

Further information on corporate governance in the Company and a detailed report on the amount and 

structure of the remuneration of the Supervisory Board and the Board of Management can be found on 

pages 9 ff. and 52 ff. of this Annual Report.

Personnel changes 

In the 2008 financial year, the following personnel change took place in the Supervisory Board: Mr Dietmar 

P. Binkowska resigned his office as a shareholder member of the Supervisory Board with effect from 

21 November 2008. The Supervisory Board would like to thank Mr Binkowska for his valuable work in this 

body. The Local Court responsible appointed Mr Artur Grzesiek as the successor to Mr Binkowska with 

effect from 24 November 2008. 

Report by the Board of Management on relations with affiliated companies 

The Supervisory Board examined the Board of Management’s report on relations with affiliated companies in 

accordance with Article 312 AktG for the 2008 financial year. Neither this examination nor the audit performed 

by the auditors gave rise to any objections. 

The audit company PricewaterhouseCoopers Aktiengesellschaft issued Holding with the following audit 

opinion for the period from 1 January to 31 December 2008: 

“On completion of our audit in accordance with professional standards, we confirm that 

1. the factual statements made in the report are correct, 

2. the Company’s compensation with respect to the transactions listed in the report was 

not inappropriately high.” 

On completion of its examination, the Supervisory Board raised no objections to the closing statement by the 

Board of Management in its report on relations with associated companies in accordance with Article 312 AktG. 

Annual financial statements 2008 

These annual financial statements of Holding and the management report for the 2008 financial year, as well 

as the consolidated financial statements of Holding with the Group management report, have been audited 

by the auditor mandated by the Annual General Meeting, PricewaterhouseCoopers Aktiengesellschaft 

Wirtschaftsprüfungsgesellschaft, Frankfurt / Main, Berlin branch, taking into consideration the focus of the 

audit determined by the Supervisory Board and with an unqualified audit opinion. The Supervisory Board 

approved the auditor’s certificate issued in each case. 

During each audit, the Chairman of the Supervisory Board was regularly informed of the content and status 

of the audit by the auditor. The annual financial statements of Holding were prepared in accordance with the 

provisions of the German Commercial Code (HGB), while the consolidated financial statements of Holding 

were prepared in accordance with International Financial Reporting Standards (IFRS). Both the annual financial 

statements and the consolidated financial statements together with the management report and the Group 

management report and the respective auditor’s report were presented to the Supervisory Board for inspection 

following a detailed preliminary examination by the APS Committee. 

Management 

Report of the Supervisory Board 

7

8 


The accounts meetings of the full Supervisory Board and the APS Committee were attended by the auditors 

responsible for signing the annual and consolidated financial statements. The auditors reported on the key 

results of their audit and gave detailed answers to questions from the members of these committees. The 

Supervisory Board is confident that the auditor has no conflicts of interest in accordance with the GCGC 

7.2.1 in terms of an independent audit. 

There were no objections to the audit results. The Supervisory Board approved the annual financial statements 

of Holding and of the Group prepared by the Board of Management as of 31 December 2008 in its meetings 

on 27 March 2008. The annual financial statements of Holding are thereby adopted in accordance with Article 

172 (1) sentence 1 of the German Stock Corporation Act (AktG). 

The Supervisory Board approved the proposal by the Board of Management to carry forward the reported 

unappropriated surplus of the Company for the 2008 financial year in the amount of € 13,206,360.23 to new 

account. 

The Supervisory Board would like to thank the members of the Board of Management and all the employees of 

the Company for their achievements in a difficult and challenging market environment in the 2008 financial year. 

Berlin, March 2009 

The Supervisory Board 

Heinrich Haasis 

Chairman

Corporate Governance Report 

The Board of Management and the Supervisory Board attach great importance to clear and efficient rules 

for managing and monitoring the Company and its subsidiaries. The Supervisory Board and the Board of 

Management act in the knowledge that sound corporate governance is in the interests of the Capital Markets 

and constitutes an important basis for the success of Group companies and therefore also the employees. 

For the Company, compliance with the corporate governance guidelines is also an important factor in 

strengthening confidence among the general public. 

The Group companies adhere to the recommendations of the German Corporate Governance Code (GCGC), 

irrespective of their legal form, to the extent that these principles are applicable to and important for the 

implementation of a Group-wide model. 

In the interests of acting in a uniform manner, non-listed Landesbank Berlin AG (LBB) also resolved to apply 

the corporate governance principles voluntarily. This is therefore the joint Corporate Governance Report of 

Landesbank Berlin Holding AG (Holding) and LBB. 

Berlin-Hannoversche Hypothekenbank AG describes its principles in its own corporate governance report, 

including its declaration of conformity. 

Board of Management 

The Boards of Management of Holding and LBB are committed to the principles of sound, responsible, 

efficient corporate management and monitoring based on sustained value-added. They manage the respective 

company under their own responsibility in accordance with statutory provisions, articles of associations 

and internal regulations as well as internal directives and work towards compliance with these by the Group 

companies. Each Board of Management develops the strategic orientation of the company with the approval 

of the Supervisory Board and ensures that this strategy is implemented. 

Both Boards of Management each inform their Supervisory Board promptly and comprehensively of the 

business performance of their company, its planning, risk situation, risk management and compliance and, 

where applicable, deviations in business performance from the original planning. 

Neither the Board of Management of Holding nor that of LBB was subject to conflicts of interest while 

carrying out their duties with the result that there is no information that must be reported. The composition 

of both Boards of Management and the responsibilities of the individual Board of Management members 

are presented on page 48. 

Management 

Report of the Supervisory Board | Corporate Governance Report 

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10 


Supervisory Board 

The Supervisory Board of Holding comprises 20 members. In accordance with the provisions of the German 

Codetermination Act, it is composed of ten shareholder members and ten employee members. The Supervisory 

Board of LBB comprises 16 members. Its composition is also in accordance with the provisions of the German 

Codetermination Act. It is made up of eight shareholder members and eight employee members. The Supervisory 

Boards of Holding and LBB are largely made up of the same people. 

The members of both Supervisory Boards are named on pages 14 and 15 of the Annual Report. 

The Supervisory Boards of Holding and LBB advise and monitor the respective Board of Management in its 

management of the company and cooperate closely with it in an environment of trust. 

The Supervisory Boards have defined material transactions that the Board of Management may only perform 

with the approval of the Supervisory Board. Furthermore, they have established rules that serve to prevent 

conflicts of interest. The Chairman of the Board of Management constantly exchanges information with the 

Chairman of the Supervisory Board. 

In both Supervisory Boards, committees have been formed to increase the efficiency of the Supervisory 

Board’s work and to deal with complex matters. In addition to the respective Mediation Committee and the 

Accounting, Personnel and Strategy Committee, there is also a Credit Committee in the Supervisory Board 

of LBB. 

The activity of the Supervisory Boards and their committees is governed in each case by the internal regulations 

of these bodies. The respective Chairmen inform all Supervisory Board members about the ongoing 

work of the committees in the following plenary meeting. The responsibilities of the individual committees 

and the key topics discussed by the committees and in the Supervisory Board in the 2008 financial year are 

presented in detail in the Report of the Supervisory Board of Holding or LBB respectively. As in previous 

years, neither of the two Supervisory Boards was subject to conflicts of interest while carrying out their 

duties with the result that there is no information that must be reported. 

The Supervisory Board of the listed Holding undertook an efficiency review in the past year, as did the 

Supervisory Board of its wholly-owned subsidiary LBB on a voluntary basis. The review was carried out 

using a detailed checklist in each case in which all issues relating to the GCGC were dealt with and 

assessed individually by each Supervisory Board member. In the result of the final survey analysis in the 

Supervisory Board plenum, both bodies came to the opinion that the efficiency of the Supervisory Board 

activities had further improved compared with the previous year. The existing proposals for improvement 

were each conveyed to the Board of Management with a request that these be taken into account when 

working together with the Supervisory Board in future. 

A D&O insurance policy (director and officers’ liability insurance) is in place for members of the Supervisory 

Board as well as for members of the Board of Management. To emphasise the responsibility of the individual 

body members to the respective company and the shareholders, an appropriate deductible was agreed in 

each case.

Transparency 

The members of the Board of Management and the Supervisory Board of Holding did not carry out any 

reportable transactions in Holding shares in the 2008 financial year. 

The members of the executive bodies of LBB who do not perform management roles in Holding also did not 

carry out any transactions in Holding shares in the 2008 financial year. 

No other shares of the Company or related financial instruments that must also be reported under 6.6 of 

the GCGC were held by the Board of Management or Supervisory Board members of Holding or LBB in the 

reporting year. 

Remuneration report 

The compensation of the Board of Management and the Supervisory Board is presented in a separate remuneration 

report for the 2008 fiscal year in the Annual Report. The compensation of the Board of Management 

and Supervisory Board members is also broken down individually. 

The remuneration report is included in the Group Management Report from page 52 with its presentation of 

the remuneration system and from page 181 with details on the compensation of the Board of Management 

and Supervisory Board by member in the Notes. 

Accounting 

The consolidated financial statements for Holding and for LBB for the 2008 financial year were reported in 

accordance with International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS). 

The single-entity financial statements of Holding and of LBB are prepared according to the provisions of the 

Handelsgesetzbuch (HGB – German Commercial Code). 

The consolidated and annual financial statements each contain a detailed risk report that provides information 

on the Company’s risk position and risk control. The consolidated financial statements of Holding can be 

found on pages 74 to 102. 

Financial disclosure 

Shareholders and other interested parties are kept informed about the business and earnings performance 

of Holding. In addition to the annual financial statements, interim reports are published in the form of semiannual 

and quarterly financial reports. All company news that could affect the share price is published in ad 

hoc disclosures. The Internet is widely used in order to ensure that shareholders, shareholder representatives, 

analysts and the media receive information – including key financial dates – in a timely manner and, to the 

greatest possible extent, at the same time. The annual and interim reports as well as important information 

can be found in the “Investor Relations” section here. 

Management 


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12 


Recommendations of the German Corporate Governance Code 

In line with the amendments of the German Corporate Governance Code that came into force on 6 June 

2008, the Board of Management and Supervisory Board of Holding revised and submitted the declaration 

of conformity in December 2008. 

Contrary to the recommendations in 7.1.2 of the German Corporate Governance Code, the Group has not 

yet fulfilled the requirement to make the consolidated financial statements publicly available within 90 days 

of the end of the 2008 financial year. For the 2008 financial year, the consolidated financial statements of 

Landesbank Berlin Holding were published within 90 days of the end of the financial year. 

At present, the Supervisory Board does not consider it necessary to form a Nomination Committee made 

up exclusively of shareholder representatives to propose suitable candidates to the Supervisory Board for 

election by the Annual General Meeting, as a result of the composition of the Supervisory Board on the 

shareholder side. The shareholder representatives handle topics recommended by the DCGC for the Nomination 

Committee jointly. This ensures that the Supervisory Board is able to fulfil its duty to select new 

Supervisory Board members without setting up a separate committee. 

The application made in 2007 to have the shareholder representatives of the Supervisory Board appointed 

by the court was not limited to the next Annual General Meeting in order to ensure continuity in the work of 

the Supervisory Board following conclusion of the restructuring and privatisation process. 

The Supervisory Board has decided to waive the dividend-dependent portion of the Supervisory Board 

remuneration because it does not consider the level of the dividend to be a benchmark for the quality of 

responsible Supervisory Board work. It does not therefore seem appropriate for remuneration to be based 

on this. The additional remuneration components for work in committees and acting as chair or deputy 

chair of the Supervisory Boards represent an appropriate settlement for additional work. Additional performance-related 

remuneration for responsible Supervisory Board work is therefore not considered productive. 

When Board of Management contracts are concluded or extended, a compensation cap is not included in 

the content of every contract requiring that, if the Board of Management duties are terminated early without 

good cause, settlement payments are limited to the amount of two years’ compensation including fringe 

benefits. If compensation caps are agreed generally, it is no longer possible to take into account individual 

circumstances when concluding or extended contracts. As a result, a decision should therefore be made 

in each individual case on whether a compensation cap should be agreed.

In view of this, a revised declaration of conformity was issued as of December 2008 and published on the 

Bank’s website. 

The wording of the declaration of conformity of the Board of Management and the Supervisory Board in 

accordance with Article 161 of the Aktiengesetz (AktG – German Stock Corporation Act), submitted on the 

basis of the GCGC in the version published on 6 June 2008, is as follows: 

“Article 1 Landesbank Berlin Holding AG complied / complies with all the recommendations of the Government 

Commission on the German Corporate Governance Code announced by the Federal Ministry of Justice in 

the official section of the electronic Bundesanzeiger (Federal Gazette) with the exceptions mentioned under 

Article 2. 

§ 2 Landesbank Berlin Holding AG deviates from the following recommendations of the Code: 

(a) The requirement to make the consolidated financial statements publicly accessible within 90 days of the 

end of the financial year could not be met by the Group in the past. In future, this requirement should be 

met (7.1.2 of the GCGC). 

(b) The Supervisory Board does not form a Nomination Committee, which proposes suitable candidates for 

its elections to the Annual General Meeting (5.3.3 of the GCGC). 

(c) The period in office of members of the Supervisory Board of Landesbank Berlin Holding AG appointed 

by resolution of the Charlottenburg Local Court of August 30, 2007 was not limited to the Annual General 

Meeting of the following year (5.4.3 of the GCGC). 

(d) The members of the Supervisory Board do not receive any performance-related remuneration (5.4.7 of 

the GCGC). 

(e) When Board of Management contracts are concluded , a compensation cap is not included in the content 

of every contract requiring that, if the Board of Management duties are terminated early without due 

reason, settlement payments are limited to the amount of two years’ compensation including additional 

payments.” 

The Board of Management and the Supervisory Board 

of Landesbank Berlin Holding AG 

Management 


13

14 


and Landesbank Berlin AG 


Hans-Jörg Vetter 

Chairman 

Landesbank Berlin Holding AG 

Landesbank Berlin AG 

Dr. Thomas Veit 



Serge Demolière 


Dr. Johannes Evers 


Hans Jürgen Kulartz 


Martin K. Müller 






Chairman 

President of the German Savings Banks 

and Giro Association (DSGV) 

Bärbel Wulff * 



Deputy Chairwoman 

Chair of the Works Council 

of Landesbank Berlin AG 

Gregor Böhmer 



Former Managing President 

of the German Savings Banks and 

Giro Association of Hesse-Thuringia 

Dagmar Brose * 


Consultant in the Finance division 

at Landesbank Berlin AG 

Hans Jörg Duppré 


President of the Deutscher Landkreistag 

(German County Association) 

Christina Förster * 



Financial Services Secretary, 

ver.di Berlin-Brandenburg region 

Artur Grzesiek 



Chairman of the Board of Management 

of Sparkasse Köln / Bonn

Sascha Händler * 



Member of the Works Council 


Export finance customer adviser 


Jürgen Hilse 



Chairman of the Management Board 

of Kreissparkasse Göppingen 

Claus Friedrich Holtmann 



Managing President of the East German 

Savings Bank Association 

Michael Jänichen * 



Divisional Manager of Regional Corporate Banking 


Daniel Kasteel * 





Customer adviser for sales division east 

Thomas Mang 



President of the Savings Bank Association 

of Lower Saxony 

Astrid Maurer * 



Member of the Works Council Landesbank Berlin AG, 

Women’s Officer of Landesbank Berlin AG 

Andreas Rohde * 





Peter Schneider 




of Baden-Württemberg 

Friedrich Schubring-Giese 



of Versicherungskammer Bayern 

Joachim Tonndorf * 


Former Financial Services Secretary, 


Dr. Harald Vogelsang 




of HASPA Finanzholding 

and Hamburger Sparkasse AG 

Frank Wolf * 



Head of Financial Services Department, 


* Employee representatives 

Status: March 2009 

Management 

Executive Bodies 

15

Landesbank Berlin – 

a reliable partner 

at all times 

The global economy is facing great challenges. Almost 

all industries are impacted by the developments on the 

international markets. The financial market crisis is now 

affecting all of us: as a bank, as savers, as investors. 

Many people are feeling concerned. We have responded 

to this with our range of consultation services. It is 

precisely in economically difficult times that our work 

in partnership with our customers has to prove itself. 

Alongside daily conversations at our branches, we also 

organise customer events and take part in reader telephone 

events about the current situation on the financial 

markets. Intensive use is made of these services, since 

there is a high level of need for information. Responsibility 

is also shown by the fact that we have maintained 

the same criteria as before for issuing loans to small 

and medium-sized business customers and to private 

customers. We have made it our goal to navigate our 

customers securely through these uncertain times. 

Our commitment and the dedication of our employees 

have been recognised. We are proud of this.

Innovative – with modern 

financial services 

We offer our customers a comprehensive 

range of services and advice, 

with specialised products and flexible 

banking possibilities. We aim to keep 

improving our products and services 

on an ongoing basis, thus expanding 

our already leading market position. 

In retail banking business, Berliner 

Sparkasse is by far the No. 1 among 

providers of comprehensive banking 

services in Germany’s capital. Likewise 

in regional corporate banking, we are 

also the market leader in Berlin. In 

commercial real estate financing, we 

have gained a sustained solid position 

on the national market, too. Selected 

capital market activities with innovative 

products und services round off our 

well-balanced business model.

Trustworthy – 

close to our customers 

Banks live on the basis of the trust 

their customers place in them. However, 

this trust can only exist if we 

keep proving it justified day by day 

and live according to reliable principles. 

We do this with over 6,000 

employees for approximately two million 

customers. The requirements 

and wishes of people and companies 

form the basis of our work. A bank’s 

closeness to its customers must consist 

of more than just an extensive 

network of branches and easy accessibility. 

It is also determined by the 

extent to which our advisors are aware 

of the individual needs of each customer 

and deal with these specifically. 

Only then can a customised solution 

with substance be provided based on 

the customer’s wishes.

Expert and fair – 

our claim 

In uncertain times, it is particularly 

important to act in a transparent 

way. We aim to offer our customers 

expert advice and attractive products. 

When markets change, it is a case 

of examining investment and financing 

goals together and adapting these 

where necessary. This can only be 

achieved through personal conversa- 

tions, openness in our dealings with 

one another, and mutual trust. Whether 

they are employees, students or pen- 

sioners, a high-tech company, a bakery 

or a fashion boutique – the variety 

among our customers always keeps us 

in touch with the real world in our 

daily work. Our specialists und experts 

advise, finance and offer ongoing 

support with our customers’ life plans, 

both for private individuals and for 

small and medium-sized companies. 

We have a particular commitment to 

three claims: quality, innovation and 

fairness.

Proven – through our 

long history 

The unity between Sparkasse and 

Landesbank has a long history in 

Berlin. Berliner Sparkasse has been 

acting by public-sector mandate as 

a banking partner for Berliners ever 

since 1818. In the 1920s, the bank 

first began to assume clearing house 

functions as well. Even back then, 

this model guaranteed short decision 

paths and attractive offers. Today, 

almost every second Berliner is a cus- 

tomer of Berliner Sparkasse, which 

for 200 years has had a special 

responsibility towards the citizens of 

Berlin. Berliner Sparkasse does not 

just want to be the market leader in 

Berlin: it also clearly asserts its claim 

to be the leader for quality in the 

Berlin banking market – with first-rate 

services.

27 Strategic divisions 

28 Retail Banking 

About the company 

32 Regional Corporate Banking 

36 Capital Markets 

39 Real Estate Financing 

42 Employees 

43 Share Price of Landesbank Berlin Holding AG

Strategic divisions 

The business model of Landesbank Berlin is based 

on four divisions, namely Retail Banking, Regional 

Corporate Banking, Capital Markets and Real Estate 

Financing. With this strategic line-up LBB is an 

effective universal bank for Berlin-Brandenburg. It 

occupies leading market positions in all divisions 

in its core region. In sub-areas such as credit card 

business, publicly offered funds or commercial real 

estate financing, it also ranks among the leading 

providers nationally. In the German capital, Landesbank 

Berlin is the top financial services provider and 

stands for client orientation, security and innovation. 


27

The retail banking business of Landesbank Berlin is primarily 

operated regionally by Berliner Sparkasse – by the number of 

bank accounts, it is the largest savings bank in Germany. Nationally, 

these activities are supplemented by credit card business, 

the sales financing acquired in 2008, and netbank AG, operating 

as an exclusively Internet bank. 

28 

Retail Banking 

In 2008, the Retail Banking division posted a pleasing business development overall, 

despite the large-scale uncertainty among many customers due to the financial crisis. 

The good customer contact by our advisors, open communication with customers 

and the high quality of service and advice in our branches helped to ensure confidence 

in Sparkasse as a solid and reliable financial partner. Berliner Sparkasse remains the 

undisputed market leader in Berlin. At the beginning of 2008, in its national business, 

the acquisition of sales financing from BHW Bank represented another future investment 

with development potential. 

ReTAIL BANkING – LoANS 

in € million 31.12.2008 31.12.2007 1) 

Current account 292 298 

Near-money market loans 541 400 

Real estate loans 1,541 1,554 

Other loans (e.g. consumer loans) 1,583 1,003 

Total loans and advances to customers 3,957 3,255 

ReTAIL BANkING – DepoSITS 

in € million 31.12.2008 31.12.2007 1) 

Demand deposits 3,159 3,441 

Overnight deposits 506 17 

Term deposits / savings certificates 483 572 

Savings deposits 7,185 6,718 

‘Cash direkt’ 1,017 735 

Total customer deposits 12,350 11,483 

1) Figures for the previous year have been adjusted

Berlin’s economy weakening 

After posting a slight upward trend in the previous 

year, the economy in Berlin declined in the second 

half of 2008. Berlin’s gross domestic product grew 

by only 1.6 % over the whole of the year, compared 

to 2.0 % in 2007. 

Although the number of persons employed increased 

and the number of unemployed decreased, the economic 

situation of our retail banking customers 

improved only slightly overall. Disposable income in 

Berlin remains below the national average, as does 

the savings rate. The number of personal insolvencies 

decreased by approximately a quarter as a result of 

changes to procedures. 

Further increase in instalment loans 

The instalment loans / all-purpose loans business of 

Landesbank Berlin grew as planned in 2008. At the 

year-end, the portfolio of this type of loans was 

10.9 % up on the same date in the previous year, at 

€ 602.7 million. New business in instalment loans / 

all-purpose loans reached € 416.8 million (previous 

year: € 363.4 million). Landesbank Berlin’s private 

construction finance business also increased in 

2008. New business in loan extensions increased 

by 10.3 % to € 183.2 million. 

The lending volume of the Private Banking division 

totalled € 3.96 billion as of December 31, 2007 and 

was consequently 21.6 % up on the figure for the 

previous year. The new activities in sales financing 

create additional sales channels for Landesbank 

Berlin in its instalment loans business, and create 

further business potential nationally in connection 

with the card business and the Internet sales via 

netbank AG. 

Stock market trends benefit deposits business 

The securities business of Landesbank Berlin could 

not escape the negative performance of the stock 

market. Custodian account volume (including LBB- 

Invest accounts and DekaBank securities accounts) 

fell sharply by 20 % due to market jitters. However, 

the deposits business benefited from the increased 

need for security among customers. As a result, 

Landesbank Berlin increased its deposit volume 

by a total of 6 % to € 11.6 billion, and to as much 

as € 12.35 billion when netbank AG is included. 

Sales of certificates were significantly affected in the 

last few months of the 2008 financial year due to 

general public discussion about this type of security 

following the insolvency of Lehman Brothers in the 

USA. Gross sales of certificates, including in the 

FlexInvest product family, therefore decreased to 

€ 254 million during the financial year as a whole 

(previous year: € 351 million). 



29

30 


Insurance and building society business 

develop as planned 

Landesbank Berlin’s insurance business also developed 

as forecast in 2008. Net policy premiums (life 

assurance and annuity insurance including fundlinked 

agreements and direct public service insurance) 

rose by 15.3 % to € 283.4 million. 

Building society business generated growth in total 

savings of 10.0 % to € 336.5 million. 

National business grows independently and 

due to acquisitions 

Landesbank Berlin successfully maintained its position 

as the largest issuer of credit cards in Germany. 

Numerous market cooperation programmes were the 

basis for continuous growth in this regard, and also 

offer potential for additional business with cooperation 

partners. In this way, Landesbank Berlin will 

extend its cooperation with the ADAC beyond the 

co-branding of credit cards. Furthermore, in direct 

sales, cooperation with netbank AG is being 

strengthened. 

The number of credit cards issued increased in 

the reporting year to more than 1.97 million cards, 

an increase of 10.7 % from the 1.78 million cards 

at the end of the previous year. As a result of the 

acquisition of sales financing from the BHW bank, 

it also acquired the BHW’s credit card portfolio 

with 113,000 credit cards issued. 

Customer-oriented sales network 

Despite the financial crisis, we maintained our effective 

and dense sales and service network as the basis 

for contact with customers. In 2008, stationary sales 

comprised 146 Retail Banking Centres, 27 Asset 

Management Centres, three Real Estate Centres and 

one Private Banking Centre at Berliner Sparkasse. 

This enables Berliner Sparkasse to support its customers 

as a contact providing information, expert 

consultancy services and individual problems across 

the region. There are also 20 self-service centres 

where clients can carry out banking transactions 

independently of branch opening hours, which were 

supplemented by a further 81 ATMS. 

In online banking, we have further increased mobility 

and security for our customers by introducing TAN 

numbers sent by SMS and the chip-TAN. Sparkasse’s 

improved voice-controlled telephone banking system 

was introduced at the end of 2008.

pRoSpecTS foR 2009 

At the beginning of 2009, the new current account concept was launched. This 

was developed according to the needs of our customers and employees on the 

basis of extensive surveys. The revised key current account product in the private 

Banking division supports the objective of increasing the number of customer 

accounts and thereby anchoring our position as the market leader in Berlin. 

We will continue to stand by the established quality strategy of Landesbank Berlin / 

Berliner Sparkasse. This means that we demand appropriate conditions and 

prices for attractive products and a high level of service and consultation, and 

that we clearly distance ourselves from the aggressive price policies of some 

of our competitors. In times such as the present, when the reliability and respectability 

of the relationship between the bank and the customer are coming 

increasingly into focus, we are convinced that our strategy will receive a positive 

response from the market. 

During the past year, the German Institute for Service Quality, in its investigation 

of consultancy on pensions at 15 banks, confirmed the performance of Berliner 

Sparkasse by placing it in leading position in its overall assessment, awarding it 

a “good” for service quality. 



31

Landesbank Berlin is the market leader in the Regional corporate 

Banking business in the core region of BerlinBrandenburg. It supports 

approximately 63,400 business clients and small and mediumsized 

companies with a diverse range of products and services. 

A local presence combined with extensive market knowledge, competencies 

and a demand for the highest levels of quality form the 

basis of the business model. The support concept is thus tailored to 

individual customer needs during all phases of the company cycle. 

32 

Regional Corporate Banking 

The Regional Corporate Banking segment also posted a stable development of business 

in 2008. There was encouraging development in the Regional Corporate Banking 

business market position. According to a study carried out again in 2008 on the 

regional corporate banking market in Berlin and the surrounding regions, the Landesbank 

Berlin and Berliner Sparkasse joint venture is the market leader in this core 

region. In comparison to the last survey, considerably more companies chose Landesbank 

Berlin or Berliner Sparkasse as their principal bank. In 2008, the number of 

ReGIoNAL coRpoRATe BANkING – LoANS 

in € million 31.12.2008 31.12.2007 1) 

Overnight / term money 511 926 

Current account 254 183 

Real estate loans 875 957 

Other loans 3,843 3,770 


ReGIoNAL coRpoRATe BANkING – DepoSITS 

in € million 31.12.2008 31.12.2007 1) 

Demand deposits 1,089 1,287 

Overnight deposits 1,083 588 

Term deposits / savings certificates 1,230 1,081 

Savings deposits 245 260 

‘Cash direkt’ / Flexgeld 526 299 



clients rose by almost 1,000. We see this trust placed 

in us by corporate clients as an indication of the 

quality of our business model and our customer support 

principles. We are adhering to this, even in these 

economically difficult times. Berliner Sparkasse is 

one of Germany’s leading savings banks for consultancy 

and start-up finance. 

The operating result increased again. Despite intensive 

competition with regard to terms, which led to 

decline in margins in the area of deposits, net interest 

income was up 3.6 % year-on-year. There was 

also pleasing development in terms of risk costs in 

2008. Net fee and commission income exceeded 

last year’s value by a considerable amount. This can 

attributed to assigning export finance to the Regional 

Corporate Banking segment for the first time during 

the reporting year. 

Persistent challenges in the market 

environment 

In 2008, the economic upward trend slowed in our 

core region. Key growth drivers were the innovative 

technology sectors and business support services. 

However, the economic power of the predominantly 

small-scale corporate landscape remained below 

average compared with other German states. Yet the 

frequency of company insolvencies was above the 

national average. Falls in orders which have been 

posted in part, the development in energy prices as 

well as business prospects estimated as being 

tougher in view of the financial and economic crisis 

all contributed to planned capital expenditure projects 

being postponed at least in part. 

In 2008, the Regional Corporate Banking business 

was also affected by intensive competition and high 

pressure on margins in all client segments. In this 

market environment, Landesbank Berlin succeeded 

in further improving its market penetration. This 

strength can again be seen in the net growth in 

small and medium-sized client numbers and in the 

business client segment. 

Average lending for the year expanded 

In 2008, despite the difficult general economic conditions, 

the business volume at Landesbank Berlin 

expanded. Although the volume of client receivables 

fell to € 5.5 billion as at the reporting date as a result 

of short-term loans, the average for the year in terms 

of the corporate loans portfolio increased year-onyear 

by 7.6 %. New business also expanded. We 

continued our strict risk policy. 

Encouraging growth in deposits 

The deposits business for Regional Corporate Banking 

at Landesbank Berlin once again showed an 

encouraging development. The volume of customer 

deposits as at the balance sheet date 31 December 

2008 exceeded the previous year’s value by 18.7 %, 

reaching € 4.2 billion. The considerable growth in 

deposits corresponded to the sector trend for German 

companies in the Berlin-Brandenburg banking centre 

up until the third quarter. In the fourth quarter of 

2008, boosted growth in deposits made by small 

and medium-sized companies and business clients 

was posted for Regional Corporate Banking at 

Landesbank Berlin as a reaction to the turbulence on 

the financial markets. This development again confirms 

our customers’ high level of trust in the safety 

of their deposits and the reliability of our business 

model. 



33

34 


Proven sales channel mix 

The sophisticated support concept at Landesbank 

Berlin with clear client segmentation and an innovative 

sales channel mix has proved its worth. There 

are three ways in which clients can contact us – by 

phone via BusinessLine direct bank sales, via clientoriented, 

fixed Regional Corporate Banking Centres 

or via departments for small and medium-sized corporate 

clients. Representative surveys have shown 

that the satisfaction of business clients and small 

and medium sized companies has increased further 

across all sales channels. 

We are continuing to ensure a high level of quality in 

our corporate client support. We have introduced a 

structured consultation process for this purpose 

which we developed further in 2008. The structured 

“Balance sheet rating communication” was introduced 

in 2008 which we would like to deploy to a 

greater extent. We are thus reacting to the ongoing 

high level of information required by corporate clients. 

Our customer advisers explain the complexities 

behind the ratings combined with financial analyses 

during lending decisions. Our structured approach 

towards support contributes to ensuring high quality 

standards in Regional Corporate Banking and to 

strengthening customer loyalty. Activity management 

is supported by a modern Customer Relationship 

Management system in all sales channels. 

Successful expansion of quality strategy 

In 2008, the quality strategy for Regional Corporate 

Banking was developed further. Independent, 

national auditors from TÜV Rheinland had already 

certified the BusinessLine and Regional Corporate 

Banking Centre sales channels in 2007, which cover 

the entire business client segment. Thanks to this 

certification, Landesbank Berlin together with Berliner 

Sparkasse is setting a challenging benchmark for 

competitors in terms of quality. Another audit was 

also carried out successfully in the reporting year. 

Client opinion confirms marked satisfaction, high 

readiness to recommend, reliability and competence. 

We have optimised our processes further in the 

Re gion al Corporate Banking business as an element 

of this quality strategy in order to be able to give 

our clients an ambitious service commitment. For 

example, structuring credit processes in the Regional 

Corporate Banking segment ensures that, when 

con ditions are met, a loan decision can be made 

within 48 hours. 

Product and services range further developed 

The company accounts models introduced in October 

2007, broken down into basic price, free items and 

other features, have established themselves in the 

reporting year as a solid component of a demandoriented 

product range. This range accommodates 

the varied demand and usage patterns of the companies. 

Our corporate clients have responded well 

to this concept. This also ensured a sustainable 

basis for future net commission income in payment 

services. 

In 2008, Landesbank Berlin developed the concept 

of hospital forfeiting for the hospitals target group 

and introduced it as a new product. This concept 

involves acquiring hospital claims on legal German 

health insurers. This means that industry expertise 

was used specifically for expanding the range of 

products.

Close dialogue with regional economy 

Further advances were made in the close dialogue 

with the regional economy in the Regional Corporate 

Banking. In 2008, we carried out a second SME 

survey in cooperation with the German Institute for 

Economic Research (DIW). The increased participation 

shows the huge interest small and medium-sized 

companies have in reporting their economic situation, 

finance plans and business prospects. 


In March 2008, a cooperation agreement was concluded 

with the School of Economics on the subject 

of business succession. Landesbank Berlin is thus 

contributing to a closer linkage of theory and practice 

thanks to its special expertise and is promoting 

economic commitment. The intensive support 

Landesbank Berlin has given to the Berlin-Brandenburg 

Innovation Prize and the Business Plan Competition 

also gives a clear message. Since 2000, 

Berliner Sparkasse has financed approximately 

1,300 start-ups and business successions. In 2008 

alone, we have enabled more than 300 company 

founders and successors to start up their own 

company. 

Thanks to its established and reliable business model, Landesbank Berlin continues 

to provide its business clients and small and mediumsized companies in 

the core region of BerlinBrandenburg with a clientoriented, competent regional 

bank with an extensive range of financial services. In order to consolidate our 

leading market position, we wish to intensify our existing customer accounts 

and push ahead with acquiring new customers. The quality competitive factor 

will continue to gain in importance in support processes in all client segments – 

especially after customer experiences in these times of crisis on the financial 

markets. our strategic aim is to continue to strengthen the earnings basis in our 

operating business. The continuation and development of the lending business 

and the commission earnings services business will also contribute to this via 

product and service ranges in line with the market. Landesbank Berlin will 

adhere to its strict income and riskoriented business policies of recent years. 



35

36 

Capital Markets 

In the capital Markets business, Landesbank provides capital market 

products and solutions aimed at financial institutions, institutional 

investors and also private clients. In 2008, despite a broadbased 

positioning with extensive, crossproduct client activities and a 

conservative investment policy, the divisions were – just as the 

entire banking community – affected by the global financial crisis 

and posted significant charges on earnings. 

In 2008, the Capital Markets segment continued its strategic orientation towards 

client-oriented business and forms of investment which are less susceptible to fluctuations. 

However, the escalation of the global crisis on the financial markets also 

affected Landesbank Berlin’s investment strategies. The significant increase in risk 

premiums (credit spreads) led to huge losses, particularly as a consequence of the 

collapse of Lehman Brothers and the Icelandic banks. Shortages of liquidity on the 

markets and products exacerbated the problem of price determination for many 

assets. The proprietary trading strategies of Landesbank suffered considerably as 

a result of market jitters, meaning that only a few strategies were actually successful. 

Earnings from customer business did not compensate for falls in value from the 

investment strategies and the badly hit trading activities. 

cApITAL MARkeTS – LoANS 

in € million 31.12.2008 31.12.2007 1) 

Loans and advances to banks 15,952 18,156 


Assets recognised at fair value 

through profit or loss 16,136 12,817 

Financial assets 32,202 35,666 

cApITAL MARkeTS – DepoSITS 

in € million 31.12.2008 31.12.2007 1) 

Deposits by banks 37,427 38,662 


Securitised debt 5,202 5,742 

Liabilities recognised at fair value 

through profit or loss 16,400 9,972 


Net interest income developed extremely positively, 

increasing to € 381 million. It was thus up € 251 million 

year-on-year. This success is mainly due to money 

market activities. 

As a result of the jitters on the credit markets, there 

was a decline in net income from financial instruments 

recognised at fair value through profit and 

loss, in the amount of € 243 million to € – 284 million. 

Due to the write-downs on exposures with Lehman 

Brothers, Washington Mutual, Icelandic banks and 

funds, net income from financial assets declined by 

€ 267 million year-on-year to € – 293 million. 

At € 53 million, allowance for losses on loans and 

advances was up € 83 million year-on-year. The key 

influencing factors were the collapse of Lehman 

Brothers and valuation allowances for securitised 

US real estate loans as well as, to a lesser extent, 

worsening country ratings (for example Ukraine, 

Kazakhstan). 

In 2008, net commission income was affected for the 

first time by an income settlement from the reassignment 

of export financing to the Regional Corporate 

Banking segment (€ – 14 million). At € 30 million, net 

fee and commission income was down € 8 million 

as against 31 December 2007 (after adjustment for 

the above income settlement), mainly resulting from 

falling brokerage income. 

Administrative expenses fell year-on-year by € 21 mil- 

lion to € 152 million. Alongside the continued success 

of cost reduction measures, the reassignment of 

income from the export financing department to the 

Regional Corporate Banking segment also led to 

easing of expenses. 

At € – 391 million, the result from Capital Markets 

was down € 380 million year-on-year as a result of 

negative impacts caused by market conditions. 

Financial market crisis affects LBB-INVEST 

The growth achieved over recent years in the special 

and mutual funds of LBB-INVEST did not continue in 

2008. The fund volume decreased from € 12.8 billion 

at the end of 2007 to € 10.3 billion at the end of 2008. 

The decline in the mutual fund volume to € 3.4 billion 

is mainly attributable to price losses on the share 

markets. 

The outstanding certificate volume fell to € 2.3 billion 

in the course of the financial crisis, mainly driven by 

price effects. Gross sales of certificates and structured 

products amounted to € 1.2 billion in the reporting 

year. 

Landesbank Berlin will continue to provide its customers 

with creative, tailored product solutions based 

on its many years’ experience and recognised competence 

in the market, even though it is not yet 

foreseeable where customer demand will be focused 

following the uncertainties brought about by the 

financial crisis. 

Initially in 2008, business volume in international 

business markedly expanded, particularly in export 

finance. With the escalation of the financial crisis, 

limits and thus new business were scaled back in 

the fourth quarter. In our operating business, income 

was up € 4 million year-on-year. 



37

38 


Capital Markets’ strategic line-up 

The Capital Markets division comprises the Treasury 

& Trading, Client Business and International Business 

units. 

Treasury & Trading combines trading and investment 

activities in treasury and proprietary trading. It holds 

a central function for the entire Group’s liquidity 

support and refinancing. 


Client Business combines all cross-product customer 

activities. 

The International Business unit provides corporate 

clients and financial institutions with tailored financing 

instruments for markets in Central and South 

Eastern Europe as well as CIS countries, including 

central Asia. 

The crisis on the financial markets has shown that our many years spent focusing 

on clientoriented business has been the correct strategic approach for Landesbank 

Berlin. The challenge for 2009 is to adapt the Bank’s product range in line 

with the market in order to meet investors’ expectations which have altered as a 

result of the crisis. 

Based on the core competencies of capital Markets in this sector, we see good 

opportunities to maintaining a firm position in the market. With the decline 

in shortterm interest and the introduction of settlement tax, incomeoriented 

products will be even more in demand. 

When the markets stabilise and with a continued investment requirement, 

opportunities will again be opened up for LBBINVeST. We plan to offer new 

product categories when this happens. 

However, it is still very near impossible to forecast further development on the 

financial markets. This makes it difficult to orient our product range and to make 

projections on customer demand. However, further development on the financial 

markets and stricter regulations, towards which politicians are working, will set 

parameters according to which the segment will have to orient itself both in its 

strategies and operations in 2009.

Real Estate Financing 

In 2008, the division continued the successful developments of previous years. At 

€ 6.7 billion, contracted new business volume in its core business was up slightly 

year-on-year, despite the difficult market environment. The situation on the financial 

markets led to additional opportunities for new business in the first half year, since 

demand for finance exceeded supply. Increasingly difficult capital market conditions 

successively led to a higher cost of funds, and thus to considerable increases in 

interest. As a consequence, demand from investors contracted as scheduled projects 

were cancelled or postponed in view of the market situation. Reversals of allowances 

for losses and higher net commission income contributed to the fact that the division’s 

operating result again exceeded the high value of € 246 million in the previous year, 

increasing to € 259 million. 

ReAL eSTATe fINANcING – LoANS 

in € million 31.12.2008 31.12.2007 1) 

Real estate loans 25,563 24,405 

Other loans 8,165 8,635 


ReAL eSTATe fINANcING – DepoSITS 

in € million 31.12.2008 31.12.2007 1) 

Demand deposits 345 406 

Overnight deposits 199 140 

Term deposits / savings certificates 8,463 6,910 

Savings deposits / ‘Cash direkt’ 2 4 


Securitised debt 22,638 21,010 



Capital Markets | Real Estate Financing 

Landesbank Berlin combines its expertise in individual financing 

solutions for commercial real estate projects in the Real estate 

financing division. With our two brands, Landesbank Berlin and 

Berlin Hyp, it caters for institutional investors, residential construction 

companies and developers in Germany and selected foreign markets. 

The Landesbank Berlin Holding ranks as one of the largest and 

most performancedriven providers in the market for commercial 

real estate in Germany. 

39

New business 

in 2008 by 

lending region 

New business 

in 2008 by 

property type 

New business 

in 2008 by 

customer segment 

40 


New business at previous year level, 

exceeding expectations 

In 2008, the division achieved contracted new business 

of € 6.7 billion compared with € 6.6 billion in 

the 2007 financial year. This exceeded expectations 

for 2008. In the previous year, there were also nonrecurring 

transactions, guarantees in particular, of 

Former West German states 60 % 

Berlin and 

surrounding regions 18 % 

Abroad 16 % 

Other former 

East German states 6 % 

Offices / business premises 38 % 

Residential 23 % 

Retail sales 10 % 

Management properties 4 % 

Other 25 % 

Investors 85 % 

Housing companies 6 % 

Property developers 5 % 

Building firms 4 % 

€ 3.6 billion. In Germany, LBB continued to concentrate 

on financial centres as target markets. Despite 

higher repayments and further reduction in problem 

loans, good new business led to a slight increase in 

the real estate loans portfolio to € 25.6 billion as at 

31 December 2008 (2007: € 24.4 billion). The quality 

of the portfolio continued to improve overall. 

An analysis of the structure of new business by client 

segment shows that the focus has remained on 

investor financing. Approximately 16 % of new business 

volume was contracted abroad in 2008 thanks 

to the new offices. The volume of transactions in 

the former West German states increased to 60 % 

compared with 47 % in the previous year. In 2007, 

there was very little change in the breakdown of 

new business by type of property compared with the 

previous year. Details of this can be seen in the 

following diagrams. 

Difficult refinancing conditions 

Business was initially dominated by sustained and 

substantial interest in the German real estate market 

by foreign investors. Landesbank Berlin and Berlin- 

Hyp were able to exploit the business opportunities 

this offered to further expand their client base. Our 

competitive success continued to be underpinned 

by our expertise and short coordination processes 

that enabled swift decision-making. 

In the second half of the year, the difficult refinancing 

conditions on the Capital Markets caused conditions 

to be increased and demand among investors 

to decline. The average margin on new business 

increased slightly.

Improvement in risk structure 

In 2008, LBB adhered systematically to the principle 

of foregoing transactions that did not correspond to 

internal profitability and risk criteria. By and large, 

the upheavals on financing markets have increased 

market players’ comprehension of the fact that risk 

must be adequately priced – a development that is 

in line with LBB’s fundamental approach. Over 90 % 

of new business was to borrowers with a good or 

very good risk class. 

In 2008, we again reduced the volume of risk-carrying 

financing (work out portfolio). This was based on 

successful restructuring or settlement activities par- 


ticularly in relation to two large properties, and the 

sale of smaller portfolios. The overall improvement 

in the risk structure allowed us to write back allowances 

for losses, which led to a positive figure for 

allowances for losses. 

Foreign business stable 

LBB continued the business gained in 2007 in 

selected neighbouring foreign regions. The success - 

ful sales partnership in the Netherlands, aimed at 

covering the entire Benelux market, was transformed 

into a representative office for the company. The 

share of new business related to foreign financing 

is approximately 16 %. 

Landesbank Berlin will continue its successful market strategy in real estate 

financing. An effective, clientoriented sales team in the major German conurbations, 

which can be specifically reinforced in line with regional market potential, 

continues to form the backbone of these activities. In addition, we will continue 

to push ahead with foreign business, albeit with sound judgment and careful 

consideration of regional circumstances. 

continuous adaptation of the division’s range of products and services to evolving 

client requirements represents another important task. This aspect will become 

increasingly important as a result of structural changes to commercial real estate 

financing following the changes on the international financial markets. In this 

regard, we intend, for example, to intensify consultation on the topic of payment 

services. 



41

42 

Employees 

In 2008, we rigorously pursued measures aimed at 

improving employee qualifications, promoting junior 

staff and improving employability, as well as expanding 

occupational health management. 

With regard to employee qualifications, the focus 

has been on continuing to extend and consolidate 

specialist knowledge and development of personal 

and methodological skills. We will systematically 

develop the potential of managers, specialists and 

junior staff with tailored programs. 

The number of employees recruited for training as 

bankers increased again in 2008. From now on, in 

addition to the February start, training will also start 

in August each year. In many of the Bank’s divisions, 

employees will also be given training as required as 

part of specific programmes for university graduates. 

All junior staff that have been acquainted with the 

Company during their training and demonstrated 

commitment and success will be taken on as permanent 

staff. They ensure a balanced and forward-looking 

employee structure for the Bank. 

In addition, we have further expanded our occupational 

health management. In order to preserve the 

performance and health of employees, particularly 

in times of increasing competition, we analysed the 

working conditions in our company from a health 

perspective. All employees participated in a targeted 

survey on this topic. The insight gained from this 

survey will allow us to develop and implement targeted 

measures for promoting health. 

The Board of Management would like to thank all its 

employees for their dedication in 2008, which has 

been characterised by very difficult market influences. 

It would also like to thank employee representatives 

of the Group for their constructive support in implementing 

company requirements.

110 110 

100 100 

90 

80 

70 

60 

50 

40 

30 

20 

10 

Share Price of Landesbank Berlin Holding AG 

In 2008, the share price of Landesbank Berlin 

Holding AG reflected a difficult year for the banking 

industry as a whole. 

In the first six months of 2008, the price still managed 

to stay slightly above the industry average, and then 

joined the general downward trend for bank securities. 

At the end of 2008, the share price was € 2.93, 

meaning the price fell to approximately half the 

pRIce peRfoRMANce AS AGAINST DAX AND cDAX BANkS 

closing price as at 28.12.2007 = 100 % 

90 

80 

70 

60 

50 

40 

30 

20 

10 

Landesbank Berlin Holding AG’s shares are listed 

in official trading (General Standard) on the Berlin- 

Bremen, Frankfurt and Dusseldorf stock exchanges. 

value from the previous year’s reporting date. 

Development ran largely parallel with the CDAX 

Banken comparable index, which lost approximately 

two thirds of its value in the reporting year. 

In view of the result of Landesbank Berlin Holding 

AG, the Board of Management and the Supervisory 

Board will make no proposal at the Annual General 

Meeting on distributing a dividend. 

in % Landesbank Berlin Holding AG CDAX Banks DAX 

28.12.2007 

22.01.2008 

12.02.2008 

04.03.2008 

27.03.2008 

17.04.2008 

09.05.2008 

02.06.2008 

23.06.2008 

15.07.2008 

05.08.2008 

26.08.2008 

16.09.2008 

07.10.2008 

28.10.2008 

18.11.2008 

09.12.2008 

06.01.2009 

27.01.2009 

17.02.2009 

10.03.2009 


Employees | Share Price 

43

Group management report 

Overview of the 2008 financial year 46 

Company profile 46 

General development 50 

Remuneration system for the Board of 

Management and the Supervisory Board 52 

Information in accordance with Article 315 (4) 

of the German Commercial Code 57 

Development of business – 

January to December 2008 60 

Results of operations 61 

Segment results 65 

Net assets 69 

Financial position 72 

Effects of consolidation 72 

Events after 31 December 2008 73 

Final statement on the dependent company 

report in accordance with Article 312 of the 

German Stock Corporation Act 73 

Risk report 74 

Principles for risk management and control 75 

Overall risk management 75 

Counterparty default risk 79 

Liquidity risks 89 

Share and fund price risks 92 

Real estate risks 96 

Operational risks 96 

Other risks 102 

Report on expected developments / Outlook 103 

Expected developments / 

Assessment of the economic situation 103 

Business orientation 104 

Development of the business segments 104 

Comparison of projected and actual figures 106 

Estimation procedure / Medium-term planning 106 

Summary / Overall assessment 106

46 

Company profile 

Organisational and legal structure 

As of 31 December 2008, the organisational and 

legal structure of the Landesbank Berlin Holding 

Group is as follows: 

Beteiligungsgesellschaft der 

S-Finanzgruppe mbH & Co. KG 

90.4 % 

Berlin Hyp AG 

Overview of the 2008 financial year 

General partner 

General partner 

10.6 % 

Regionalverbandsgesellschaft mbH 

Erwerbsgesellschaft der 

S-Finanzgruppe mbH & Co. KG 

88.0 % 


100 % 

BankenService GmbH 

100 % 


Berliner Sparkasse 

Landesbank Berlin Holding AG (Holding) is the 

parent company of the Landesbank Berlin Group. 

It is a listed public limited company and a financial 

holding company as defined in the German Banking 

Act (KWG) headquartered in Berlin. The majority 

shareholder is Erwerbsgesellschaft der S-Finanzgruppe 

mbH & Co. KG (S-Erwerbsgesellschaft) 

with a holding of 88.0 %. It is general partner 

of Beteiligungsgesellschaft der S-Finanzgruppe 

75.0 % –1 share 

Free float 

netbank AG LBB-INVEST GmbH 

1.4 % 

100 % 

mbH & Co. KG (S-Beteiligungsgesellschaft), which 

holds 10.6 % of shares as of 1 January 2008. 

Overall, the shares held by S-Erwerbsgesellschaft 

including the shares held by S-Beteiligungsgesellschaft 

as of 31 December 2008 thus amounted to 

98.6 %. In its role as general partner of S-Erwerbsgesellschaft, 

Regionalverbandsgesellschaft mbH 

assumes management of both S-Erwerbs gesellschaft 

and S-Beteiligungsgesellschaft.

Landesbank Berlin AG (LBB) is a wholly owned 

subsidiary of the Holding. It is an unlisted public 

limited company and a financial institution as 

defined in the KWG. 

LBB holds the Group’s strategically important 

investments, in particular, the interests in Berlin- 

Hannoversche Hypothekenbank AG (Berlin Hyp), 

in BankenService GmbH (BankenService) and in 

netbank AG (netbank). It also maintains branches 

in London and Luxembourg. Landesbank Berlin 

Investment GmbH (LBB-INVEST) was transferred 

from LBB to the Holding with effect in rem as of 

31 December 2008 / 1 January 2009. 

The Group is organised as follows: 

The Holding does not conduct any banking business 

of its own and therefore does not employ any staff 

Its principal purpose is to hold the investment in 

LBB. The work that this entails and the support for 

the Holding’s executive bodies are provided on an 

agency basis by LBB. 

LBB is divided into four strategic business areas 

and the Corporate Centres that support them. The 

business areas consist of Retail Banking, Corporate 

Banking, Capital Markets and Real Estate Financing. 

The Corporate Centres include the areas of IT, Risk 

and Controlling, Personnel, Corporate Development, 

Audit and Finance. Back-office tasks, including 

complete processing of the lending business, are 

largely grouped together at LBB BankenService. 

The real estate financing provided by LBB and Berlin 

Hyp is, as far as is legally possible, managed by the 

cross-bank business area. The respective units 

in the two companies are also closely linked correspondingly 

with each other. 

Landesbank Berlin 

Retail Banking Regional Corporate Banking Capital Markets Real Estate Financing 

At 5,999 employees, the number of staff in the 

Group’s scope of consolidation at 31 December 2008 

was slightly above the previous year’s level (5,965 

employees). The proportion of women was 62.5 % 

Corporate Center 

Back-Office 

of the total staff, almost unchanged from the previous 

year (31 December 2007: 62.1 %). The total 

fluctuation rate was very low at 2.7 %, or 1.6 % after 

adjustment for retirement, and showed a decrease 

as against the previous year. 



47

48 


The Board of Management and the division 

of departments 

As of 31 December 2008, the Board of Management 

of the Landesbank Berlin Holding consisted of 

Hans-Jörg Vetter and Dr. Thomas Veit. 


(Chairman) 



Corporate Development 

Personnel 

Audit Dept. 

Legal 

Segments 

The Group’s banking business is conducted in 

the following four strategic business segments and 

the supporting Corporate Centres. 


The Group operates its retail banking business in 

Berlin under the Berliner Sparkasse brand. Thus, 

LBB is the clear market leader in its core region of 

Berlin. Retail banking products are mainly centred 

on current account management, investment consulting 

and asset management, consumer finance 





Finance 

Organisation 

Information Technology 

Serge Demolière 



Dr. Johannes Evers 



All operating activities of the Holding are performed 

by LBB on the basis of an agency agreement between 

the Holding and LBB. In the 2008 financial year, the 

responsibilities of the individual members of the 

Board of Management were organised as follows: 

Hans Jürgen Kulartz 



Martin K. Müller 


Risk and Controlling 

Compliance 

Lending business 

Risk Management 


and private construction finance. The credit card 

business operated throughout Germany with cobranding 

partners is another focal point of activities. 

LBB also operates in direct banking through its 

majority interest in netbank AG (netbank). 


Regional Corporate Banking comprises business 

with small and medium-sized companies as well as 

the public sector. The core market is the Berlin- 

Brandenburg region. Customer support takes place 

under the joint brands of “Landesbank Berlin” and

“Berliner Sparkasse”. In the Regional Corporate 

Banking segment, the traditional banking services 

are offered to small and medium-sized companies 

with payment services and investment business. 

LBB also offers working capital, investment and 

other financing solutions. The range of services also 

includes services for international business, leasing, 

factoring and electronic banking products as well 

as consulting and support for start-ups and business 

succession. Landesbank Berlin is the market leader 

in the regional corporate banking business for small 

and medium-sized companies in the core region. 


The Capital Markets division of LBB comprises Client 

Business (Distribution und Production), Treasury & 

Trading and International Business, as well as the 

Holding’s 100 % investment in LBB-INVEST, which is 

assigned to the business area. 

Client Business designs (Client Production) and 

sells (Client Distribution) mainly equity, interest and 

currency products. The offering of LBB-INVEST 

includes both publicly offered funds and special 

funds for institutional investors. 

Treasury & Trading manages the liquidity and refinancing 

of the Group and generates income from 

trading and investment strategies. 

International Business focuses on export finance 

covered and not covered by the Export Credit 

Agency, trade finance, commercial foreign business 

and lending business with banks, companies and 

states in selected regions. 

The Capital Markets business area also includes 

operating units at the international locations in 

London and Luxembourg. The activities of the Retail 

Banking segment at the Luxembourg location were 

sold to Landesbank Baden-Württemberg (LBBW) 

during the financial year, meaning that now only 

activities of the Capital Markets segment remain in 

Luxembourg. 


The Real Estate Financing segment covers the real 

estate financing business throughout Germany, 

which is operated in close cooperation (sales and 

organisation) by LBB and Berlin Hyp. In addition 

to the international offices established in 2007 in 

London, Warsaw und Prague, the successful sales 

co-ordination in Holland was extended in 2008 as 

a representative office for the company, aimed at 

covering the entire Benelux market. This segment 

includes all the business activities of Berlin Hyp 

(exception: changes in the carrying amount of deri v atives 

for managing the interest rate risk). Business 

activities in commercial real estate financing are 

focused on financing on a property-covered basis. 

Refinancing is carried out by issuing mortgage 

bonds. The main clients of the division are investors 

and residential construction companies. The predominantly 

small and medium-sized clients are offered 

the entire range of real estate financing services. 

Flexible and innovative solutions with short decision 

paths are a special strength in this segment. In 

terms of size, the division remains in the top half of 

the sector. 

Other / Consolidation 

In addition to the divisions, Group segment reporting 

includes the “Other / Consolidation” segment. This 

segment includes the Group management and service 

functions, the balance sheet structure management 

and the consolidation items of the Group. 



49

50 


General development 

General economic situation 

After the first half of the year which was generally still 

good, the economic situation in Germany bleakened 

considerably over the course of the second half and 

particularly in the fourth quarter of 2008. By the end 

of the year, the economy as a whole was in a deep 

recession. Sales opportunities for German products 

on the export market worsened and consumption 

on the domestic market remained weak due to the 

sharp decline in purchase power. There was no sign 

of any imminent improvement in the situation at 

the end of 2008. Because they took an increasingly 

negative view of their employment prospects, private 

households did not increase their spending as a 

result of the overall slower rise in the cost of living. 

The crisis on the international financial markets 

intensified in the third quarter of the reporting period, 

with the effect that extensive guarantee and stabilisation 

measures were initiated for the financial system 

by state institutions. In particular, the insolvency of 

Lehman Brothers in September led to a re-evaluation 

of default risks, even from major financial system 

counterparties. As a result, established refinancing 

sources largely dried up and a string of major market 

players became illiquid. Impairments taken across 

almost all asset classes drastically impacted income 

statements in the financial sector. 

In the fourth quarter, the national economies of the 

major industrialised nations showed a highly accelerated 

downwards trend. Financial services providers 

across the globe came under great pressure to reduce 

risks and restructure their balance sheets. In the 

USA und some European countries, the accelerated 

fall in value of residential property forced consumers 

to make increased efforts to save. In major newly 

industrialising nations, export-oriented growth strategies 

were put to the test, and in some cases foreign 

investors withdrew. Overall, investing activities in 

this group of countries were increasingly impaired. 

Both in Germany and abroad, banks adjusted their 

lending conditions to the market situation. However, 

here in Germany there had been no major excesses 

on the part of companies or of private households 

in the previous years, meaning that initially the consequences 

for the investment cycle were kept within 

limits. 

The situation also left its mark on Berlin’s economy. 

Although for 2008 as a whole, GDP still rose by 1.6 % 

year-on-year, growth rates in the tourism sector de - 

creased and the export business even had to report 

losses. However, the region is benefiting from the 

consolidation of economic structures in the previous 

years. The trend in employment levels, for example, 

remains better than the national average. In addition, 

the continuing good order situation in the construction 

industry still provides impetus for growth. 

The Group itself did not remain unaffected by the 

strains in the financial sector, either. Capital Markets 

business in particular suffered as a result of the 

difficult environment, having to cope with substantial 

value adjustments. However, the pleasing development 

in retail banking business and continued good 

new business in real estate financing emphasise the 

Bank’s strong position in the market environment. 

In a crisis of an exceptional nature, the business 

model with four strategic business segments is 

proving to be particularly viable.

Measures to improve earnings 

Also in 2008, LBB rigorously implemented measures 

to reduce administrative costs and improve its earnings 

structure. 

In the Retail Banking segment, the measures aimed 

at increasing earnings proved successful, even in 

the difficult environment in the 2008 financial year. 

The process efficiency developed in the past years 

and the systematic focus on customer requirements 

promoted customers’ trust in Berliner Sparkasse. 

The implementation of its quality and service understanding 

was attested, for example, by a top place 

for Berliner Sparkasse in an investigation by the 

German Institute for Service Quality on the pension 

advice provided by 15 different banks. The revision 

of the key current account product constituted a 

further step to secure the leading market position. 

In 2008, the quality strategy for the Regional Corpo- 

rate Banking segment was developed further. With 

a value-oriented management approach and ongoing 

process optimisation, the focus was on fulfilling 

higher quality requirements in customer support and 

improving customer loyalty and market penetration. 

The sophisticated support concept with clear client 

segmentation and an innovative sales channel mix of 

BusinessLine, Regional Corporate Banking Centres 

and Regional Corporate Banking departments has 

proved its worth. Structured consulting processes, 

and continued optimisation of the range of services 

offered and their focus on individual customer 

demand, led once again to a stable contribution to 

Group earnings. Landesbank Berlin is TÜV certified 

for the quality of its services and consulting for 

two full sales channels (BusinessLine and Regional 

Corporate Banking Centre). This supports its strong 

claim to quality and performance in corporate banking 

business. 

In 2008 as a whole, the Capital Markets segment 

was influenced by the extent and development of 

the crisis on the international financial markets. 

Activities and strategies in the individual divisions 

of the segment were developed as planned. However, 

due to the market environment, new commitments – 

especially in Treasury and Trading and in International 

Business – were assessed increasingly critically and 

in some cases were discontinued. 

Landesbank Berlin continued to issue and distribute 

specifically structured products. However, due to the 

escalating financial market there were significant 

declines for the certificates class of products. As a 

result, the product range was adjusted to the change 

in investors’ risk awareness. On this basis, the Client 

Business division is well positioned for the coming 

years. 

The Capital Markets segment further increased the 

scope and operating security of risk management 

in 2008. In addition, new processes for internal 

management were developed and implemented. 

Despite a difficult market environment, in 2008 the 

Real Estate Financing segment successfully continued 

with its new business in its core market of 

Germany and selected international markets in compliance 

with strict risk and profitability param eters. 

Furthermore, the sales partnership in Holland was 

expanded into a representative office and was 

staffed by a Bank employee. The segment also reorganised 

its sales structure (States of former West 

Germany, States of former East Germany / Berlin, 

International / Syndicate business). In addition to new 

business volumes, value-oriented parameters were 

increasingly used in measuring and controlling sales 

performance. 



51

52 


Remuneration system for the Board 

of Management and the Supervisory Board 

The Supervisory Board of the listed Landesbank 

Berlin Holding AG (Holding) and its wholly owned 

subsidiary Landesbank Berlin AG (LBB) largely 

consist of the same people. The members of the 

Board of Management of the Holding are also the 

members of the Board of Management of LBB. In 

the interests of clarity, a summarised presentation 

in the form of the remuneration report recommended 

by the German Corporate Governance Code is provided 

for both companies. 

This remuneration report summarises the principles 

applied in stipulating the remuneration of the Board 

of Management of the Holding and LBB and it 

presents the structure and amount of the remuneration 

of members of the Board of Management. In 

addition, the principles applicable to and the amount 

of the remuneration paid to members of the Supervisory 

Board and its committees are described. 

In so doing, the remuneration report takes account 

of the recommendations of the German Corporate 

Governance Code for both companies and it contains 

the details, which under German commercial law 

are a component of the Group Management Report 

pursuant to Article 315 (2) No. 4 of the German 

Commercial Code and of the notes pursuant to 

Article 314 (1) No. 6 of the German Commercial 

Code. 

Remuneration of the Board of Management 

The remuneration system for the Board of Management 

including material contractual elements is 

decided upon by the Supervisory Board plenum and 

reviewed by it on a regular basis. The Audit, Personnel 

and Strategy Committee of the Supervisory 

Board is responsible for proposing the structure and 

stipulating the amount of the remuneration components. 

The remuneration is determined on the basis 

of an analysis of the income paid to members of 

the executive management within the Group and in 

comparable German financial institutions. 

For all members of the Board of Management, the 

individual rights and duties resulting from their membership 

of the Board of Management are regulated 

through their contracts of employment with LBB. 

The Board of Management of the Holding is formed 

by its Chairman Mr. Hans-Jörg Vetter and Dr. Thomas 

Veit. At the same time, they are also members of 

the Board of Management of LBB. Accordingly, notwithstanding 

their appointments as members of 

the Holding’s Board of Management, the Board of 

Management contracts, supply agreements and 

comparable contracts for Mr. Hans-Jörg Vetter and 

Dr. Thomas Veit are with LBB, for which the vast 

majority of their work is undertaken. 

On this contractual basis, LBB pays all the Board of 

Management remuneration for the members of the 

Board of Management acting for both companies. 

In return, it receives compensation from the Holding 

based on time spent amounting to a monthly lumpsum 

of € 5 thousand per Board of Management 

member and € 6 thousand for the Chairman of the 

Board of Management. Accordingly, the Holding 

reimbursed LBB € 132 thousand in 2008 (previous 

year: € 132 thousand). 

The Holding and LBB have concluded an appropriate 

Group insurance policy covering economic losses by 

third parties (D & O insurance) for the members of 

their executive bodies. This also covers the personal 

liability of members of the Boards of Management of 

the Holding and LBB in the event that claims are 

made against the group of persons in question for 

economic losses incurred in carrying out their work. 

A deductible, as defined in the German Corporate 

Governance Code, amounting to three months’ fixed 

salary is agreed for members of the Board of Management. 

The Holding pays the premiums for this 

D & O policy, which is also in the interests of the two 

companies.

With regard to their remuneration, the following components 

are stipulated in the contracts of employment 

for members of the Board of Management: 

Fixed annual salary: 

The fixed salary is payable in equal monthly instalments. 

In line with the agreements contained in the 

contracts of employment, the Audit, Personnel and 

Strategy Committee reviews the fixed remuneration 

every two years to ensure that it is appropriate. The 

criteria applied are the responsibilities of the respective 

member of the Board of Management, his personal 

performance, the performance of the body as 

a whole, and the economic situation, success and 

prospects of the Company, taking into consideration 

its comparative environment. 

The salaries of the Board of Management are adjusted 

on the basis of the Group’s earnings position, but the 

general increases in prices and collectively agreed 

pay rates in the Federal Republic of Germany also 

have to be taken into account and they are compared 

with the structure of Board of Management remuneration 

in other comparable financial institutions. There 

is no legal entitlement to any increase in the fixed 

salary. 

Annual bonus: 

Members of the Board of Management receive an 

annual bonus for their work in the past financial 

year, which is resolved in the following year. The 

amount of the bonus is geared, in particular, to the 

criteria for the fixed salary and to the development 

of the results of the Holding and LBB and is payable 

in one amount after the annual financial statements 

of both companies have been approved. Payment 

of a specific minimum is guaranteed for each Board 

of Management member. Any amount in excess of 

this figure is determined by the Audit, Personnel and 

Strategy Committee taking account of the parameters 

mentioned above, particularly the individual 

performance appraisal. 

There are no additional remuneration components 

offering a long-term incentive (subscription rights, 

other share-based payments etc.) for members of 

the Board of Management. 

Other remuneration: 

Each member of the Management Board also has 

unlimited use of a company car plus driver. In 

this connection, some of the Management Board 

members are also entitled under their contracts 

of employment to have the tax payable on the 

monetary benefit resulting from private use of the 

company car paid by their employer. 

Under his contract of employment as a member of 

the Board of Management, Mr. Martin K. Müller is 

entitled to payment of the premiums for an insurance 

policy equal to the compulsory health and long-term 

support insurance by his employer up to half the 

statutory maximum. 

Total remuneration: 

In financial year 2008, members of the Board of 

Management received remuneration (including performance-related 

components) totalling € 6,861 

thousand (previous year: € 7,496 thousand). This 

figure includes the guaranteed components of the 

annual bonus for the work of the Board of Management 

in financial year 2008 amounting to € 2,092 

thousand, which will be paid in 2009 (previous year: 

€ 2,242 thousand). Total remuneration also includes 

the performance-related components of the annual 

bonus for financial year 2007 of € 2,015 thousand, 

which was paid in 2008 (previous year: € 2,325 thousand). 

The amount of such remuneration cannot be 

estimated reliably for financial year 2008. 



53

54 


The members of the Board of Management did not 

receive any additional benefits for work carried 

out for subsidiaries of the Holding and of LBB; in 

particular, they received neither attendance fees 

nor expense reimbursements. 

Benefits from third parties were neither promised 

to Board of Management members for their work 

as a Board of Management member nor granted 

in the financial year. 

Pension plans: 

In the event that members of the Board of Management 

are unable to work as a result of accident or 

illness, they are entitled to their full remuneration for 

a specific period: Mr. Hans-Jörg Vetter, Dr. Thomas 

Veit and Mr. Serge Demolière up to one year, Dr. 

Johannes Evers, Mr. Hans Jürgen Kulartz and Mr. 

Martin K. Müller up to two years not exceeding the 

end of their employment agreements. 

Following the end of the contractual relationship 

as a result of reaching their 65th birthday, because 

of occupational disability, at the end of their appointment 

or as a result of the contractual relationship 

being dissolved by LBB, which is not triggered by 

good cause on the part of the Board of Management 

member (Article 626 of the German Civil Code), the 

members of the Board of Management are entitled to 

a pension. After their 60th birthday, the service agreements 

can be terminated by Mr. Serge Demolière, 

Dr. Johannes Evers and Mr. Hans-Jörg Vetter or by 

LBB. Dr. Thomas Veit and Mr. Hans Jürgen Kulartz 

can retire of their own volition after their 62nd birthday. 

The members of the Board of Management 

will then receive their pensions before their 65th 

birthdays. 

During the first six months following their retirement 

from the Company’s service, members of the Board 

of Management are entitled to their official remuneration 

but payment of their pension will start from the 

seventh month. In the case of Mr. Martin K. Müller, 

his pension will be paid in the first month following 

his retirement from the Company’s service. 

Depending on age, the pension is assessed according 

to a specific percentage of the fixed annual salary 

and increases by 2 % for each year spent working 

as a member of the Board of Management up to an 

agreed maximum for each member of the Board of 

Management. In each case, the basis for calculating 

the pension is the pensionable portion of the fixed 

salary, which amounts to 100 % and 69 % in the 

case of Mr. Serge Demolière. 

Individual details: 

Pension rights Maximum 

acquired as at 

31.12.2008 

in % in % 

Mr. Demolière 49 60 

Dr. Evers 58 75 

Mr. Kulartz 56 75 

Mr. Müller 42 70 

Dr. Veit 52 60 

Mr. Vetter 58 60 

Under their contracts of employment members of 

the Board of Management are entitled to have their 

ongoing pension benefits adjusted. This adjustment 

is based on the percentage changes to collective 

wages in the private banking industry and in public 

banks.

In line with their service agreements and subject to 

a future difference of opinions between the members 

of the Board of Management on the one hand and 

the Supervisory Board or the majority shareholder 

on the other that cannot be resolved, Mr. Hans-Jörg 

Vetter and Dr. Thomas Veit have a special right of 

termination. If the contract of employment ends as 

a result of notice being given on these grounds, both 

men will be entitled to payment of the remuneration 

still outstanding until the end of their contract term. 

In January 2009, a new contract of employment was 

concluded with Mr. Martin K. Müller which included 

an adjustment to the pensionable basic salary effective 

1 January 2009. 

In 2008, pension commitments towards members of 

the Board of Management under IFRS increased by 

€ 1,255 thousand (previous year: € 754 thousand). As 

at the balance sheet date, the present value of the 

pension obligations (DBO) under IFRS for the Board 

of Management amounted to € 13,095 thousand 

(previous year: € 11,840 thousand). 

Members of the Board of Management have received 

advances or loans from the Bank and there were 

contingent liabilities amounting to € 344 thousand as 

of 31 December 2008 (previous year: € 388 thousand). 

Furthermore, remuneration (pensions, dependants’ 

pensions and related benefits) totalling € 8,046 thousand 

was paid to former members of the Board of 

Management or their surviving dependants in the 

past financial year (previous year: € 6,160 thousand). 

This includes backpayments to a former executive 

body member for several years. 

As at the balance sheet date, the present value of 

the pension obligations (DBO) under IFRS for this 

employee group amounted to € 86,735 thousand 

(previous year: € 90,661 thousand). 

It should be noted in this connection that this remuneration 

and / or provisions also relate to former 

members of the Holding’s Board of Management in 

addition to those of LBB. This is based on the fact, 

as shown above, that in the course of the virtually 

complete divestment of the assets of the Holding to 

LBB, all supply agreements and similar contracts 

were transferred to LBB. The corresponding provisions 

for ongoing pensions and entitlements to 

pensions were also transferred to LBB. 

Remuneration of the Supervisory Board 

The remuneration of the Supervisory Board is set out 

in the respective Articles of Association, which may 

be amended by resolution of the Annual General 

Meeting if necessary. The remuneration of the Supervisory 

Board is based on the size, the economic 

position and the long-term success of the respective 

company as well as the particular tasks and the 

responsibility of the members of the Supervisory 

Board. 

The rules on remuneration applicable to the Holding 

are set out in Article 13 of its Articles of Association. 

Under these rules, members of the Supervisory Board 

of the Holding receive fixed remuneration annually. 

Separate remuneration based on the company’s performance 

is no longer provided for the Supervisory 

Board of the Holding. A corresponding change to the 

Articles of Association was resolved at the Annual 

General Meeting of 4 July 2008. 

The rules on remuneration applicable to the Super- 

visory Board of LBB are set out in Article 11 of its 

Articles of Association. Accordingly, the members of 

the Supervisory Board of the Holding receive a fixed 

remuneration annually; separate, performance-based 

remuneration is not provided for the Supervisory 

Board of LBB. 



55

56 


Additional remuneration is paid for membership of 

the committees as well as the roles of chairman and 

deputy chairman of the Supervisory Board and of 

its committees at the Holding and at LBB. 

The remuneration of members of the Supervisory 

Board is set out as follows: 

Fixed annual remuneration: 

Members of the Supervisory Board receive a fixed 

annual remuneration of € 15,000 at the Holding 

and € 10,500 at LBB. 

The chairman of the Supervisory Board at both companies 

receives twice the amounts in question, while 

his deputy receives one and a half times the amounts 

in question. 

Remuneration of the committees: 

Members of the Audit, Personnel and Strategy 

Committee of the respective Supervisory Board 

and members of the Credit Committee of the 

Supervisory Board of LBB each receive a fixed 

remuneration in addition. At the Holding this 

amounts to € 10,000 per year, the chairmen 

receive € 15,000 each, their deputies € 12,500 

each. At LBB, this remuneration amounts to 

€ 6,000 per year, while the chairmen of these 

committees each receive € 8,000 and their 

deputies € 7,000. 

Members of the two Supervisory Boards do not 

receive a separate attendance fee for meetings. 

For members of the Supervisory Board, who did not 

belong to the Supervisory Board or one of its committees 

for the entire financial year, their remuneration 

is paid on the basis of the number of days they were 

in office. 

The Holding and LBB have concluded an appropriate 

Group insurance policy covering economic losses 

by third parties (D & O insurance) for the members of 

their executive bodies. A deductible, as defined in 

the German Corporate Governance Code, amounting 

to half their fixed annual remuneration is agreed for 

each member of the Supervisory Board. The Holding 

pays the premiums for this D & O policy, which is also 

in the interests of the two companies. 

The members of both Supervisory Boards receive 

their remuneration for their work carried out in the 

respective financial year after the end of the financial 

year in question. 

Supervisory Board of LBB Holding AG: 

For work on the Supervisory Board of the Holding, 

total remuneration of € 389 thousand is payable to 

the members of this Supervisory Board and its 

committees for financial year 2008 (previous year: 

€ 374 thousand), not including VAT. 

Supervisory Board of LBB AG: 

For work on the Supervisory Board of LBB, total 

remuneration of € 268 thousand is payable to the 

members of this Supervisory Board and its committees 

for financial year 2008 (previous year: 

€ 251 thousand), not including VAT. 

Supervisory Board of LBB Holding AG (Group): 

For work on the Supervisory Board of the Holding 

and the Supervisory Boards of other Group companies 

including committees, total remuneration of 

€ 657 thousand is payable to the members of the 

Supervisory Board of the Holding for financial year 

2008 (previous year: € 636 thousand), not including 

VAT.

Apart from the trade union representatives, all 

employee representatives on the Holding’s Supervisory 

Board are employees of LBB. The employee 

representatives on both Supervisory Boards employed 

by LBB receive their salaries as employ ees in 

addition to their Supervisory Board remuneration. 

Members of the Supervisory Board have received 

advances or loans from the Bank in the reporting 

year and there are contingent liabilities amounting 

to € 2 thousand as of 31 December 2008 (previous 

year: € 98 thousand). 

No remuneration or benefits for services supplied 

personally, in particular, consultancy and brokerage 

services were paid or granted to members of the 

Supervisory Board of the Holding or LBB. 

Information in accordance with Article 315 (4) 

of the German Commercial Code 

Composition of the issued capital 

The subscribed capital of Landesbank Berlin Holding 

AG amounts to € 2,554 million and is divided into 

999,327,870 no-par shares. The shares are bearer 

shares and each share entitles the holder to one 

vote. Further rights and duties of the shareholders 

are taken from the legal regulations, particularly 

Article 12 (53a) ff, (118) ff and (186) of the German 

Stock Corporation Act. 

Restrictions on voting rights or transfer of shares 

of which the Board of Management is aware 

In acquiring its shares (808,996,446 votes, equivalent 

to 80.95 % of the voting rights), Erwerbsgesellschaft 

der S-Finanzgruppe mbH & Co. KG, Neuhardenberg 

(the buyer) has an obligation towards the State of 

Berlin (the seller) not to transfer ownership of the 

acquired shares to a third party for a period of at least 

ten years from 8 August 2007, except if this third 

party is an affiliated company of the buyer in terms 

of Article 15 of the German Stock Corporation Act 

(AktG) or another member of S-Finanzgruppe, and 

this third party (and in some cases all other companies 

affiliated to the buyer in terms of Article 15 of 

the German Stock Corporation Act / other members 

of S-Finanzgruppe, to which seller shares are transferred) 

also assumes this contractual obligation 

towards the buyer. 

Apart from the following exceptions, there are no 

restrictions on shareholders’ voting rights either by 

law or in the Articles of Association. In cases of 

Article 136 of the German Stock Corporation Act, 

voting rights from the shares concerned is excluded 

by law. If the company holds Treasury shares, then 

in accordance with Article 71b of the German Stock 

Corporation Act, it cannot exercise any rights from 

these. 



57

58 


Investments in the capital exceeding 

10 % of voting rights 

Under the voting rights notifications applicable 

to the company in line with Article 21 (1) Sentence 1 

und (1a) of the German Securities Trading Act 

(WpHG), Erwerbsgesellschaft der S-Finanzgruppe 

mbH & Co. KG, Schloss Neuhardenberg, Schinkelplatz, 

15320 Neuhardenberg, Germany, holds 

88.0 % of voting rights directly. It is represented by 

its one general partner, Regionalverbandsgesellschaft 

mbH, Schloss Neuhardenberg, Schinkelplatz, 

15320 Neuhardenberg, Germany, to which the voting 

rights are attributable in line with Article 22 (1) No. 1 

WpHG. Beteiligungsgesellschaft der S-Finanzgruppe 

mbH & Co. KG, Schloss Neuhardenberg, Schinkelplatz, 

15320 Neuhardenberg, Germany, holds 10.6 % 

of voting rights directly. It is represented by Erwerbsgesellschaft 

der S-Finanzgruppe mbH & Co. KG, 

Schloss Neuhardenberg, Schinkelplatz, 15320 Neuhardenberg, 

Germany, meaning that its voting rights 

are likewise indirectly attributable to Regionalverbandsgesellschaft 

mbH, Schloss Neuhardenberg, 

Schinkelplatz, 15320 Neuhardenberg, Germany, in 

line with Article 22 (1) No. 1 WpHG. 

Shares with special rights conferring powers 

of control 

The company has not issued any shares with special 

rights. 

Special rights conferring powers of control 

The employees of the company and its subsidiaries 

do not have an interest in the capital such as results 

in indirect exercise of rights of control by the employees. 

Because the company shares are bearer 

shares, no detailed information on their free float 

shareholders and thus possible private ownership of 

shares by employees is available to the company. 

Provisions governing the appointment and dismissal 

of members of the Board of Management 

and changes to the Articles of Association 

Articles 84 and 85 of the German Stock Corporation 

Act apply to the appointment and dismissal of members 

of the Board of Management. In accordance 

with Article 2 (1) of the Articles of Association, the 

number of members is decided upon by the Supervisory 

Board and consists of at least two members. 

The Supervisory Board appoints the members of the 

Board of Management for a maximum of five years. 

In accordance with Article 31 of the German Co- 

Determination Act, a two-thirds majority of the 

Supervisory Board is required for the appointment 

of Board of Management members. Landesbank 

Berlin Holding AG is a financial holding company 

as defined in Article 1 (3a) of the German Banking 

Act (KWG). In accordance with Article 2d KWG, the 

members of the Board of Management must be 

reliable and must possess the necessary technical 

aptitude to manage the companies. There are no 

further provisions in the Articles of Association. 

In accordance with Article 16 (3) of the Articles of 

Association, resolutions of the Annual General 

Meeting are passed with a simple majority of votes 

and – when a capital majority is required – with a 

simple capital majority, unless otherwise stipulated 

by law or in the Articles of Association. The statutory 

provisions of Articles 179 ff of the German Stock 

Corporation Act apply to changes to the Articles of 

Association. In accordance with Article 12 (3) of the 

Articles of Association, the Supervisory Board is 

entitled to make changes to the Articles of Association 

which relate only to the wording. 

Powers of the Board of Management concerning 

the possibility of issuing or buying back shares 

The Annual General Meeting of 23 August 2007 had 

authorised Landesbank Berlin Holding AG to buy 

and sell own shares for the purpose of securities 

trading until 30 September 2008 in accordance with

Article 71 (1) No. 7 of the German Stock Corporation 

Act. On rescission of this resolution, the Annual 

General Meeting of 4 July 2008 authorised Landesbank 

Berlin Holding AG to buy and sell own shares 

for the purpose of securities trading until 30 September 

2009 in accordance with Article 71 (1) No. 7 

of the German Stock Corporation Act. 

Both resolutions were made under the condition that 

the acquisition prices may not exceed or fall short 

of the average closing price of the shares in the 

XETRA trading system (or a comparable successor 

system) of the Frankfurt Stock Exchange for the ten 

preceding days by more than 10 %, and that the 

trading portfolio of the shares acquired for this purpose 

may not exceed 5 % of the share capital at the 

end of each day. 

In addition, in accordance with the resolution of the 

Annual General Meeting on 23 August 2007, there 

was authorisation to acquire treasury stock for purposes 

other than securities trading in accordance 

with Article 71 (1) No. 8 of the German Stock Corporation 

Act until 30 September 2008. On rescission 

of this resolution, the Annual General Meeting of 

4 July 2008 authorised Landesbank Berlin Holding 

AG to acquire treasury stock for purposes other than 

securities trading in accordance with Article 71 (1) 

No. 8 of the German Stock Corporation Act until 

30 September 2009. 

Both resolutions were made on the condition that 

the purchase price per share may not exceed or fall 

short of the average closing price of the company 

shares in the XETRA trading system (or a comparable 

successor system) of the Frankfurt Stock Exchange 

for the ten preceding days by more than 10 %, and 

that in total only shares up to 10 % of the share capital 

may be acquired on the basis of this authorisation. 

Together with treasury shares acquired for trading 

purposes and for other reasons which are owned by 

the company or are attributable to the company 

under Articles 71a ff of the German Stock Corporation 

Act, the shares acquired on the basis of these authorisations 

may not exceed 10 % of the company’s 

share capital at any time. The Board of Management 

was authorised in each case to withdraw shares 

acquired on the basis of the above authorisation, 

fully or partially, in the latter case also through 

repeated exercise of the authorisation, without the 

withdrawal or its execution requiring a further 

resolution by the Annual General Meeting. It may 

allow for the remaining shareholders’ proportion of 

share capital to increase as a result of the withdrawal. 

The Board of Management was authorised 

to adjust the information on the number of shares 

in the Articles of Association. 

No use was made of the powers from the four 

above-mentioned resolutions in the reporting year. 

Material agreements on condition of a 

change of control 

There are no material agreements made on condition 

of a change of control in the case of a takeover offer. 

Compensation agreements with members of 

the Board of Management or employees in the 

case of a takeover offer 

No compensation agreements have been made with 

members of the Board of Management or employees 

in the case of a takeover offer. See also the section 

“Remuneration system for the Board of Management 

and the Supervisory Board”. 



59

60 

Development of business – January to December 2008 

The subject which dominated in 2008 was the escalation 

of the global crisis on the financial markets. The 

financial crisis, which greatly intensified in the second 

half of the year, is now encroaching on the real 

economy. As a result, the global economy lost pace 

considerably over the course of 2008. The major 

industrialised nations are now almost without exception 

in recession, whilst in the emerging markets 

the strong economic growth of the past years slowed 

down considerably. The continued outlook for the 

German economy is looking negative. The decline in 

economic performance is also impacting on industry 

in Berlin. Whereas for 2008 as a whole, GDP grew 

at a rate of 1.6 %, for 2009 at best a stagnation in 

economic performance is anticipated. 

Triggered by the loss of confidence on the financial 

markets, the money and Capital Markets effectively 

came to a standstill in the fourth quarter of 2008. 

Central banks worldwide lowered interest rates in 

concerted interest rate measures. Whilst the ECB 

was still raising interest rates in the middle of the year, 

pointing to increased rates of inflation, in the second 

half of the year there were steep cuts in the base rate. 

By means of a financial markets stabilisation fund 

in the region of € 500 billion, the German government 

initiated an emergency programme aimed at stabilising 

the financial sector in order to revive the interbank 

market. It remains to be seen whether the 

government measures will create confidence on the 

markets, thus achieving a turning point in the crisis. 

To save the struggling Hypo Real Estate Group, 

Landesbank Berlin contributed to liquidity assistance 

for the German financial sector in two stages 

and a counter-guarantee of the S-Finanzgruppe. 

Since 2007, it has also participated in a concerted 

action for SachsenLB and IKB Deutsche Industriebank 

AG. 

The Group was not able to escape the turbulence 

on the money and Capital Markets during the past 

financial year. The markets were marked by a significant 

decline in trading activities, decreased trading 

volumes, a lower number of transactions and even 

sometimes a complete lack of trades, as well as 

increased price spreads. In addition, there was substantially 

increased volatility, accompanied by a rise 

in the credit spreads, due both to lower ratings and 

to increased illiquidity in some markets. Overall, 

there was increased distrust on the securities and 

money markets. The intensification of the financial 

crisis and problematic price determination for financial 

instruments – particularly on inactive markets – 

influenced the performance of the Group’s Capital 

Markets business to a considerable extent. 

These negative influences were offset by the pleasing 

development in the other business areas: Retail 

Banking, Regional Corporate Banking and Real 

Estate Financing. 

In the Retail Banking and Regional Corporate Banking 

segments, the strong market position was consolidated 

or even expanded. Particularly significant is the 

expansion of new business in instalment loans and 

the further extension of the leading market position in 

nation-wide credit card business. Despite the difficult

market environment, the Real Estate Financing segment 

managed to extend customer relations further 

and increase the portfolio through sustained new 

business. 

Following the Annual General Meeting on 4 July 2008, 

a dividend of € 0.10 per share was distributed to the 

shareholders (previous year: € 0.06). This corresponds 

to a total distribution amount of € 100 million (previous 

year: € 60 million). 

With a contract dated 1 October 2008, Landesbank 

Berlin AG sold the private customer banking business 

of its Luxembourg-based subsidiary, Landesbank 

Berlin International S.A. This was implemented in the 

fourth quarter of 2008. 

Income Statement 

1.1. – 31.12. 1.1. – 31.12. Change 

in € million 2008 2007 1) in % 

Net interest income 1,247 815 53 

Interest income 6,919 6,210 11 

Interest expenses 5,672 5,395 5 

Allowance for losses on loans and advances 63 – 68 > 100 

Net interest income after risk provisioning 1,184 883 34 

Net commission income 302 297 2 

Fee and commission income 439 429 2 

Fee and commission expense 137 132 4 

Net income from hedge accounting – 18 3 < – 100 

Net gain from financial instruments recognised at fair value through profit or loss – 344 – 45 < – 100 

Net income from financial assets – 308 – 4 < – 100 

Net income from investments carried at equity – 18 12 < – 100 

Other operating income 139 119 17 

Administrative expenses 940 965 – 3 

Operating result before restructuring – 3 300 < – 100 

Restructuring expenditure and income (net) 12 6 100 

Operating profit / earnings before taxes 9 306 – 97 

Income tax expense – 20 76 < – 100 

Consolidated net profit for the period / earnings after taxes 29 230 – 87 

Net profit / loss attributable to minority interests 12 19 – 37 

Consolidated net profit for the period of the shareholders of the parent company 17 211 – 92 


In addition, in January 2008 Landesbank Berlin AG 

acquired the limited partnership interest in Bianca 

Vermögensverwaltung AG & Co. KG, and thus a 

portfolio of consumer loans and credit card payables 

and receivables. This portfolio was transferred to 

Landesbank Berlin AG during the reporting year. 

Landesbank Berlin Investment GmbH (LBB-INVEST) 

was transferred from Landesbank Berlin AG to 

Landesbank Berlin Holding AG with the contract 

dated 22 December 2008 and with effect in rem from 

31 December 2008 / 1 January 2009. 



61

Due to the negative effects of the crisis on the 

financial markets to be processed, which are predominantly 

reflected in net income through financial 

instruments recognised at fair value through profit 

or loss and in net income from financial assets, 

operating profit / earnings before taxes of € 9 million 

were significantly down on the result of the previous 

year. In contrast, net interest and commission income 

again developed positively, reflecting successes in 

our retail banking business. 

The Group generated earnings after taxes of 

€ 29 million after € 230 million in the same period 

of the previous year. 

The individual earnings components of the Group 

are presented below: 

Net interest income again developed at above the 

average for the previous year, increasing by around 

53 % to € 1,247 million. For the most part, favourable 

new business and increases in the customer basis 

at good margins, particularly in the Capital Markets 

and Real Estate Financing segments, were responsible 

for the positive result. These developments 

were partially offset by the opposing effects of 

financial instruments recognised at fair value through 

profit or loss. 

1.1. – 31.12. 1.1. – 31.12. Change 

in € million 2008 2007 in % 

Interest income 

Interest income from receivables 3,578 3,205 12 

62 

Interest income from financial assets 2,092 1,868 12 

Similar (interest) income from financial investments 46 25 84 

Other interest income 1,203 1,112 8 

Total interest income 6,919 6,210 11 

Interest expenses 


Interest expenses for liabilities 3,998 3,807 5 

Interest expenses for subordinated liabilities 20 63 – 68 

Similar (interest) expenses from financial assets 0 2 – 100 

Other interest expenses 1,654 1,523 9 

Total interest expenses 5,672 5,395 5 


Total expense of € 63 million was recognised in 

the allowance for losses on loans and advances. 

€ 337 million was added to write-downs. This is 

offset by reversals of € 274 million. The allowance 

for losses also reflects the worsening general 

economic conditions. However, due to continued 

rigorous risk management, the ongoing reduction 

of risk-carrying positions and reversals to be carried 

out, overall it is lower than anticipated. 

The comparable period of the previous year showed 

a positive net amount of € 68 million for allowances 

for losses, primarily due to higher reversals.

Net commission income increased by € 5 million 

year-on-year to € 302 million (+2 %). The expan- 

sion of the guarantee bond business significantly 

increased income from lending business. The 

increased expenses in the credit card business, 

linked to high sales success, were far more than 

offset by the resulting income. The structure of net 

commission income is also defined by earnings 

contributions from securities and issue business 

and payment services. 

1.1. – 31.12. 1.1. – 31.12. Change 

in € million 2008 2007 in % 

Fee and commission income 

Securities and issue business 147 176 – 16 

Payment services / account management 116 115 1 

Lending business 48 35 37 

Card business 95 76 25 

Other services 18 14 29 

Other fee and commission income 15 13 15 

Total fee and commission income 439 429 2 

Fee and commission expense 

1.1. – 31.12. 1.1. – 31.12. Change 

in € million 2008 2007 1) in % 

Income from the reversal of write-downs on receivables and from the 

reversal of provisions in the lending business 274 449 – 39 

Depreciation and amortisation expense and write-downs of receivables 

and additions to provisions in the lending business 337 381 – 12 

Total 63 – 68 > 100 







Other fee and commission expense 5 4 25 

Total fee and commission expense 137 132 4 




63

64 


At € – 18 million, net income from hedge accounting 

was down € 21 million as against the figure for the 

previous year and shows the net gain or loss on the 

revaluation of effective fair value hedges. 

At € – 344 million, net income from financial instru- 

ments recognised at fair value though profit or 

loss recorded significant expenditure. Expense of 

€ 45 million was recorded in the same period of 2007. 

The earnings components were marked considerably 

by the distortions on the international Capital Markets. 

In the net income from the fair value measurement 

of financial instruments, the improvement in net 

trading income by € 475 million to € 102 million was 

offset by a reduction of € 774 million to € – 446 million. 

This particularly reflects the difficult situation on the 

Capital Markets. The reduction in net income from 


profit or loss to some extent corresponds to the 

opposing effects in net interest income. 

Net income from financial assets declined against 

the previous year by € 304 million to € – 308 million. 

This net result is primarily affected by net income 

from remeasurement (€ – 294 million). As well as 

write-downs on exposure at the Lehman Brothers 

investment bank, valuation corrections also had to 

be taken on our Iceland and Washington Mutual 

receivables and on funds. 

Net income from investments carried at equity 

decreased to € – 18 million (previous year: € 12 mil- 

lion). In addition to current income of € 5 million 

(previous year: € 3 million), this included effects of 

measurement changes of € – 23 million (previous 

year: € 9 million). 

Other operating income improved by € 20 million to 

€ 139 million. Total income of € 8 million was reported 

for taxes on assets and transactions and interest on 

income taxes in the financial year. Income of € 29 million 

was reported for the disposal of property, plant 

and equipment and of intangible assets. There was 

also income and reimbursements of costs from third 

party transactions totalling € 35 million. 

At € 940 million, administrative expenses were once 

again down on the previous year’s level of € 965 million 

and broke down as follows: 

1.1. – 31.12. 1.1. – 31.12. Change 

in € million 2008 2007 in % 

Staff costs 492 511 – 4 

Depreciation of property, plant and equipment and amortisation of intangible assets 62 66 – 6 

Other administrative expenses 386 388 – 1 

Total 940 965 – 3

Staff costs amounted to € 492 million after € 511 mil- 

lion in the comparative year (– 4 %). Write-downs and 

other administrative expenses declined by € 6 million 

as against the same period of the previous year. 

Overall, the development of administrative expenses 

in the reporting year is pleasing and is considerably 

lower than expected. 

Net restructuring expenditure and income related 

to expenditure for interest on restructuring provisions 

and income from the reversal of provisions that are 

no longer necessary. It increased by € 6 million yearon-year 

to € 12 million. 

In addition to current taxes with a net income of 

€ 28 million, income tax included expenses relating 

to deferred taxes in the amount of € 8 million. 

The fourth quarter of the 2008 financial year continued 

to be influenced by the effects of the global 

financial crisis. Nonetheless, an improvement in the 

operating result of € 141 million to € 6 million was 

achieved in comparison to the third quarter of 2008. 

The continued pleasing development of net interest 

income was offset by increased expenses due to 

market conditions in the areas of allowance for losses 

on loans and advances and net income through 


profit or loss. Following the high write-downs and 

valuation corrections on receivables recognised in the 

third quarter, net income from financial assets stabilised 

in the final quarter of the reporting year. 

Segment results 

At € 365 million, net interest income in the Retail 

Banking segment was 7.0 % or € 24 million higher 

than the figure from the previous year. This includes 

extraordinary income from the initial public offering 

of the credit card provider VISA totalling € 19.4 million, 

positive effects from the third-party card business 

(€ + 8.7 million), and negative special factors due 

to the expansion in the sales financing business 

(€ – 7.9 million). 

The volume as at the balance sheet date, particularly 

that of deposits, grew by 6 % as against 31 December 

2007. This was due to the crisis on the financial 

markets, since the increased need for security among 

customers led to return flows of deposits to the 

Berliner Sparkasse. At the same time, new business 

in approved general-purpose loans rose by 14.7 % 

and new business in mortgage loans made available 

increased by 10.3 % as against the previous year’s 

results. 

In 2008, net commission income was 1.0 %, or 

€ 2 million, up on the previous year’s level as a result 

of increased income from credit card business. 

A significant portion of net commission income was 

earned in the securities business, yet it remained 

13.1 % below the result of the previous year. As a 

result of the difficult market environment, the Retail 

Banking segment saw a 8.3 % decline in the level 

of internal certificates to € 865 million as against 

31 December 2007. In 2008, gross unit sales of 

€ 254 million were below the value of the previous 

year of € 351 million (– 27.6 %). Unit sales of insurance 

products developed well, with a 15.3 % year-on-year 

increase in net policy premiums. The national credit 

card business (co-branding) shows growth both 

in higher commission income and above-average 

growth in terms of credit cards (+15.9 %). 



65

66 


Allowance for losses on loans and advances was 

negatively impacted by portfolio-based allowances 

required in line with IFRS totalling € 7.6 million for 

the considerably increased volume of consumer 

loans, and was increased by the added consumer 

loans portfolio assumed from BHW Bank. 

Due to the increase in business (third-party cards 

and consumer loans portfolio in sales financing), 

administrative expenses were, at € 412 million, up 

slightly by € 3 million on the previous year’s figure. 

The increase in employee capacity (+75) resulted 

both from taking on trainees and from external 

appointments in connection with the transfer of 

employees from the acquired BHW portfolio. 

The Regional Corporate Banking segment consoli- 

dated its strong market position. One contributing 

factor was the growth in interest-bearing loans and 

advances to customers, which rose by an average 

for the year of 10 %. However, due to repayment of 

short-term loans, the segment assets recognised as 

at 31 December 2008 were below the level of the 

previous year. Customer deposits also increased by 

13 % as against the previous year. This was also 

reflected in the increase in segment liabilities. 

The number of customers increased by almost 

1,000 customers to approximately 63,400. In spite 

of a highly competitive environment, net interest 

income increased by 3.6 % to reach € 114 million. 

As in the previous year, the segment benefited from 

positive developments in the allowance for losses 

on loans and advances. Net commission income 

was up from the previous year’s figure, since in 2008 

income from export financing was presented in the 

Regional Corporate Banking segment for the first 

time rather than in the Capital Markets segment as 

previously. As a result, administrative expenses 

increased as against the previous year – adjusted 

for this effect, there was an overall decrease. Other 

operating income increased due to the disposal of 

an asset in the HILOG participation. 

The global financial crisis had a huge impact on the 

activities and result of the Capital Markets segment 

in financial year 2008. Market jitters left their mark 

on all activities in the segment through limited 

liquidity, huge increases in risk premiums (credit 

spreads) and extreme volatility on the interest and 

share markets. This led to losses in trading and 

remeasurement losses for asset items as a result of 

markets no longer functioning. In contrast, income 

from customer business remained virtually 

unchanged. 

The development of the credit spreads led to 

considerable remeasurement losses in our various 

investment strategies (e.g. tender option program, 

asset backed securities, credit investment portfolio), 

which were recognised only partially in terms of 

income. 

Despite the wide range of strategies and portfolios, 

trading activities also suffered enormously, although 

here the losses were limited by timely risk-reducing 

measures. The constant, non-volatile income from 

customer business and income revenue from investment 

strategies failed to compensate for the trading 

and remeasurement losses incurred.

Capital Markets generated an operating loss of 

€ 391 million, down € 380 million on the figure for 

the previous year. 

Due to impairments on exposures with Lehman 

Brothers, Washington Mutual, Icelandic banks 

and funds, net income from financial assets experienced 

a negative impact of € – 293 million (2007: 

€ – 26 million). 

Moreover, the collapse of Lehman Brothers meant 

that additions to write-downs on loans and advances 

were necessary. There was a corresponding increase 

in allowance for losses on loans and advances which, 

at € 53 million, was up € 83 million year-on-year. This 

includes write-downs on securitised US mortgage 

loans (CDO of ABS) and, to a lesser amount, value 

allowances for country risks from the Ukraine and 

Kazakhstan. 

Net interest income developed extremely positively, 

increasing to € 381 million (up € 251 million on 2007), 

primarily due to money market activities. 

At € – 284 million (previous year: € – 41 million), net 

income from financial instruments recognised at fair 

value through profit or loss was down heavily as 

a result of high exchange losses, particularly in the 

second half of the year. 

In 2008, an income settlement from the reassignment 

of export financing to the Regional Corporate Banking 

segment (€ – 14 million) was undertaken for the 

first time. At € 30 million, net fee and commission 

income was down € 8 million as against the year 2007 

(after adjustment for the above income settlement), 

mainly resulting from falling brokerage income. 

Administrative expenses decreased by € 21 million 

to € 152 million due to rigorous implementation of the 

agreed saving measures and the reassignment of 

export financing to the Regional Corporate Banking 

segment. 

The measures to attract new customers and intensify 

sales were expanded at all times in 2008 and led 

to a further increase in the number of clients. The 

outstanding certificate volume fell to € 2.3 billion in 

the course of the financial crisis. Gross sales of 

certificates amounted to € 1.2 billion as at 31 Decem- 

ber 2008. Growth in the special and mutual funds 

of LBB-INVEST did not continue in 2008. The fund 

volume decreased from € 12.8 billion as at 31 December 

2007 to € 10.3 billion as at 31 December 2008. 

The decline in the mutual fund volume to € 3.4 billion 

is mainly attributable to price losses on the share 

markets. 

Lending volumes in international lending business, 

which is essentially covered by state export credit 

agencies (ECA), grew significantly over the course 

of the year. With the escalation of the financial crisis, 

limits and thus new business were scaled back in 

the fourth quarter. Net operating interest and commission 

income were up on the previous year. 



67

68 


The Real Estate Financing segment generated 

pleasing operating earnings of € 259 million in the 

reporting period, representing a 5.3 % year-on-year 

increase (€ 246 million as at 31 December 2007). 

In the process, the balance of net interest income 

and net income from financial instruments recognised 

at fair value through profit or loss rose by 

€ 33 million. One contributing factor to the positive 

development in provisions for losses on loans and 

advances was extraordinary reversals, which significantly 

exceed newly created provisions. Net commission 

income improved by 73.7 % year-on-year 

to € 33 million. 

Despite the difficult market environment, new business 

– at around € 6.7 billion – once again exceeded 

the figure for the previous year of around € 6.6 billion 

(excluding non-recurring transactions of € 3.6 billion). 

The positive development in new business of previous 

years was continued though rigorous deployment 

of market opportunities. The breakdown of new 

business in terms of property use, lending areas and 

customer segments and the development of new 

business margins was consistent with the segment’s 

objectives. The segment’s strategy of risk limitation 

was still systematically observed. 

The customer receivables portfolio increased by 

€ 1 billion in the core business of Real Estate 

Financing in the reporting period. In the German 

market, the Real Estate Financing segment is thus 

firmly established as one of the leading providers. 

The Group management and service functions, 

the balance sheet structure management and the 

consolidation items in the Group are shown under 

Other / Consolidation. Other items reported in this 

segment include non-interest-bearing balance sheet 

items, such as non-current assets and the associated 

write-downs in administrative expense in the 

amount of € 32 million (previous year: € 33 million). 

The operating profit in the reporting period increased 

by € 44 million year-on-year to € – 84 million. 

The number of employees in the Other / Consolidation 

segment is 2,513, as compared to 2,083 in 

the pre vious year. 1,158 of these jobs (31 December 

2007: 1,190) relate to head office staff (including 

organisation and IT), and 1,332 of them relate to 

back office positions, which include both Banken- 

Service GmbH and also, since 1 July 2008, the back 

office positions at the credit units in the Regional 

Corporate Banking, Capital Markets and Real Estate 

Financing segments. In addition, there are also 

some employees in other Group companies included 

in the Other / Consolidation segment. The reclassification 

of back office positions is the reason for 

the increase in the number of employees as at 

31 December 2008 in comparison to the previous 

year. There is a corresponding decrease in the 

number of employees in the Regional Corporate 

Banking, Capital Markets and Real Estate Financing 

segments. Because services were recharged, 

these reclassifications did not have any impact on 

the overall results of the segments concerned.

Net assets 

total assets at the end of 2008 amounted to 

€ 145.4 billion, slightly up on the corresponding 

figure for the previous year (31 December 2007: 

€ 142.2 billion). 

At € 22.4 billion, loans and advances to banks 

were down 16 % year-on-year. This was due to a 

reduction in loans and investments in the money 

and Capital Markets. Whilst term and demand 

deposits decreased by € 1.9 billion year-on-year, 

amounts of promissory note loans declined by 

€ 1.0 billion. There was a € 0.4 billion decrease in 

public-sector loans to € 3.2 billion. 

Loans and advances to customers increased 

slightly by € 0.4 billion or 1 % year-on-year to 

€ 47.5 billion, reflecting the positive development 

in retail banking business. 

AssEts 

31.12.2008 31.12.2007 1) Change 

in € million in % 

Cash 1,727 986 75 

Loans and advances to banks 22,369 26,514 – 16 

Loans and advances to customers 47,462 47,026 1 

Risk provisioning – 1,245 – 1,411 12 

Positive fair value of derivative hedging instruments 749 397 89 

Financial assets recognised at fair value through profit or loss 18,295 13,637 34 

Financial assets 50,466 50,696 0 

Investments carried at equity 98 129 – 24 

Intangible assets 650 665 – 2 

Property, plant and equipment 578 583 – 1 

Investment property 65 82 – 21 

Current tax assets 99 85 16 

Deferred tax assets 913 793 15 

Other assets 3,074 1,915 61 

Non-current assets and groups of assets held for sale 71 66 8 

Total 145,371 142,163 2 


For allowances for losses on loans and advances, 

there was a decline of € 0.2 billion to € 1.2 billion 

(previous year: € 1.4 billion). 

At € 0.7 billion, the positive fair values of derivative 

hedging instruments were up € 0.3 billion on the 

level of the previous year (€ 0.4 billion). 

In addition to the portfolio changes, the change in 

interest rates also impacted the figures reported for 

derivative financial instruments. The fair values of 

financial assets recognised at fair value through 

profit and loss rose by € 4.7 billion to € 18.3 billion 

as against 31 December 2007 (€ 13.6 billion). 

At € 50.5 billion, financial assets remained virtually 

unchanged (previous year: € 50.7 billion). 



69

shares carried at equity amounted to € 98 million 

compared with € 129 million in the previous year. 

Changes arose particularly from the disposal of 

three companies. 

intangible assets decreased only very slightly yearon-year 

and totalled € 650 million, mainly consisting 

of goodwill of € 592 million. 

Property, plant and equipment declined slightly 

from € 583 million to € 578 million (– 1 %). 

investment property used by third parties was 

recognised at € 65 million, a € 17 million decrease in 

comparison to the previous year (€ 82 million). The 

main reason for the decline is disposals and reclassifications 

in non-current assets and groups of 

assets held for sale (€ 14 million). 

LiABiLitiEs ANd shAREhOLdERs’ Equity 

31.12.2008 31.12.2007 1) Change 


Deposits by banks 45,950 50,686 – 9 

Amounts due to customers 32,720 29,552 11 

Securitised debt 29,826 30,517 – 2 

Negative fair value of derivative hedging instruments 1,340 985 36 

Financial liabilities recognised at fair value through profit or loss 27,097 21,893 24 

Provisions 1,168 1,270 – 8 

Current tax liabilities 157 199 – 21 

Deferred tax liabilities 33 32 3 

Other liabilities 1,915 1,018 88 

Liabilities assigned to groups of assets held for sale 83 1 > 100 

Subordinated capital 3,137 3,163 – 1 

of which: Dormant participations 687 700 – 2 

Shareholders’ equity 1,945 2,847 – 32 

Total 145,371 142,163 2 


70 


At € 99 million, current tax assets were up slightly 

by € 14 million overall as against the figure for the 

previous year. 

deferred tax assets increased by € 120 million to 

€ 913 million. 

The increase in other assets by € 1,159 million to 

€ 3,074 million is largely due to the € 1,186 million 

rise in cash collateral to be deposited. 

The figure shown in the item for non-current assets 

and groups of assets held for sale related mainly to 

the intended disposal of investments and buildings / 

properties.

deposits by banks declined by € 4.7 billion or 9 % 

year-on-year to € 46.0 billion. The decrease results 

primarily from lower term and demand deposits 

(€ – 3.1 billion). 

Amounts due to customers increased by € 3.2 billion 

or 11 % year-on-year to € 32.7 billion. A large 

proportion of this rise related to term, demand and 

savings deposits at € 2.1 billion, and issued registered 

bonds at € 1.0 billion. 

The volume of securitised debt decreased by 

€ 0.7 billion or 2 % year-on-year to € 29.8 billion. 

€ 13.9 billion of this was attributable to publicsector 

mortgage bonds, € 7.9 billion to mortgage 

bonds and € 7.8 billion to debt instruments. 

Negative fair values of derivative hedging increased 

by € 0.3 billion to € 1.3 billion in comparison with 

the previous reporting date. 

As a result of factors including portfolio changes 

and changes in interest rates, the volume of financial 

liabilities recognised at fair value through profit or 

loss rose by € 5.2 billion to € 27.1 billion. 

Provisions declined by € 0.1 billion year-on-year 

to a total of € 1.2 billion. Reversals and utilisation 

totalling € 149 million were offset by additions of 


income tax liabilities of € 190 million decreased by 

€ 41 million year-on-year. They consisted of current 

liabilities of € 157 million and deferred liabilities of 


The other liabilities item increased by € 0.9 billion 

as against the previous year to € 1.9 billion and 

included in particular liabilities from collateral 

received (€ 1.7 billion). 

Liabilities allocated to groups of assets held for 

sale rose by € 82 million to € 83 million and related 

to the obligations of available for sale groups of 

assets. 

Measurement of pension obligations in accord- 

ance with IAS 19 took account of the development 

of the applicable interest rate (5.8 %; 31 December 

2007: 5.7 %), the salary trend (3.0 % to 3.5 %; 

31 December 2007: 2.5 % to 3.0 %), the pension 

trend (unchanged at 1.0 % to 3.0 %) and the rate of 

fluctuation (unchanged). The changes increased 

shareholders’ equity – before deferred taxes and 

minority interests – by a total of € 28 million. 

The overall capital ratio for liable capital reported at 

the level of the RVG Group as at 31 December 2008 

was 16.41 %; the tier 1 capital ratio was 13.74 %. 

The overall capital ratio reported on 31 December 

2007 after the approval of the annual financial statements 

was 15.04 %; the Tier 1 capital ratio was 

11.80 %. The overall capital ratio for the Holding as 

at 31 December 2008 was 10.96 %; the Tier 1 capital 

ratio was 7.76 %. 



71

72 


The subordinated capital item includes subordinated 

liabilities and dormant participations. 

As at 31 December 2008, Group shareholders’ equity 

in accordance with IFRS totalled € 1.9 billion. This 

represents a decrease of € 0.9 billion from 31 Decem- 

ber 2007. This was largely due to the reduction of 

the revaluation reserve and the decrease in minority 

interests by € 0.5 billion and € 0.3 billion respectively. 

For more information, please see the statement of 

changes in Group shareholders’ equity. 

As at 31 December 2008, the amount of off-balance 

sheet financing instruments after risk provisioning 

totals € 6.0 billion (previous year: € 9.9 billion). Offbalance 

sheet financing instruments include primarily 

contingent liabilities from guarantees and warranties 

and irrevocable loan commitments. 

Financial position 

The Bank has chosen not to prepare a more detailed 

analysis of the cash flow statement as it does not 

derive any impulses relevant to liquidity management 

as a result. The aims of financial management 

are the targeted and controlled risk-taking in line with 

return-oriented parameters and regulatory standards. 

The liquidity management relevant for the Bank is 

based on principles derived from the German Banking 

Act which are presented in the Risk Report. 

Please also see the presentation on the cash flow 

statement. 

As a result of the financial market crisis, the situation 

on the refinancing markets worsened. LBB is also 

affected by this as a result of limited access to these 

markets. Reduced investments in financial assets 

ensured the availability of liquidity for operations 

and the maintenance of sufficient reserves. The refinancing 

markets have eased to the extent that since 

January 2009 our customer requirements can be 

entirely covered. Because credit and liquidity spreads, 

especially in the short term, are offset by decreased 

base interest rates, at present the realisation of our 

customers investment plans depends primarily 

on whether sufficient equity is available and whether 

our customers are anticipating positive market 

developments. 

At the present time, we do not foresee restrictions 

to the core business with our customers for reasons 

of liquidity. The Sparkasse will remain available to 

all customers in its traditional business without qualification. 

Despite the difficult market situation, the 

refinancing situation at LBB allowed an ongoing 

expansion of business. 

Effects of consolidation 

The items of the consolidated income statement 

and the consolidated balance sheet volume are primarily 

determined by LBB and Berlin Hyp. Based 

on the consolidated financial statements, 90.2 % of 

total assets related to these companies (previous 

year: 88.3 %).

Events after 31 December 2008 

As at 31 December 2008, valuation models were 

applied in calculating the fair value of numerous 

financial instruments. This was because the extreme 

market situation, primarily characterised by inactive 

markets, meant that in these cases it was practically 

impossible to determine the fair value on the basis 

of listed prices or by means of estimates based 

on most recent transactions or currently available 

market prices. As far as possible and wherever 

available, observable market data was applied. 

Our evaluation of the current non-typical market 

situation – which was dominated by a sharp decline 

in trading activities and sometimes even a complete 

lack of trades, as well as increased volatility together 

with a rise in credit spreads – remains unchanged. 

Despite a noticeable increase in activities on the 

primary market, financial markets are still highly 

In accordance with Article 312 of the German Stock 

Corporation Act, the Board of Management of 

Landesbank Berlin Holding AG submitted a report 

on business relations with affiliated companies for 

the 2008 financial year. The declaration at the end 

of this report is as follows: 

“The Board of Management of Landesbank Berlin 

Holding AG hereby declares that the Landesbank 

Berlin Holding AG companies received appropriate 

unsettled. We are seeing ongoing low market volume 

on the secondary market, a high bid / offer spread, 

little willingness to implement actual transactions, and 

quotations from different sources which sometimes 

vary widely from one another or are themselves contradictory. 

This means that no price quotes / only 

indicative price quotes are available. The markets in 

Germany, in particular the previous issuing activities, 

are also heavily influenced by state rescue measures, 

which can only be used for limited market assessments. 

The sale of the retail banking business of the 

Luxembourg-based subsidiary Landesbank Berlin 

International S.A. as agreed upon in the contract of 

1 October 2008, was concluded in January 2009 

with the receipt of purchase price payment and the 

transfer of assets and obligations. 

Final statement on the dependent company report in accordance 

with Article 312 of the German Stock Corporation Act 

consideration for all legal transactions and other 

measures with Erwerbsgesellschaft der S-Finanzgruppe 

mbH & Co. KG, with Regionalverbandsgesellschaft 

mbH and with companies affiliated 

thereto in accordance with the circumstances known 

at the time of legal transactions or measures and 

that these companies were not disadvantaged by 

the measures taken.” 


Development of business – January to December 2008 | Events after 31 December 2008 | Final statement on the dependent company report 

73

74 

Risk report 

The risk report of the Landesbank Berlin Holding 

Group contains the information required under 

GAS 510 and IAS / IFRS. The Group is thereby exercising 

the regulation under IFRS 7.B6, which allows 

bundling the information required on the nature 

and extent of risks arising from financial instruments 

in a risk report. Please see also note 61 (risk management). 

As the Group parent, Landesbank Berlin Holding AG 

(Holding) essentially performs the function of a 

financial holding company that no longer performs 

its own banking activities and is no longer a bank. 

Its central activity is holding the 100 % interest in 

Landesbank Berlin AG (LBB). 

Due to the fact that LBB is the parent company of 

the financial holding group in terms of regulatory law 

and all the banks in the Group are merged under its 

umbrella, there is a high correlation between the 

risks of the Landesbank Berlin Group and those of 

the Landesbank Berlin Holding Group. 

As a result of the dramatic intensification of the 

international financial crisis as of September 2008, 

the Group had to revise its expectations for the 

2008 financial year. 

From the middle of September 2008 on, general conditions 

for banks deteriorated worldwide on a sustained 

basis and with unprecedented momentum, 

with the effect that extensive guarantee and stabilisation 

measures were initiated for the financial system 

by state institutions. Specifically the insolvency of 

Lehman Brothers led to the re-evaluation of default 

risks, even from major financial system counterparties. 

As a result, established refinancing sources 

largely dried up and a string of major market players 

became illiquid. The Group itself did not remain 

unaffected by market jitters in 2008. These led to a 

perceptible negative impact and subjected our risk 

management methods, procedures and systems 

to an acid test in the reporting year. Even in these 

extreme circumstances, our risk management processes 

generally showed themselves to be appropriate. 

Control measures were initiated on this basis. 

However, in the environment of dysfunctional Capital 

Markets, these measures could not prevent remeasurement 

losses (for structured products, securitisation 

transactions and especially financial securities) 

and impairment losses. At all times, the group’s 

unutilised coverage existed both according to our own 

internal measures and from a regulatory viewpoint.

Principles for risk management and control 

The targeted, controlled assumption of risks in the 

context of return-oriented parameters is a key 

component of the Group’s overall risk management 

strategy. Risk control and qualified, timely risk 

monitoring are performed in accordance with the 

conditions of the Board of Management’s risk policy 

as set out in the risk strategy and the risk manual. 

Acting as an independent unit, Risk Management 

is responsible for identifying and evaluating risks, 

supporting the company’s risk management activities 

and providing the company’s management 

with regular information. 

The risk strategy is derived from the Bank’s strategic 

framework and principles, and sets out the provisions 

of the latter with regard to the taking of risks. This 

includes the stipulation of Group-wide methods and 

procedures for risk measurement. In addition, all 

companies and organisational units are responsible 

for ensuring that all risks are transparent and can 

be measured using uniform Group methods. 

The risk manual, which sets out the framework for 

operational risk control and applies to both the Group 

and the individual banks, provides detailed information 

on conditions, responsibilities and methods 

for the individual phases of risk management. 

Overall risk management 

Overall risk management for the Group is the 

responsibility of the Board of Management of LBB. 

In accordance with the Group’s business policy, the 

Board of Management performs risk limitation and 

allocation for the various companies and organisational 

units of the Group by implementing limits and 

structural requirements, taking into account economic 

risk tolerance and the regulatory rules. The Finance 

and Risk and Controlling divisions report in the 

monthly joint top management report. In addition 

to the financial analysis, this contains risk reporting 

in line with the Minimum Requirements for Risk 

Management (MaRisk). Using this report, which 

summarises all risk types, the Board of Management 

discusses the overall risk and result of operations 

and examines the extent to which reactions are 

required. 

Within the Group, a distinction is made between 

the following risk categories in terms of content: 

Counterparty risks (including participation risks) 

Liquidity risks 

Market price risks, interest rate risks (cash flow 

and fair value), currency risks, share price risks 

Real estate risks 

Operational risks 

Other risks / remaining risks 

The risk categories are divided into monetary and 

non-monetary risks. Monetary risks are included in 

the quantitative combination forming total risk 

(internal risk tolerance concept). Non-monetary risks 

(e.g. liquidity risk and strategic risk) are managed 

qualitatively. In addition, for risk tolerance analyses, 

when significant risks (i.e. potential losses of assets) 

are identified that have not yet been included, they 

are reported separately under remaining risks. 


Risk report 

75

76 

Risk report 

At Group level, risks are controlled and monitored 

at Group level by breaking down all companies into 

a graded concept (internal scope of consolidation) 

that is regularly reviewed. 

The internal risk tolerance concept is composed of 

a system of measurement procedures and limits for 

all material risks that ensures down to a small residual 

possibility that a defined maximum asset loss is 

not exceeded. The assumptions this is based on are 

reviewed on a regular basis, at least once a year, 

and are adjusted if necessary, as is also the case for 

the corresponding limits. On the basis of the individual 

risk types identified, the overall risk is calculated 

by aggregating the individual risks, taking into account 

diversification effects between the risk types. The 

overall risk situation was measured by comparing the 

capital available to cover risks (aggregate risk cover) 

with the total risk and with the crisis scenario at 

Group level. 

To be able to interpret risk assessments more accurately, 

the risk to the Bank as a whole is calculated 

for various confidence levels. The results are compared 

with various loss scenarios (e.g. loss equal to 

the planned results for the year, falling short of the 

overall capital ratio required by the supervisory 

authorities). Furthermore, the discontinuation of all 

diversification effects between risk categories is 

defined as a crisis scenario at Group level. In the 

reporting year, the scenario analyses for the individual 

risk categories were developed further and 

integrated into reporting. 

Internal capital adequacy 

To improve the efficiency of overall management 

further, a risk capital figure is set at an overall level 

and for the divisions. The risk capital is in addition 

to the existing limits and functions as an observation 

limit derived from the strategic goals, which means 

that countermeasures can be taken in good time if 

the Group comes close to this limit. 

The Capital Management Committee, introduced 

in 2007, coordinates Group-wide measures to 

ensure a long-term, optimised capital structure in 

line with internal and external conditions. To achieve 

this, it compares the development of risk positions 

at the key Group companies and the Group on 

the basis of approved medium-term planning and 

internal (economic), accounting and regulatory 

capital requirements. 

The composition of the internal aggregate risk cover 

was redefined in 2008 and is now defined on the 

basis of equity according to IFRS plus 70 % of subordinated 

capital. This allows for an improved and 

more up-to-date mapping of the risk situation and 

the related assets. On the basis of the new, slightly 

reduced aggregate risk cover, there is still scope for 

new business in line with our strategy. Unutilised 

coverage is in place in stress situations and on theoretical 

full utilisation of the current total limit. As of 

31 December 2008, the Group had aggregate risk 

cover of € 4,200 million; regulatory capital resources 

amounted to € 4,511 million after establishment to 

the same date.

To ensure risk tolerance, there is a limit system 

along with escalation processes based on this 

system. When risk limits are approached (this is 

generally taken to mean utilisation of more than 

90 %), the Board of Management decides 

on measures to prevent limits being exceeded. 

in € million 

Credit risk 

Participation risk 

Market price risk 

Operational risk 

Real estate risk 

Remaining risks 

Correlation 

Total risk 

Excess 

Aggregate risk cover 

Total risk 

Stress risk 

Aggregate risk cover 

1,076 

24 

At Group level, even during periods of greater risk 

values in connection with the financial crisis, there 

was sufficient excess capacity for aggregate risk 

cover at all times in the reporting year, both in terms 

of utilisation and the established limits. 

Utilisation by risk type, overall risk and the resulting 

unutilised coverage within the Group as of 31 December 

2008 were as shown: 

2,027 

1,276 

90 

71 

65 

– 575 

2,173 

4,200 

0 1,000 2,000 3,000 4,000 5,000 

2,027 

0 1,000 2,000 3,000 4,000 5,000 

2,602 

4,200 


Risk report 

Utilisation by 

risk type for the 

Group as at 

31 December 2008 

77

78 

Risk report 

OvERALL CAPitAL RAtiO (sOLvv) 

25.0 25.0 

RVG 16.4 % 

LBB 12.1 % 

20.0 20.0 

LBBH 11.0 % 

15.0 15.0 

10.0 10.0 

5.0 5.0 

January 2008 

February 2008 

March 2008 

April 2008 

May 2008 

June 2008 

July 2008 

August 2008 

September 2008 

Regulatory capital adequacy (German 

Solvency Ordinance) 

October 2008 

By way of the acquisition of the Holding by 

S-Erwerbsgesellschaft with its partners Regionalverbandsgesellschaft 

mbH (RVG, general partner) 

and DSGV ö.K. (limited partner) in 2007, LBB is 

owned by the RVG Group in terms of regulatory 

requirements. Please see also the regulatory ratios 

at the level of the Holding and at the level of RVG. 

The RVG Group and the sub-banks prepared statements 

in accordance with the Solvency Ordinance 

(SolvV) in the reporting year. As of the beginning of 

the year 2008, Berlin Hyp and netbank also report 

in accordance with SolvV. 

November 2008 

December 2008 

tiER 1 CAPitAL RAtiO (sOLvv) 

January 2008 

February 2008 

March 2008 

April 2008 

May 2008 

June 2008 

July 2008 

August 2008 


RVG 13.7 % 

LBB 8.4 % 

LBBH 7.8 % 

The information shown on the overall capital ratio 

and the Tier 1 capital ratio relates to the figures 

reported to the regulatory authorities as of the respective 

reporting date. As of 31 December 2008, figures 

after approval of the annual financial statements 

are shown for LBB and LBBH. 

October 2008 

November 2008 

December 2008 

The required minimum regulatory ratios of 8 % for 

the overall capital ratio and 4 % for the Tier 1 capital 

ratio were maintained at all times in the reporting 

year. 

In the SolvV statements up till July 2008, the regulatory 

ratio (overall capital ratio) was calculated 

including the additional equity requirements (floor) 

in line with Article 339 SolvV. This floor resulted 

primarily from the scaling of SolvV required capital 

resources to 90 % (2008 floor) of the required 

capital resources in accordance with Principle I.

In accordance with BaFin’s interpretation recommendation 

for calculating and reporting the floor, the 

Bank adjusted its calculation methods to regulatory 

ratios as of September. With the new procedure, 

adjustment amounts from the parallel calculation of 

Principle I (floor) are no longer included. 

The floor analysis is carried out as an auxiliary calculation, 

whereby the capital backing in line with 

Principle 1 is multiplied by the current floor of 90 %, 

taking into account the write-down comparison and 

the expected loss for investments, and is set against 

the Bank’s capital. This requirement was met on a 

regular basis in the reporting year. 

Counterparty default risk 

Counterparty default risk is defined as the risk of loss 

or foregone profit as a result of default by a business 

partner. This definition includes the risk that a 

contractual partner of the bank does not meet its 

obligations or does not do so in a timely manner or 

that the bank itself must meet an obligation on 

account of the non-performance of a third party, as 

well as the participation risk arising from the provision 

of equity. In the commercial credit business, the 

counterparty default risk when granting book loans 

is identical to the credit risk. If the asset held is a 

security instead of a book loan, the risk in question 

is an issuer risk. Other types of risk included under 

risk of default, and that are standard in trading 

business in particular, are counterparty risk (risk of 

potentially disadvantageous recoverage of a derivative 

transaction in the event of default by a business 

partner), settlement risk (risk that no counterperformance 

occurs on the payment date in spite of 

performance) and country risk (transfer risk). 

The measurement and management of counterparty 

default risks in the Group is based on a risk-adequate 

presentation of transactions subject to credit 

risk. Credit risks and counterparty and issuer risks 

are measured specifically to each product and quantified 

using the current credit exposure. The internal 

reporting of credit risks to management is essentially 

determined on the basis of this factor. In line with 

this and in accordance with IFRS 7.34(a), the presentations 

used internally are used below. 

On account of the risk content orientation of positions 

there are quantitative differences for some 

products between the current credit exposure and 

the receivable volume for accounting purposes: 

For trade transactions including securities and 

derivatives, the current credit exposure is calculated 

on the basis of counterparty, issuer and 

borrower risks. In addition, add-ons are included 

for potential future exposure for counterparty risks. 

Risks are mitigated by netting agreements and 

by offsetting long and short positions for issuer 

risks or by compensation agreements. 

Passed on development loans that do not represent 

a risk for the Group are not included. 

In line with the method differences shown, the current 

credit exposure can be reconciled to balance 

sheet assets. It should be noted that balance sheet 

assets also include items not subject to counterparty 

risk, e.g. intangible assets or property, plant 

and equipment. The table below shows the key 

differences to the balance sheet assets. 


Risk report 

79

Reconciliation: 

current credit 

exposure to 

balance sheet 

assets 

80 

Risk report 

in € billion 

150.0 

145.0 

140.0 

135.0 

130.0 

125.0 

120.0 

115.0 

110.0 

The Group’s entire current credit exposure as of 

31 December 2008 was € 124.9 billion. € 41.5 billion 

of this related to credit risks from commercial lending 

business quantified on the basis of remaining 

carrying amounts. 

Issuer, counterparty and borrower risks of capital 

market transactions are based on the market prices 

of the financial instruments and are included in the 

current credit exposure in the amount of € 83.4 billion. 

stRAtEGiC BusiNEss AREA 


Current 

credit 

exposure 

124.9 

Add-on 

5.4 

Netting 

8.9 

Offset 

16.0 

Compensation 

0.9 

Pass-through 

loans 

0.1 

Measurement 

differences for 

derivatives 

5.7 

The majority of the current credit exposure related 

to the Capital Markets, Real Estate Financing and 

Other segments. 

Alongside current credit exposure, credit exposure 

is also considered below. This additionally includes 

limits promised to customers that have not yet been 

drawn. These limits include both revocable and 

irrevocable commitments. 

In line with the above composition of credit exposure 

and current credit exposure, the breakdown for the 

Group’s strategic business areas as of 31 December 

2008 was as follows: 

Credit 

exposure 

Total assets in 

line with IFRS 

(LBBH Group) 

Difference for 

145.4 

amortised cost 

0.2 Other 

Credit risks 

Balance sheet 

items excluding 

counterparty 

default risk 

5.9 

Current credit exposure 

Issuer, counterparty,borrower 

risks 

Retail Banking 10,194 3,868 395 4,262 

Regional Corporate Banking 6,720 5,448 0 5,448 

Real estate 54,944 28,180 22,992 51,173 

of which mortgages 28,805 26,043 0 26,043 

Capital Markets 50,627 3,979 46,258 50,237 

Miscellaneous 13,738 2 13,735 13,737 

LBBH Group 136,223 41,477 83,380 124,857 

In this table and all following tables, figures have been rounded up / down, meaning that it may be the case that the figures provided for the totals differ slightly 

from the sum of the individual items. 

0.1 

Total

In line with its risk strategy, the Group primarily enters 

into credit risks in Berlin and the Federal Republic 

of Germany. In contrast, in line with its own strategy, 

risks in Capital Markets are predominantly issuer, 

counterparty and borrower risks abroad and in the 

former West German states. 

The industry breakdown is similar: the portfolio of 

credit risks is largely determined by real estate finance 

and retail and corporate customer business. In particular, 

issuer and counterparty risks are entered into with 

banks and regional and local authorities. 


Former East German states 12 % 

Berlin 40 % 

International 16 % 

Miscellaneous 1 % 


Former East German states 3 % 

Berlin 4 % 

International 56 % 


Real estate financing 48 % 

Banking industry 13 % 

Business discharged 

from liability 11 % 

Private individuals 9 % 

Trade and commerce 6 % 

Services 6 % 

Health and social 2 % 

Regional authorities 2 % 

Participation companies 2 % 


Banking industry 78 % 

Regional authorities 19 % 

Services 2 % 

Trade and commerce 1 % 



Risk report 

Regional 

distribution of 

credit risks 

(€ 41.5 billion) 

Regional 

distribution of 

issuer, counter- 

party and 

borrower risks 


Credit risks 


Issuer, counter- 

party and 

borrower risks 


81

Remaining maturity 

of credit risks 


Remaining 

maturity of Issuer, 

counterparty 

and borrower risks 


82 

Risk report 

up to 3 months 19 % 

between 3 months and 1 year 5 % 

between 1 and 5 years 19 % 

more than 5 years 57 % 

up to 3 months 13 % 

between 3 months and 1 year 11 % 

between 1 and 5 years 47 % 

more than 5 years 29 % 

Risk mitigation 

Various risk mitigation elements are used in the 

Group to reduce counterparty default risks. The key 

element for credit risks are physical and personal 

collateral. In addition, counterparty risks from trading 

activities are reduced by way of agreements on 

closeout netting. These make it possible to offset 

receivables and liabilities in the event of a deterioration 

in the counterparty’s credit rating, even if the 

counterparty becomes insolvent. In addition, other 

risk-minimising measures such as the conclusion 

of credit derivatives and the exchange of collateral 

are carried out in trading. 

The volume-weighted residual term for credit risks 

exceeds that for issuer, counterparty and borrower 

risks. 

Credit risk measurement procedure 

The probability of an exposure’s default is calculated 

as the key parameter for determining credit risks 

using rating and scoring methods. Each of these rating 

methods serves the purpose of validly estimating 

the probability of default for certain borrower groups 

on the basis of statistical procedures. All the risk 

classification systems used in the Group are subject 

to permanent quality control by credit risk controlling. 

For retail banking, regional corporate banking in 

Germany and real estate financing in Germany, 

internal Sparkasse rating and scoring methods from 

Sparkassen Rating und Risikosysteme GmbH are 

used. For major clients and international business, 

rating methods from Rating Service Unit GmbH & 

Co. KG are applied. LBB was involved in the development 

projects and participated in the bodies and 

working groups of both service providers.

The rating methods are calibrated to probabilities of 

default in line with the default definitions of Basel II. 

Based on the probability of default, they are assigned 

to one of the 25 classes of the DSGV master scale. 

The main rating methods were analysed and accepted 

by banking supervisory authorities as part of the 

admissions review for the internal rating-based 

approach under Basel II. 

As part of the credit analysis, a rating category is 

determined for each borrower. The allocation of rating 

classes to probabilities ensures the comparability 

of borrower credit ratings across all segments. The 

lending principles and allocation of competencies 

are based on the risk category. In addition to the 

probability of default determined from the rating, this 

also includes the collateral provided, thus giving an 

overview of the loss potential of a given exposure. 

In line with the risk class, the portfolio can be 

broken down into: 

Good loans risk class (1 to 12) 

Sub-performing loans risk class (13 to 15) 

Non-performing loans risk class (16 to 18) 

Quantitative analysis of default risks using statistical 

procedures is carried out for lending portfolios on 

the basis of the credit portfolio model developed by 

the Bank. This model, which is based on a Groupspecific 

adaptation of standard models, enables 

aggregation of borrower-specific risks of default for 

a risk indicator at portfolio level, the credit value at 

risk (CreditVaR). This figure is calculated daily on the 

basis of confidence levels of 90 % and 99.9 % with 

a holding period of one year for the main Group, 

sub-bank and business area portfolios. It is included 

in the monthly top management report and in risk 

tolerance calculations. 

On the basis of credit-specific exposure, the rating, 

the collateral and correlation estimates, the credit 

portfolio model estimates the probability of major 

losses as a result of correlated credit default. Owing 

to its structure, the model used reacts sensitively 

to cluster risks or industry concentrations and also 

takes into account the risk of country-transfer 

events. The mapping of risks is refined by stochastic 

modelling of loss ratios (e.g. collateral proceeds). 

The risk contributions of individual borrowers are 

calculated and are presented as part of credit risk 

reporting. 

Credit quality 

The following table shows the credit quality of 

financial assets that are neither past due nor 

impaired, grouped according to their risk class. 

CuRRENt CREdit ExPOsuRE 

Risk class 

Credit risks 

Issuer, 

counterparty, 

borrower 

risks 

in € million in € million 

1 – 3 25,132 78,359 

4 – 7 6,717 3,963 

8 – 12 4,497 624 

13 – 15 698 16 

no risk class available 562 213 

LBBH Group 37,606 83,175 

Share in total CCE 90.7 % 99.8 % 


Risk report 

83

84 

Risk report 

Credit monitoring 

The Group uses various manual and automatic 

methods to monitor the specific risk of borrowers 

in order to detect credit risks at an early stage and 

manage them proactively. Generally, borrower ratings 

are updated at least once per year. Within this 

framework, portfolios and the impairment of collateral 

are also regularly monitored and may be subject to 

remeasurement. In the event of rating deterioration, 

a decision is made as to the nature of the continued 

exposure. 

The Group uses early warnings systems to identify 

enhanced risk borrowers. Based on quantitative and 

qualitative early warning indicators, corresponding 

watch lists are prepared listing borrowers to be 

examined separately. 

The Group updates and refines the quality of its 

credit monitoring on an ongoing basis to accelerate 

decision-making processes and to improve the 

quality of the available information for recognising 

and measuring potential risks. Credit business, 

the implemented risk measurement methods and in 

particular the credit processes are regularly reviewed 

by the internal audit department. Measures are 

derived from this to improve further the quality of 

credit analysis and monitoring. 

Risk limitation 

Counterparty default risks are limited and managed 

at the level of individual borrowers and at portfolio 

level as part of strategic credit portfolio management. 

In addition to the portfolio analysis on the basis of 

the credit value at risk model, country risks are also 

managed using their own limits. 

Specific borrower limits 

Counterparty default risks are limited at specific 

borrower level by individual limits for borrowers for 

the parameters of amount, term and type of transaction. 

These limits are systematically tracked and 

subjected to a daily MaRisk process. 

In retail credit business, which covers standard 

credits such as instalment loans and overdraft facilities, 

largely computer-based methods are used for 

approval. For larger exposures, a vote by back-office 

is also required. For business not settled in standardised 

processes, individual credit decisions are 

made in clearly defined processes depending on the 

amount of exposure and risk content. Larger exposures 

are generally decided on and processed by 

back-office. 

Portfolio management 

New business and the lending portfolio are limited 

on a daily basis by portfolio limits on the basis of 

the credit portfolio model. For this purpose, limits 

are also in place for the expected loss and the 

unexpected loss at various confidence levels for 

the divisional portfolios as well as those of the 

sub-banks and the Group. 

The unexpected loss at a confidence level of 99.9 % 

is included in risk tolerance. The Group’s expected 

loss, unexpected loss (99.9 %) and its limit throughout 

2008 are shown below. The rise in unexpected 

loss is due to an adjustment to the parameterisation 

of the credit portfolio model and is linked to an 

adjustment to the limit.

1800 

1600 

1400 

1200 

1000 

800 

600 

400 

200 

0 

GROuP CREdit-vALuE-At-Risk RAtiOs 

in € million Unexpected loss Limit of unexpected loss Expected loss 

1,800 

1,600 

1,400 

1,200 

1,000 

800 

600 

400 

200 

January 2008 

February 2008 

March 2008 

Country and transfer risks are also limited using 

volume-based country limits. In the 2008 financial 

year, the limits system was adjusted such that 

only the Eurozone countries, the USA, Canada, 

Switzerland, the Channel Islands, the UK, Denmark, 

Sweden and Norway are not subject to any limits. 

The limits are determined by the Board of Management 

with consideration of economic influences 

April 2008 

May 2008 

Europe without limiting 1.3 North America 6.9 

Rest of EU without limiting 9.8 

Eurozone 28.6 

In addition to these limits, regular reports are submitted 

on the lending volume by other categories. 

A separate voting unit of Risk Management, which 

June 2008 

July 2008 

August 2008 


October 2008 

and the actual development of the lending portfolio 

on the recommendation of the Credit Risk Committee. 

Country limits restrict the net potential future exposure, 

which is equivalent to the current credit exposure 

including add-ons, taking into account collateral. As 

shown below, 94 % of this international volume relates 

to non-limited countries with top credit ratings (i.e. with 

an internal rating classification better than 1 (AA –)). 

Limited 

international 

volume 

November 2008 

December 2008 

Low transfer risk 2.2 

Medium transfer risk 1.0 

High transfer risk / 

no rating 0.1 

gives an additional vote for loan commitments for 

which the full Board of Management is responsible, 

checks the portfolio compatibility of a major commitment. 


Risk report 

International 

volume: net 

potential future 

exposure 

in € billion 

85

Risk prevention 

In the 2008 financial year, the Risk Prevention department 

took up its function. It is part of Direktbankservice. 

The department has the task of addressing 

targeted customers in the Retail Banking segment 

who have foreseeable difficulties making payments / 

increased default risk, in order to reduce the amount 

of cancellations in the Retail Banking segment. 

Handling problem credits 

Problematic loan commitments generally fall within 

the processing competence and responsibility of the 

credit risk divisions in which these loans were reorganised 

or liquidated. In case of restructuring, the 

conditions of loans with a current credit exposure of 

€ 52 million were amended without recognising a 

write-down. There were no rescue acquisitions in the 

financial year. 

CuRRENt CREdit ExPOsuRE FOR CREdit Risk 

as at 31 December 2008 


Age 

< 1 year 

Age 

1 – 5 years 

Age 

5 – 10 years 

Below, portfolios with credit risks are broken down 

into good loans, sub-performing and non-performing 

loans and by the age of the receivable. In addition, 

the exposure of borrowers that are in arrears but 

that have not been written down are also reported. 

At the same time, the amount of performance in 

arrears for these sub-portfolios is also stated. The 

current credit exposure and in particular the performance 

in arrears of non-performing loans have been 

largely shielded by specific allowances for impairment 

losses and provisions, and also as a result of 

the weighting of collateral. 

Age 

> 10 years 

Total Collateral 1) Valuation 

allowances 2) 

Good Loans 8,496.9 13,510.5 5,573.8 10,149.1 37,730.3 29,023.3 

of which in arrears 100.3 197.5 75.7 448.6 822.1 

of which performance in arrears 1.2 12.4 2.2 149.1 164.8 

Sub-performing 102.8 328.5 54.5 501.3 987.1 658.3 



Non-performing 79.9 807.6 478.9 1,394.1 2,760.6 1,587.6 1,117.2 



Group LBBH 8,679.6 14,646.7 6,107.2 12,044.6 41,478.0 

of which in arrears 133.2 344.6 109.3 811.6 1,398.7 


1) In line with regulations on recognised collateral and other economically eligible shielding 

2) For good loans and sub-performing loans: portfolio and country valuation allowances; 

for non-performing loans: specific allowances for impairment losses, specific impairment allowances calculated on a portfolio basis and provisions 

86 

Risk report 

152.5

On account of the largely low-risk structure of 

issuer, counterparty and borrower risks, there are 

practically no sub-performing or non-performing 

loans in these areas. 

CuRRENt CREdit ExPOsuRE OF issuER, COuNtERPARty, BORROwER Risks 


The share of non-performing loans in the Group’s 

total exposure declined further in 2008. As of 

31 December 2008, it amounted to 2.4 % of the 

current credit exposure (previous year: 3.6 %). 

The following graphic shows the decline in non- 

performing loans in recent quarters. 

Age 

0 – 3 month 

Age 

3 month 

to 1 year 

Age 

1 – 5 years 

Age 

> 5 years 

Total in % 

Sub-performing 0.0 0.0 14.9 1.2 16.0 0.02 

Non-performing 0.0 26.1 120.3 58.4 204.7 0.25 

Total 0.0 26.1 135.2 59.5 220.8 0.26 


5,000 

4,000 

3,000 

2,000 

1,000 

0 

31.12.2007 31.03.2008 30.06.2008 30.09.2008 31.12.2008 


Risk report 

Current credit 

exposure of 

non-performing 

loans 

87

88 

Risk report 

Credit risk provisioning 

The authority of the credit risk divisions includes 

recognising specific allowances for impairment 

losses. Above defined amounts, individual members 

of the Board of Management or the Board of Management 

as a whole decides on the amount of the 

specific allowance for impairment losses. 

Provisioning for credit risk made during the year 

and the expected future developments are reported 

monthly to the Board of Management. The level of 

the proposed specific valuation allowance is based 

on strictly defined criteria that depend on the type 

of collateral provided and the status of the loan 

commitment (restructuring or settlement), among 

other things. 

In the context of a portfolio assessment, we also 

calculate the credit risk provisioning requirement for 

loan commitments for which no specific valuation 

allowance is carried out. The results of the credit risk 

measurement procedure described above (rating, 

probability of default, loss ratio) are included in this 

calculation. 

Participation risks 

The participation risks are integrated into the internal 

risk tolerance calculations. Risk capital for investments 

is calculated not only on the basis of book 

values, but also with a view to the probability of 

default, contingencies and any liquidation periods, 

as well as expert estimates. This ensures that risks 

relating to the issuance of equity are reflected to 

the greatest possible extent. Results are backtested 

annually to confirm the adequacy of risk determination. 

Scenario analyses, e.g. “default of the company 

with the highest exposure”, are integrated into 

reporting. 

The Group participations are generally allocated to 

the individual divisions. The only exception to this 

is a certain number of companies which primarily 

perform central services, and which are therefore 

managed centrally. The management in charge of 

the respective division is responsible for setting the 

operational and strategic objectives for its participations, 

from which the corresponding operational 

planning and management is then derived. The 

participations form part of the risk strategy of the 

division to which they are allocated. 

The Board of Management of LBB is informed about 

the risk situation on a monthly basis. 

Under the premises of risk diversification and the 

strategic risk approach of focusing on strategically 

advantageous investments, the following sub-portfolios 

were formed: 

product suppliers promoting core business, 

sales channels promoting core business, 

investments in service providers, 

investments within the Group, 

bundling the real estate holdings of LBB, 

financial investments. 

In addition, there are investments intended for 

divestment, including in particular companies that 

are no longer operational, companies in silent 

liquidation and restructuring activities. 

Changes in the economic environment of the participations 

are identified and analysed regularly by way 

of benchmarking using external sector ratings. The 

Group’s participation risk declined by € 11 million or 

32 % as against the previous year.

Liquidity risks 

The liquidity risk is the risk that at any time, the 

Group may not be in a position to meet its payment 

obligations on time and in full (solvency). 

Effects of the financial crisis 

As a result of the financial market crisis, the situation 

on the refinancing markets worsened further in 2008. 

Extensive government aid for avoiding insolvency 

influenced general market activity. Even in these 

extreme circumstances, the methods and procedures 

of LBB have demonstrated their success, with the 

LBB liquidity position showing itself to be in order. 

Reduced investments in strategic assets ensure the 

availability of liquidity for operations and the maintenance 

of sufficient reserves. If the difficulties on 

refinancing markets persist, even restrictions in the 

planned new business with institutional customers 

cannot be ruled out in order to ensure that LBB has 

sufficient liquidity reserves available, also on the 

basis of a one-year time horizon. At the present 

time, we do not foresee restrictions to the core business 

with retail customers for reasons of liquidity. 

Principles and liquidity ratios 

Internal liquidity risk controlling is divided into 

procurement and maturity risk. 

The procurement risk is the risk that it may no longer 

be possible to meet short-term mature payment 

obligations in the next 30 days with barred access to 

the unsecured money market in the case of a crisis. 

The maturity risk involves the risk that it may only be 

possible for mature, originally medium and long-term 

refinancing funds for which there are no assets 

falling due to be extended for a short period, due to 

credit rating problems or for market-related reasons. 

In the Group, the liquidity risk is monitored in 

accordance with Article 11 of the German Banking 

Act (KWG) and the internal liquidity risk measurement 

procedure. Article 11 of the German Banking 

Act states that banks must invest their funds in 

such a way that sufficient liquidity can be guaranteed 

at all times. Liquidity is considered sufficient if 

the liquidity ratio is at least 1.0. 

The liquidity ratios in the Group as of 31 December 

2008 in line with the German Liquidity Ordinance 

were: 

Sub-bank 2008 2007 

Landesbank Berlin 1.64 1.61 

Berlin Hyp 1.37 1.19 

The regulatory liquidity ratios are being achieved 

comfortably. The lowest ratio for 2008 at LBB was 

1.45, while at Berlin Hyp it was 1.15. 


Risk report 

89

90 

Risk report 

Measuring and limiting liquidity risks 

In addition, liquidity risk controlling that ranges far 

beyond the Liquidity Ordinance has been introduced 

for the Group. It forms the Bank’s internal framework 

for measuring and limiting liquidity risks and is 

adapted to the Group’s requirements. 

The capital maturity statement, which reflects the 

Bank’s cash flow profile, will now form the basis for 

all liquidity risk assessments by Risk Management. 

The capital maturity statement shows the complete 

range of maturities for all financial instruments 

reported in the Group. Factored into the capital 

maturity statement are the assumptions on the prolongation 

of assets falling due and the elimination 

of intragroup payments in order to ensure that the 

actual liquidity effect of each cash flow is presented 

correctly. 

On the basis of the above, the Bank calculates the 

daily refinancing balances required to be covered for 

short-term assets with a term of up to 30 days. These 

are monitored by Risk Management to ensure that 

the Group’s liquidity is secure at all times, even where 

restrictive assumptions are applied. The assumptions 

reflect, to a varying extent, outflows of short-term 

deposits, draw-downs on approved credit lines and 

discounts on the sale of securities port folios for 

the purposes of generating liquidity. Some of the 

assumptions made here are based on significantly 

higher liquidity charges than are assumed in the 

Liquidity Ordinance, and are therefore much more 

conservative for the assessment of the liquidity 

situation. In addition, in all of these scenarios, it is 

assumed that access to unsecured refinancing 

sources will no longer be possible and that refinancing 

for each day in the assessed period can only 

be secured using avail able securities portfolios. The 

potential realisability of each security in terms of its 

realisation period and the associated costs is taken 

into account. 

For assets with terms of between 31 and 360 days, 

the limitation of refinancing balances for these terms 

follows the same risk assessment. In this respect, 

the cash flows are divided into different term bands, 

some of which overlap. This limits the need for 

short-term refinancing in the case of a crisis affecting 

the Bank’s access to medium and longer-term 

unsecured money market refinancing. The upper 

limits are based on the securities liquidity reserve 

that is available for the entire period. In addition to 

this restriction due to the unused liquidity reserve, 

the balances are also nominally limited. 

A representation of the liquidity risk situation, the 

current risk utilisations and the short-term financing 

requirement is prepared on a daily basis and made 

available to the Board of Management every two 

weeks during the meetings of the Asset Liability 

Committee and monthly in the context of top management 

reporting. In addition, as of autumn 2008 

the Board of Management is informed every week as 

part of the separate presentations on the liquidity 

position to the banking supervisory authority (BaFin). 

Internal reporting covers the monitoring of prior 

warning levels. When these are reached, defined 

escalation measures are initiated. In 2008, utilisation 

of the limits for both the procurement and the maturity 

risk was not a problem either at the yearend or 

during the course of the year. 

In the context of the general crisis on the financial 

markets, extended disclosure requirements were 

issued by the German banking supervisory authority. 

In this connection, LBB provides Bundesbank and 

BaFin with detailed analyses on a weekly and a daily 

basis.

Managing liquidity risks 

Group-wide liquidity management is handled by 

Treasury and Trading. The same system and methods 

are used as for internal determination of liquidity 

risks by Risk Management. The aim of liquidity 

management is to ensure that sufficient liquidity is 

secured at all times in line with the methodology 

described, even during short-term bottlenecks and 

long-term general or bank-specific liquidity crises. 

Concentrations of risk 

The Group’s liquidity risk policy is based on maintaining 

sufficient levels of assets that can be easily 

liquidated to cover actual expenses and those 

calculated in stress tests. 

The location of the Group’s companies means that 

regional concentrations arise in particular with 

regard to the highly diversified customer deposits, 

which are highly concentrated in the Berlin-Brandenburg 

region. At around 80 %, interbank financing 

is also largely focused on Germany. Due to the 

collapse in the interbank money market caused by 

the crisis in the reporting year, Deutsche Bundesbank 

is currently the most important refinancing 

partner. The distribution is similar for subordinated 

debt, with the share of placements attributable to 

regions outside Germany is estimated at 30 %. 

Because the crisis on the financial markets meant 

that unsecured bond markets could not be used 

economically, LBB’s new issues in 2008 were limited 

almost entirely to mortgage bonds. Whereas smallscale 

tranches were predominantly sold in Germany, 

the share of LBB’s single jumbo transaction in 2008 

attributable to regions outside Germany was 47 %. 

Due to the Hypo Real Estate Group’s existential crisis, 

the mortgage bonds segment was also fully involved 

in the market jitters in September 2008. As a result, 

investor demand for mortgage bonds saw a sharp 

decline. High-volume transactions were not possible 

in 2008. The mortgage bonds spreads widened 

significantly and there is not yet a foreseeable end 

to this trend. 

BALANCE shEEt iNFORMAtiON 

(shAREhOLdERs’ Equity ANd LiABiLitiEs): 

in % 2008 2007 

Deposits by banks 31.6 35.7 

Amounts due to customers 22.5 20.8 

Securitised debt 20.5 21.5 

Financial liabilities recognised at 

fair value through profit or loss 18.6 15.4 

Other liabilities 6.7 6.6 

Total assets (Group) 100.0 100.0 

Breakdown by residual term 

The following table shows the Group’s financial 

liabilities as at 31 December 2008, broken down by 

their contractually agreed remaining maturity. The 

data is based on the capital maturity statement by 

internal liquidity risk controlling. It is shows only a 

cash flow view, which – as permitted under IFRS 7 – 

differs from the details in the balance sheet. «Factors 

such as future interest payments are also taken into 

account here. The cash flows are included with their 

respective earliest possible payment dates. 

in € million 2008 2007 

< = 1 month 41,021 43,907 

> 1 month to 1 year 80,727 75,750 

Group’s obligations 160,757 156,007 


Risk report 

91

Share and fund price risks 

The Group is exposed to market price risks in the 

form of interest rate, currency, share price and other 

price risks (particularly credit spread risks) in the 

various divisions of Capital Markets (trading portfolio) 

and in interest management (banking book). 

Trading portfolio and banking book activities 

Trading portfolio activities form an integral part of 

the written individual strategies of the respective 

Capital Markets divisions. For the trading portfolio 

and banking book activities alike, the strategic 

MARkEt PRiCE Risk LiMits ANd utiLisAtiON iN thE GROuP iN 2008 

framework is transformed into firm market price risk 

limits (value-at-risk (VaR) limits; 10-day value-at-risk 

at a 99 % confidence level) and approved by the 

LBB Board of Management on the basis of the risk 

tolerance concept and annual planning. 

Market price risk limits and utilisation in 

the Group in 2008 

The table below compares average, maximum and 

minimum values with the limits. Details and management 

of market price risks are described in the 

following sections. 

in € million Group capital-at-risk 2008 

Average Minimum Maximum Limit as at 

Unit 2008 2007 2008 2007 2008 2007 31.12.2008 31.12.2007 

Trading 20 24 10 14 37 43 15 81 

Client Business 13 6 5 3 24 27 25 25 

Treasury 121 47 49 12 195 110 160 160 

International Business 1 3 1 2 5 4 5 5 

Capital Markets 137 67 56 30 221 128 175 175 

Landesbank banking book 39 22 17 8 98 42 150 150 

Berlin Hyp banking book 67 6 8 1 127 21 130 90 

Other banking books 3 2 2 1 5 3 12 12 

Banking book 98 25 23 9 210 56 290 252 

Group 199 78 85 35 370 145 420 427 

Price risk 27 24 14 13 58 41 

Currency risk 12 5 4 1 28 12 

Interest rate risk 78 41 32 17 153 79 

Credit spread risk 170 42 74 11 401 98 

Group 199 78 85 35 370 145 

Due to diversification effects, the Group amounts are not calculated as the total of the individual activities. 

92 

Risk report

Risk concentration 

The Group’s daily MaRisk reports extensively on 

detailed and specific risks. In addition, there are a 

large number of prescribed detail stress tests, a 

variable stress test counter to the respective current 

positioning and scenario-based risk calculations 

with changing correlations. These presentations 

serve to identify and therefore help avoid concentration 

risks. 

Interest rate risk 

Uncertainty regarding future changes in market 

interest rates and the resulting losses are a major 

risk factor for the Bank. This risk is determined in 

the Group as part of VaR calculations. It is limited 

and regularly monitored. Interest rate risk is managed 

holistically, taking into account all cash flows. 

As at the end of 2008, the Group’s position in terms 

of interest rate fluctuations was largely neutral. 

Exposure in the Group remained constant as against 

the previous year. 

In addition, various different scenario calculations 

have been drawn up in order to determine – among 

other aspects – the effect that would be produced 

by a change in overall interest rates of +100, +130 

or –190 basis points. Whether interest rates increase 

or decrease, trading swaption positions beyond the 

end of the year lead to negative values at LBB and 

in the Group. 

+ 100 BP + 130 BP – 190 BP 

2008 2007 2008 2007 2008 2007 

Group – 94 – 177 – 133 – 232 – 85 315 

LBB – 4 – 153 – 17 – 200 – 149 272 

Berlin Hyp – 79 – 22 – 103 – 28 38 38 

Others – 10 – 3 – 13 – 4 25 5 

Currency risk 

The Group does not have any significant currency 

exposure. The price risk shown is primarily due to 

a present value mismatch between assets and their 

refinancing due to the price deductions for many 

positions observed in 2008 after credit spreads 

widened. It also results from residual amounts from 

customer transactions, foreign currency liquidity 

support and individual trading items with foreign 

currency assets. There is no significant risk for any 

currency. 

Share and fund price risks 

Share price risks primarily result from trading 

strategies and surpluses in issuing business from 

structured share products. Losses mainly occur 

when share prices fall. 

Over the course of 2008, the Group held a broadly 

diversified funds portfolio mainly in its banking book. 

Funds are treated as shares in risk measurement 

methods. There are also specified stress tests for 

different categories of funds. 


Risk report 

93

94 

Risk report 

GROuP MARkEt PRiCE Risk 

in € million Banking book Capital Markets 

240 240 

220 220 

200 200 

180 180 

160 160 

140 140 

120 120 

100 100 

80 80 

60 60 

40 40 

20 20 

0 

January 2008 

February 2008 

March 2008 

Group market price risk 

As the financial crisis intensified, the market price 

risk in the Capital Markets business also increased 

considerably as of September 2008, exceeding the 

market risk limit at the end of the year. This was 

driven particularly by investment portfolios held for 

long-term liquidity support in the Treasury. Due to 

the excessive market volatility, judged to be shortterm, 

as well as the significance of the portfolios for 

liquidity support and the limited opportunities for 

disposal as a result of the lack of market liquidity, 

the Bank elected to tolerate this exceeded limit for 

a limited period and with intensive monitoring and 

reporting. Utilisation for Capital Markets business 

(limit € 175 million) and the banking book (limit € 290 

million) throughout 2008 is shown above. 

April 2008 

May 2008 

June 2008 

July 2008 

August 2008 


October 2008 

Management of market price risks 

Risk management for trading portfolio activities is 

carried out by the front office divisions on the basis 

of market price risk limits / utilisation, stress tests 

and the profit and loss (P&L) analyses for each division 

and desk or trader. It is supplemented by daily 

and annual loss limits and other front office procedures 

that are tailored to the respective type of 

transaction and that vary depending on the division 

involved (e.g. scenario matrix limits, shift sensitivity 

limits, basis point value limits, duration limits or vega 

limits). The results of the daily risk and P& L analyses 

are reported to risk controlling and to the member 

of the Board of Management of LBB responsible for 

Capital Markets. 

November 2008 

December 2008

Risk and income monitoring for the banking book is 

also performed daily on the basis of the procedures 

used for managing trading transactions. Economic 

income effects (changes in net asset value) are analysed, 

thus enabling control based on net present 

value and maturity criteria. In addition, analyses are 

carried out with regard to current income, especially 

net interest income; these also form the basis for 

the management of the profit and loss account. At 

least every 14 days, the Asset Liability Committee of 

the Board of Management discusses and decides 

on business policy re-evaluation and, where appropriate, 

the reorientation of the interest rate and price 

risk incurred. 

Monitoring market price risks 

In December 2004, the internal procedures for market 

price risk monitoring (full-use model including specific 

price risks and currency risks) received regulatory 

approval. Since then the Group’s trading portfolio 

activities have been reported on the basis of this 

internal model. The Group’s equity tie-up has been 

significantly reduced as a result. 

The monitoring of market price risk incorporates a 

system of limits to restrict risk and loss and a set of 

related procedural rules. The Product Committee 

meets regularly and is required to assess the risks 

and organisational effects from new forms of business, 

and to monitor the necessary steps up until 

their launch. Final authorisation of any new product 

is issued by the respective Board of Management 

on the basis of a joint proposal by the General 

Product Committee. Comparable procedures apply 

for the initiation of activities in new markets. 

Risk assessment methods for market price risks 

In terms of methodology, the procedures applied for 

risk assessment (VaR exposure) are based on an 

analytical delta-gamma approach including volatility 

risks on the basis of a 10-day holding period and 

99 % confidence level. The spread risks inherent to 

the interest-bearing operations are measured explicitly, 

taking into account government, mortgage bond 

and swap curves. For interest rate-related products, 

individual price risks are calculated by way of implicit 

default intensities. Share price-related products are 

split into an equity index-related portion and an 

individual portion (single index model). This procedure 

means that the Group is also able to anticipate 

unexpected price movements of individual securities 

in the risk model that fall outside market trends. 

Integrative reporting of option risks is carried out in 

the form of gamma and vega risks. 

Correlations of the approximately 2,000 risk factors 

are taken into account in full for each division and for 

the report on the Bank as a whole. In addition to the 

provisions mentioned, the risk content of the positions 

is examined on a daily basis in a large number 

of different (historical, fixed and exposure related) 

scenarios by means of stress tests and reported to 

the Board of Management. 

The forecasting quality of the models is determined 

by means of clean backtesting (i.e. ex post testing of 

intraday changes in value of a constantly held portfolio. 

Since 2002, backtesting checks in all divisions 

have produced results that confirm the high level of 

forecasting quality. The validity of model assumptions 

is regularly analysed using other mathematical 

methods. 

The risk and income calculations for trading transactions 

are updated every 15 minutes. This means 

that the Group’s market risk system clearly exceeds 

the requirements of the MaRisk, as well as enabling 

the effective monitoring of trading activities during 

the course of the day. 


Risikobericht 

95

96 

Risk report 

Reporting market price risks 

The Group has established a comprehensive and 

detailed risk reporting system for market price risks: 

Intraday monitoring of the risks and income of 

the trading divisions (every 15 minutes), 

Submission of a daily report in accordance with 

the MaRisk to the responsible members of the 

Board of Management, 

Fortnightly asset / liability report for discussion 

by the Asset Liability Committee, 

Monthly reporting in accordance with MaRisk 

to the Group Board of Management with an 

explanation of the changes that have occurred 

during the month. 

The risk control procedures used in the Group have 

proved their worth in all market situations during 

the year under review. This is particularly true for the 

unusual market developments resulting from the 

crisis on the financial markets. Risks are identified 

in a timely manner, reported, and controlled by the 

respective decision-makers. 

Real estate risks 

Real estate risk denotes the risk of losses (including 

changes in value) from the portfolio of real estate 

directly or indirectly attributable to the Group. 

The risks are monitored on a regular basis and 

measured using the value at risk procedure. The 

properties’ exposure – current carrying amounts, 

impairment or survey values – is allocated to individual 

location and use-related property indices, 

whose volatility is calculated on the basis of price 

trends over the past 15 years. Account is also taken 

of correlations between the property indices when 

aggregating the risks. 

In the reporting year, scenario analyses, e.g. changes 

in volatilities, were developed and integrated into 

reporting. 

Real estate risks are managed on the basis of the 

independent “real estate risk” category, for which 

limits have been determined for both the Group and 

the strategic business areas. Utilisation of these 

limits is monitored in rotation. The figures are 

reported every quarter. The risk declined by around 

€ 46 million or 39 % in 2008, due to adjustments to 

the parameters and the disposal of several items. 

Operational risks 

Operational risk in line with Article 269 (1) SolvV is 

defined as the risk of losses arising from the inadequacy 

or failure of internal methods and systems, 

people or as a result of external events. This definition 

includes legal risks, but excludes strategic risks and 

reputation risks. Legal risks are the risks of violations 

of current and changing legal conditions, particularly 

legal provisions arising from contracts, law or court 

rulings. This includes the risk of violations of legal 

conditions due to ignorance, insufficient diligence in 

legal application (negligent interpretation), negligent 

action or late implementation.

Organisational structure 

The controlling of operational risks is the responsibility 

of the Risk and Controlling division. This independent 

unit is responsible for the development of 

a framework of operational risks, which includes 

strategy, principles and procedures for identifying, 

measuring, monitoring, analysing and reporting and 

developing methods for controlling operational risks. 

The Risk and Controlling division also ensures the 

implementation and application of this framework. In 

addition, the unit handles the monitoring and application 

of existing and new regulatory requirements as 

regards operational risks. Changes in the framework 

are submitted to the Risk Board for coordination. 

In line with the Group’s strategy for operational 

risks, the implementation of the framework 

described above and day-to-day management of 

operational risks are the responsibility of the divisions 

as part of their responsibility for earnings. 

The OpRisk Committee is a body for all issues relating 

to the controlling and management of operational 

risks. It supports the Board of Management in the 

performance of its monitoring function for operational 

risks. The Committee consists of representatives of 

the business and central divisions and the Group 

companies. Among other things, the body serves the 

purpose of an exchange of information on new controlling 

instruments and current risk developments 

and the clarification of operational risk issues (e.g. new 

regulatory requirements). It also serves to promote 

risk culture in the Bank. The responsible member of 

the Board (Risk Board) is informed of the resolutions 

passed by the OpRisk Committee. 

Risk management and monitoring 

Operational risk is included in the risk tolerance 

concept for the Group’s overall risk management. 

Operational risk is managed on the basis of the 

Group-wide framework. The operational risk profile 

is determined by comparison with the Group’s risk 

propensity. Measures and priorities for risk mitigation 

are also defined. The current operational risk 

situation is reported to the Board of Management 

as a whole on a monthly basis. Special, detailed 

reports on operational risks are prepared for the 

individual strategic business areas each year and 

presented to the responsible member of the Board 

of Management and the local OpRisk officer. 

Various instruments are used to manage operational 

risk efficiently. These include: 

self-assessment (qualitative OpRisk inventory), 

which uses a bottom-up approach, 

scenario analysis, which is used to determine the 

loss potential of critical scenarios for the Bank, 

loss event accumulation (internal / external), 

early warning system (tracking and monitoring 

risk indicators), 

controlling of measures: identified measures from 

loss events, risk indicators and self-assessment 

are tracked and monitored, 

a risk transfer through insurance protection; the 

use of a special OpRisk policy is currently under 

examination. 

The Group has developed its own software tools to 

prepare / manage and report on the above data. 


Risk report 

97

98 

Risk report 

Measurement of operational risks – adequacy 

of capital resources 

The Group currently uses the standard approach 

in line with Article 272 SolvV for regulatory equity 

requirements. In line with the provisions of the 

standard approach, regulatory capital of € 167 mil - 

lion was determined in 2008. 

The Group has further refined its model for calculating 

internal (economic) capital. The components 

of the model are: 

loss distribution approach (past loss distribution), 

features of risk indicators (measurement using 

traffic light status), 

loss analysis, particularly for large-scale losses 

(internal / external), 

scenario analysis (determination of future loss for 

critical scenarios). 

In particular, to better estimate the risk of largescale 

losses, the scenario analysis was improved by 

including large-scale losses from a public losses 

database. The Loss Distribution Approach (LDA) is 

a statistical model for determining the amounts of 

losses. It is based on analyses of historical loss 

events based on loss analyses and is integrated into 

the process of determining operational risk (determining 

economic capital). Past and forward-looking 

risk indicators are regularly examined to identify 

negative developments in risks in a timely manner. 

The result of the interplay of the model components 

is a specific risk assessment for each strategic business 

area examined. By aggregating all business 

areas and Group companies included, this produces 

the Group’s operational risk (economic capital 

requirement). 

As of 31 December 2008, the risk calculation based 

on the internal model produced a value of € 90 million, 

which is included in the Group’s risk tolerance 

calculation. 

Personnel risks 

The Group monitors and controls personnel risks in 

line with the four MaRisk risk factors with the aim of 

identifying negative trends and introducing suitable 

measures to prevent or minimise them: 

Fluctuation risk: Appropriate representation 

regulations in the divisions ensure that the 

departure of employees does not lead to longterm 

disruptions in operating processes. 

Availability risk: Qualitative and quantitative 

personnel resources are managed on the basis 

of the individual goals and requirements of 

d ivisions, including in particular business activities, 

risk strategy and the risk situation. 

Qualification risk: The Bank implements targeted 

training measures to ensure that the level of 

employee qualifications is consistent with current 

developments at all times. 

Motivation risk: Disincentives and conflicts 

of interests are countered by the use of special 

remuneration and incentive programmes.

IT and system risks 

Extraordinary IT and system risks can result from 

insufficient security and quality and errors or disruptions 

in key IT systems and processes. 

At present, no high-probability IT or system risks 

threatening the future of the Bank as a going concern 

are expected. The future systematic ongoing development 

and improvement of the IT infrastructure and 

methods is ensured by proper IT operations. Restructuring 

goals were met and legal requirements were 

satisfied. 

IT risk management is defined centrally and holistically 

and includes constant risk awareness training 

for employees and regular risk analysis in the context 

of established procedures. Defined risk indicators 

are examined periodically to aid risk identification. 

This enables LBB to identify operative IT risks and 

implement risk-reducing measures. 

The quality of information security is constantly updated 

and refined in line with ISO standard 27002. 

For this purpose, the Group has implemented a 

comprehensive set of regulations on information 

security and the necessary organisational structures 

and methods. The integrity, availability and confidentiality 

of information and information goods are 

ensured by the application of typical quality standards 

for the industry in designing IT systems and 

processes, and by the use of best practices. The 

ability to maintain business capacity during crises 

and emergencies is regularly and successfully 

evidenced by corresponding certification and emer- 

gency drills. 

In 2008, the IT project portfolio focused on the 

implementation and ongoing development of 

projects to: 

meet changing legal requirements, 

optimise data and quality management, 

reduce structural complexity, 

modernise, consolidate and integrate the 

IT infrastructure and IT processes, 

prepare for the changeover to the OSPlus 

standard for financial information technology 

in the coming years. 

The management of operational risks and emergency 

provision are essential elements of project requirements. 

This ensures that projects continue to make 

a regular contribution to the reduction of operational 

risks in future. 

Security and emergency plans 

The Group has established a crisis team for the 

management of catastrophe situations to perform 

decision-making and management functions in the 

event of crisis. Regular drills are performed in this 

context. 

Against the background of securing bank operations 

on an ongoing basis and reducing losses in the event 

of severe disruptions of operations to a minimum, 

the Group also has a detailed information security 

policy and an extensive written emergency plan for 

its critical and highly critical business processes. 


Risk report 

99

100 

Risk report 

The Group has appointed a Chief Security Officer 

(CSO) for the coordination and monitoring of information 

security and the topicality of its emergency 

plans including the necessary emergency drills. 

The OpRisk unit in the Risk and Controlling division 

works closely with core competence divisions (e.g. 

CSO, working group for information security and 

emergency planning for IT and non-IT) in regular 

work meetings and committees. 

Outsourcing 

Due to the adaptation and integration of existing 

outsourcing guidelines into MaRisk, the Group 

reviewed internal regulations as scheduled in 2008 

and introduced a more extensive risk analysis to 

determine any significant outsourcing. 

Detailed, binding internal and contractual regulations 

and process flows are used to ensure that data protection 

is maintained when the Group contracts 

external service providers for order data processing 

purposes. 

The relevant contractors are selected carefully by 

the Group. The Bank regularly ensures that the 

technical and organisational data protection measures 

taken by the contractor are adhered to. 

In December 2008, there were illegal acts by employees 

of a logistics company relating to a misdirection 

of LBB credit card data. The data concerned was 

safeguarded immediately. The risk of misuse of 

the data was minor from the point of view of the 

Group and was further minimised through additional 

measures. 

In order to justify our customers’ confidence in the 

protection of data they entrust to us in the future as 

well, external experts were involved in reviewing 

the business processes concerned and implementing 

measures to improve data protection further. 

Legal risks 

Legal risks are countered by observing the legal 

environment, specifying guidelines and utilising 

standard contracts. Sufficient provisions are recognised 

for legal risks. 

Indemnity declarations by LBB and IBG 

As stated in previous annual reports, LBB and 

Immobilien und Baumanagement der BIH-Gruppe 

GmbH (IBG), previously Immobilien und Baumanagement 

der Bankgesellschaft Berlin GmbH, issued 

so-called declarations of exemption to natural 

persons between 1994 and 1997. Under the terms 

of the declarations, these persons were exempted 

by LBB and IBG from their full liability to third 

parties as partners in various real estate funds.

The Federal Financial Supervisory Authority (BaFin) 

stated that it considered the declarations of exemption 

to be invalid under civil law. LBB and IBG are 

of the same opinion. Accordingly, the declarations of 

exemption do not have any relevance under commercial 

or regulatory law. 

Disposal of the shares in Allgemeine 

Privatkundenbank Aktiengesellschaft (Allbank) 

Bankgesellschaft Berlin AG sold its shares in Allbank 

to GE Bank GmbH in 2003. Its legal successor, GE 

Money Bank GmbH, enforces guarantee claims arising 

from the share purchase agreement due to imminent 

limitation as part of an affirmative action for a right, 

for which adequate provisions have been created. 

Risks from the implementation of the detailed 

agreement and the disposal of the key Group real 

estate companies to the State of Berlin 

The Landesbank Berlin Holding AG is largely shielded 

by the “Detailed agreement on the shielding of the 

Bankgesellschaft Group from material risks of Real 

Estate Services” (DetA) by the State of Berlin dated 

16 April 2002. Among other things, the shielding 

relates to certain letters of comfort and the loans 

issued by Group banks to certain Real Estate Services 

companies. For assuming the various guarantees, 

the Holding is to pay guarantee commission of 

€ 15 million p.a. until at least 2011 inclusively. In 

addition, a debtor warrant was agreed that carries 

with it certain conditions, the costs of which are 

to be borne by the Holding alone as the principal 

beneficiary of the detailed agreement. 

Any settlement risks are countered by procedures 

agreed jointly with Berliner Gesellschaft, which was 

established by the State of Berlin for controlling 

Immobilien Altrisiken mbH (BCIA), and through 

appropriate risk management systems. Prior to the 

sale of the real estate services area to the State of 

Berlin as concluded in 2007, legal positions and 

assets not intended for sale were assumed by companies 

remaining in the Group. This led to various 

creditors asserting claims to collateral security 

against Group companies. However, these do not 

result in any additional risks. Should the Group have 

to provide collateral in this connection, it would only 

be a case of providing collateral for existing obligations. 

Proceedings instigated by a fund company 

As reported in previous years, the fund company 

“LBB Fonds 13” filed for damages amounting to 

€ 29.25 million against the Holding, LBB and IBG 

on account of the transfer of swaps to the fund 

company that were originally concluded between 

the Holding and Bavaria Objekt und Baubetreuung 

GmbH (BOB). The Holding and LBB served notice 

of the legal dispute to BOB and IBV – the latter as 

the managing limited partner of the fund company. 

In its ruling of 2 August 2007, the Berlin District 

Court found the Holding, LBB and IBG jointly and 

severally liable to pay compensation. After examining 

and analysing the ruling, the defendants have 

appealed to the Court of Appeal. The Holding 

and LBB have recognised sufficient risk provisions 

in the event that the ruling is upheld. 


Risk report 

101

102 

Risk report 

Contested AGM resolutions 

There were four cases, involving five shareholders, 

of proceedings concerning action in rescission and 

action for annulment against resolutions passed at 

the ordinary Annual General Meeting on 4 July 2008. 

One of these shareholders instituted proceedings 

against all the resolutions passed at the above-mentioned 

Annual General Meeting, whilst the other four 

shareholders each attacked only individual resolutions. 

The Bank considers the chances of success 

to be minor. 

In three of the proceedings, a compromise was 

reached, following which the claims were withdrawn. 

The company is currently in the process of negotiating 

a compromise with regard to the fourth firstinstance 

claim. 

Other risks 

Business policy and strategy decisions 

Strategic risk is understood to mean the risk of 

failing to meet long-term company goals as a result 

of inaccurate, unprepared or incorrect assumptions 

regarding strategic decisions. Management of 

strategic risk is the responsibility of the Board of 

Management as a whole, with certain decisions also 

requiring the approval of the Supervisory Board. 

The overall bank strategy, which was approved by 

the Board of Management of LBB and is regularly 

updated, represents a synopsis of the strategies 

of all divisions, back-office sectors and corporate 

centres. 

A standardised report geared towards strategic indicators 

that can be managed by the bank structure 

has been developed as an instrument for monitoring 

and managing the result targets of the divisions. 

Deviations from plans in terms of the result targets 

are to be regarded as early warning indicators. In 

these cases, appropriate measures are instigated and 

their success is examined. The report is regularly 

presented at Board of Management meetings. 

Adherence to the strategy is regularly examined at 

the same time.

Report on expected developments / Outlook 

Expected developments / Assessment 

of the economic situation 

At the beginning of 2009, most market participants 

are not expecting any quick turnaround in the trend 

regarding the global crisis on the capital and financial 

markets. Particularly in terms of short-term financing, 

the reduction in key interest rates has compensated 

for a significant portion of the premiums which result 

from the intensification of the financial crisis. However, 

corporate investment propensity is strongly 

influenced by expectations regarding the economic 

development. 

In major international markets such as the USA, the 

UK and France, there have also been some drastic 

economic effects, to which the national governments 

reacted with economic stimulus programs on an 

often considerable scale. German manufacturers’ 

order levels are tumbling rapidly, and their export 

prospects are diminishing dramatically. This will also 

lead to a turnaround in the trend on the employment 

market. Despite regaining purchasing power as a 

result of falling energy and food prices, private households 

are expected by experts to remain restrained 

in their spending behaviour. Stimulation measures 

by the public sector are alleviating the recession. 

Overall, a significant decline in economic performance 

can be expected in Germany in 2009. 

The economy of the Berlin-Brandenburg region 

will not escape the effects of the weak economic 

situation. As a result of the economic slump which 

can also be seen in Central and Eastern Europe, 

export successes are unlikely. Growth centres in the 

fields of business support services, biotechnology, 

medical technology, traffic engineering and information 

and communication technology are likely to 

prove themselves comparatively stable. In these 

sectors, Berlin benefits from work in conjunction 

with existing scientific institutions. The realisation of 

major construction projects provides a positive 

economic stimulus. Other than this, however, recessional 

trends will dominate, and the international 

environment will take its toll on the tourist industry 

in particular. This will impact retail sales and the 

hospitality industry. 

The banking industry will continue to operate in an 

extremely difficult environment in 2009. Although 

earnings potential is indeed improved by the maturity 

transformation with a steeper interest structure, continuing 

lack of confidence among market participants 

means that refinancing costs still remain negatively 

impacted by high liquidity premiums, particularly 

for longer durations. The weak economic situation 

will be another factor negatively impacting bank 

results. The requirement for higher equity ratios for 

banks which resulted from the financial crisis means 

that continuing reductions in balance sheets are to 

be expected. The pressure to consolidate on the 

German banking market, already strong, will therefore 

tend to increase further. 


Risk report | Report on expected developments / Outlook 

103

104 


Business orientation 

Landesbank Berlin Holding Group is still focused on 

continuing its growth in its four strategic business 

areas, using investments to exploit market opportunities, 

and continually improving the quality of its products 

and services. The Group has a strong market 

position in its core region of Berlin-Brandenburg. 

However, this region is marked by a weaker income 

and assets structure of its private households than 

the rest of Germany, companies which are predominantly 

in the smaller revenue-generating categories, 

and a partially recovered but still underdeveloped 

real estate market. The investments that have been 

made in national credit card, direct banking and 

point-of-sale business and the national outlook of 

real estate financing business are expected to offset 

the limited growth prospects in the Group’s core 

region. 

The Group’s strategic business areas are managed 

using the following performance ratios: operating 

result / earnings before taxes, return on equity and 

the cost / income ratio. 

The return on equity is determined by dividing the 

“operating result / earnings before taxes” and “tied-up 

equity capital”. The tied-up equity capital of the 

segments is the capital required according financial 

procedures. 

The cost-income ratio is calculated as the ratio of 

administrative expenditure and the total of net 

interest income, net commission income, net income 

from hedges, net gain from financial instruments 

recognised at fair value through profit or loss, net 

gain from financial investments, net income from 

investments carried at equity and other operating 

income. 

Adequate capital resources and dividend performance 

are also used as control parameters at Group 

level and the level of the individual banks. 

Development of the business segments 

Given the changes in the market environment and 

the general orientation described above, the following 

developments are expected in the individual 

business segments in 2009. 


The new current account models, which were 

brought onto the market at the beginning of 2009, 

support activities to increase customer loyalty and 

expand our position as market leaders in regional 

business. In addition, there is a continued focus on 

investment business and consumer finance. The 

strengthening of customer relations and the further 

growth in business volume should result in corresponding 

rise in income. In national business, the 

“LBB Finanzkauf” brand sales financing acquired 

in 2008 strengthens the consumer loans business, 

although it also leads to a temporary negative 

impact on earnings due to integration measures. 

Further product innovations should lead to expansion 

of the customer base in national business. 

Cooperation with netbank is being expanded further. 

Berliner Sparkasse retail banking business should 

also continue to develop stably and lead to a return 

on equity in the region of 40 % in the next two years.


Landesbank Berlin AG intends to continue to act as 

a client-oriented, competent regional bank with an 

extensive range of financial services for business 

clients and small and medium-sized companies in 

the core market of Berlin-Brandenburg. Its strategic 

aim remains reinforcing its strong market position, 

as well as continuing to strengthen the earnings 

basis. 

This aim is to be achieved through measures to 

strengthen customer loyalty, increase the use made 

of existing customer accounts, and gain new customers. 

Without giving up its strict income and 

risk-oriented business policy, it will further expand 

lending business and services with a commission 

charge, using product and service ranges in line with 

the market. 

In this process, the implementation of the quality 

strategy in all customer segments and sales channels 

will be of central importance in the future as well. 

Regional corporate banking business should also 

continue to develop stably and achieve a return 

on equity of over 20 % in the next two years even 

without special factors. 


In the Client Business area, an intensification of 

business relations with the Sparkassen and other 

companies in the Sparkassen organisation is 

expected. The joint discussions and activities 

undertaken in 2008 should begin to show positive 

effects here. As a result of the public discussion 

about the risks and benefits of certificates, designing 

structured investment products in other legal 

forms will be relevant. LBB will provide the relevant 

offers for its customers in this respect. 

Further advances are targeted in LBB-INVEST’s 

positioning as a niche provider (“boutique”). Within 

the Sparkassen organisation, we aim to establish 

LBB-INVEST as a provider of special solutions 

alongside the broad standard range offered by Deka 

as the leading Sparkassen fund company. LBB is 

expecting the fund volume to pick up again in 2009 

following the declines caused by market conditions 

in 2008. 

International business will continue in our current 

target region of Central and Eastern Europe with 

a continued focus on trade and export finance, 

paying particular attention to country risks in the 

target region. Here, too, special activities for and 

with Sparkassen are already being implemented. 

Treasury and Trading will continue its reduction of 

the importance of short-term strategies as begun in 

previous years. However, these trading activities 

will continue to supplement the range of investment 

strategies, particularly for short durations. Investment 

and trading strategies will be designed and 

reported in a more differentiated manner, but will 

continue to be subject to overall risk management. 

However, the earnings development and also the 

extent to which earnings fluctuate will be dependent 

on the further development of financial markets in 

2009. The risk positions are likely to stagnate or 

even decline slightly in reaction to the market environment. 

Due to increased margins, a return on equity 

of around 15 % will be targeted as previously. 



105

106 



In commercial real estate financing, the focus on 

investor finance and innovative financing structures 

throughout Germany remains unchanged. Financing in 

selected international markets is undertaken with 

the aim of a balanced mixture and a wider distribution 

of risk in the portfolio. Commercial real estate 

financing business will continue to develop positively 

and achieve a return on equity of over 15 % even 

without special factors. 

Comparison of projected and actual figures 

The Group’s operating profit in 2008 was considerably 

below original planning. The financial market 

crisis is the key factor behind the fact that despite 

improved performance in the second quarter of 

2008, profits in Capital Markets are not at the level 

planned. This was not offset by the other segments, 

despite performances considerably above the 

planned level in some cases. 

Estimation procedure / Medium-term planning 

The Group’s business planning and forecasts are 

based on macroeconomic assumptions about the 

development of the economy, the labour market and 

interest rates. For 2009 and the medium term planning 

horizon up to 2013, the Board of Management 

does not expected any sustained negative effects for 

the Group and assumes the existence of functioning 

markets. At the same time, it also assumes that the 

yield curve will return to its normal pattern. On the 

basis of these assumptions regarding framework 

conditions, we set central key points. Subsequently, 

the previous medium-term planning was revised 

throughout the Group by the divisions. In this process, 

the targets for clients / market position, new business 

and earnings and risks were planned, and investments 

and costs were determined in detail. 

The above estimate of development in our core 

divisions is based on our medium-term planning, 

which extends to 2013. 

The plan is based on approved business and risk 

strategies. 

Summary / Overall assessment 

Generally, the Bank is assuming that it will be able 

to continue its positive performance in operating 

business. At the same time, the uncertainty on 

the international finance markets remains high. In 

combination with the as yet unforeseeable consequences 

of the economic downturn, a more detailed 

forecast is not possible at the current time.

Annual Financial 

Statements for the Group 

Consolidated Income Statement 108 

Quarterly Development of the 

LBB Holding Group 109 

Consolidated Balance Sheet 110 

Statement of Changes in Consolidated Equity 111 

Consolidated Cash Flow Statement 112 

Notes 114

Consolidated Income Statement 

for the period from 1 January to 31 December 2008 

Notes 1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 1) 


Net interest income 21 1,247 815 432 53 

Interest income 6,919 6,210 709 11 

Interest expenses 5,672 5,395 277 5 

Allowance for losses on loans and advances 22 63 – 68 131 > 100 

Net interest income after risk provisioning 1,184 883 301 34 

Net commission income 23 302 297 5 2 

Fee and commission income 439 429 10 2 

Fee and commission expense 137 132 5 4 

Net income from hedge accounting 24 – 18 3 – 21 < – 100 

Net gain from financial instruments recognised at fair value through profit or loss 25 – 344 – 45 – 299 < – 100 

Net income from financial assets 26 – 308 – 4 – 304 < – 100 

Net income from investments carried at equity 27 – 18 12 – 30 < – 100 

Other operating income 28 139 119 20 17 

Administrative expenses 29 940 965 – 25 – 3 

Operating profit before restructuring – 3 300 – 303 < – 100 

Restructuring expenditure and income (net) 30 12 6 6 100 

Operating profit / earnings before taxes 9 306 – 297 – 97 

Income tax expense 31 – 20 76 – 96 < – 100 

Consolidated net profit for the period / earnings after taxes 29 230 – 201 – 87 

Net profit / loss attributable to minority interests 12 19 – 7 – 37 

Consolidated net profit for the period of the shareholders of the parent company 17 211 – 194 – 92 

Earnings per share Notes 1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 1) 

Consolidated net profit for the period of the shareholders 

of the parent company (€ million) 32 17 211 – 194 – 92 

Average number of ordinary shares outstanding 32 999,327,870 999,327,870 0 0 

Earnings per share (€) 2) 0.02 0.21 – 0.19 – 92 


2) Diluted = basic earnings 

108 

Change 

Change 

in %

Quarterly Development of the LBB Holding Group 

in € million Q4 2008 Q3 2008 Q2 2008 Q1 2008 Q4 2007 1) Q3 2007 1) Q2 2007 1) Q1 2007 1) 

Net interest income 369 315 287 276 234 179 217 185 

Interest income 1,596 1,701 1,789 1,833 1,527 1,406 1,663 1,614 

Interest expenses 1,227 1,386 1,502 1,557 1,293 1,227 1,446 1,429 

Allowance for losses on loans and advances 50 – 6 32 – 13 – 38 – 1 12 – 41 

Net interest income after risk provisioning 319 321 255 289 272 180 205 226 

Net commission income 67 77 75 83 76 74 71 76 

Fee and commission income 106 110 107 116 114 109 103 103 

Fee and commission expense 39 33 32 33 38 35 32 27 

Net income from hedge accounting – 21 2 6 – 5 4 – 5 1 3 

Net gain from financial instruments recognised 

at fair value through profit or loss – 116 – 115 – 12 – 101 – 84 – 18 9 48 

Net income from financial assets – 56 – 234 – 2 – 16 – 34 – 1 11 20 

Net income from investments carried at equity – 6 – 4 – 3 – 5 1 3 7 1 

Other operating income 64 34 17 24 29 35 31 24 

Administrative expenses 243 216 241 240 244 222 256 243 

Operating profit before restructuring 8 – 135 95 29 20 46 79 155 

Restructuring expenditure and income (net) – 2 0 0 14 5 – 2 4 – 1 

Operating profit / earnings before taxes 6 – 135 95 43 25 44 83 154 

Income tax expense – 34 – 7 15 6 – 4 32 17 31 

Consolidated net profit for the 

period / earnings after taxes 40 – 128 80 37 29 12 66 123 

Net profit / loss attributable to minority interests 9 2 – 11 12 5 – 5 12 7 

Consolidated net profit for the period 

of the shareholders of the parent company 31 – 130 91 25 24 17 54 116 


Consolidated Financial Statements 

Consolidated Income Statement | Quarterly Development of the LBB Holding Group 

109

Consolidated Balance Sheet 

as at 31 December 2008 

Assets 

Notes 31.12.2008 31.12.2007 1) Change 


Cash 8, 33 1,727 986 741 75 

Loans and advances to banks 7, 34 22,369 26,514 – 4,145 – 16 

Loans and advances to customers 7, 35 47,462 47,026 436 1 

Risk provisioning 7, 36 – 1,245 – 1,411 166 12 

Positive fair value of derivative hedging instruments 7, 37 749 397 352 89 

Financial assets recognised at fair value through profit or loss 7, 38 18,295 13,637 4,658 34 

Financial assets 7, 39 50,466 50,696 – 230 0 

Investments carried at equity 9, 40 98 129 – 31 – 24 

Intangible assets 10, 12, 41 650 665 – 15 – 2 

Property, plant and equipment 11, 12, 42 578 583 – 5 – 1 

Investment property 14, 43 65 82 – 17 – 21 

Current tax assets 17, 44 99 85 14 16 

Deferred tax assets 17, 44 913 793 120 15 

Other assets 45 3,074 1,915 1,159 61 

Non-current assets and groups of assets held for sale 15, 46 71 66 5 8 

Total 145,371 142,163 3,208 2 


Liabilities and shareholders’ equity 

Notes 31.12.2008 31.12.2007 1) Change 


Deposits by banks 7, 47 45,950 50,686 – 4,736 – 9 

Amounts due to customers 7, 48 32,720 29,552 3,168 11 

Securitised debt 7, 49 29,826 30,517 – 691 – 2 

Negative fair value of derivative hedging instruments 7, 50 1,340 985 355 36 

Financial liabilities recognised at fair value through profit or loss 7, 51 27,097 21,893 5,204 24 

Provisions 16, 52 1,168 1,270 – 102 – 8 

Current tax liabilities 17, 53 157 199 – 42 – 21 

Deferred tax liabilities 17, 53 33 32 1 3 

Other liabilities 54 1,915 1,018 897 88 

Liabilities assigned to groups of assets held for sale 55 83 1 82 > 100 

Subordinated capital 18, 56 3,137 3,163 – 26 – 1 

of which: Dormant participations 687 700 – 13 – 2 

Shareholders’ equity 19, 57 1,945 2,847 – 902 – 32 

Issued capital 19, 57 2,554 2,554 0 0 

Capital reserves 19, 57 77 77 0 0 

Retained earnings 19, 57 – 93 – 14 – 79 < – 100 

Revaluation reserve 19, 57 – 664 – 182 – 482 < – 100 

Currency translation reserve 19, 57 – 9 – 2 – 7 < – 100 

Minority interests 19, 57 80 414 – 334 – 81 

Total 145,371 142,163 3,208 2 


110

Statement of Changes in Consolidated Equity 



Issued 

capital 

Capital 

reserves 

Retained 

earnings 

Currency 

translation 

reserve 

Revaluation 

reserve 

Minority 

interests 

Unappropriated 

surplus / 

accumulated 

loss 

Total shareholders’ 

equity 

Shareholders’ equity 

as of 31.12.2006 2,554 77 – 395 1 137 97 153 2,624 

Change in retained earnings 90 – 90 0 

Distributions – 60 – 60 

Consolidated net profit for the period 19 201 220 

Recognised income and expense 72 – 308 – 236 

Changes in scope of consolidation 

and other changes 90 – 3 – 11 298 1) – 91 283 

Shareholders’ equity as of 31.12.2007 2,554 77 – 143 – 2 – 182 414 113 2,831 

1) including € 187 million from the first-time consolidation of Albatros Select Fund and € 68 million from the first-time consolidation of Keppler Global Value 


Issued 

capital 

Capital 

reserves 

Retained 

earnings 

Currency 

translation 

reserve 

Revaluation 

reserve 

Minority 

interests 

Unappropriated 

surplus / 

accumulated 

loss 

Total shareholders’ 

equity 


as of 31.12.2007 2,554 77 – 143 – 2 – 182 414 113 2,831 

Adjustments in accordance with IAS 8 129 – 113 3) 16 


as of 31.12.2007 (adjusted) 2,554 77 – 14 – 2 – 182 414 0 2,847 

Distributions – 100 – 100 

Consolidated net profit for the period 12 17 29 

Recognised income and expense 20 – 7 – 482 – 469 

Changes in scope of consolidation 

and other changes 1 – 346 2) – 17 3) – 362 

Shareholders’ equity as of 31.12.2008 2,554 77 – 93 – 9 – 664 80 0 1,945 

2) including € –187 million from the first-time consolidation of Albatros Select Fund, € – 68 million from the first-time consolidation 

of Keppler Global Value and € –116 million from the first-time consolidation of Lingohr Alpha 

3) Reclassification to retained earnings (cf. Accounting policies) 

Presentation of recognised income and expenses 


Consolidated Balance Sheet | Statement of Changes in Consolidated Equity 

The income and expenses recognised directly in equity relate to the changes in the revaluation reserve from the fair value measurement of 

available-for-sale securities (€ – 478 million), cash flow hedge changes (€ – 135 million), changes in retained earnings as a result of the remeasurement 

of pension obligations (€ 28 million) and changes in the currency translation reserve (€ – 7 million). Deferred taxes on changes 

in value charged directly to equity amounted to € 123 million, resulting in a net reduction in equity of € 469 million. 

Taking into consideration the consolidated net profit for the period, the total figure for the financial year in accordance with IAS 1.96 

was € – 440 million, of which € – 449 million was attributable to the shareholders of the parent company and € 9 million to minority interests. 

111

Consolidated Cash Flow Statement 


in € million 2008 2007 1) 

Consolidated net profit for the period 29 230 

Non-cash items included in consolidated net profit for the period and reconciliation 

to net cash from / used in from operating activities 

Depreciation and amortisation, allowances for impairment losses, reversals of impairment losses 419 22 

Changes in provisions (additions and reversal only) 45 70 

Change in other non-cash items 551 – 16 

Net income from the disposal of property, plant and equipment and intangible assets – 26 – 34 

Net interest income – 1,247 – 815 

Other adjustments (net) – 580 157 

Subtotal – 809 – 386 

Change in assets and liabilities used in operating activities after adjustment for non-cash items 

Loans and advances to banks 4,081 1,885 

Loans and advances to customers – 622 3,486 

Financial assets recognised at fair value through profit or loss – 5,779 1,103 

Other assets used in operating activities – 1,323 239 

Payments for the acquisition of financial assets used in operating activities – 10,967 – 20,095 

Proceeds from the disposal of financial assets used in operating activities 11,297 12,828 

Deposits by banks – 4,654 1,705 

Amounts due to customers 3,214 618 

Securitised debt – 709 – 1,895 

Financial liabilities recognised at fair value through profit or loss 5,101 645 

Other liabilities used in operating activities 972 – 952 

Interest and dividends received 6,985 6,228 

Interest paid – 5,873 – 5,383 

Income tax payments – 29 86 

Cash flow from operating activities 885 112 

Proceeds from the disposal of 

financial assets used in investing activities 86 96 

property, plant and equipment 33 5 

intangible assets 1 1 

Payments to acquire 

financial assets used in investing activities – 23 – 4 

property, plant and equipment – 34 – 23 

intangible assets – 14 – 16 

Effects of changes in the scope of consolidation 

Proceeds from the disposal of consolidated companies after deduction of transferred cash 0 57 

Payments for the acquisition of consolidated companies after deduction of transferred cash 0 – 16 

Change in cash and cash equivalents due to other investing activities 0 0 

Cash flow from investing activities 49 100 

Proceeds from capital increases 0 0 

Dividends paid – 100 – 60 

Cash inflows from subordinated capital 170 40 

Cash outflows from subordinated capital – 263 – 161 

Change in cash and cash equivalents due to other financing activities 0 0 

Cash flow from financing activities – 193 – 181 

Cash and cash equivalents at the beginning of the prior period 986 955 

Cash flow from operating activities 885 112 

Cash flow from investing activities 49 100 

Cash flow from financing activities – 193 – 181 

Changes in cash due to exchange rate, consolidation and measurement-related changes 0 0 

Cash and cash equivalents at the end of the period 1,727 986 


112


Consolidated Cash Flow Statement 

The cash flow statement provides information on the amounts and development of cash and cash equivalents for the financial year, broken 

down into operating, investing and financing activities. 

The cash flow from operating activities is shown using the indirect method based on the net profit for the period. Cash flows 

from operating activities essentially include cash flows from loans and advances to banks and customers as well as deposits by banks and 

amounts due to customers, cash flows from securitised debt and assets and liabilities recognised at fair value through profit or loss, cash 

flows from financial assets allocated to operating activities and cash flows from interest paid and received. In particular, this includes interest 

and dividend income, interest expense and income tax expenses. 

The cash flow from investing activities essentially results from receipts and payments in conjunction with the sale or acquisition 

of financial assets, property, plant and equipment and intangible assets, as well as changes in the scope of consolidation. 

In addition to investor relations, the cash flow from financing activities also includes changes in subordinated liabilities. 

The reported cash and cash equivalents are composed of cash, which consists of cash on hand and balances at central banks. 

113

Notes – Contents 

Notes to the Financial Statements 

1 Principles of reporting 116 

2 Standards and interpretations applied 116 

3 Accounting policies 117 

4 Principles of consolidation 119 

5 Scope of consolidation 120 

6 Segment reporting 122 

Notes on Accounting Policies 

7 Financial instruments 126 

8 Cash 131 

9 Investments carried at equity 131 

10 Intangible assets 131 

11 Property, plant and equipment 131 

12 Impairment of property, plant and equipment and 

intangible assets including goodwill 132 

13 Leases 133 

14 Investment property 133 

15 Non-current assets and groups of assets held for sale 134 

16 Provisions 135 

17 Income taxes 135 

18 Subordinated capital 136 

19 Shareholders’ equity 136 

20 Off-balance sheet transactions 137 

Notes to the Income Statement 

21 Net interest income 138 

22 Allowance for losses on loans and advances 138 

23 Net commission income 139 

24 Net income from hedge accounting 139 

25 Net gain from financial instruments recognised at fair value through profit or loss 140 

26 Net income from financial assets 140 

27 Net income from investments carried at equity 141 

28 Other operating income 141 

29 Administrative expenses 142 

30 Restructuring expenditure and income (net) 144 

31 Income tax expense 144 

32 Earnings per share 145

Notes to the Balance Sheet 

33 Cash 146 

34 Loans and advances to banks 147 

35 Loans and advances to customers 148 

36 Allowance for losses on loans and advances 149 

37 Positive fair value of derivative hedging instruments 152 

38 Financial assets recognised at fair value through profit or loss 152 

39 Financial assets 153 

40 Investments carried at equity 155 

41 Intangible assets 155 

42 Property, plant and equipment 156 

43 Investment property 157 

44 Income tax assets 157 

45 Other assets 158 

46 Non-current assets and groups of assets held for sale 158 

47 Deposits by banks 159 

48 Amounts due to customers 160 

49 Securitised debt 161 

50 Negative fair value of derivative hedging instruments 162 

51 Financial liabilities recognised at fair value through profit or loss 162 

52 Provisions 164 

53 Income tax liabilities 170 

54 Other liabilities 170 

55 Liabilities assigned to groups of assets held for sale 171 

56 Subordinated capital 171 

57 Shareholders’ equity 171 

Other Notes 

58 Adjustments due to changes in accordance with IAS 8 172 

59 Trust Activities 173 

60 Contingent liabilities and similar obligations 173 

61 Risk management 175 

62 Fair values of financial instruments 175 

63 Assets pledged as collateral 178 

64 Related party disclosures 178 

65 Number of employees 184 

66 Events after 31 December 2008 184 

67 List of investment holdings 185 

68 Corporate governance 190


1 Principles of reporting 

Landesbank Berlin Holding AG (hereinafter referred to as the “Holding”) is the parent company of the Landesbank Berlin Holding Group, 

Berlin, Germany (hereinafter referred to as the “Group”). Its head office is in Berlin, Germany, and it is entered in the commercial register there. 

Regionalverbandsgesellschaft mbH (RVG), based in Neuhardenberg, Germany, is the Group’s parent company. As of 31 December 2008, 

it directly and indirectly holds 98.6 % of shares in Landesbank Berlin Holding AG. 

This report is a full annual financial report as defined by Article 37v of the German Securities Trading Act (WpHG). The consolidated 

financial statements of Landesbank Berlin Holding for the financial year 2008 found here were prepared in accordance with the International 

Financial Reporting Standards (IFRS) applicable in the EU and also the applicable provisions in accordance with Article 315a (1) of the 

German Commercial Code (HGB). 

Furthermore, the German Accounting Standards (GAS) passed by the German Accounting Standards Committee and promulgated 

by the Federal Ministry of Justice in accordance with Article 342 (2) of the German Commercial Code by 31 December 2008 were 

observed. 

An overview of all standards applied can be found in the following note. 

The Holding also prepares and publishes a Group management report in accordance with Article 315a HGB in conjunction with Articles 315, 

340k HGB. The relevant GAS were also complied with here. 

Unless otherwise indicated, all amounts are shown in millions of euro (€ million). In isolated cases there may be minor deviations in 

additions due to rounding figures up or down. 

2 Standards and interpretations applied 

In its accounting policies, the Group applies all valid standards that are mandatory as of the reporting date. The consolidated financial 

statements for 2008 are based on the IASB framework concept and the following relevant IAS / IFRS: 

Standard Title 

Version / 

latest amendment 

Date of 

firsttime 

application 

IAS 1 Presentation of Financial Statements rev. 2003 / 18.08.2005 01.01.2007 

IAS 7 Cash Flow Statements rev. 1992 01.01.1994 

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors rev. 2003 01.01.2005 

IAS 10 Events After the Balance Sheet Date rev. 2003 01.01.2005 

IAS 12 Income taxes rev. 2000 01.01.2001 

IAS 14 Segment reporting rev. 1997 01.07.1998 

IAS 16 Property, plant and equipment rev. 2003 01.01.2005 

IAS 17 Leases rev. 2003 01.01.2005 

IAS 18 Revenue rev. 1993 / Dec.1998 01.01.2001 

IAS 19 Employee Benefits rev. 2002 / 16.12.2004 01.01.2005 

IAS 21 The Effects of Changes in Foreign Exchange Rates rev. 2003 / 15.12.2005 01.01.2006 

IAS 23 Borrowing Costs rev. 1993 01.01.1995 

IAS 24 Related Party Disclosures rev. 2003 01.01.2005 

IAS 27 Consolidated and Separate Financial Statements in accordance with IFRS rev. 2003 01.01.2005 

IAS 28 Investments in Associates rev. 2003 01.01.2005 

IAS 31 Interests in Joint Ventures rev. 2003 01.01.2005 

IAS 32 Financial Instruments: Presentation rev. 2003 / 18.08.2005 01.01.2007 

IAS 33 Earnings per share rev. 2003 01.01.2005 

IAS 36 Impairment of Assets rev. 2004 31.03.2004 

IAS 37 Provisions, Contingent Liabilities and Contingent Assets 1998 01.07.1999 

IAS 38 Intangible assets rev. 2004 31.03.2004 

01.01.2006 / 

IAS 39 Financial Instruments: Recognition and Measurement rev. 2004 / 13.10.2008 01.07.2008 

IAS 40 Investment Property rev. 2003 01.01.2005 

IFRS 3 Business Combinations rev. 2004 31.03.2004 

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations 2004 01.01.2005 

01.01.2007 / 

IFRS 7 Financial Instruments: Disclosures 18.08.2005 / 13.10.2008 01.07.2008 

The standards IAS 2, 11, 20, 26, 29, 34 and 41 and IFRS 1, 2, 4 and 6 were not pertinent to the Group and therefore were not applied in 

the consolidated financial statements. IAS 1 (rev. 2007), IFRS 3 (rev. 2008) and IFRS 8 were not yet mandatory. Their future application from 

the financial year 2009 will not have any material effect. 

116

In addition to the standards listed, the following interpretations of the International Financial Reporting Interpretations Committee (IFRIC) 

and the Standing Interpretations Committee (SIC) were also applied in the preparation of the consolidated financial statements: 

Standard Title Relates to As at 

Date of 

firsttime 

application 

SIC-12 Consolidation – Special Purpose Entities IAS 27 1998 01.07.1999 

SIC-15 Operating Leases – Incentives IAS 17 1998 01.01.1999 

SIC-21 Income Taxes – Recovery of Revalued Non-Depreciable Assets IAS 12 1999 15.07.2000 

SIC-25 Income Taxes – Changes in the Tax Status of an Entity or its Shareholders IAS 12 1999 15.07.2000 

SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease IAS 1, 17, 18 2000 31.12.2001 

IFRIC 4 Determining whether an Arrangement contains a Lease IAS 17 02.12.2004 01.01.2006 

IFRIC 9 Reassessment of Embedded Derivatives IAS 39 01.03.2006 01.06.2006 

IFRIC 10 Interim Financial Reporting and Impairment IAS 34, 36, 39 02.06.2007 01.11.2006 

IFRIC 13 Customer Loyalty Programs IAS 8, 18, 37 28.06.2007 01.07.2008 

The interpretations SIC-7, 10, 13, 29, 31 and 32 and IFRIC 1, 2, 5-8 and 11, 12, 14-17 were not pertinent to the Group or were not yet 

mandatory and therefore were not included in the consolidated financial statements. 

Furthermore, the following German Accounting Standards (GAS) passed by the German Accounting Standards Committee and 

promulgated by the Federal Ministry of Justice in accordance with Article 342 (2) of the German Commercial Code by 31 December 2008 

were observed in these consolidated financial statements: 

GAS 2 Cash Flow Statement 

GAS 2-10 Cash Flow Statements of Financial Institutions 

GAS 3 Segment Reporting 

GAS 3-10 Segment Reporting by Financial Institutions 

GAS 5 Risk Reporting 

GAS 5-10 Risk Reporting by Financial Institutions and Financial Service Institutions 

GAS 15 Management Reporting 

GAS 15a Group Management Report Disclosures and Narrative Explanations Required by Takeover Law 

GAS 17 Reporting on the Remuneration of Governing Bodies 

3 Accounting policies 


Basic principles 

The consolidated financial statements 2008 of the Holding are prepared in accordance with International Financial Reporting Standards (IFRS). 

Items are recognised and measured under the assumption of the going concern principle. Income and expenses are recognised in 

the income statement pro rata temporis in the period to which they relate. 

The main accounting policies applied in the preparation of these consolidated financial statements are detailed below. These notes 

initially explain general aspects; detailed information can be found in notes 7 to 20. Unless stated otherwise, the policies described were 

applied uniformly and consistently to the reporting periods presented. 

Uncertainty in estimates and assumptions 

The presentation of the net assets, financial position and results of operations in the consolidated financial statements is dependent on the 

recognition and measurement policies as well as assumptions and estimates used as the basis for the preparation of the consolidated 

financial statements. 

The estimates and assessments required in IFRS accounting are made in line with the respective standard, reassessed on an ongoing 

basis and based on historical experience and other factors, including expectations with regard to future events that appear reasonable 

under the given circumstances. 

Stock exchange prices and internal measurement models with current market parameters for assets and liabilities carried at fair 

value. For some financial instruments, other factors which may influence the fair value of the financial instrument were taken into account 

as well as observable market data. Details of this plus information on assumptions and estimates can be found in other notes (note 62). 

Notes 

117


The current extreme market situation, primarily characterised by inactive markets, means that since the middle of financial year 2008 for 

numerous financial instruments it has been practically impossible to assess fair value on the basis of listed prices or by means of estimates 

based on most recent transactions or currently available market prices of similar financial instruments. To ascertain fair value for these 

financial instruments, it was not possible to use prices of transactions on an active market (IAS 39.AG71-73). 

In these cases, the fair value valuation hierarchy in line with IAS 39 must be used, with the application of valuation models. Here 

account was taken of statements of deployment of the valuation models of the International Accounting Standards Board (IASB) from 

October 2008. The underlying valuation models and their parameterisation on which the valuation of these financial instruments are based 

lead to a more realistic calculation of fair value. 

According to IAS 39.AG 82, the valuation methods factor in observable market data and other factors appropriate to influencing the 

fair value of the financial instrument. In the case of inactive markets, the valuation results on the basis of discounted cash flows, with the 

discounting factors including interest rates observable on the market, general credit spreads (external category spreads according to industry, 

origin and rating) and individual credit spreads (specific to the instrument). In order to determine the latter, the most recently observed plausible, 

individual spreads or more current spreads of related bonds or credit default swaps or their own estimates are considered. These may for 

example result from support activities by national governments. Stock market prices are also used as the basis for calculating positive and 

negative market values of derivatives. If no stock market prices are available, the market value is calculated using the normal mathematical 

methods of measurement for the sector, in particular present value methods and option pricing models. The parameters used in the measurement 

models are determined on the balance sheet date based on market conditions available on the market. 

The reclassification of financial instruments, made possible in the modification of IAS 39.50 (October 2008), was recognised directly 

in equity as of 1 October 2008. Details of this can also be found under Other Notes (Note 62). 

The recognition of property, plant and equipment and intangible assets entails estimates to determine their fair value at the date 

of acquisition. This applies to such assets that were acquired as part of a business combination. The expected useful life of assets is also 

estimated. The calculation of the fair values of assets and liabilities and the useful lives of assets are based on management assessments 

made in line with the standards on the basis of all available information. 

Currency translation 

In the companies’ financial statements, foreign currency payments are translated using the exchange rate at the date of initial recognition. 

Exchange rate gains and losses on monetary items are recognised in the income statement. Exchange rate gains and losses on non-monetary 

items are recognised directly in equity. 

In the Group, the annual financial statements of foreign entities are translated in line with the functional currency concept in accordance 

with IAS 21. For most foreign entities, foreign currencies are translated into the functional currency (euro) in line with the temporal 

method. Exchange gains and losses are recognised in the income statement. 

The other companies operate independently in GBP and USD. The functional currency is therefore GBP or USD and prices are 

translated in accordance with IAS 21 using the modified balance sheet date rate method. Exchange gains and losses of these companies 

are recognised separately in shareholders’ equity. 

Changes in accounting policies 

The accounting policies used in the consolidated financial statements for 2007 have been essentially retained for these consolidated financial 

statements, with the exception of the amendments shown below. 

Financial instruments have also been assigned to the held-to-maturity category since financial year 2008. Only new business 

was included. 

Recognition of the retained profit in the “Statement of Changes in Shareholders’ Equity” shows consolidated net profit, determined 

in accordance with IFRS provisions. Since the third quarter of 2008, there is no adjustment to the unappropriated surplus determined in 

accordance with HGB provisions. The generated and undistributed net result of the Group was allocated to retained earnings because the 

consolidated financial statements make determination relating to distributions. The prior year comparative figures have been adjusted 

accordingly. 

Through the optimisation of process flows in loan administration as well as the implementation of further measures in the strategic 

Retail Banking segment for identifying risks early, the period between the occurrence of a loss event and the identification of loss (Loss 

Identification Period – LIP) was shortened by the bank. As a consequence of these measures, the LIP factor used for calculating the portfolio 

impairment losses was adjusted for this partial portfolio. 

For the purposes of reporting as at 31 December 2008, adjustments in accordance with IAS 8.42 were made to the comparative 

figures as at 31 December 2007. A detailed presentation of these adjustments and their quantitative effects can be found in the other notes 

(note 58). 

118

4 Principles of consolidation 


The consolidated financial statements of the Holding were prepared using uniform accounting policies in accordance with IAS 27.28. The 

consolidated financial statements essentially include all companies controlled directly or indirectly by the Group. 

33 subsidiaries, including special purpose entities (SIC-12), 10 associated entities and 6 joint ventures of subordinate importance 

for the Group’s financial position and results of operations, are not included. They are recognised as financial assets in the balance sheet 

and are measured according to the corresponding regulations. In determining the scope of consolidation, value criteria such as total assets, 

equity and the group’s net income for the year are considered and assessed, both on the level of the individual companies and overall. 

Companies that are not classed as controlled companies, in spite of a voting majority, and companies that are classed as controlled 

companies, in spite of the Group not having a voting majority, are indicated in the list of investment holdings (note 67). In addition, companies 

(special-purpose entities) in line with SIC-12 must be consolidated under certain conditions. This also applies to entities such as special 

funds and ABS constructions, details of which can be found in note 5 on “Scope of consolidation”. 

As part of capital consolidation, assets as well as liabilities and contingent liabilities of the acquired company are completely revalued 

at fair value at the date of acquisition. Positive differences between the cost of the business combination and the net fair value of the assets 

and liabilities are capitalised as goodwill. Acquisitions of minority interests are treated in the same way (modified parent company model). 

In subsequent years, goodwill is carried at cost, subject to an annual impairment test. Impairment is recognised under other operating 

expenses. After checking the measurement of assets or liabilities and contingent liabilities again, negative differences are recognised in the 

income statement together with gains on deconsolidation under other operating income. 

Intra-group receivables and liabilities, income and expenses arising from intra-group transactions and any intra-group results are 

eliminated in accordance with IAS 27.24 et seq. and IAS 28.20 et seq. 

All fully consolidated companies and joint ventures and associated entities carried at equity prepared their annual financial statements 

as at the balance sheet date 31 December 2008. Funds and special purpose vehicles with a different balance sheet date presented 

audited reports as at the balance sheet date 31 December 2008. Thus, all material transactions in the reporting year were included in the 

consolidated financial statements. The inclusion of financial statements with a balance sheet date other than that of the Group is indicated 

in the list of investment holdings. 

Non-consolidated subsidiaries are categorised as available for sale and reported at fair value under financial assets in line with 

IAS 39.46. If there is no listed price on an active market and the fair value cannot be reliably determined, measurement is at cost in line with 

IAS 39.46 (c). 

Joint ventures where there is a contractual agreement whereby two or more parties undertake an economic activity which is subject 

to joint control are carried at equity and reported under a separate balance sheet item in accordance with IAS 31.38. 

An associated entity is one over which the Group has the power to exert significant influence by participating in its financial and 

operating policy decisions but which is neither a subsidiary nor a joint venture of the Group. Companies not classed as an associated entity 

despite an interest of more than 20 % and companies classed as an associated entity despite an interest of less than 20 % are indicated in 

the list of investment holdings. 

Associated companies are measured in accordance with the equity method. The Group’s share of changes reported directly in the 

shareholders’ equity of the associated entities is reported directly in the shareholders’ equity of the Group. Gains and losses of associated 

entities are recognised pro rata under “Net income from investments carried at equity”. 

Changes in the carrying amount of associates’ equity are recognised on the basis of audited financial statements which are adapted 

to comply with uniform Group accounting policies via reconciliations. 

Shares in joint ventures and associated entities not valued at equity are valued in accordance with IAS 39. 

Shares in subsidiaries and associated entities held for sale are measured and reported separately in line with IFRS 5. 

Notes 

119


5 Scope of consolidation 

As of 31 December 2008, 106 companies are included in the consolidated financial statements in addition to Landesbank Berlin Holding 

AG. These companies represent the scope of consolidation and can be seen in the list of investment holdings. The changes in the scope of 

consolidation in the 2008 financial year were as follows: 

31.12.2007 Additions Disposals 31.12.2008 

Subsidiaries 24 1 4 21 

Special purpose entities (SIC-12) 

Special funds 13 1 2 12 

Holdings in mutual funds 4 3 4 3 

Other special purpose entities (SIC-12) 69 3 2 70 

Total 110 8 12 106 

Company acquisitions and business combinations 

Acquisition of Bianca Vermögensverwaltung AG & Co. KG 

Landesbank Berlin AG acquired a portfolio of consumer loans and credit card receivables and payables with economic effect on 

2 January 2008. In accordance with Section 123 of the Reorganisation Act, the portfolio was spun off by the seller to Bianca Vermögensverwaltung 

AG & Co. KG, the sole limited partnership interest of which LBB AG acquired effective that date. After the spin-off was 

entered in the commercial register and the general partner left the company, the business of Bianca Vermögensverwaltung AG & Co. KG 

was integrated into LBB AG on 2 June 2008. On this date, LBB AG acquired the right of disposal to the portfolio acquired. 

As a result of the business combination, the following assets and liabilities were included in the consolidated financial statements for the 

first time: 


Carrying 

amount at date 

of inclusion 

Loans and advances to banks 2 

Loans and advances to customers, other assets 581 

Amounts due to customers and provisions 40 

Deferred income 2 

Acquired net assets 541 

Because receivables and payables were assumed by Bianca Vermögensverwaltung AG & Co. KG at fair value, the carrying amounts for the 

most part correspond to the fair value at which Bianca Vermögensverwaltung AG & Co. KG was first recognised in accordance with IFRS 3.61. 

In purchase price allocation in line with IFRS 3, the purchase price was allocated to the identifiable assets and liabilities at fair value. 

in € million 2.6.2008 

Purchase price 540 

Incidental costs of acquisition 0 

Total cost of acquisition 540 

Less pro rata net assets measured at fair value 541 

Goodwill – 1 

In economic terms, the negative goodwill represents the income accumulated by Bianca Vermögensverwaltung AG & Co. KG since 

2 January 2008. This was recognised in other operating income through profit or loss. The purchase price was paid in full with cash and 

cash equivalents. 

120

From 2 January 2008 until the date of purchase, Bianca Vermögensverwaltung AG & Co. KG generated earnings after taxes of € 1.3 million 

under local accounting provisions (HGB). In accordance with the terms of the contract, this amount is already available in full to LBB AG 

and is thus included in its full amount in the consolidated financial statements. It was not possible to state the revenues, profits and losses 

for the Group as if the acquisition had taken place at the start of the reporting period as Bianca Vermögensverwaltung AG & Co. KG only 

prepared accounts in accordance with HGB. 

Other additions to the scope of consolidation 

Since 31 December 2007, the following companies have been added to the scope of consolidation: 

Additions 

FlexBond-Plus-INVEST, Berlin As a result of shares being withdrawn, the relevant stake of the Bank again exceeded 50 %. 

LBB Re Luxembourg S.A., Luxembourg Formed owing to relocation of LBB Reinsurance Ltd. headquarters from Dublin to Luxembourg 

LBB-nb 08-Fonds, Berlin Formed by netbank Aktiengesellschaft, Hamburg 

RR II R-11305, City of Wilmington / Delaware Formed within context of the Tender Option Program 



Private Banking FlexBond, Berlin Issue of new mutual fund by LBB-INVEST, Berlin 

VermögensStruktur Chance / Inhaber-Anteile, Berlin Issue of new mutual fund by LBB-INVEST, Berlin 

In the third quarter, the special fund, GSIM Global Corporate Bond Fond, Frankfurt / Main, was renamed GSAM Global Corporate Bond Fonds 

INKA, Dusseldorf. At the same time, the administrator of the funds assets changed. 

Company disposals and other disposals from the scope of consolidation 

Disposals 

Albatros Select Fund, Luxembourg Liquidation 

BSI Immobilien-Beteiligung GmbH & Co. 

Objekt Wilmersdorf oHG, Pöcking Discontinuation of the company 

Check Point Charlie Inc., London Acquisition of business operations of Check Point Charlie Inc., London 

by Check Point Charlie Ltd., London 

ConvertibleBond-INVEST, Berlin No balance left in this fund 

HILOG Beteiligungs GmbH & Co. Immobilienleasing KG, Munich Following the disposal of the main asset, the operation was discontinued. 

Keppler-Global Value-LBB-INVEST, Berlin Reduction of holding in this mutual fund to less than 50 % and thus measurement at equity 

LBB Reinsurance Ltd. I.L., Dublin Business activities were transferred to LBB Re Luxemburg S.A., Luxembourg. 

LBB-Spezialsituationen-Fonds, Berlin Liquidation 

LBB-TopPick-Fonds, Berlin Liquidation 

LINGOHR-ALPHA-SYSTEMATIC-LBB-INVEST, Berlin Reduction of holding in this mutual fund to less than 50 % and thus measurement at equity 

Private Banking Flex Bond, Berlin Reduction of holding to less than 20 % and thus recognition as an interest under IAS 39 

Wilkendorf Golf Betriebsgesellschaft mbH, Altlandsberg Disposal of shares 

Other companies included in the scope of consolidation 

With a contract dated 22 December 2008 and effect in rem from 31 December 2008 / 1 January 2009, Landesbank Berlin AG sold its 

100 % stake in Landesbank Berlin Investment GmbH, Berlin, to Landesbank Berlin Holding AG. The Group’s scope of consolidation remains 

unaffected by this. 

The changes in the scope of consolidation did not have a material effect on the net assets, financial position and results of 

operations of the Group. 


Notes 

121


6 Segment reporting 

The Landesbank Berlin Holding Group is a universal bank; its business activities comprise the four business areas described below. 

Segment results are presented in line with business areas; there is no secondary segment reporting level. 

Description of segment results 

At € 365 million, net interest income in the Retail Banking segment was 7.0 % or € 24 million higher than the figure from the previous 

year. This includes extraordinary income from the initial public offering of the credit card provider VISA totalling € 19.4 million, positive 

effects from the third-party card business (€ + 8.7 million), and negative special factors due to the expansion in the sales financing business 

(€ – 7.9 million). 

The volume as at the balance sheet date, particularly that of deposits, grew by 6 % as against 31 December 2007. This was due to 

the crisis on the financial markets, since the increased need for security among customers led to return flows of deposits to the Berliner 

Sparkasse. At the same time, new business in approved general-purpose loans rose by 14.7 % and new business in mortgage loans made 

available increased by 10.3 % as against the previous year’s results. 

In 2008, net commission income was 1.0 %, or € 2 million, up on the previous year’s level as a result of increased income from 

credit card business. A significant portion of net commission income was earned in the securities business, yet it remained 13.1 % below 

the result of the previous year. As a result of the difficult market environment, the Retail Banking segment saw a 8.3 % decline in the level 

of internal certificates to € 865 million as against 31 December 2007. In 2008, gross unit sales of € 254 million were below the value of the 

previous year of € 351 million (– 27.6 %). Unit sales of insurance products developed well, with a 15.3 % year-on-year increase in net policy 

premiums. The national credit card business (co-branding) shows growth both in higher commission income and above-average growth 

in terms of credit cards (+ 15.9 %). 

Allowance for losses on loans and advances was negatively impacted by portfolio-based allowances required in line with IFRS 

totalling € 7.6 million for the considerably increased volume of consumer loans, and was increased by the added consumer loans portfolio 

assumed from BHW Bank. 

Due to the increase in business (third-party cards and consumer loans portfolio in sales financing), administrative expenses were, 

at € 412 million, up slightly by € 3 million on the previous year’s figure. The increase in employee capacity (+ 75) resulted both from taking on 

trainees and from external appointments in connection with the transfer of employees from the acquired BHW portfolio. 

The Regional Corporate Banking segment consolidated its strong market position. One contributing factor was the growth in 

interest-bearing loans and advances to customers, which rose by an average for the year of 10 %. However, due to repayment of short-term 

loans, the segment assets recognised as at 31 December 2008 were below the level of the previous year. Customer deposits also 

increased by 13 % as against the previous year. This was also reflected in the increase in segment liabilities. 

The number of customers increased by almost 1,000 customers to approximately 63,400. In spite of a highly competitive environment, 

net interest income increased by 3.6 % to reach € 114 million. As in the previous year, the segment benefited from positive developments 

in the allowance for losses on loans and advances. Net commission income was up from the previous year’s figure, since in 2008 income 

from export financing was presented in the Regional Corporate Banking segment for the first time rather than in the Capital Markets 

segment as previously. As a result, administrative expenses increased as against the previous year – adjusted for this effect, there was an 

overall decrease. Other operating income increased due to the disposal of an asset in the HILOG participation. 

The global financial crisis had a huge impact on the activities and result of the Capital Markets segment in financial year 2008. 

Market jitters left their mark on all activities in the segment through limited liquidity, huge increases in risk premiums (credit spreads) and 

extreme volatility on the interest and share markets. This led to losses in trading and remeasurement losses for asset items as a result 

of markets no longer functioning. In contrast, income from customer business remained virtually unchanged. 

The development of the credit spreads led to considerable remeasurement losses in our various investment strategies (e.g. tender 

option program, asset backed securities, credit investment portfolio), which were recognised only partially in terms of income. 

Despite the wide range of strategies and portfolios, trading activities also suffered enormously, although here the losses were limited 

by timely risk-reducing measures. The constant, non-volatile income from customer business and income revenue from investment strategies 

failed to compensate for the trading and remeasurement losses incurred. 

122

Capital Markets generated an operating loss of € 391 million, down € 380 million on the figure for the previous year. 

Due to impairments on exposures with Lehman Brothers, Washington Mutual, Icelandic banks and funds, net income from financial 

assets experienced a negative impact of € – 293 million (2007: € – 26 million). 

Moreover, the collapse of Lehman Brothers meant that additions to write-downs on loans and advances were necessary. There was 

a corresponding increase in allowance for losses on loans and advances which, at € 53 million, was up € 83 million year-on-year. This 

includes write-downs on securitised US mortgage loans (CDO of ABS) and, to a lesser amount, value allowances for country risks from the 

Ukraine and Kazakhstan. 

Net interest income developed extremely positively, increasing to € 381 million (up € 251 million on 2007), primarily due to money 

market activities. 

At € – 284 million (previous year: € – 41 million), net income from financial instruments recognised at fair value through profit or loss 

was down heavily as a result of high exchange losses, particularly in the second half of the year. 

In 2008, an income settlement from the reassignment of export financing to the Regional Corporate Banking segment (€ – 14 million) 

was undertaken for the first time. At € 30 million, net fee and commission income was down € 8 million as against the year 2007 (after 

adjustment for the above income settlement), mainly resulting from falling brokerage income. 

Administrative expenses decreased by € 21 million to € 152 million due to rigorous implementation of the agreed saving measures 

and the reassignment of export financing to the Regional Corporate Banking segment. 

The measures to attract new customers and intensify sales were expanded at all times in 2008 and led to a further increase in the 

number of clients. The outstanding certificate volume fell to € 2.3 billion in the course of the financial crisis. Gross sales of certificates 

amounted to € 1.2 billion as at 31 December 2008. Growth in the special and mutual funds of LBB-INVEST did not continue in 2008. The 

fund volume decreased from € 12.8 billion as at 31 December 2007 to € 10.3 billion as at 31 December 2008. The decline in the mutual 

fund volume to € 3.4 billion is mainly attributable to price losses on the share markets. 

Lending volumes in international lending business, which is essentially covered by state export credit agencies (ECA), grew significantly 

over the course of the year. With the escalation of the financial crisis, limits and thus new business were scaled back in the fourth 

quarter. Net operating interest and commission income were up on the previous year. 

The Real Estate Financing segment generated pleasing operating earnings of € 259 million in the reporting period, representing a 

5.3 % year-on-year increase (€ 246 million as at 31 December 2007). In the process, the balance of net interest income and net income 

from financial instruments recognised at fair value through profit or loss rose by € 33 million. One contributing factor to the positive development 

in provisions for losses on loans and advances was extraordinary reversals, which significantly exceeded newly created provisions. 

Net commission income improved by 73.7 % year-on-year to € 33 million. 

Despite the difficult market environment, new business – at around € 6.7 billion – once again exceeded the figure for the previous 

year of around € 6.6 billion (excluding non-recurring transactions of € 3.6 billion). The positive development in new business of previous years 

was continued though rigorous deployment of market opportunities. The breakdown of new business in terms of property use, lending 

areas and customer segments and the development of new business margins was consistent with the segment’s objectives. The segment’s 

strategy of risk limitation was still systematically observed. 

The customer receivables portfolio increased by € 1 billion in the core business of Real Estate Financing in the reporting period. 

In the German market, the Real Estate Financing segment is thus firmly established as one of the leading providers. 

The Group management and service functions, the balance sheet structure management and the consolidation items in the Group 

are shown under Other / Consolidation. Other items reported in this segment include non-interest-bearing balance sheet items, such 

as non-current assets and the associated write-downs in administrative expense in the amount of € 32 million (previous year: € 33 million). 

The operating profit in the reporting period increased by € 44 million year-on-year to € – 84 million. 

The number of employees in the Other / Consolidation segment is 2,513, as compared to 2,083 in the previous year. 1,158 of these jobs 

(31 December 2007: 1,190) relate to head office staff (including organisation and IT), and 1,332 of them relate to back office positions, 

which include both BankenService GmbH and also, since 1 July 2008, the back office positions at the credit units in the Regional Corporate 

Banking, Capital Markets and Real Estate Financing segments. In addition, there are also some employees in other Group companies 

included in the Other / Consolidation segment. The reclassification of back office positions is the reason for the increase in the number of 

employees as at 31 December 2008 in comparison to the previous year. There is a corresponding decrease in the number of employees 

in the Regional Corporate Banking, Capital Markets and Real Estate Financing segments. Because services were recharged, these 

reclassifications did not have any impact on the overall results of the segments concerned. 


Notes 

123


Segment Results 



1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 1) 

Regional 

Corporate Banking 

1.1. – 31.12. 

2008 7) 

1.1. – 31.12. 

2007 1) 

Net interest income 365 341 114 110 

Allowance for losses on loans and advances 1) 37 26 – 9 – 25 

Net interest income after risk provisioning 328 315 123 135 

Net commission income 200 198 41 29 

Net income from hedge accounting 

Net gain from financial instruments recognised at fair value through profit or loss 

Net income from financial assets 

Net income from investments carried at equity 5 4 

Other operating income 4 9 28 6 

Administrative expenses 412 409 92 88 

of which normal depreciation and amortisation 13 12 2 4 

Operating profit before restructuring 125 117 100 82 

Restructuring expenditure and income (net) 

Operating profit / earnings before taxes 125 117 100 82 

Segment assets 2) 4,972 4,031 5,355 5,863 

Segment liabilities (not including shareholders’ equity) 2) 12,358 11,489 5,267 4,699 

Risk items in accordance with the German Banking Act (reporting date) 3) 3,334 2,652 3,130 4,234 

Capital resources in accordance with SolvV 267 k. A. 250 k. A. 

Tied-up equity (average) 1) 4) 242 245 232 263 

Employee capacity (reporting date) 7) 2,330 2,255 293 636 

Return on equity 1) 5) 51.7 % 47.8 % 43.1 % 31.2 % 

Cost-income ratio 5) 71.8 % 74.1 % 50.3 % 60.7 % 

1) Figures for the previous year: changed presentation for tied-up equity and allowance for losses on loans and advances; see also explanations under “notes 6” 

2) Segment assets / liabilities not including tax items 

3) 2008 in accordance with the SolvV (12.5 x required capital resources); 2007 in accordance with KWG 

4) For the Group as a whole, the average IFRS equity is recognised; in the segments, the capital required according to financial procedures. 

5) Calculated with rounded figures in € million 

6) 2007 including expenses for the repayment of „dormant participations“; no such expenses for 2008 

7) The back office of the credits area of Regional Corporate Banking, Capital Markets and Real Estate Financing have been reported under “Other/consolidation” since July 1, 2008; 

This changed the reported employee capacity but had no overall effect on income as this was charged back to the customer business areas concerned. 

Methods and changes in line with IAS 8 

Income and expenses are allocated to segments in accordance with the principle of causality. In order to allocate third-party net interest 

income to the segments, the market interest rate method is applied for interest, supplemented by net interest income from the application of 

the IFRS accounting policies on which the consolidated financial statements are based. For each product, a margin result is calculated as 

the difference between the customer interest rate and an internal interest rate on an individual transaction basis. Berlin Hyp uses derivatives 

to manage its interest rate risk. The changes in the carrying amount of these derivatives has been shown in “Other / Consolidation” since 

1 January 2006. Interest-induced changes in host contracts from issues that have to be separated are charged directly to equity between 

the Capital Markets and Other / Consolidation segment. Income tax assets / liabilities are not included in segment assets / liabilities. 

All other income and credit risk provisions are allocated to the segments on a counterparty basis. The administrative expense consists 

of staff costs, other administrative expenses, depreciation of property, plant and equipment and amortisation of other intangible assets 

(excluding goodwill). Inter-segment services are recognised at full cost by way of cost allocation. Within staff costs, the interest effect on the 

transfer of pensions reserves is now allocated to the “Other / Consolidation” segment, where the provisions are also invested. 

Segment assets include the balance sheet assets of the respective segment. For the segments operating in the area of banking 

business, these are essentially loans and advances to customers; in Capital Markets, these also include loans and advances to banks, 

financial assets (securities), assets held for trading and positive fair values of derivatives. Accordingly, segment liabilities are defined as 

balance sheet liabilities, i.e. primarily amounts due to customers and, in Capital Markets, deposits by banks and securitised debt as well 

as liabilities held for trading and negative fair values of derivatives. 

The risk positions for 2007 consist of the risk assets and the market risks in accordance with Principle I on Article 10 KWG. For 2008, 

they are shown as 12.5 x required capital resources in accordance with the SolvV. LBB provides the segments with the capital required 

according to economic procedures and calculates the investment benefit, which is included in the net interest income of the respective 

segment. LBB uses an interest rate corresponding to a risk-free, rolling long-term investment on the capital market. The average equity 

124

Capital Markets Real Estate Financing Other / Consolidation 6) GROUP 

1.1. – 31.12. 

2008 7) 

1.1. – 31.12. 

2007 1) 

1.1. – 31.12. 

2008 7) 

1.1. – 31.12. 

2007 1) 

1.1. – 31.12. 

2008 7) 

1.1. – 31.12. 

2007 1) 

1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 1) 

381 130 319 259 68 – 25 1.247 815 

53 – 30 – 37 – 38 19 – 1 63 – 68 

328 160 356 297 49 – 24 1.184 883 

30 52 33 19 – 2 – 1 302 297 

– 4 – 10 2 – 4 1 – 18 3 

– 284 – 41 21 48 – 81 – 52 – 344 – 45 

– 293 – 26 – 7 8 – 8 14 – 308 – 4 

– 19 8 – 4 – 18 12 

3 9 – 15 – 6 119 101 139 119 

152 173 119 122 165 173 940 965 

7 8 8 9 32 33 62 66 

– 391 – 11 259 246 – 96 – 134 – 3 300 

12 6 12 6 

– 391 – 11 259 246 – 84 – 128 9 306 

68,388 68,921 50,910 49,630 14,734 12,840 144,359 141,285 

64,546 58,106 41,356 40,367 19,709 24,424 143,236 139,085 

17,699 21,850 14,835 18,581 2,152 3,174 41,150 50,491 

1.416 k. A. 1.187 k. A. 172 k. A. 3.292 k. A. 

1.064 893 865 683 – 147 753 2.256 2.837 

426 454 437 537 2,513 2,083 5,999 5,965 

neg. neg. 29.9 % 36.0 % 0.0 % 0.0 % 0.4 % 10.8 % 

neg. > 100 % 34.9 % 37.0 % 0.0 % 0.0 % 94.0 % 80.6 % 

capital tie-up is reported for each segment. This subsequently forms the reference base for determining the return on equity, which is 

calculated for the segment results before taxes. At Group level, the average IFRS equity forms the reference base for calculating the return 

on equity. 

The number of employees reported is the employee capacity (converted to full-time employees, not including trainees and 

apprentices) at the balance sheet date. 

The cost-income ratio is calculated as the ratio of administrative expenditure and the total of net interest income, net commission 

income, net income from hedges, net gain from financial instruments recognised at fair value through profit or loss, net gain from financial 

investments, net income from investments carried at equity and other operating income. 

In the segment reporting for 2007, the following matters led to adjustments in line with IAS 8: 


The method for determining reversals of impairment losses on receivables was refined further in financial year 2008. More detailed 

information was therefore available, allowing for a differentiated assessment of individual cases. In applying this refined method, reversals 

of impairment losses were also identified relating to 2007 (€ 14.8 million), 2006 (€ 7.7 million) and 2005 (€ 0.6 million). Amounts relating to 

the previous years are adjusted in accordance with IAS 8.42. The amount relating to financial year 2007 led to changes in reporting for 

risk provisioning on loans and advances in the Real Estate Financing segment (€ – 6.2 million), the Retail Banking segment (€ –5.5 million), 

the Regional Corporate Banking segment (€ – 2.7 million) and the Capital Markets segment (€ –0.4 million). 

Starting in 2008, the return on Group equity is calculated on the basis of average equity according to IFRS. Capital required according to 

financial procedures is recognised in the segments. The figures for the previous year, 2007, have been adjusted accordingly. 

For 2007, expenses for the repayment of dormant participations are recognised in the “Other / Consolidation” segment. There were 

no such expenses for 2008. 

Notes 

125


7 Financial instruments 

The Group recognises all financial instruments, including financial assets and liabilities, in line with IAS 39. On initial measurement, all financial 

instruments are measured at cost on their addition, which is the fair value of the amount given or received in exchange for the financial 

instrument. Both primary financial assets and primary financial liabilities are carried in line with their carrying amount, partly at amortised cost 

and partly at fair value. Derivative financial instruments are measured solely at fair value. Specific subsequent measurement is based on 

which category these financial instruments are assigned to. First-time recognition of financial instruments is as of the trade date (trade date 

accounting). 

Financial instruments are broken down by class. In addition to distinguishing between financial assets, liabilities and equity, a key 

feature of categorisation is subsequent measurement at either fair value or amortised cost. There is also a further breakdown. 

7.1 Categorisation of financial assets and liabilities 

The Group assigns financial assets and liabilities to the (measurement) categories shown below. However, there are differences in the 

reporting of financial assets and liabilities, so categories do not correspond directly to balance sheet items. A reconciliation of the respective 

carrying amounts per category can be found in note 62 of this report. Information on permissible changes made in classification into these 

categories (re-categorisations) can also be found here. 

Loans and Receivables (L & R) 

Loans made directly to debtors and receivables due directly from debtors are allocated to this category. The Group reports these under 

loans and advances to banks and loans and advances to customers. Acquired loans and receivables and securities are also shown in this 

category if they are not traded in an active market (e.g. ABS securities). These are reported under financial assets. 

Measurement is made at amortised cost less impairment. Premiums and discounts are recognised in income over their term as net 

interest income in line with the effective interest method. In the case of re-categorised financial instruments which were previously shown 

as AfS, the net income from re-measurement – previously recognised in the revaluation reserve – is recognised over the term as net interest 

income / is immediately eliminated in the income statement on disposal of the financial assets. 

Held-to-maturity (HtM) 

As of this financial year, bonds and other fixed-interest securities which have a fixed duration and are held until the maturity date are 

reported in this category for the first time. The intention to hold also includes the ability to hold the securities until maturity. The Group 

reports securities in this category exclusively under financial assets. They only include new business – there were no reclassifications into 

this category. 

They are measured at amortised cost. Premiums and discounts are recognised in income over their term, as are interest payments, 

as net interest income in accordance with the effective interest rate method. 

Financial assets and liabilities recognised at fair value through profit or loss 

Assets and liabilities held for trading (HfT) 

All financial assets and liabilities held for trading purposes are assigned to this sub-category. These are primary financial instruments – 

bonds and other fixed-income securities, shares and other non-fixed-income securities – and trading book derivatives with a positive fair 

value (assets held for trading) on the one hand and obligations from short sales of securities as well as derivative financial instruments 

with negative fair values (liabilities held for trading) on the other. Investment book derivatives are also assigned to assets or liabilities held 

for trading. Derivative financial instruments used in IAS 39 hedge accounting are not assigned to this category. 

Assets and liabilities held for trading including investment book derivatives are reported on the balance sheet under assets and 

liabilities recognised at fair value through profit and loss. They are measured at fair value at each balance sheet date. Gains and losses 

on remeasurement and current interest, commission and dividend payments are recognised under net income from financial instruments 

recognised at fair value through profit or loss. 

126

Financial assets and liabilities designated at fair value (fair value option) 

The Group uses the fair value option and designates selected financial assets and liabilities at fair value. For assets, the fair value option is 

applied to bonds and shares if these are managed on a fair value basis or in order to avoid measurement incongruencies in economic 

hedges (accounting mismatches). The liabilities are securitised debt containing separable embedded derivatives are designated using the 

fair value option. In addition, the fair value option was used for selected securitised liabilities and liability promissory notes if they are hedged 

by derivative transactions but are not suitable for effective IAS 39 hedge accounting and there was therefore an accounting mismatch. 

Financial instruments assigned to this sub-category are recognised at fair value in first-time and subsequent measurement. They are 

also a component of the balance sheet item for financial instruments measured at fair value through profit or loss. Gains and losses on 

remeasurement are taken directly to the corresponding income item. Current interest and dividend payments and commission from these 

financial instruments are reported in net interest and net commission income. 

Financial assets available for sale (AfS) 

This category covers the non-derivative financial assets that are not allocated to any of the above categories. These essentially include 

interest-bearing securities, shares, investments and associated companies not included in consolidation or carried at equity. They are 

reported under financial assets. The Group also assigns loans for which there is an active market to the AfS category. They are reported 

under loans and advances to banks and loans and advances to customers. 

Assets are measured at cost on the date of acquisition. Subsequent measurement is at fair value – with the exception of non-listed 

equity securities. Changes in value that are not impairment are recognised separately in equity (revaluation reserve). On disposal of the 

financial asset, the cumulative net gain or loss on remeasurement recognised in the revaluation reserve is reversed and reported under net 

income from financial assets. In the event of impairment, the revaluation reserve is corrected directly and the impairment amount is taken to 

net income from financial assets. Reversals of impairment on borrowing securities are shown in income and reversals of impairment on 

equity securities are shown in equity. Premiums and discounts are recognised in income over their term – as are interest and dividend payments 

– as net interest income in accordance with the effective interest rate method. 

Other financial liabilities (OL) 

This category includes all primary financial liabilities that are not held for trading or designated at fair value. They are reported in the balance 

sheet as deposits by banks and amounts due to customers, securitised debt, other liabilities and subordinated capital. 

They are measured at amortised cost. Premiums and discounts are recognised in income over their term, as are interest payments, 

as net interest income in accordance with the effective interest rate method. 

7.2 Receivables 


Receivables are broken down into loans and advances to banks and loans and advances to customers. They include mortgage loans, 

public-sector loans, loans secured by real estate liens and other loans – lending business – and receivables from money market business. 

Receivables covered by the detailed agreement with the State of Berlin are allocated to public-sector loans due to the guarantee for these 

loans by the State of Berlin. They are predominantly measured at amortised cost, thereby taking into account any premiums / discounts. 

Any valuation allowances required are reported in the balance sheet item for allowance for losses on loans and advances. A small group of 

receivables are part of the AfS category and are therefore measured at fair value. The fair value is calculated by determining the present 

value of contractually agreed cash flows discounted using a risk-adjusted market interest rate based on the respective partner’s credit rating. 

Projected cash flows (e.g. interest or principal payments, realisation of collateral) are applied for impaired receivables. 

Selected receivables are used in the context of hedge accounting as hedged items in micro fair value hedges. The carrying amounts 

of these receivables are adjusted for the book gain or loss attributable to the hedged risk; this is recognised in net income from hedge 

accounting. 

Premiums and discounts are recognised in net interest income over the term of the related assets in line with the effective interest 

method. Deferred interest on receivables as well as unamortised premiums and discounts are included as part of the receivables balance 

within the relevant balance sheet line item. 

Financial assets voluntarily measured at fair value (fair value option) are not reported under receivables. 

Notes 

127


7.3 Write-downs of receivables 

The Group takes account of the risks from on-balance sheet loans and advances by recognising specific allowances for impairment losses, 

portfolio-based allowances for impairment losses and specific impairment allowances calculated on a portfolio basis. 

Specific allowances for impairment losses 

Significant receivables are considered on a case-by-case basis. If there is an indication of impairment (breach of contract, concessions 

to borrowers on account of financial difficulties, insolvency, other restructuring measures or financial difficulties on the part of the issuer or 

debtor) this is recognised taking the expected default into account. Specific allowances for impairment losses are reversed as soon as 

either the value of the receivable is decreased by inflows, additional collateral is pledged, or the value of the collateral or the credit rating 

of the borrower shows a fundamental and sustained improvement. 

Portfolio-based allowances for impairment losses 

In the case of portfolios of receivables for which no specific allowances for impairment losses have been recognised, portfolio-based 

allowances for impairment losses are recognised for general credit risks (e.g. general economic risks) and transfer risks (valuation allowances 

for country risks). The basis of measurement is the entire portfolio of receivables, less receivables that have already been subject 

to a specific allowance for impairment losses. Corresponding probabilities of default, calculated using ratings and scorings, are applied 

to the basis of measurement. 

Financial instruments which were previously recognised at fair value and are now measured at amortised cost as a result of reclassification 

during the financial year (see note 62), are included in portfolio-based allowances for impairment losses. The methods applied for 

them remain the same following the increased portfolios to be considered. 

Specific impairment allowances calculated on a portfolio basis 

Non-significant receivables with the above indications of impairment and receivables subject to legal uncertainty are combined into narrowly 

defined portfolios and measured as groups of receivables using a standard method. 

If necessary, allowances for off-balance sheet transactions (loan commitments, guarantees, letters of credit, liabilities in relation to 

bills) are accounted for using a provision for risks from loans and advances or included in the portfolio-based allowances for impairment losses. 

Non-collectable receivables are written down directly. Recoveries on loans previously written down are recognised in income. 

Further information can be found in Risk Management. 

7.4 Liabilities 

Financial liabilities are broken down into deposits by banks and amounts due to customers, securitised debt and subordinated capital and 

reported accordingly. Some financial liabilities are also recognised under other equity and liabilities. Financial liabilities are reported at amortised 

cost. Premiums and discounts are recognised in net interest income over the term of the related assets in line with the effective interest 

method. Deferred interest is reported as part of the respective liability in the balance sheet. When buying back own bonds, securitised debt 

is reported as net in the balance sheet. Any gains or losses between the carrying amount and the cost (fair value) on buying back bonds 

are reported under net interest income. 

Selected financial liabilities are designated in the context of hedge accounting as hedged items in micro fair value hedges. The 

carrying amounts of these liabilities are adjusted for the book gain or loss attributable to the hedged risk; this change in value is recognised 

in net income from hedge accounting. 

Financial liabilities voluntarily measured at fair value (fair value option) are not reported under liabilities. 

7.5 Financial instruments recognised at fair value through profit or loss 

This balance sheet item is divided into held for trading financial instruments on the one hand – including financial assets and liabilities held 

for trading and non-trading book derivative transactions – and fair value option financial instruments on the other. Financial instruments in 

this category with positive fair values are reported as financial assets recognised at fair value through profit and loss, those with negative fair 

values are reported as financial liabilities recognised at fair value through profit and loss. 

Derivatives used in hedge accounting are reported separately as positive and negative fair values of hedging derivatives. 

128

7.6 Embedded derivatives 

Embedded derivatives are derivative financial assets or liabilities that are not independent instruments but are components in structured 

financial instruments. These are usually structured products that consist of an interest-bearing host contract not held for trading purposes 

and one or more derivatives. These individual components form an inseparable legal and economic entity. 

In the Group, separable embedded derivatives were identified in structured issues of equity securities as well as structured interest 

rate issues with an inherent credit risk (credit-linked notes). 

If these derivatives are separated, the host contract is assigned to the OL category, measured at amortised cost and reported 

under securitised debt. In contrast, separated derivatives belong in the HfT sub-category, are measured at fair value and reported under 

assets held for trading. Without exception, structured financial instruments containing embedded derivatives and which were added after 

31 December 2005 were designated as financial instruments recognised at fair value through profit or loss. Separation of the components 

is not possible in such cases and instead the entire structured financial instrument is measured at fair value and reported in the balance 

sheet in the appropriate category. 

7.7 Hedge accounting 

The rules of IAS 39 allow the presentation of economic hedges under restrictive conditions. It proposes three concepts for presenting 

hedge accounting. Of these, the Group uses micro fair value hedging and macro cash flow hedging. 

Micro fair value hedge accounting 

In micro fair value hedges, the Group hedges the fair value of financial instruments against fluctuations arising from changes in reference 

interest rates or currencies. Among other things, this affects the Group’s issuing business and fixed-interest securities used in liquidity 

management. Interest rate swaps, currency swaps and interest rate-currency swaps are used in these hedges. 


Hedging derivatives are reported in the balance sheet under positive or negative fair values of derivative hedging instruments 

respectively and measured at fair value. Measurement differences are taken in full to net income from hedge accounting. For L & R / OL 

hedged items, the carrying amount in the balance sheet is adjusted for the change in fair value resulting from hedged (interest rate) risk 

(hedge adjustment). This change in value is recognised in net income from hedge accounting. For AfS hedged items, the hedge adjustment 

is also reported under net income from hedge accounting while the remainder of the change in value – the component not due to the 

hedged interest rate risk – is recognised in equity in the revaluation reserve. 

As this balance sheet treatment is dependent on the effectiveness of micro fair value hedges, the Group performs effectiveness 

tests. It does this using the dollar offset method on a cumulative basis and regression analysis. The fair value changes in the hedging 

instrument (derivative) and the hedged item are compared over all past reporting periods since the inception of the hedge relationship. 

In a prospective effectiveness test, fair values are calculated to the end of the term of the hedging instrument and the hedged item on the 

basis of market data scenarios (+ 100 bp shift) or a critical term match is carried out. 

Macro cash flow hedge accounting 

In a macro cash flow hedge, the Group uses interest rate swaps to hedge against cash flow fluctuations due to variable interest rates on 

loans, securities and liabilities used in asset / liability management. 

All the interest rate derivatives used and designated for this are recognised as positive or negative fair values of hedging instruments 

at fair value. Provided that they do not exceed the hedged items (the effective portion), cumulative changes in value are recognised in equity 

in the revaluation reserve for cash flow hedges. If the total cumulative changes in value of the hedged derivative exceed the total changes 

in value of the hedged item (ineffective portion), the difference is recognised under net trading income. 

The general accounting rules do not change for the hedged items. 

The change in fair value of cash flows method is used to test the effectiveness of macro cash flow hedges. In the prospective test, 

expected cash flows from the hedging instrument and the hedged item are compared for the corresponding maturity bands. Retrospectively, 

the Group checks that effectiveness is within a range of 80 % – 125 % using the hedge ratio of actual cash flows from the hedging 

instrument and the hedged item. 

Notes 

129


7.8 Financial assets 

Financial assets include all bonds and other fixed-income securities, shares and other non-fixed-income securities, investments and investments 

in associates (not measured at equity) and investments in unconsolidated subsidiaries that are not held for trading. These assets 

are generally in the AfS category. In addition, financial assets include bonds and asset-backed securities categorised as loans and receivables 

that are not traded on an active market. Furthermore, bonds and other fixed-interest securities are recognised as financial assets in the 

HtM category. 

AfS assets are measured at fair value. The changes in value are recognised in the revaluation reserve in equity until disposal. If the 

fair value of equity securities cannot be reliably measured, they are carried at cost. Bonds and asset-backed securities are measured at 

amortised cost as long as they are categorised as L & R or HtM. 

All financial instruments received are regularly tested for material permanent impairment. If there is any corresponding impairment, 

the amount is recognised in the income statement in net income from financial assets. For debt securities, the impairment loss is reversed 

to amortised cost, also in net income from financial assets. Impairment losses on equity securities cannot be reversed to the income 

statement when the reason for impairment ceases to exist; instead they are taken directly to the revaluation reserve in equity and eliminated 

in the income statement upon disposal, in net income from financial assets. The reversal of impairment is generally not permitted for equity 

securities measured at amortised cost. 

7.9 Securities repurchase and securities lending agreements 

Repurchase agreements (repo agreements) 

Repo agreements are a combination of regular purchases or regular sales of securities with a simultaneous agreement to forward sale or 

repurchase with the same counterparty. The securities sold under repo agreements (regular way sales) continue to be recognised and 

measured as securities in the consolidated balance sheet. The liquidity from the repo agreement is recognised under deposits by banks 

or amounts due to customers. Agreed interest payments are recognised as interest expenses. 

In reverse repo agreements, the securities received (regular way purchases) are not recognised by the Group. The resulting out flows 

of liquidity are recognised as loans and advances to banks or customers and measured accordingly. Agreed interest is recognised as 

interest income. 

Securities lending transactions 

Securities lending agreements are entered into with banks and with customers. The securities lent by Landesbank Berlin are reported under 

securities, whereas the securities lent to Landesbank Berlin are not recognised in the balance sheet. Cash collateral provided for securities 

lent by Landesbank Berlin is reported under receivables, whereas collateral received for securities lent to Landesbank Berlin is reported 

under liabilities. The income and expense resulting from securities lending agreements is included in the income statement as net interest 

income. 

7.10 Financial guarantees 

Financial guarantees are agreements whereby the Bank, as the guarantor, is under obligation to make certain payments to compensate 

the guaranteed party for losses arising because a certain obligor does not meet its payment obligations as per the original or amended 

conditions of a debt instrument on time. Financial guarantees can include bank guarantees, credit guarantees and letters of credit. 

The Bank measures financial guarantees at fair value on first-time recognition. The fair value of financial guarantees issued as 

part of a transaction conforming to market terms is equal to the premium for granting the guarantee (IAS 39.43 in conjunction with 

IAS 39.AG 4 (a)). The net method is used. If payment of the premium to the guarantor is spread over the term of the financial guarantee, 

it is carried at nil and the respective premium payment is recognised. Financial guarantees against one-off payments are deferred pro 

rata over the full term of the financial guarantee. 

The financial guarantee is recognised at the higher of measurement in line with IAS 37 and the value calculated in first-time 

measurement amortised under IAS 18 at subsequent balance sheet dates. 

130

8 Cash 

Public-sector debt instruments are measured at fair value. All other items (cash in hand and credit at central banks) are reported at 

nominal amount. 

9 Investments carried at equity 

Investments in associates and joint ventures carried at equity are reported in this category. 

Associates as defined by IAS 28 are investments over which an investor has the power to exert significant influence without there 

being joint control. Joint ventures as defined by IAS 31 are contractual agreements whereby two or more parties undertake an economic 

activity which is subject to joint control. 

31.12.2007 Additions Disposals 31.12.2008 

Joint ventures (IAS 31) – carried at equity 1 0 0 1 

Associated companies (IAS 28) – carried at equity 3 0 1 2 

Special purpose and publicly issued funds – carried at equity 2 3 3 2 

Total 6 3 4 5 

Investments carried at equity are initially reported at cost and, in subsequent periods, their carrying amount changes in line with the investor’s 

share in its net profit or loss for the period. Changes in the equity of the associate or joint venture also result in changes in its carrying 

amount in equity. Distributions by the investment company are recognised in equity and reduce the carrying amount of the investment. 

Income from transactions with companies carried at equity are eliminated pro rata. 

10 Intangible assets 

An intangible asset is an identifiable non-monetary asset without physical substance held for use in the supply of services or for administrative 

purposes. Intangible assets are divided into acquired and internally generated intangible assets. In particular, intangible assets 

include software, rights, licenses and goodwill. The straight-line amortisation period for such assets – with the exception of goodwill – is 

between three and five years. 

Intangible assets are reported at historical cost net of straight-line depreciation. Internally generated intangible assets can only 

be capitalised if certain conditions of IAS 38.21 and IAS 38.57 are met. 

11 Property, plant and equipment 


Property, plant and equipment are reported at historical cost net of straight-line depreciation. 

The depreciation period is calculated on the basis of the economic life. Any legal or contractual restrictions are also taken into 

consideration. Property, plant and equipment is depreciated on a straight-line basis to a residual value of € 1. If there are indications of 

impairment in excess of depreciation, impairment tests are carried out in accordance with IAS 36 and any necessary impairment losses are 

recognised in the income statement. If the reasons for impairment cease to apply, the impairment is reversed up to the maximum of the 

amortised cost. 

Notes 

131


Depreciation period in years 

Owner-occupied buildings and other property, plant and equipment are written down on a straight-line basis over the following periods in 

line with their type of use: 

Type of use Economic life 

Residential and commercial properties (< 10 % commercial share) 60 – 80 years 

Residential and commercial properties (> 10 % commercial share) 50 – 70 years 

Office buildings, office and commercial properties 40 – 60 years 

Car parks, underground garages 40 – 50 years 

Operating and office equipment 7 – 25 years 

Acquired computer systems 3 – 8 years 

The economic useful life of finance lease items is based on the term of the lease agreement, taking into account residual values. 

Gains and losses on the disposal of property, plant and equipment are reported under other operating income. Impairment and 

write-downs are reported under administrative expenses. 

12 Impairment of property, plant and equipment and intangible assets including goodwill 

Property, plant and equipment and intangible assets, including goodwill, are tested for impairment at every balance sheet date to determine 

whether there are indications of impairment. If such indications exist, the recoverable amount of the asset is calculated in order to determine 

the amount of the corresponding impairment loss. The recoverable amount of an asset is the greater of the fair value net of selling costs 

and the value in use. 

Estimates relating to factors such as cause, date and amount of impairment are also made in calculating the impairment of property, 

plant and equipment and intangible assets. The identification of indications of impairment, estimates of future cash flows and the calculation 

of the fair values of assets (or groups of assets) entail material estimates that must be made by the management with regard to identifying 

and reviewing indications of impairment, expected cash flows, the applicable discount rates, the respective useful lives and the remaining 

values. 

Impairment is based on a large number of factors, such as changes in current competitive conditions, expectations of growth, 

increased cost of capital, changes in the future availability of financing, technological obsolescence, discontinuance of services, current 

replacement costs and other changes in circumstances that indicate impairment. The recoverable amount and the fair values are typically 

determined using a discounted cash flow method which incorporates reasonable market participant assumptions. 

Recognised goodwill is not amortised but checked for impairment. An impairment test is conducted once a year as of the balance 

sheet date and whenever there are indications of impairment. 

If the recoverable amount of an asset is less than its carrying amount, the asset is written down to the recoverable amount. The 

impairment loss is recognised immediately in the income statement; for intangible assets (not including goodwill) this is reported under 

administrative expenses, while for goodwill it is reported under other operating income. 

If impairment losses are reversed in subsequent periods, the carrying amount of the asset is adjusted to equal the new recoverable 

amount. This is restricted, however, such that the carrying amount of the asset cannot exceed what its carrying value would have been had 

no impairment taken place. The reversal of impairment is taken directly to profit and loss and is reported in other operating income. Goodwill 

impairment cannot be reversed. 

132

13 Leases 

In accordance with IAS 17, leases are assessed and recognised based on consideration of whether the risks and rewards of ownership of 

the leased item are borne by the lessor or by the lessee. 

A lease is classified as a finance lease if all the risks and rewards of ownership are substantially transferred to the lessee. All other 

leases are classified as operating leases. Leases are classified at their inception. 

Group as lessor (operating leases) 

If leases are operated by Group companies, economic ownership of the leased item remains with the Group company. The leased items are 

reported in the consolidated balance sheet as property, plant and equipment and under investment property. They are recognised at cost 

less depreciation over the useful life or impairment losses. Unless otherwise indicated for individual leases, proceeds from leases are recognised 

on a straight-line basis over the term of the lease and are included in the income statement within other operating income. 

Group as lessee (operating leases) 

Economic ownership of assets leased under an operating lease remains with the lessor. 

Lease instalments paid for operating leases are reported in full as an expense in the income statement. The expense is recognised 

on a straight-line basis over the term of the contract. As with rental payments, lease instalments are calculated on a regular basis in line 

with the pattern of benefits received from the lease agreement and reported in the income statement under administrative expenses. 

Group as lessor (finance leases) 

As of the balance sheet date, there were no finance leases in which the Group is the lessor. 

Group as lessee (finance leases) 

Assets held under finance leases are recognised as assets of the Group at the lower of fair value and the present value of the minimum 

lease payments at the inception of the lease. Both the asset value (leased item) and the associated liability (present value of minimum lease 

payments) are reported in its balance sheet. 

The leased item is reported in the balance sheet under either property, plant and equipment or investment property and the associated 

liability is shown under amounts due to customers or deposits by banks. 

The lease instalments to be paid by the Group are divided into a repayment portion (which has no impact on the income statement 

when paid as it simply reduces the lease liability) and an interest expense portion (which is recognised directly in the income statement). The 

lease payments are divided between interest expense and a reduction of the lease liability such that the remaining liability incurs a constant 

rate of interest. Interest expense is recognised directly in the income statement. The repayment portion included in the lease instalments is 

deducted from lease liabilities. 

The leased items reported as assets are depreciated in the same manner as assets acquired by the Group itself. The depreciation 

is disclosed in the same manner as depreciation of non-leased property, plant and equipment or investment property. 

14 Investment property 

In accordance with IAS 40, investment property refers to property that is held to earn rental income or for capital appreciation. It is not 

intended to use these properties to render services or for the entity’s own administrative purposes. In order to distinguish investment 

property from owner-occupied property, the following characteristics have been defined: 

Investment property generates cash flows that are largely independent of other assets held by the enterprise. 

Mixed-use properties in which own use accounts for more than 5 % of total space are classified and reported as owner-occupied property, 

plant and equipment in accordance with IAS 16. 


Notes 

133


The Group has no property held for sale in the ordinary course of business (IAS 2). 

In line with the cost model, investment property is carried at historical cost and reported in the balance sheet as a separate item. 

It is shown net of straight-line depreciation; it is depreciated to a residual value of € 1. The depreciation period is calculated on the basis of 

the economic life. Any agreed legal or contractual restrictions are also taken into consideration. Any impairment in excess of depreciation 

is recognised. If the reasons for impairment cease to apply, the impairment is reversed up to the maximum of the amortised cost. 

to the entity. 

Costs incurred subsequent to initial recognition are capitalised when it is probable that additional future economic benefits will flow 

All income and expenses resulting from investment property are recognised under other operating income. 

Investment property is depreciated on a straight-line basis over the following periods: 

Type of use Economic life 

Residential and commercial properties (< 10 % commercial share) 60 – 80 years 

Residential and commercial properties (> 10 % commercial share) 50 – 70 years 

Office buildings, office and commercial properties 40 – 60 years 

Car parks, underground garages 40 – 50 years 

The economic useful life of finance lease items is based on the term of the lease agreement, taking into account residual values. 

There are no restrictions on the usability or disposal of investment property. 

15 Non-current assets and groups of assets held for sale 

Non-current assets and groups of assets held for sale are recognised at the lower of the carrying amount and the fair value less costs of 

disposal. The present value of the costs of disposal is used if the disposal will take place after more than twelve months. 

Assets and groups of assets held for sale are classified as held for sale if the intention is to dispose of them rather than for them 

to continue in use. This condition is satisfied when it is highly likely that a planned disposal will take place and when the non-current asset 

or group of assets held for sale is available for immediate disposal in its current condition. 

No adjustments or reclassifications are made to prior periods in respect of non-current assets and groups of assets held for sale. 

Depreciation of non-current assets and groups of assets held for sale ceases from the date of reclassification. Impairment is only recognised 

on these assets if the carrying amount exceeds the fair value less costs to sell. If the fair value less costs to sell later rises again, the 

previous impairment is reversed. The reversal is limited to the impairment previously recognised on the assets concerned. The liabilities 

assigned to these assets are measured in the amount of the reportable payment obligations. 

Income from the reversal of write-downs on long-term assets and disposal groups available for sale are recognised under other 

operating income. 

134

16 Provisions 

Provisions are recognised when the Group has present obligations that arise from past events, which are expected to result in an outflow 

of economic resources that can be reliably estimated. The timing or the amount of the obligation are uncertain. Owing to the uncertainties 

associated with this assessment, actual obligations may deviate from the original estimates and thereby from the provision amount. In addition, 

significant estimates are involved in the determination of provisions related to taxes and litigation risks. 

Provisions are recognised for pensions and similar obligations in line with IAS 19. 

Other provisions are only recognised for uncertain obligations to third parties and onerous contracts in accordance with IAS 37 when utilisation 

of the provision is likely and the amount of utilisation can be reliably determined. 

Provisions with a term of more than one year are discounted using a rate of interest which is uniform across the Group and accrue 

interest in the income statement in subsequent periods. 

The recognition and measurement of provisions in connection with pending legal disputes are largely associated with appraisals by 

the Group. Thus, the assessment of the probability that pending proceedings will be successful or will result in a liability or the quantification 

of the possible amount of the payment obligation is based on an appraisal of the respective situation. Provisions resulting from general legal 

disputes with other parties are not disclosed as the publication of this information could damage the Group’s standing in respect of other 

parties in ongoing litigation (IAS 37.92). 

The actuarial measurement of pension provisions is based on the projected unit credit method (PUC) for defined benefit retirement 

plans set out in IAS 19, taking into account certain demographic and economic assumptions. Using this method, the portfolio-specific 

parameters for measurement are based on the earliest possible retirement age under the Act on the Adjustment of the Standard Age Limit 

(RVAGAnpG), age-dependent fluctuation, and probabilities of death and invalidity according to the 2005G Heubeck mortality tables. In 

establishing the economic parameters, both the interest rate and other company-specific trend assumptions concerning the development 

of salaries and pensions, as well as other legal bases for calculation (e.g. income threshold in the German pension scheme), are taken into 

consideration. 

The expected long-term development of the available plan assets is determined in line with the fund structure, also taking into 

account historic data. 

17 Income taxes 


Deferred taxes are recognised for all temporary differences between IFRS valuations and tax values (balance sheet approach). Temporary 

differences arise between these differing valuations which mean that income taxes will be either higher or lower in the future. Deferred taxes 

on tax losses carried forward are recognised at the amount at which they can realistically be expected to be realised within a planning 

period of five years – in line with minimum taxation and taking into account a security discount for years two to five. This applies when 

sufficient future taxable profit is generated; the company’s current earnings planning is used to judge this. Deferred tax assets and liabilities 

are measured at the tax rates that apply at the balance sheet date. 

Expenses and income from deferred taxes are reported in the income statement together with from current tax expenses and 

income as “Income taxes”. Depending on the accounting treatment of items to which the deferred taxes relate, deferred tax assets and 

liabilities are recognised and written down either in the income statement under income taxes or through equity under the appropriate 

equity item. 

Current tax assets result from advance tax payments and eligible capital gains taxes if they exceed the current tax expense calculated 

by the respective company for the relevant assessment year and refund claims in line with past tax assessment notices. Tax provisions 

have been recognised for expected tax liabilities of previous years in line with the advance payments made and eligible capital gains taxes 

using the calculated tax results of the companies and for audit risks. 

Current and deferred tax assets and liabilities are each reported separately in the balance sheet. 

Notes 

135


18 Subordinated capital 

Subordinated capital is capital transferred to the Group that qualifies as a financial obligation on account of the right to restitution of the 

respective capital provider and has a temporary liability function. 

Subordinated capital consists of participations by dormant partners (Article 10 (4) KWG) and subordinated obligations (Article 10 (5a) 

KWG). Subordinated capital is recognised at amortised cost. Premiums and discounts are recognised in income over their term in line with 

the effective interest method and included as part of net interest income in the income statement. Subordinated capital used for hedge 

accounting purposes is adjusted for the gains or losses attributable to the hedged risk. 

19 Shareholders’ equity 

Composition of shareholders‘ equity 

The equity of Landesbank Berlin Holding AG consists of issued capital (share capital) in the form of bearer shares and various reserves. 

Issued capital 

The issued capital (share capital) of Landesbank Berlin Holding AG consists of no-par-value bearer shares with a notional value of € 2.56 per 

share. The issued capital amounts to € 2,554 million. There are no preferential rights or restrictions on the distribution of dividends at 

Landesbank Berlin Holding AG. All issued shares are fully paid up. 

Treasury shares 

The Group did not hold any treasury shares in the financial year. 

Capital reserves 

Premiums on the issuance of shares are reported under capital reserves. Capital reserves also include amounts generated on the issuance 

of bonds for conversion and option rights for the acquisition of shares. 

Retained earnings 

Retained earnings consist of the legal reserves and other reserves. In accordance with national law, mandatory reserves are recognised 

in the legal reserves; the amounts appropriated to the legal reserves are subject to a prohibition on distribution in the single-entity financial 

statements of the Holding. The total amount of retained earnings reported in the balance sheet consists of € 13 million (previous year: 

€ 13 million) of legal reserves (German Stock Corporation Act); € – 12 million (previous year: € – 41 million) of reserves for the measurement 

of pensions; and € – 94 million (previous year: € 14 million) of other retained earnings. 

Currency translation reserve 

The currency translation reserves contains gains and losses on translation arising from capital consolidation. This includes currency 

translation differences from the consolidation of subsidiaries and associates. 

Revaluation reserve 

The revaluation reserve includes the gain or loss on revaluation of AfS securities consisting of interest-bearing and dividend-oriented securities 

and investments, as well as loans and advances to banks and customers at fair value. Gains and losses are only recognised in the income 

statement when the asset has been sold or written off. This equity items also includes the net gains or losses on revaluation of macro cash 

flow hedging instruments in effective hedges. € – 130 million (previous year: € – 32 million) was recognised for this in the reporting period, 

and € – 5 million (previous year: € 0 million) was derecognised and reported in net interest income. 

The revaluation reserve also includes deferred taxes that are reported in equity (e.g. those on AfS securities and cash flow hedge 

derivatives). 

136

Minimum capital requirements 

The composition of the internal aggregate risk cover at the LBB Holding Group was redefined in 2008 and is now defined on the basis of 

equity according to IFRS plus 70 % of subordinated capital. As of 31 December 2008, the Landesbank Berlin Holding Group has aggregate 

risk cover of € 4,200 million; regulatory capital resources amounted to € 4,511 million at the same date. 

By way of the acquisition of Landesbank Berlin Holding AG by Erwerbsgesellschaft der S-Finanzgruppe mbH & Co. KG der Regionalverbandsgesellschaft 

mbH (RVG, general partner) and DSGV ö.K. (limited partner), the Holding is owned by the RVG Group in terms of 

regulatory requirements. Regulatory disclosures are issued for RVG. Please also see the values at the level of the Landesbank Berlin 

Holding Group. 

The Group issues a statement in accordance with the Solvency Ordinance (SolvV) on a regular basis. At the level of RVG, the overall 

capital ratio as of the end of the year was 16.41 % with a Tier 1 capital ratio of 13.74 % after adoption of the financial statements. Both 

regulatory minimum ratios were maintained at all times at the level of the Group and the individual banks. 

Capital management 

The primary task of the Capital Management Committee, which was established in 2007, is to coordinate Group-wide measures to ensure 

a long-term, optimised capital structure in line with internal and external conditions. Detailed information on capital management can be 

found in the section on overall risk management in the risk report. 

Dividend payment 

In 2008, a dividend of € 0.10 per share was distributed to the shareholders. This corresponds to a total distribution amount of € 100 million. 

20 Off-balance sheet transactions 


Trust Activities 

Trust activities which involve the holding or placing of assets in the Bank’s name but on behalf of third parties are not recognised under 

IFRS as they represent off-balance sheet transactions. Commission payments for such activities are included in the income statement in 

net commission income. 

Contingent liabilities 

Contingent liabilities are obligations that arise from past events and whose existence will be confirmed only by the occurrence or non-occurrence 

of one or more uncertain future events not wholly within the control of the Group. In banking business these include guarantee liabilities 

and irrevocable loans commitments. 

This also includes current obligations that arise from past events but that cannot be recognised in the balance sheet as it is not 

probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or the amount of the obligation 

cannot be measured with sufficient reliability. 

Commission payments for the above activities are included in the income statement in net commission income. 

Notes 

137


21 Net interest income 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Interest income 

Interest income from receivables 3,578 3,205 12 

Interest income from financial assets 2,092 1,868 12 

Similar (interest) income from financial investments 46 25 84 

Other interest income 1,203 1,112 8 

Total interest income 6,919 6,210 11 

Interest expenses 

Interest expenses for liabilities 3,998 3,807 5 

Interest expenses for subordinated liabilities 20 63 – 68 

Similar (interest) expenses from financial assets 0 2 – 100 

Other interest expenses 1,654 1,523 9 

Total interest expenses 5,672 5,395 5 


Other interest income / expenses include income of € 188 million (previous year: € 185 million) and expenses of € 659 million (previous year: 

€ 632 million) resulting from financial instruments designated at fair value through profit or loss (FVO). They also include interest income 

of € 1,015 million (previous year: € 927 million) and interest expenses of € 995 million (previous year: € 891 million) from hedge accounting. 

Interest income also includes income from financial instruments subject to valuation adjustments in the amount of € 69 million 

(previous year € 109 million) (unwinding effects). The unwinding effects result from the adjustment of present values as at the balance sheet 

date, assuming no change in future cash flows. The original effective interest rate of the respective financial instrument is used to determine 

the present value. 

22 Allowance for losses on loans and advances 

Risk provisioning in the consolidated income statement is as follows: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 1) 

Change 

in % 

Income from the reversal of write-downs on receivables and from the 

reversal of provisions in the lending business 274 449 – 39 

Depreciation and amortisation expense and write-downs of receivables 

and additions to provisions in the lending business 337 381 – 12 

Total 63 – 68 > 100 


Risk provisioning results from receivables in the loans and receivables category. 

Risk provisioning in the lending business is determined on the basis of the structure and quality of lending portfolios and general 

economic factors. 

138

23 Net commission income 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Fee and commission income 






Other fee and commission income 15 13 15 

Total fee and commission income 439 429 2 

Fee and commission expense 






Other fee and commission expense 5 4 25 

Total fee and commission expense 137 132 4 


Net commission income includes commission income of € 193 million (previous year: € 223 million) and expenses of € 61 million (previous 

year: € 63 million) resulting from financial instruments designated at fair value through profit or loss (FVO). 

Commission income from trust activities amounts to € 1 million (previous year: € 1 million) and is included in other commission 

income. Commission expenses from trust activities were not incurred in either 2008 or 2007. 

24 Net income from hedge accounting 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Net income from hedged underlyings 83 – 67 > 100 

Net income from derivatives used as hedge accounting instruments – 101 70 < – 100 

Total – 18 3 < – 100 

This includes net income from the remeasurement of hedged items and hedging instruments in micro fair value hedges that meet the 

IAS 39 criteria for hedge accounting. 

Owing to the model, there is no portion of the change in value of derivatives in macro cash flow hedges resulting from macro cash 

flow hedges that can be designated as ineffective. 

In addition, the Group does not use hedge accounting. 


Notes 

139


25 Net gain from financial instruments recognised at fair value through profit or loss 

Net income from fair value measurement through profit or loss breaks down into: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Income from financial instruments 

classified as trading (held-for-trading) 102 – 373 > 100 

designated at fair value (fair value option) – 446 328 < – 100 

Total – 344 – 45 < – 100 

These components can be broken down as follows: 

Net income from the trading category (HfT) 

Net income from the trading category (HfT) is composed of earnings contributions from securities and trading book derivatives as well as 

non-trading book derivatives. In addition to measurement and disposal effects, it also includes interest income and expenses, commission 

income and expenses and dividend income. 

Net income from financial instruments designated at fair value (FVO) 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Net income from remeasurement of assets – 357 161 < – 100 

Net income from remeasurement of equity and liabilities – 89 167 < – 100 

Total – 446 328 < – 100 

Measurement and disposal effects are included in net income from financial instruments designated at fair value (FVO). 

26 Net income from financial assets 

Net income from financial investments contains gains / losses on the disposal and remeasurement of financial assets. 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Net gain on disposal of financial assets – 14 37 < – 100 

Income from the disposal of financial assets 19 59 – 68 

Expenses from the disposal of financial assets 33 22 50 

Net income from the remeasurement of financial assets – 294 – 41 < – 100 

Income from reversals of write-downs on financial assets 12 3 > 100 

Expenses from write-downs on financial assets 306 44 > 100 

Total – 308 – 4 < – 100 

€ – 288 million (previous year: € – 6 million) of net income from financial assets related to AfS financial assets and € – 20 million (previous 

year: € 2 million) related to L & R assets. 

Of the expenses from write-downs on financial assets, € 20 million (previous year: € 2 million) related to bonds and other fixed-interest 

securities (L & R), € 286 million (previous year: € 42 million) to bonds and other fixed-interest and some non-interest-bearing securities (AfS), 

and € – 0.1 million to financial assets in the HtM category. 

140

Net income by category 

The so-called “net income” is calculated for each category of financial instruments. The net income for the L & R, AfS, HtM and OL categories 

include the earnings effects of measurement on the one hand (write-downs – recognised as risk provisioning – and impairment and reversals) 

including the measurement of hedge accounting and disposals on the other. Net income breaks down as follows: 

Net income for the L & R category amounts to € 538 million (previous year: € – 71 million). This includes the share of income from financial 

assets relating to L & R instruments, the recognised (or reversed) risk provisioning, measurement effects from hedged L & R items and a 

portion of income from receivables sold, which is included in other operating income. 

The net income for the AfS category consists of the AfS share of income from financial assets and measurement effects of hedged AfS 

items and amounts to € – 35 million (previous year: € – 125 million). This includes € – 288 million (previous year: € – 6 million) which was 

taken from the revaluation reserve (AfS) and recognised in income. In addition, € – 766 million (previous year: € – 434 million) was transferred 

directly to equity in this reserve. Including deferred taxes, the total effect on the revaluation reserve amounted to € – 478 million 

(see statement of changes in consolidated equity). 

The net income of the HtM category includes only the portion of net income from financial assets relating to HtM instruments and 

amounts to € – 0.1 million. 

The net income of the OL category includes the earnings effects of buying back own promissory note loans and the measurement effects 

of hedged OL transactions and amounts to € – 789 million (previous year: € 161 million). 

27 Net income from investments carried at equity 

This item consists of income from associates and joint ventures carried at equity. 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Net income from remeasurement – 23 9 < – 100 

Current income 5 3 67 

Total – 18 12 < – 100 

28 Other operating income 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Net income from financial assets, property, plant and equipment and intangible assets 29 18 61 

Net income from investment property 7 7 0 

Net income from promissory note loans 1 – 17 > 100 

Non-bank revenue 35 33 6 

IT income 13 12 8 

Deconsolidation effects – 5 4 < – 100 

Other tax expenses 5 – 4 > 100 

Miscellaneous other operating income 64 58 10 

Total 139 119 17 

Net income from promissory note loans includes net gains on the disposal of L & R promissory note loans. Income from buying back own 

promissory note loans is also recognised here. 

The “other tax expenses” item includes taxes on assets and transactions. 

Other operating income is composed of items that cannot be allocated to any other income statement account. 


Notes 

141


The Group as lessor (operating leases) 

Other operating income and expenses includes operating lease income. Future minimum lease payments relate to rental income from land 

and buildings. 

The gross carrying amount of leased items is € 36 million. 

Total future minimum lease payments from non-cancellable operating leases breaks down as follows: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Remaining term 

less than one year 1 4 – 75 

between one and five years 3 4 – 25 

more than five years 0 1 – 100 

Total 4 9 – 56 

29 Administrative expenses 

The Group’s administrative expenses are composed of staff costs, depreciation of property, plant and equipment and amortisation of 

intangible assets (not including goodwill) and other administrative expenses. These expenses break down as follows: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Staff costs 492 511 – 4 

Depreciation of property, plant and equipment and amortisation of intangible assets 62 66 – 6 

Other administrative expenses 386 388 – 1 

Total 940 965 – 3 

Staff costs: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Wages and salaries 365 389 – 6 

Social security contributions 56 60 – 7 

Expenses for pensions and other benefits 71 62 15 

Total 492 511 – 4 

Depreciation of property, plant and equipment and amortisation of intangible assets (not including goodwill): 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Depreciation of property, plant and equipment 37 37 0 

Depreciation 37 37 0 

Impairment 0 0 0 

Amortisation of intangible assets 25 29 – 14 

Depreciation 25 29 – 14 

Impairment 0 0 0 

Total 62 66 – 6 

142

Other administrative expenses: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Office space costs 63 69 – 9 

Operating and office equipment 4 4 0 

IT costs 158 153 3 

Advertising and marketing 24 28 – 14 

Business operating costs 66 60 10 

Consulting, audits and contributions 51 57 – 11 

Staff-related operating costs 18 15 20 

Miscellaneous 2 2 0 

Total 386 388 – 1 

The fees paid to auditors in financial year 2008 are composed as follows: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

for audits 6 5 20 

for other assurance and valuation services 2 3 – 33 

Total 8 8 0 

Other assurance and valuation services mainly relate to assurance services for projects. 

The Group as lessee (operating leases) 

Operating leases mainly relate to branch offices and IT systems. Part of the lease payments for branch offices are made depending on 

the general rental index, and part of those for IT systems are made depending on utilisation. There are also extension options for these 

rental agreements. 

Future minimum lease payments from non-cancellable operating leases break down as follows: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Remaining term 

less than one year 23 23 0 


more than five years 27 21 29 

Total 120 115 4 

Total future minimum payments from subleases amount to € 1 million. 

Minimum lease payments in the financial year amounted to € 32 million (previous year: € 39 million), and contingent rent amounted 

to € 1 million (previous year: € 1 million). No payments were incurred for subleases in 2008 or the previous year. 


Notes 

143


30 Restructuring expenditure and income (net) 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 

Change 

in % 

Restructuring income 18 11 64 

Restructuring expenditure 6 5 20 

Total 12 6 100 

31 Income tax expense 

The Landesbank Berlin Holding Group consists of two groups of integrated companies and companies that do not belong to any of these 

tax groups. 

Our foreign subsidiaries and branches are taxed in the respective country in which they are based. Dividends flowing to Landesbank 

Berlin AG are essentially tax-free in Germany. The profits from foreign branches are fully tax-free in Germany. 

Income tax expenses break down as follows: 


1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 1) 

Change 

in % 

Current taxes – 28 – 10 < – 100 

Deferred taxes 8 86 – 91 

Total – 20 76 < – 100 


Current tax income is based on extraordinary income totalling € 60 million, which is offset primarily by expenses from current income 

tax expenses totalling € 18 million for the Holding and € 13 million for Berlin Hyp. 

The reversal of temporary differences led to the deferred tax expense. This is largely offset by an opposing effect of almost the 

same amount resulting from additional recognition of deferred tax assets on tax loss carryforwards. 

The following statement of reconciliation shows the differences between the expected and reported tax expense in the Group: 

in € million 2008 2007 

Profit before income taxes in accordance with IFRS 9 306 

Consolidated income tax rate (%) 30.2 % 38.9 % 

Expected income tax expense 3 119 

1. Tax-free income – 29 – 24 

2. Non-deductible expenses 68 39 

3. Differences in the basis of calculation of trade tax 5 10 

4. Changes in tax rates 4 1 

5. (Non-)recognition and measurement of deferred tax assets – 12 – 241 

6. Effects of changes in tax rates 0 220 

7. Non-deductible income or withholding tax 2 2 

8. Prior-period effects – 60 – 48 

9. Other – 1 – 2 

Reported income tax expense / tax income (–) – 20 76 

Effective tax rate – 222.2 % 24.8 % 

144

As a result of the German Business Tax Reform Act of 14 August 2007, new income tax rates are applicable in Germany as of 2008. 

Deferred taxes for the previous year were already calculated using these new tax rates. 

The consolidated rate of income tax selected as the basis for the statement of reconciliation lies at 30.175 % and is composed 

of the corporation tax rate of 15 % applicable in Germany, plus the solidarity surcharge of 5.5 % and the trade tax rate of 14.35 %. As 

the Group companies are primarily based in Berlin, trade tax was calculated on the basis of the Berlin assessment rate of 410 %. 

However, deferred taxes were calculated on the basis of the income tax rates applicable to the respective companies. 

The effects of tax-free income primarily results from income that is tax-free income under Article 8b (1) and (2) KStG. 

The additional charges for non-deductible expenses primarily include the non-deductible expenses in accordance with Articles 8a 

and 8b (2) and (3) KStG, and guarantee commission to be paid to the State of Berlin on the basis of the risk shielding assumed under 

the detailed agreement. 

The foreign tax rates are between 12 % and 30 %. The tax effect due to the difference from the consolidated tax rate is shown in 

the statement of reconciliation under changes in tax rates. 

The item (non-)recognition and valuation of deferred tax assets primarily relates to tax effects in connection with the additional 

capitalisation of deferred taxes on loss carryforwards on account of improved medium-term planning results. 

Deferred taxes totalling € 358 million (previous year: € 294 million) were recognised for corporation tax loss carryforwards (including 

foreign loss carryforwards) of € 1,358 million (previous year: € 1,132 million) and for trade tax loss carryforwards of € 764 million (previous 

year: € 766 million). Deferred tax assets of € 32 million (previous year: € 23 million) were reversed as a result of the utilisation of loss carryfor- 

wards. As in the previous year, this affected LBB Holding AG and Berlin Hyp and in this year it also affected HILOG. No deferred taxes were 

recognised for corporation tax loss carryforwards (including foreign losses) of € 2,107 million (previous year: € 2,307 million) and for trade 

tax loss carryforwards of € 2,496 million (previous year: € 2,723 million). There are no limits on the use of losses carried forward. 

The recognisability and value of deferred tax assets on loss carryforwards and deductible temporary differences are examined on 

the basis of a forecast of future taxable income. This forecast takes into account regulations on off-balance sheet tax reduction and addition 

(including Article 8b KStG, tax-free permanent establishment results and Article 8 GewStG in particular). The deferred tax assets recognised 

in the Holding Group are covered by future positive tax results. No write-downs of deferred taxes were required in the period under review. 

The revaluation reserve for deferred taxes amounted to € 207 million (previous year: € 77 million). € 171 million of this (previous year: 

€ 82 million) related to the AfS reserve and € 36 million (previous year: € – 5 million) to the reserve for cash flow hedges. 

The temporary differences in accordance with IAS 12.81 (f) for which no deferred tax liabilities were recognised amount to € 1 million 


The nominal amount of the corporation tax credit in line with Article 37 (2) KStG was € 3.1 million (previous year: € 3.3 million). The 

remaining amount will be paid out in eight equal annual instalments over the period up until 2017. The final EK02 amount is € 0 million. 

32 Earnings per share 

1.1. – 31.12. 

2008 

1.1. – 31.12. 

2007 1) 

Change 

in % 

Consolidated net profit for the period of the shareholders of the parent company (€ million) 17 211 – 92 

Average number of ordinary shares outstanding 999,327,870 999,327,870 0 

Earnings per share (€) 0.02 0.21 – 92 



There were no conversion or option rights outstanding in the financial year or as at 31 December 2008. The diluted earnings per share are 

therefore the same as the basic earnings per share. 

Notes 

145


33 Cash 

The cash item breaks down as follows: 


31.12.2008 31.12.2007 Change 

in % 

Cash in hand 455 503 – 10 

Central bank balances 1,272 483 > 100 

Total 1,727 986 75 

All assets are available at short notice. 

€ 1,246 million of central bank balances relates to the balance at Deutsche Bundesbank (previous year: € 451 million). 

As at the balance sheet date, the required minimum reserve amounted to € 563 million (previous year: € 495 million). 

146

34 Loans and advances to banks 

Loans and advances to banks are as follows: 


31.12.2008 31.12.2007 Change 

in % 

L & R 

Term and demand deposits 14,839 16,751 – 11 

payable on demand 2,154 2,936 – 27 

up to three months 7,098 9,824 – 28 

between three months and one year 5,587 3,879 44 



Loans 1,894 2,362 – 20 

up to three months 323 604 – 47 

between three months and one year 529 717 – 26 

between one and five years 950 1,027 – 7 

more than five years 92 14 > 100 

Promissory note loans 1,982 2,969 – 33 





Mortgage bank mortgage loans 7 7 0 

up to three months 1 1 0 

between three months and one year 0 0 0 

between one and five years 2 2 0 


Mortgage bank publicsector loans 2,923 3,050 – 4 

up to three months 646 180 > 100 


between one and five years 1,072 1,484 – 28 


Other loans and advances 422 848 – 50 

payable on demand 352 432 – 19 



between one and five years 37 18 > 100 


Total L & R 22,067 25,987 – 15 

AfS 

Mortgage bank publicsector loans 302 527 – 43 




Other loans and advances 0 0 0 

Total AfS 302 527 – 43 

Total 22,369 26,514 – 16 

These include € 21,929 million (previous year: € 26,005 million) of loans and advances to banks in Germany and € 440 million (previous year: 

€ 509 million) of loans and advances to banks outside Germany. Loans and advances are classed as in Germany or outside Germany on 

the basis of the registered office of the subsidiary. 

As of 31 December 2008, there were allowances for impairment losses on loans and advances to banks in the amount of € 18 million 


Loans and advances were broken down in more detail than previously, meaning that the presentation of the previous year’s figures 

is different from the 2007 Annual Report. 


Notes 

147


35 Loans and advances to customers 

Loans and advances to customers are as follows: 


31.12.2008 31.12.2007 1) Change 

in % 

L & R 


payable on demand 1,616 1,928 – 16 



Loans 11,241 8,981 25 



between one and five years 3,886 2,945 32 

more than five years 5,587 4,287 30 

Promissory note loans 358 387 – 7 





Mortgage bank mortgage loans 15,248 14,545 5 

up to three months 3,196 2,402 33 

between three months and one year 1,710 2,167 – 21 



Loans secured by real estate liens 1,660 1,808 – 8 




more than five years 1,131 1,285 – 12 

Mortgage bank publicsector loans 6,580 6,531 1 





Publicsector loans of other banks 6,862 8,655 – 21 





Other loans and advances 1,043 787 33 

payable on demand 554 429 29 




more than five years 54 3 > 100 

Total L & R 45,877 45,043 2 

AfS 

Mortgage bank publicsector loans 1,585 1,983 – 20 





Other loans and advances 0 0 0 

Total AfS 1,585 1,983 – 20 

Total 47,462 47,026 1 


148

These include € 46,315 million (previous year: € 46,984 million) of loans and advances to customers in Germany and € 1,147 million 

(previous year: € 42 million) of loans and advances to customers outside Germany. Loans and advances are classed as in Germany or 

outside Germany on the basis of the registered office of the subsidiary. 

As of 31 December 2008, there were allowances for impairment losses on loans and advances to customers in the amount of 

€ 1,227 million (previous year: € 1,402 million). 

Loans and advances were broken down in more detail than previously, meaning that the presentation of the previous year’s 

figures is different from the 2007 Annual Report. 

Group as lessor (finance leases) 

There are currently no loans and advances to customers arising from leases in which the Group is the lessor (finance leases). 

36 Allowance for losses on loans and advances 

Risk provisioning was recognised for (loans and receivables category only): 


31.12.2008 31.12.2007 Change 

in % 

Loans and advances to banks 18 9 100 

Loans and advances to customers 1,227 1,402 – 12 

Total 1,245 1,411 – 12 



31.12.2008 31.12.2007 Change 

in % 

Risk provisioning 1,245 1,411 – 12 

Plus provisions 24 35 – 31 

Total 1,269 1,446 – 12 

Existing loans are defined as loans acquired by the LBB as part of the European Monetary Union. The necessary risk provisioning for these 

loans was calculated for the opening balance sheet as at 1 July 1990 and assigned as an equalisation claim. LBB still manages these loans. 

As risk provisioning is not recognised in the Bank’s own income statement and is instead deducted from equalisation claims, receipts on 

loans, for which impairment allowances exist, do not accrue to LBB but to the German government (Currency Conversion Equalisation Fund) 

and must be transferred accordingly. 

Notes 

149


In the financial year, risk provisioning reported as assets and provisions developed as follows: 

Loans and advances 

to banks 

Specific allowances 

for impairment losses 

Loans and advances 

to customers 

Specific impairment 

allowances calculated 

on a portfolio basis 

Portfoliobased 

allowances for 

impairment losses 

in € million 2008 2007 2008 2007 2008 2007 2008 2007 

As of 1.1. 

prior to change in the scope of consolidation 2 1 1,114 1,224 111 386 115 119 

Change in scope of consolidation 0 0 0 1 7 0 0 1 

As of 1.1. 2 1 1,114 1,225 118 386 115 120 

Additions 6 1 237 273 37 33 25 0 

Disposals 

Utilisation 0 0 186 191 10 86 0 0 

Reversals 0 0 166 227 11 70 0 6 

Unwinding 0 0 67 105 2 4 0 0 

Changes in exchange rates / reclassifications 0 0 – 68 139 40 2) – 148 0 1 

As of 31.12. 8 2 864 1,114 172 111 140 115 

As of 31.12. 

by type of receivable: 

Mortgage bank mortgage loans (L & R) 0 0 273 306 

Loans secured by real estate liens (L & R) 0 0 71 101 

Mortgage bank public-sector loans (L & R) 0 0 0 0 

Public-sector loans of other banks (L & R) 0 0 0 0 

Other receivables (L & R) 8 2 520 707 

Mortgage bank public-sector loans (AfS) 0 0 0 0 

Other receivables (AfS) 0 0 0 0 


2) Due to reassignments of accounts, there were adjustments in presentation between specific allowances for impairment losses 

and specific impairment allowances calculated on a portfolio basis. 

150

Existing loans 

Provisions for 

lending business 

Country risk 

Total 


Of which recognised 

in the income statement 

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 

59 78 35 74 10 17 1,446 1,899 

0 0 0 0 0 0 7 2 

59 78 35 74 10 17 1,453 1901 

0 0 2 14 5 2 312 323 312 323 

10 19 0 10 0 0 206 306 

0 0 13 46 3 9 193 358 193 358 

0 0 0 0 0 0 69 109 69 109 

0 0 0 3 0 0 – 28 – 5 

49 59 24 35 12 10 1,269 1.446 50 – 144 

Notes 

Direct write-downs 24 38 

Recoveries on loans previously written off 80 71 

Total – 6 – 177 

of which: 

Risk provisioning recognised in the income statement 63 – 68 1) 

Interest income recognised in the income statement (unwinding) 69 109 

151


37 Positive fair value of derivative hedging instruments 

Hedging instruments with a positive fair value to which hedge accounting in line with IAS 39 was applied break down as follows: 


31.12.2008 31.12.2007 Change 

in % 

Positive fair values of derivatives in micro fair value hedges 653 378 73 

Positive fair values of derivatives in macro cash flow hedges 96 19 > 100 

Total 749 397 89 

38 Financial assets recognised at fair value through profit or loss 

This item includes trading assets and investment book derivatives (HfT) and financial instruments designated at fair value (FVO). 


31.12.2008 31.12.2007 Change 

in % 

Assets held for trading 14,472 10,231 41 

Financial instruments designated at fair value (fair value option) 3,823 3,406 12 

Total 18,295 13,637 34 

Assets held for trading (HfT) 


31.12.2008 31.12.2007 Change 

in % 

Bonds and other fixed-income securities 1,056 2,713 – 61 

Money market securities 0 53 – 100 

Bonds and notes 1,056 2,660 – 60 

Shares and other non-fixed-income securities 515 1,568 – 67 

Positive fair value of trading book derivative financial instruments 10,330 4,927 > 100 

Positive fair value of investment book derivative financial instruments 2,571 1,023 > 100 

Total 14,472 10,231 41 

Breakdown of assets held for trading by remaining maturity: 


up to three 

months 

between three 

months and 

one year 

between one 

and five years 

more than 

five years 

Bonds and other fixed-income securities 96 198 591 171 1,056 

Bonds and notes 96 198 591 171 1,056 

Shares and other non-fixed-income securities 0 0 0 515 515 

Positive fair value of trading book derivative financial instruments 708 916 4,778 3,928 10,330 

Positive fair value of investment book derivative financial instruments 45 213 980 1,333 2,571 

Total 849 1,327 6,349 5,947 14,472 

152 

Total

Financial instruments designated at fair value (FVO) 


31.12.2008 31.12.2007 Change 

in % 

Loans and advances to customers 52 51 2 


Total 3,823 3,406 12 

As at 31 December 2008, the maximum default risk of loans and advances to customers was € 52 million (previous year: € 51 million); 

there were no credit derivatives or similar instruments to hedge this risk as at the balance sheet date. 

Breakdown of fair value option financial assets (FVO) by contractual remaining maturity: 


up to three 

months 

between three 

months and 

one year 

between one 


more than 

five years 

Loans and advances to customers 0 0 0 52 52 

Financial assets 99 103 1,778 1,791 3,771 

Total 99 103 1,778 1,843 3,823 

The change in the fair values of the above items due to a change in the default risk (credit spread) for 2008 amounts to € – 50 million 

(previous year: € – 60 million). The cumulative changes in value amounted to € – 118 million (previous year: € – 51 million). 

In calculating the above amounts, receivables and financial assets were initially measured at the respective current credit spread 

on the balance sheet date and then at the respective credit spread of the previous year’s balance sheet date. The difference between 

these two measurements is the change in fair value due to the change in credit spread. 

39 Financial assets 

Financial assets break down as follows: 



31.12.2008 31.12.2007 Change 

in % 

L & R 42,940 5,341 > 100 

Bonds and other fixed-income securities 42,930 5,341 > 100 

Shares and other non-fixed-income securities 10 0 x 

AfS 6,201 45,355 – 86 

Bonds and other fixed-income securities 5,935 44,763 – 87 

Shares and other non-fixed-income securities 162 423 – 62 

Investments 102 165 – 38 

Affiliated companies 2 4 – 50 

HtM 1,325 0 x 

Bonds and other fixed-income securities 1,325 0 x 

Total 50,466 50,696 0 

The changes between the L & R and AfS categories result from a re-categorisation in the fourth quarter of 2008 (see note 62.1 for details). 

Notes 

Total 

153


They break down by contractual remaining term as follows: 


up to three 

months 

between three 

months and 

one year 

between one 


more than 

five years 

L & R 

Bonds and other fixed-income securities 3,742 6,327 22,104 10,757 42,930 


AfS 

Bonds and other fixed-income securities 90 214 3,861 1,770 5,935 


Investments 102 102 

Affiliated companies 2 2 

HtM 

Bonds and other fixed-income securities 0 0 694 631 1,325 

Total 3,834 6,541 26,669 13,422 50,466 

In the financial year, investments and unconsolidated affiliated companies developed as follows: 

Investments Affiliated companies 

in € million 2008 2007 2008 2007 

Carrying amount at 1.1. 165 275 4 12 

Additions 23 2 0 1 

Disposals 84 73 2 7 

Reclassification 0 – 5 0 0 

Write-downs 2 20 0 2 

Impairment 0 0 0 0 

Reversals of impairment losses 0 0 0 0 

Effects of changes in exchange rates 0 0 0 0 

Cumulative change due to fair value measurement 0 – 14 0 0 

Carrying amount at 31.12. 102 165 2 4 

The disposals at affiliated companies do not include any effects from changes in the scope of consolidation. 

Associated companies and joint ventures 

Investments include 16 (previous year: 18) associated companies and joint ventures not carried at equity. Measurement is at cost in line 

with IAS 39. 

Companies not classified as associated entities despite a share of voting rights of more than 20 % due to immateriality and 

companies classified as associated entities despite a share of voting rights of less than 20 % due to a material influence in the form of 

representation on governing bodies are indicated in the list of investment holdings. 

Summary of financial information on associated companies and joint ventures not carried at equity: 


31.12.2008 31.12.2007 Change 

in % 

Total assets 527 382 38 

Total liabilities 512 325 58 

Revenue 276 256 8 

Net profit for the year 8 8 0 

154 

Total

40 Investments carried at equity 

A total of two (previous year: three) associated companies, one (previous year: one) joint venture and two (previous year: two) funds were 

carried at equity and reported separately in the income statement and the balance sheet. 

Companies not classified as associated entities despite a share of voting rights of more than 20 % due to immateriality and 

companies classified as associated entities despite a share of voting rights of less than 20 % due to a material influence in the form of 

representation on governing bodies are indicated in the list of investment holdings. 

Investments carried at equity break down as follows: 


31.12.2008 31.12.2007 Change 

in % 

Investments in banks 71 68 4 

Investments in other companies 27 61 – 56 

Total 98 129 – 24 

The following table provides a summary of financial information on associates, joint ventures and funds carried at equity: 


31.12.2008 31.12.2007 Change 

in % 

Total assets 8,011 7,962 1 

Total liabilities 7,563 7,458 1 

Revenue 446 542 – 18 

Net profit for the year 10 41 – 76 

41 Intangible assets 


31.12.2008 31.12.2007 Change 

in % 

Goodwill 592 595 – 1 

Other internally generated intangible assets 4 6 – 33 

Other acquired intangible assets 54 64 – 16 

Total 650 665 – 2 

Capitalised development costs amounted to € 0.3 million (previous year: € 1 million). Non-capitalisable research expenses for internally 

generated software amount to € 0.3 million (previous year: € 1 million). 


Notes 

155


In the financial year, intangible assets developed as follows: 

Goodwill Other internally generated 

intangible assets 

Other acquired 

intangible assets 

in € million 2008 2007 2008 2007 2008 2007 2008 2007 

Carrying amount at 1.1. 595 571 6 8 64 71 665 650 

Additions 0 0 0 1 14 16 14 17 

Additions from business combinations 0 24 0 0 0 4 0 28 

Additions from internal development 0 0 0 0 0 0 0 0 

Disposals 0 0 0 0 1 1 1 1 

Reclassification – 3 0 0 0 0 0 – 3 0 

Write-downs 0 0 2 3 23 26 25 29 

Impairment 0 0 0 0 0 0 0 0 

Reversals of impairment losses 0 0 0 0 0 0 0 0 

Effects of changes in exchange rates 0 0 0 0 0 0 0 0 

Carrying amount at 31.12. 592 595 4 6 54 64 650 665 

For both the year under review and the previous year, the gross carrying amount of goodwill was the same as the respective carrying 

amount. There was no amortisation of goodwill. 

The gross carrying amount of other intangible assets is € 268 million (previous year: € 255 million). Cumulative amortisation amounted 

to € 185 million at the beginning of the period and € 210 million at the end of the period. 

42 Property, plant and equipment 


31.12.2008 31.12.2007 Change 

in % 

Land and buildings 443 448 – 1 

Operating and office equipment 135 135 0 

Total 578 583 – 1 

Property, plant and equipment with a net carrying amount of € 326 million (previous year: € 329 million) is used in the context of finance leases. 

The development of property, plant and equipment as against the previous year is as follows: 

Land and buildings Operating and 

office equipment 

in € million 2008 2007 2008 2007 2008 2007 

Carrying amount at 1.1. 448 473 135 140 583 613 

Additions 19 – 6 30 23 49 17 

Additions from business combinations 0 0 0 0 0 0 

Disposals 1 0 5 4 6 4 

Reclassification – 4 – 20 – 1 0 – 5 – 20 

Write-downs 13 14 23 24 36 38 

Impairment 0 0 1 0 1 0 

Reversals of impairment losses 0 17 0 0 0 17 

Effects of changes in exchange rates – 6 – 2 0 0 – 6 – 2 

Carrying amount at 31.12. 443 448 135 135 578 583 

The gross carrying amount of owner-occupied land and buildings is € 532 million (previous year: € 537 million). Cumulative amortisation 

amounted to € 89 million at the beginning of the period and € 89 million at the end of the period. 

The gross carrying amount of operating and office equipment is € 346 million (previous year: € 386 million). Cumulative amortisation 

amounted to € 251 million at the beginning of the period and € 211 million at the end of the period. 

156 

Total 

Total

43 Investment property 

This item relates to land and buildings used by third parties in line with IAS 40. 


31.12.2008 31.12.2007 Change 

in % 

Undeveloped land 1 1 0 

Developed land and buildings 64 81 – 21 

Total 65 82 – 21 

Investment property with a net carrying amount of € 16 million (previous year: € 16 million) is used in the context of finance leases. 

Investment property developed as follows: 

Investment Property 

in € million 2008 2007 

Carrying amount at 1.1. 82 83 

Additions 0 – 1 

Additions – subsequent cost 0 0 

Additions from business combinations 0 0 

Disposals 8 21 

Reclassification – 6 20 

Write-downs 2 3 

Impairment 3 0 

Reversals of impairment losses 2 4 

Effects of changes in exchange rates 0 0 

Carrying amount at 31.12. 65 82 

The gross carrying amount of investment property is € 176 million (previous year: € 194 million). Cumulative amortisation amounted to 

€ 112 million at the beginning of the period and € 111 million at the end of the period. Fair values cannot be calculated owing to the lack 

of current market data. 

44 Income tax assets 

Income tax assets break down as follows: 


31.12.2008 31.12.2007 1) Change 

in % 

Current taxes 99 85 16 

Deferred taxes 913 793 15 

Total 1,012 878 15 



Deferred tax assets reflect the potential income tax benefits of timing differences between the carrying amounts of assets and liabilities 

in the IFRS consolidated balance sheet and the tax base in accordance with local tax laws for Group companies. In addition, deferred tax 

assets are recognised on tax loss carryforwards if it is sufficiently likely that they will be utilised. 

Notes 

157


Deferred tax assets were recognised in connection with the following items (before netting): 


31.12.2008 31.12.2007 Change 

in % 

Loans and advances to banks and customers less risk provisioning 443 622 – 29 

Financial assets recognised at fair value 4 1 > 100 

Financial assets 603 194 > 100 

Property, plant and equipment and intangible assets 6 6 0 

Other assets 27 6 > 100 

Deposits by banks and amounts due to customers 7 18 – 61 

Securitised debt 75 35 > 100 

Negative fair value of derivative hedging instruments 348 153 > 100 

Financial liabilities held at fair value 3,655 1,914 91 

Provisions 128 132 – 3 

Subordinated capital 52 38 37 

Other liabilities 89 34 > 100 

Loss carryforwards 358 294 22 

Subtotal 5,795 3,447 68 

Netted against deferred tax liabilities – 4,882 – 2,654 84 

Total 913 793 15 

For the purposes of presentation in the balance sheet, deferred tax assets and liabilities were netted at the level of the individual company 

or the respective group of companies taking into account the operations in Income Tax Treaty States. 

45 Other assets 


31.12.2008 31.12.2007 Change 

in % 

Receivables from collateral provided 2,960 1,774 67 

Trade receivables 38 59 – 36 

Prepaid expenses 17 8 > 100 

Other tax receivables (not including income tax assets) 1 2 – 50 

Miscellaneous 58 72 – 19 

Total 3,074 1,915 61 

All reported assets are available at short notice. 

46 Non-current assets and groups of assets held for sale 


31.12.2008 31.12.2007 Change 

in % 

Land and buildings used by third parties 11 8 38 

Financial assets 59 58 2 

Groups of assets held for sale 1 0 x 

Total 71 66 8 

The assets and disposal groups classified as held for sale are being sold as part of the Bank’s long-term strategy of focussing on its core 

business areas. The sale or transfer of ownership of the respective non-current assets and disposal groups is scheduled to take place in 2009. 

There were no impairment requirements in the “assets held for sale” category. 

158

Land and buildings used by third parties which were recognised at the end of 2007 were sold during the year 2008 with the exception of 

one item. Six properties were newly classified as available for sale during this period, and two of these had already been sold by the end 

of the year. A write-down of € 1 million was recognised for this under other operating income. Financial assets relate to six investments, 

two of which were already recognised as available for sale at the end of 2007. Purchase offers have been made for these – due to unforeseeable 

circumstances, the negotiations are still under way. These assets are included in the “Real Estate Financing” and “Other” segments 

respectively. 

As at 31 December 2008, the Group had determined a group of assets held for sale, which is classified under the Retail Banking 

segment. These are assets in connection with the agreed sale of the retail banking business of Landesbank Berlin International S.A. 

47 Deposits by banks 

Deposits by banks are as follows: 


31.12.2008 31.12.2007 Change 

in % 


payable on demand 850 372 > 100 





Issued registered bonds 290 385 – 25 





Promissory note loans received 2,051 2,433 – 16 


between three months and one year 880 402 > 100 



Registered mortgage bonds 1,047 1,725 – 39 





Other liabilities 1,282 1,738 – 26 

payable on demand 208 525 – 60 


between three months and one year 99 90 10 



Total 45,950 50,686 – 9 

These include € 41,201 million (previous year: € 47,302 million) of deposits by banks in Germany and € 4,749 million (previous year: 

€ 3,384 million) of deposits by banks outside Germany. Liabilities are classed as in Germany or outside Germany on the basis of the 

registered office of the subsidiary. 

This item also includes deferred interest of € 272 million (previous year: € 348 million). 

Liabilities were broken down in more detail than previously, meaning that the presentation of the previous year’s figures is different from 

the 2007 Annual Report. 


Notes 

159


48 Amounts due to customers 

Amounts due to customers are as follows: 


31.12.2008 31.12.2007 Change 

in % 

Term and demand deposits 11,997 10,390 15 

payable on demand 7,758 7,012 11 




Savings deposits 7,510 7,033 7 





Issued registered bonds 4,806 3,830 25 





Promissory note loans received 5,374 5,205 3 





Registered mortgage bonds 961 1,218 – 21 





Other liabilities 2,072 1,876 10 

payable on demand 1,335 1,046 28 





Total 32,720 29,552 11 

These include € 31,858 million (previous year: € 29,439 million) of amounts due to customers in Germany and € 862 million (previous year: 

€ 113 million) of amounts due to customers outside Germany. Liabilities are classed as in Germany or outside Germany on the basis of the 

registered office of the subsidiary. 

In total, this item includes deferred interest of € 344 million (previous year: € 309 million). 

Liabilities were broken down in more detail than previously, meaning that the presentation of the previous year’s figures is different from 

the 2007 Annual Report. 

The Group as lessee (finance leases) 

The net carrying amounts of leased assets classified as the economic property of the Group amount to € 342 million (previous year: 

€ 345 million). 

Lease liabilities mainly relate to liabilities from long-term rental agreements (up to and including 2026) for offices and business 

premises at Alexanderplatz, Gustav-Meyer-Allee / Brunnenstrasse, Prinzregentenstrasse, Hardenbergstrasse, Bismarck- / Wilmersdorfer 

Strasse and Fasanenstrasse. 

The buildings used by the Bank at Alexanderplatz and Prinzregentenstrasse (central buildings) and Brunnenstrasse (service 

centre) are held by closed-end real estate funds launched by Group companies. The use of these facilities currently entails annual rent 

obligations of € 51 million for the Group (previous year: € 57 million). 

160 

The total portfolio of liabilities includes finance lease liabilities of € 616 million (previous year: € 618 million).

The future minimum lease payments are as follows: 


31.12.2008 31.12.2007 Change 

in % 




Total 1,249 1,205 4 

The discount amounts break down as follows: 


31.12.2008 31.12.2007 Change 

in % 




Total 615 574 7 

The present value of the minimum lease payments (remaining maturities) breaks down as follows: 


31.12.2008 31.12.2007 Change 

in % 




Total 634 631 0 

Contingent rent for the financial year amounted to € 2 million (previous year: € 0 million). 

This is offset by future income from non-cancellable subletting agreements of € 37 million (previous year: € 38 million). 

49 Securitised debt 

The following table shows a breakdown of total securitised debt by type of financial instrument. Information on the carrying amount has 

been disclosed for each category of securitised debt. 



31.12.2008 31.12.2007 Change 

in % 

Bonds issued 29,540 30,035 – 2 

Mortgage bonds 7,887 6,625 19 

Public-sector pfandbriefs 13,838 15,291 – 10 

Other bonds 7,815 8,119 – 4 

Other securitised debt 286 482 – 41 

Total 29,826 30,517 – 2 

Other bonds include money market papers (e.g.: commercial papers, certificates of deposit and euro notes) and promissory notes. 

Notes 

161


Contractual remaining maturities of securitised debt: 


31.12.2008 31.12.2007 Change 

in % 





Total 29,826 30,517 – 2 

Material issuances, repurchases and repayments of debt and equity securities in the 2008 financial year can be broken down as follows: 

Category 

Currency 

Nominal amount 

(in million 

currency units) 

Issue Bonds EUR 5,025 

Repayment Money market securities GBP 95 

Bonds EUR 8,014 

Bonds DEM 230 

Buyback Bonds EUR 250 

Repurchases of own issues also form part of the Bank’s regular trading activities. The total amount of securitised debt includes deferred 

interest of € 546 million (previous year: € 528 million). 

No collateral was pledged for own debt in the financial year or the previous year. 

50 Negative fair value of derivative hedging instruments 

Hedging instruments with a negative fair value to which hedge accounting in line with IAS 39 was applied break down as follows: 


31.12.2008 31.12.2007 Change 

in % 

Negative fair values of derivatives in micro fair value hedges 857 555 54 

Negative fair values of derivatives in macro cash flow hedges 483 430 12 

Total 1,340 985 36 

51 Financial liabilities recognised at fair value through profit or loss 

This item includes trading liabilities and investment book derivatives (HfT) and financial liabilities designated at fair value (FVO). 


31.12.2008 31.12.2007 Change 

in % 

Trading liabilities 13,423 7,774 73 

Financial liabilities designated at fair value (fair value option) 13,674 14,119 – 3 

Total 27,097 21,893 24 

162

Trading liabilities (HfT) 


31.12.2008 31.12.2007 Change 

in % 

Obligations from short sales of securities 274 811 – 66 

Negative fair value of trading book derivative financial instruments 10,403 5,432 92 

Negative fair value of investment book derivative financial instruments 2,746 1,531 79 

Total 13,423 7,774 73 

Breakdown of liabilities held for trading by remaining maturity: 


up to three 

months 

between three 

months and 

one year 

between one 


more than 

five years 

Obligations from short sales of securities 187 5 71 11 274 

Negative fair value of trading book derivative financial instruments 445 1,000 4,787 4,171 10,403 

Negative fair value of investment book derivative financial instruments 34 151 1,083 1,478 2,746 

Total 666 1,156 5,941 5,660 13,423 

Financial liabilities designated at fair value (FVO) 


31.12.2008 31.12.2007 Change 

in % 

Deposits by banks 624 465 34 

Amounts due to customers 1,066 873 22 

Securitised debt 11,802 12,604 – 6 

Subordinated capital / hybrid capital 182 177 3 

Total 13,674 14,119 – 3 

Breakdown of fair value option financial liabilities (FVO) by contractual remaining maturity: 


up to three 

months 

between three 

months and 

one year 

between one 



more than 

five years 

Deposits by banks 21 160 338 105 624 

Amounts due to customers 19 102 355 590 1,066 

Securitised debt 1,104 345 6,097 4,256 11,802 

Subordinated capital / hybrid capital 0 0 77 105 182 

Total 1,144 607 6,867 5,056 13,674 

The change in the fair values of the above items due to a change in (the Bank’s own) default risk (credit spread) for 2008 amounts to 

€ – 93 million (previous year: € 6 million). The cumulative changes in value amounted to € – 41 million (previous year: € – 49 million). 

In calculating the above amounts, liabilities were initially measured at the respective current credit spread on the balance sheet 

date. The liabilities were then measured at the respective credit spread of the previous year’s balance sheet date. The portion of the 

change in fair value relating to the change in (the Bank’s own) risk of default (credit spread) is therefore the difference between these two 

measurements. 

The difference between the carrying amount of the financial liability and the greater amount to be repaid by the Bank on maturity 

as contractually agreed was € – 342 million (previous year: € – 809 million). This includes the effect of zero bonds and zero promissory 

notes in the amount of € – 591 million (previous year: € – 612 million) arising from the discounted payment typical for zero bonds and zero 

promissory notes and repayment at the nominal amount. 

Notes 

Total 

Total 

163


52 Provisions 

Provisions break down as follows: 


31.12.2008 31.12.2007 Change 

in % 

Pension provisions 844 842 0 

Other provisions 324 428 – 24 

Provisions for EU measures 15 21 – 29 

Restructuring provisions 46 63 – 27 

Provisions for risks from the lending business 24 35 – 31 

Miscellaneous other provisions 239 309 – 23 

Total 1,168 1,270 – 8 

Provisions for EU measures relate to the sale of Berliner Bank. Restructuring provisions include staff and location measures. Provisions for 

risks from the lending business relate primarily to guarantees. Other provisions include amounts for staff, onerous losses, litigation costs, 

restoration costs and other taxes. 

The majority of provisions are due after one year. Only the amounts for staff and other taxes included under miscellaneous provisions 

are generally due within one year. 

52.1 Pension provisions 

Detailed information on provisions for pensions and similar obligations. 

General information 

In the Landesbank Berlin Holding Group, employees acquire rights and benefits from direct pension plans. The pension provisions required 

to satisfy the obligations arising from these direct pension plans are recognised in the balance sheet accordingly. 

Measurement method and actuarial assumptions 

Provisions for retirement benefits are calculated annually by third-party actuarial experts using the projected unit credit (PUC) method in 

accordance with IAS 19.64. This method sees each period of service as giving rise to an additional unit of the final benefit entitlement and 

measures each unit separately to build up the final obligation. 

Assets 

Plan assets are recognised at fair value (IAS 19.102). 

Recognition of actuarial gains and losses 

In order to settle actuarial gains and losses, the Bank exercises the option to offset all gains and losses incurred in a reporting year against 

equity (IAS 19.93A). As a result, actuarial gains and losses are shown in full in equity. 

In financial year 2008, the effects in equity amount to € 28 million (previous year: € 101 million). 

Pension obligations 

a) Defined contribution plan 

For one group of employees, the pension plan is an indirect defined contribution plan in which the employer pays set pension contributions 

to third-party funds (pension funds and life insurance companies), possibly with the employee also contributing. In such cases, the amount 

of future benefits is determined by the contributions paid and – for the non-guaranteed portion of benefits – the cumulative return on these 

assets. As a result of the classification of this pension scheme, the contributions paid to third-party insurance funds are recognised as a 

current expense; accordingly, no pension provisions are required to be recognised. 

In the financial year, € 555 thousand was recognised in the income statement as a current expense (previous year: € 595 thousand). 

164

) Defined benefit plan 

There are several pension schemes of various methodologies in the Landesbank Berlin Holding. All pension plans are based on corresponding 

collective service agreements or individual commitments contained in employment contracts (pension agreements). The key pension 

schemes are: 

Group pension scheme (Plan 100) 

Pension schemes for employees who joined the Company before 1 July 1988 (Plan 200) 

Pension schemes for employees who joined the Company after 30 June 1988 (Plan 210) 

Individual pension agreements (Plan 220 / 230) 

Pension in accordance with the articles of association of the Versorgungsanstalt des Bundes und der Länder – VBL – (Plan 300) 

Pension scheme for Landesbank Berlin (Plan 310) 

Pension scheme dated 1 January 1984 (BerlinHyp) 

Pension scheme dated 30 December 1993 (BerlinHyp) 

Pension scheme of the former Berliner Industriebank (Plan 520 / 521) 

These are essentially salary-based systems (pension unit / points system), salary-based benefit systems (final salary pension plans) and 

nominal amount systems (flat salary pension plans). Retirement, reduced working capacity earnings and surviving dependants’ pensions 

are provided for depending on the occurrence of the insured event under the statutory pension scheme. There are no gender-specific or 

age-based distinctions. The standard age limit is generally the employee’s 65th birthday, unless the age limit for the statutory pension 

scheme is applied. Company pensions are paid for life; lump-sum benefits are not generally provided for. Benefits are adjusted in accordance 

with agreed criteria (e.g. development of collective salary agreements) or under the duty to make adjustments in accordance with 

Article 16 BetrAVG (German Company Pensions Act). 

As at 31 December 1994, all collective pension schemes were closed for new entrants. Since 1 January 1995, direct pension 

schemes for newly appointed employees have been defined in accordance with the regulations of the Group pension scheme. 

There is an occupational pension scheme for Landesbank Berlin International S.A. (Luxembourg) and Landesbank Berlin AG, 

Luxembourg branch. The obligation was spun off to a third-party insurance company. The scheme provides for retirement benefits and 

benefits for the event of invalidity and for surviving dependents. The financing of this scheme is the responsibility for the employer only. 

The annual premiums are calculated in line with German Commercial Code regulations. This is also a defined benefit system as the amount 

of benefits – irrespective of the premiums paid – is ultimately based on the pensionable annual salary at the time of the occurrence of 

the insured event. 


Provident fund 

The “Unterstützungskasse der Landesbank Berlin Holding AG e.V.” provident fund is a legally independent pension institution in the legal 

form of a registered association. It was formed in 1952 and has the sole purpose of providing its members with benefits (pensions due to 

old age, reduced earnings capacity, pensions for surviving dependents). The provident fund is financed in accordance with the principles 

of Article 4d EStG, which defines the scope and permissibility of allocations / voluntary grants by sponsoring companies and the amount of 

cash assets permissible under tax regulations. 

As at 1 July 1999, the method of performance for occupational pension schemes in the Group was harmonised. From this date 

onwards, ongoing company pensions in the Group are financed exclusively from the pension provisions of the companies. Members receiving 

ongoing benefits from the provident fund prior to the above date were not affected by this. 

As at 31 December 2008, 880 pensions were receiving monthly benefits from the provident fund. The cash assets of the provident 

fund (all sponsoring companies) as at 31 December 2008 amounted to around € 20.4 million (previous year: around € 22.7 million). 

Notes 

165


Actuarial assumptions 

Economic assumptions: 

31.12.2008 31.12.2007 

Interest rate 5,80 % 5,70 % 

Salary trend 3,00 % – 3,50 % 2,50 % – 3,00 % 

Pension trend (individually by pension plan) 1,00 % – 3,00 % 1,00 % – 3,00 % 

Development of income threshold in statutory pension scheme (BBG) 

(within and outside Germany) 2,00 % – 3,00 % 1,00 % – 2,50 % 

Asset yields (provident fund only) 4,20 % 4,93 % 

Fluctuation (total asset holdings) 

Up to age of 30 5,00 % 5,00 % 

Up to age of 40 3,00 % 3,00 % 

Up to age of 50 1,00 % 1,00 % 

From 50 and upwards 0,00 % 0,00 % 

Developments on the financial market were taken into account in establishing the interest rate. The adjustments made to the securities 

included in the iBoxx indices for Corporate as of 2 January 2009 due to pending rating downgrades from the year under review, where the 

yields generally decreased, were also included in calculating the interest rate at the reporting date. There is therefore only a slight year-on-year 

increase in the interest rate, from 5.7 % to 5.8 %. It can be expected that the effects of the crisis on the financial markets will lead to an 

increase in the credit spread, including for high-quality bonds, and thus a higher interest rate. Overall, the present value of the pension 

obligation decreases, increasing equity. 

Demographic assumptions: 

Pension age: Earliest possible start of pension in statutory pension scheme in accordance with RVAGAnpG 

Biometric risks: Prof. Heubeck tables, 2005 G IGSS mortality tables (Luxembourg) 

Structure of provisions for pensions: 

in € million 31.12.2008 31.12.2007 

Present value of funded pension provisions (DBO) 25 26 

Less fair value of plan assets – 20 – 23 

5 3 

Present value of non-funded pension provisions (DBO) 839 839 

Total 844 842 

Development of provisions for pensions: 

in € million 2008 2007 

Provisions for pensions as at 1.1. 842 920 

Current service cost 18 23 

Past service cost – – 7 

Interest cost 48 42 

Expected return on plan assets – 1 – 1 

Pension benefits paid in reporting year – 35 – 34 

Changes in the scope of consolidation – 0 

Actuarial gain / loss – 28 – 101 

Provisions for pensions as at 31.12. 844 842 

166

Development of pension obligations (DBO): 

in € million 2008 2007 

Pension obligations as at 1.1. 865 946 




Pension benefits paid in reporting year – 38 – 37 

Changes in the scope of consolidation – 0 


Pension obligations as at 31.12. 864 865 

The provisions for pensions and similar obligations in the Group – including actuarial gains and losses – increased by € 2 million to € 844 million 


Structure of plan assets 

The structure of plan assets shown relates solely to the provident fund. 

in % 2008 2007 

Bonds 

Fixed-income 75,6 74,2 

Non-fixed income 4,8 4,5 

Shares, investment certificates, options 

Domestic 15,5 16,9 

International 2,0 3,7 

Bank balances 2,1 0,7 

Other assets 0,0 0,0 

Total 100.0 100.0 

The expected return on plan assets is derived from current returns for the financial year for the various asset classes, taking into consideration 

their weighting in total assets. 

Development of plan assets 

The plan assets consist of the assets of the provident fund (€ 20.2 million) and three direct insurance policies (€ 0.4 million). 

in € million 2008 2007 

Fair value of plan assets as at 1.1. 23 26 

Expected return on plan assets 1 1 


Pension payments – 3 – 3 

Fair value of plan assets as at 31.12. 20 23 

Current income from plan assets amounts to € 634 thousand (previous year: € – 81 thousand). 

The assets of the provident fund include fixed-income debt securities of a subsidiary in the amount of €2.5 million (previous year: 

€2.4 million), but no non-fixed-income securities (previous year: €0.1 million). 

Actuarial gains and losses offset against shareholders’ equity: 


in € million 2008 2007 

Actuarial gains / losses 

Financial year 28 101 

Cumulative previous years – 42 – 143 

Total – 14 – 42 

Notes 

167


Summary of amounts recognised in the income statement: 

in € million 2008 2007 




Expected return on plan assets – 1 – 1 

Total 65 57 

These amounts are all reported in the income statement under administrative expenses. 

Overview of key data for the financial year and the maximum four preceding years: 

in € million 2008 2007 2006 2005 

Pension obligation (DBO) 864 865 946 943 

Plan assets 20 23 26 28 

Surplus in the plan 844 842 920 915 

Actuarial gains and losses 28 101 – 20 1) – 86 

in % 

Experience adjustments to: 

DBO 2,0 12,5 2) – 0,75 

Plan assets – 2,0 – 5,0 1,4 

1) not including Berliner Bank 

2) relates almost exclusively to the effects of changes in actuarial assumptions 

Expected future receipts and payments: 

in € million 2009 2008 

Payments into plan assets (provident fund) 0 0 

Expected direct pension payments – 36 – 34 

Pension-related obligations also include obligations for early retirement plans and partial retirement plans, which are also calculated on an 

actuarial basis. As at 31 December 2008, calculations were based on an interest rate of 5.2 % (previous year: 4.8 %). These obligations are 

reported under “Other provisions”. 

52.2 Other provisions 

in € million 2008 2007 

As of 1.1. 428 543 

Additions 42 129 

Utilisation 82 144 

Reversals 67 122 

Reclassification 0 15 

Change in scope of consolidation – 1 0 

Effects of changes in exchange rates – 1 0 

Interest effects 5 7 

As of 31.12. 324 428 

168

Of which: Provisions for EU measures 

in € million 2008 2007 

As of 1.1. 21 32 

Additions 0 0 


Reversals 7 6 


Change in scope of consolidation 0 0 


As of 31.12. 15 21 

Of which: restructuring provisions 

in € million 2008 2007 

As of 1.1. 63 81 

Additions 4 1 



Reclassification – 5 – 6 



As of 31.12. 46 63 

Of which: provisions for risks from the lending business 

in € million 2008 2007 

As of 1.1. 35 74 






As of 31.12. 24 35 

Of which: miscellaneous other provisions 


in € million 2008 2007 

As of 31.12. 309 356 





Change in scope of consolidation – 1 0 

Effects of changes in exchange rates – 1 0 


As of 31.12. 239 309 

Notes 

169


53 Income tax liabilities 

Income tax liabilities break down as follows: 


31.12.2008 31.12.2007 1) Change 

in % 

Current taxes 157 199 – 21 

Deferred taxes 33 32 3 

Total 190 231 – 18 


Deferred tax liabilities reflect the potential income tax charges arising from timing differences between the carrying amounts of assets and 

liabilities in the IFRS consolidated balance sheet and the tax base in accordance with local tax laws for Group companies. Deferred tax 

liabilities were recognised in connection with the following items (before netting): 


31.12.2008 31.12.2007 Change 

in % 

Loans and advances to banks and customers less risk provisioning 7 16 – 56 

Positive fair value of derivative hedging instruments 228 110 > 100 

Financial assets recognised at fair value 3,540 1,719 > 100 

Financial assets 66 11 > 100 

Property, plant and equipment and intangible assets 109 114 – 4 

Other assets 0 153 – 100 

Deposits by banks and amounts due to customers 792 441 80 

Securitised debt 139 86 62 

Provisions 5 3 67 

Other liabilities 29 33 – 12 

Subtotal 4,915 2,686 83 

Netted against deferred tax assets – 4,882 – 2,654 84 

Total 33 32 3 

For the purposes of presentation in the balance sheet deferred tax assets and liabilities were netted at the level of the individual company 

or the respective group of companies taking into account international operations. 

54 Other liabilities 


31.12.2008 31.12.2007 Change 

in % 

Liabilities from collateral received 1,733 675 > 100 

Trade payables 71 69 3 

Deferred income 43 98 – 56 

Other tax liabilities (excl. income tax liabilities) 3 4 – 25 

Miscellaneous 65 172 – 62 

Total 1,915 1,018 88 

All liabilities are to be met in the short term. 

170

55 Liabilities assigned to groups of assets held for sale 


31.12.2008 31.12.2007 Change 

in % 

Amounts due to customers 0 1 – 100 

Miscellaneous 83 0 x 

Total 83 1 > 100 

The item presented includes liabilities from the retail banking business of Landesbank Berlin International S.A. The sale of this retail banking 

business was agreed in the contract of 1 October 2008. 

56 Subordinated capital 


31.12.2008 31.12.2007 Change 

in % 

Subordinated liabilities 2,446 2,459 – 1 





Profit participation certificates 4 4 0 


Dormant participations 687 700 – 2 


Total 3,137 3,163 – 1 

In accordance with Article 10 (5a) KWG, subordinated liabilities count as equity for regulatory purposes. Subordination refers to the order in 

which creditors’ claims are satisfied in the event of insolvency or liquidation. In such cases, subordinated liabilities are only repaid after the 

claims of all prior creditors have been satisfied. 

Due to the net loss for the year, LBB does not receive compensation for dormant participation in financial year 2008. Instead, a sum 

of € 13 million had to be used for covering losses on a proportionate basis. Recognition of the dormant participation at the time of reporting 

decreased by this loss allocation. However, € 51 million was paid as compensation for the previous year. 

57 Shareholders’ equity 


31.12.2008 31.12.2007 1) Change 

in % 

Issued capital 2,554 2,554 0 

Capital reserves 77 77 0 

Retained earnings – 93 – 14 < – 100 

Legal reserves 13 13 0 

Other retained earnings – 94 14 < – 100 

Reserves for pensions measured in line with IFRS – 12 – 41 71 

Currency translation reserve – 9 – 2 < – 100 

Revaluation reserve – 664 – 182 < – 100 

Revaluation reserve (AfS) – 753 – 275 < – 100 

Revaluation reserve (CFH) – 119 16 < – 100 

Revaluation reserve for deferred taxes 208 77 > 100 

Minority interests 80 414 – 81 

Total 1,945 2,847 – 32 


In the previous year, reserves for the measurement of pensions were included under other retained earnings. 


Notes 

171

Other Notes 

58 Adjustments due to changes in accordance with IAS 8 

Adjustments were made in line with IAS 8.42 in the annual financial statements as at 31 December 2007 and the interim financial statements 

as at 31 March 2008, 30 June 2008 and 30 September 2008. However, this did not necessitate any adjustment to the comparative figures 

for the previous year in the annual financial statements as at 31 December 2008. 

As at 31 December 2008, a new matter resulted in further adjustments: 

Reversal of impairment losses on receivables: 

The method for determining reversals of impairment losses on receivables was refined further in financial year 2008. Detailed information 

was therefore available, allowing for a differentiated assessment of individual cases. In applying this refined method, reversals of impairment 

losses were also identified relating to 2007 (€ 14.8 million), 2006 (€ 7.7 million) and 2005 (€ 0.6 million). Amounts relating to the previous 

year are adjusted in accordance with IAS 8.42. 

Deferred taxes 

The above earnings adjustments, including the downstream effects of the adjustment made in the previous year, resulted in a net deferred 

tax expense of € 4.5 million in the comparative income statement as at 31 December 2007 and a reduction in the retained earnings in 

equity in the amount of € 2.6 million. 

The above adjustments had the following effect on the comparative figures for the income statement as at 31 December 2007 (after 

calculation of deferred taxes on the adjustments): 

Income statement 2007 


Published 

consolidated 

financial 

statements 

Adjustment 

Consolidated 

financial statements 

after 

adjustment 

Allowance for losses on loans and advances 1) – 53 15 – 68 

Operating profit before restructuring 285 15 300 

Restructuring expenditure and income (net) 6 – 6 

Net profit before taxes 291 15 306 

Income tax expense 2) 71 5 76 

Earnings after taxes 220 10 230 

1) due to reversal of impairment losses 

2) due to deferred taxes 

These adjustments have no effect on the previous year’s earnings per share. 

In connection with the above adjustments, we corrected the 2007 comparative figures for the relevant balance sheet items as follows: 

Balance sheet as at 31.12.2007 


Published 

consolidated 

financial 

statements 

Adjustment 

Consolidated 

financial statements 

after 

adjustment 

Loans and advances to customers 1) 47.003 23 47.026 

Deferred tax assets 2) 800 – 7 793 

Retained earnings 1) 2) – 143 16 – 127 

1) due to reversal of impairment losses 

2) due to deferred taxes 

172

The following adjustments were also made: 

The related party disclosures in the notes include additional reclassifications and adjustments to the prior-year comparative figures for 

the balances arising from the inclusion or non-inclusion of companies. 

The contingent liabilities disclosures in the notes include contingencies from rental guarantees. This amount was reported too high in the 

previous year and has now been adjusted. 

The 2007 comparative figures for segment reporting, which were also adjusted, and other method-related changes made in the segments 

are presented in note 6. 

59 Trust Activities 

Trust activities, which are not reported in the balance sheet, existed as follows at the balance sheet date: 


Loans and advances to customers 

31.12.2008 31.12.2007 Change 

in % 

210 343 – 39 

Trust assets 210 343 – 39 

Deposits by banks 9 3 > 100 


Trust liabilities 210 343 – 39 

60 Contingent liabilities and similar obligations 

Contingent liabilities and similar obligations were not recognised in the balance sheet. They describe current obligations of the Group in 

which an outflow of economic resources to settle the obligations is not likely or the amount / settlement date of the obligation cannot be 

reliably determined. 

A possible default from irrevocable loans commitments was taken into consideration by the recognition of a portfolio-based 

allowance for impairment losses, which was reported under risk provisioning (note 36). 

Quantifiable 



31.12.2008 31.12.2007 Change 

in % 

Contingent liabilities from guarantees and warranties 2.220 4.399 – 50 

Credit guarantees 931 2.334 – 60 

Letters of credit 8 52 – 85 

Other guarantees 1.281 2.013 – 36 

Irrevocable loan commitments (current account credits, guarantee loans, 

public-sector / mortgage loans, other irrevocable loan commitments) 3.743 5.402 – 31 

Other contingent liabilities 0 59 – 100 

Total 5.963 9.860 – 40 

As at 31 December 2008, contingencies from rental guarantees in the Group still amounted to € 626 million (previous year: € 617 million). 

In some cases, liability for the joint and several liability of various companies agreed in the detailed agreement with the State of Berlin 

was allocated internally by way of an agreement dated August 2002, supplemented in August 2004. This provides for a partial reimbursement 

of costs, largely in line with the investments in the company with which liability originated. 

Notes 

173

Other Notes 

The detailed agreement also includes provisions relating to a debtor warrant, which is designed as a partial profit transfer agreement with 

a term of 15 years and based on defined equity ratios. In exchange for protection from risks, a fixed amount of € 15 million is to be paid 

annually to the State of Berlin, starting from the 2002 financial year and initially continuing up to and including 2011. Negotiations will then 

be reopened. These costs were also allocated on the basis of the agreement dated August 2002, supplemented in August 2004, providing 

for the reimbursement of the costs by Landesbank Berlin AG, Berlin-Hannoversche Hypothekenbank AG and Investitionsbank Berlin in 

accordance with the volume ratios of the banks’ loans protected by the loan guarantee. 

In the year under review, the additional funding obligations from investments in the amount of € 13 million (previous year: € 13 million) 

relate solely to the investment in Liquiditätskonsortialbank GmbH. There are also payment obligations for investments of € 9 million 


In the case of four closed-end real estate funds, Group companies are obliged to acquire the limited partners’ units on request. 

These obligations have a total nominal (100 %) amount of € 188 million. The redemption values may be up to 115 % or € 216 million of the 

nominal obligations if the rights of tender are not exercised before 2024. 

The contributions for the Sicherungsreserve der Landesbanken und Girozentralen were measured in line with risk-oriented principles. 

As of the end of the year, this resulted in an obligation to make a supplementary contribution of up to € 119 million on the part of Landesbank 

Berlin AG should it be established that support is required resulting from the joint liability. This contribution can then be demanded immediately. 

The Bank achieved the agreed minimum acceptance quantities in the IT service agreements with FinanzIT GmbH (FinanzIT) and 

Siemens Business Services Management GmbH (SIS). 

Non-quantifiable 

Landesbank Berlin AG holds a 90.4 % interest in Berlin-Hannoverschen Hypothekenbank AG. In line with the contract of December 2007, 

this is a member of the Landesbank and Girozentralen Deposit Guarantee Reserve. In accordance with the declaration of 12 December 

2007, Landesbank Berlin AG is obliged, as the holder of the Deposit Guarantee Reserve of the Landesbanks and Girozentralen, to 

refund all expenses of Deutsche Sparkassen- und Giroverband e.V., including interest and foregone interest income for support measures, 

which cannot be settled using financial resources from the fund created for Berlin-Hannoversche Hypothekenbank AG. 

In accordance with Article 5 (10) of the Statutes of the Deposit Guarantee Fund, Landesbank Berlin Holding AG is also directly obliged 

to exempt Bundesverband deutscher Banken e.V. in the event of any losses that may occur as a result of measures taken for netbank AG. 

The main contingent liabilities relating to litigation or legal risks are as follows: 

Indemnity declarations by LBB and IBG 

Disposal of the shares in Allgemeine Privatkundenbank Aktiengesellschaft (Allbank) 

Risks from the implementation of the detailed agreement and the disposal of the key Group real estate companies to the State of Berlin 

Proceedings instigated by a fund company 

Proceedings relating to contested AGM resolutions 

There are also contingent assets arising from litigation, the amount of which cannot be reliably measured at the current time. Therefore, no 

figure has been disclosed in accordance with IAS 37.92. 

Further information on legal risks can be found in the management report in the risk report section. 

In the context of the financing to save Hypo Real Estate, Landesbank Berlin contributed to liquidity assistance for the German financial 

sector in two stages with a maximum of € 800 million and a counter-guarantee of the S-Finanzgruppe. Since 2007, it has also participated 

in a concerted action for SachsenLB and IKB Deutsche Industriebank AG. 

Like other Landesbanks and the Deutscher Sparkassen- and Giroverband, corporation under public law, Landesbank Berlin AG was 

a guarantor of DekaBank Deutsche Girozentrale. On 30 November 2002, Landesbank Berlin sold its shares in DekaBank. The obligations 

of Landesbank arising from the Anstaltslast (maintenance obligation) and Gewährträgerhaftung (guarantee obligation) that it assumed for 

DekaBank ended as of the date of the sale with effect for the foreseeable future. Landesbank continues to have a guarantee obligation for 

liabilities arising prior to that date. 

Letters of comfort 

Landesbank Berlin AG ensures that its subsidiaries, as defined by Article 290 (1) and 2 HGB indicated as currently covered in the list of 

shareholdings in accordance with Article 313 (2) HGB, can meet their obligations, with the exception of political risks, in the amount of its 

(calculated) investment rate in these companies. 

174

In addition, Landesbank Berlin AG bears all liabilities and obligations of the above letters of comfort expressly issued by the former 

Bankgesellschaft Berlin AG (now Landesbank Berlin Holding AG), Berlin, to a specific creditor of IDLG Immobiliendienstleistungen GmbH, 

Berlin, and the former Mario Göhr Grundstücks GmbH, Berlin, (merged to form GfBI Gesellschaft für Beteiligungen und Immobilien mbH, 

Berlin in 2007). In the case of IDLG Immobiliendienstleistungen GmbH, this letter of comfort is limited until 30 June 2015; for the liabilities 

and obligations of the former Mario Göhr Grundstücks GmbH assumed by GfBI Gesellschaft für Beteiligungen und Immobilien GmbH, 

this applies until no later than 31 December 2010. 

61 Risk management 

The purpose of the disclosure requirements under IFRS is to ensure that readers of the financial statements have a comprehensive overview 

of the risk situation of the Group, thus giving them a better understanding of the effects of financial instruments on the net assets, financial 

position and results of operations. 

The information required by IFRS 7 on the nature and extent of risks arising from financial instruments and their management can 

be found in the risk report in the management report. 

62 Fair values of financial instruments 

62.1 Re-categorisation of financial instruments 

In the past financial year, the Group made use of the possibility of re-categorising financial assets measured at fair value into the HfT or 

AfS category. The reason for this was the sharp decrease in trading activities in the context of the financial market crisis and the resulting 

illiquidity of the market in some cases. 

As of 1 October 2008, financial assets which were categorised as financial assets available for sale (AfS) were re-categorised under 

L & R. This re-categorisation affected variable-interest and fixed-interest securities and a participation certificate. The Group both intends 

to and is able to hold these securities over a long period or to maturity. 

As of 9 December 2008, securities in the HfT category were also re-categorised and are now recognised as financial assets in the 

L & R category. Here also, the Group both intends to and is able to hold these securities over a long period or to maturity. 

Fair value and carrying amount at the date of re-categorisation / at the end of the financial year: 


Carrying amount 

at the date 

of recategorisation 

(A = 1.10.2008 / B = 9.12.2008) 

Carrying 

amount 

31.12.2008 

Fair value 

31.12.2008 

A. from AfS financial assets to L & R financial assets 37,821 36,696 36,470 

B. from held-for-trading to L & R financial assets 504 501 503 

Part of the change in value is due to the fact that the amounts for A have decreased by € 1,221 million since re-categorisation due to maturities. 

As at the date of re-categorisation, the effective interest rate for financial instruments in category A was between 1.44 % and 

15.33 %, with anticipated recoverable cash flows of € 43,888 million. The effective interest rate for financial instruments in category B was 

between 3.97 % and 9.89 % at the date of re-categorisation, with anticipated recoverable cash flows of € 615 million. 

Changes in value totalling € – 295 million (previous year: € – 132 million) and a valuation difference recognised in net profit or loss 

totalling € – 210 million (previous year: € – 115 million) were recognised in the revaluation surplus for these financial instruments in the past 

financial year up to the date of re-categorisation. 


Since re-categorisation, interest amortisation totalling € – 7 million and impairment expense totalling € 16 million was recognised in 

net profit or loss for these instruments. In addition, the re-categorisation resulted in an amortisation of the AfS revaluation surplus, leading to 

a € 58 million increase in this surplus by 31 December 2008. However, this amortisation is offset by amortisation of the carrying amount for 

re-categorised financial assets in net interest income and therefore has no impact on the result. 

If no re-categorisation had taken place, € – 124 million would have been recognised in equity and € 3 million in net trading income 

as a result of the valuation change since the date of re-categorisation. 

Notes 

175

Other Notes 

62.2 Fair values of financial instruments 

Fair value is the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s 

length transaction. Quoted market prices are used if available. If none are available, the fair value is calculated using internal valuation models 

with current market parameters. Investment techniques such as the present value method and the option pricing model are applied in this 

process. For some financial instruments, other factors which were appropriate for calculating the fair value of the financial instrument were 

taken into account as well as observable market data. Particularly if no current market prices are available, then modified quotes are used – 

i.e. adjustment of the most recent quotes to current development using input factors which can be observed on or derived from the market 

and own estimates. 

Below, there is a list comparing the fair values and carrying amounts for each class of financial instruments carried in the balance sheet at 

fair value / at amortised cost: 

Fair value Carrying amount Difference 

in € million 31.12.2008 31.12.2007 1) 31.12.2008 31.12.2007 1) 31.12.2008 31.12.2007 

Assets 

L & R 110,708 75,195 109,639 74,960 1,069 235 

Loans and advances to banks 22,143 25,949 22,049 25,978 94 – 29 

Loans and advances to customers 46,056 44,051 44,650 43,641 1,406 410 

Financial assets 42,509 5,196 42,940 5,341 – 431 – 145 

AfS 8,088 47,865 8,088 47,865 0 0 

Loans and advances to banks 302 527 302 527 0 0 

Loans and advances to customers 1,585 1,983 1,585 1,983 0 0 

Financial assets 6,201 45,355 6,201 45,355 0 0 

HtM 1,295 0 1,325 0 – 30 0 

Financial assets 1,295 0 1,325 0 – 30 0 

Total 120,091 123,060 119,052 122,825 1,039 235 

Liabilities and shareholders' equity 

OL 

Deposits by banks 46,054 50,734 45,950 50,686 104 48 

Amounts due to customers 2) 32,280 28,438 32,720 29,552 – 440 – 1,114 

Amounts due to customers 3) 32,923 29,569 32,720 29,552 203 17 

Securitised debt 29,905 30,424 29,826 30,517 79 – 93 

Subordinated capital incl. dormant participations 2,854 3,134 3,137 3,163 – 283 – 29 

Total 2) 111,093 112,730 111,633 113,918 – 540 – 1,188 

Total 3) 111,736 113,861 111,633 113,918 103 – 57 


2) Including theoretical tax scenarios for variable financial instruments 

3) Excluding theoretical tax scenarios for variable financial instruments 

Fair values cannot be determined for certain equity instruments (affiliated companies and investments) in financial assets and have therefore 

not been reported. 

For fair value category financial instruments (HfT and FVO) and hedging derivatives the carrying amounts are equal to the fair values; 

these transactions are therefore not shown in the above table and can be found under the appropriate note. 

For off-balance sheet business (trust activities, contingent liabilities and similar obligations) there are no significant fair values apart 

from the provisions recognised and the portfolio-based allowances for impairment losses created for off-balance sheet business. The 

corresponding nominal amounts are not shown in this table, but are included in the respective notes. 

62.3 Methods and assumptions used in calculating fair values 

In calculating fair values, the Group applies the regulations of IAS 39 including additional application information concerning measurement 

at fair value on inactive markets / for illiquidity. In the process, stock exchange prices / other market prices are initially used as a basis in 

line with the fair value hierarchy. Due to the market development of the course of financial year 2008, there was an increasing focus on 

modified market prices and model measurements as part of the multi-stage method of measurement already established in the Group. 

176

The market situation was dominated by a sharp decline in trading activities (significantly decreased trading volumes / revenues, lower 

numbers of transactions, increased bid-ask ranges), and sometime even a complete lack of trades. In addition, there is increased volatility, 

accompanied by a rise in the credit spreads, due both to lower ratings and to increased illiquidity and forced disposals. 

Overall, there was increased distrust on the securities and money markets, leading to price quotations which no longer corresponded 

to the price quotations previously established on the basis of effective markets. As a result, no market or transaction prices were 

available for large portfolios of bonds and ABS securities. In this market situation, even quotes provided are not reliable figures which can 

be applied as fair values for measurement, since there was no willingness to carry out actual transactions and also, quotations from different 

sources sometimes varied widely from one another or were themselves contradictory. 

The Group therefore made more intensive use of model measurements as part of the LBB multi-stage method of measurement. 

According to IAS 39.AG 82, the valuation methods factor in observable market data and other factors appropriate to influencing the fair 

value of a financial instrument. In the case of inactive markets, fair values are calculated on the basis of discounted cash flows, with 

the discounting factors including interest rates observable on the market, general credit spreads (external category spreads according 

to industry, origin and rating) and individual credit spreads (specific to the instrument and the issuer). In order to determine the latter, the 

most recently observed plausible, individual spreads or current spreads of related bonds and credit default swaps and their own estimates 

are considered in a differentiated examination. These may, for example, result from support activities by national governments. A change 

of 10 basis points upwards (downwards) in the spreads used would bring about a decrease (an increase) of around 0.31 % in the fair values 

of the portfolios in the fair value through profit or loss and AfS categories (nominal amount of approximately € 15.5 billion) as measured 

using the discounted cash flow method. 

Stock market prices are also used as the basis for calculating positive and negative market values of derivatives. If no stock market 

prices are available, the market value is calculated using the normal mathematical methods of measurement for the sector, in particular 

present value methods and option pricing models. The parameters used in the measurement models are determined on the balance sheet 

date based on market conditions available on the market. 

HfT and FVO financial instruments and hedging derivatives 

In line with the measurement hierarchy of IAS 39, the fair values of trading financial instruments and investment book derivatives (HfT) 

and hedging derivatives are primarily calculated on the basis of stock market and broker prices. If these amounts do not exist, fair value 

measurement relies on standard market measurement models using market parameters specific to the financial instruments. The latter 

applies to all OTC derivatives. 

In the context of FVO financial instruments, fair values are – in line with the measurement hierarchy – derived both from available 

market prices and calculated using the measurement model described at the beginning. Fair values for promissory note loans are calculated 

exclusively using measurement models. 

AfS receivables and financial assets 

Securities not held for trading, investments and affiliated companies reported as financial assets and some loans are assigned to the AfS 

category. Their fair value is determined on the basis of exchange or market prices. However in many cases, due to unavailable or infrequent 

exchange prices, fair values for bonds and other fixed-interest securities were calculated using the measurement model shown. If the fair 

value cannot be reliably determined, it is recognised at cost. The latter applies to non-listed shares in affiliated companies and investments. 

L & R receivables and financial assets 

The Group carries loans made directly to debtors and receivables due directly from debtors, acquired loans and receivables, bonds and 

ABS securities not traded on an active market at amortised cost – taking into account any impairment. The fair values stated here are 

generally calculated using the standard measurement model shown. 


Loan portfolios are measured by discounting the cash flows with discounting factors, consisting of interest rates observable on the 

market and the credit spreads. These are derived from default probabilities on the basis of the internal rating and internal security levels. 

Due to technical considerations, costs were not included in the measurement process. 

For impaired receivables, cash flow profiles are derived on the basis of the collateral provided and realisation periods and expectations 

of future payments and costs. The recoverable amount and therefore the fair value are determined by adding the discounted cash 

flows as at the measurement date. 

Notes 

177

Other Notes 

Financial assets in the HtM category 

Bonds and other fixed-interest securities in the HtM category, which are recognised exclusively under financial assets, are carried at amortised 

cost. Fair values for these assets are derived both from available market prices and calculated using the measurement model shown. 

Liabilities, securitised debt and subordinated capital (OL category) 

Deposits by banks and amounts due to customers, securitised debt and subordinated capital are carried at amortised cost. The fair values 

for liabilities – of there are no market prices for these or securitised debt – are determined using standard, recognised measurement models. 

The fair values of subordinated capital including dormant participations are based on the present value method using the current 

market interest rate and appropriate risk premiums. 

Off-balance sheet transactions 

For off-balance sheet business (trust activities, and contingent liabilities and similar obligations), fair values were calculated only on the basis 

of models. 

For contingent liabilities and similar obligations, conditions in line with the market are agreed upon on conclusion. These are 

reviewed at least once a year and are adjusted in some cases. Trust activities only have a transmitting role. 

As a result of the regular review of conditions for guarantees and the generally short duration of the irrevocable loan commitments 

(including letters of credit), together with the pass-through role of trust activities, no significant features of business were identified which 

would lead to a fair value not equal to zero. 

63 Assets pledged as collateral 

Financial assets pledged as collateral include the following items (carrying amounts): 


31.12.2008 31.12.2007 Change 

in % 

Loans and advances to banks 2,151 3,873 – 44 

Loans and advances to customers 5,237 6,186 – 15 

Financial assets recognised at fair value through profit or loss 906 1,040 – 13 


Other assets 2,957 1,281 > 100 

Total 45,997 43,453 6 

Collateral was pledged in the context of standardised master agreements (in line with ISDA and the German Master Agreement for Financial 

Derivatives Transactions), as is standard practice in international banking. 

There was no collateral that the Group received and can use if the event of the secured party not defaulting. 

64 Related party disclosures 

Related parties of the Landesbank Berlin Holding Group in line with IAS 24 include the following groups: 

178 

S-Erwerbsgesellschaft (majority owner of LBBH with an 88 % stake, and general partner of Beteiligungsgesellschaft der S-Finanzgruppe 

mbH & Co. KG), Beteiligungsgesellschaft der S-Finanzgruppe mbH & Co. KG (S-Beteiligungsgesellschaft) and – as general partner of 

S-Erwerbsgesellschaft – Regionalverbandsgesellschaft mbH (RVG), 

subsidiaries of the Holding and companies over which the Group is able to exercise a significant influence and 

natural persons in key positions at LBB and the Holding, particularly the members of the Board of Management and the Supervisory 

Board, and the managing directors of the controlling parent company.

Majority owner related party disclosures 

As of 1 January 2008, Landesbank Berlin AG had a dormant participation by S-Erwerbsgesellschaft amounting to € 700 million. 

S-Erwerbsgesellschaft assumed the dormant participation in the context of the acquisition process by the State of Berlin. In accordance 

with the contract, the dormant partner has a results-based 7.22 % p.a. share in profits in relation to its capital contribution / it participates 

in the cumulative loss / net loss for the year which would result without loss offsetting, in the ratio of the nominal capital contribution and 

the overall nominal amount of the liable capital share. Due to the net loss for the year, LBB does not receive compensation for dormant 

participation in financial year 2008. Instead, a sum of € 12.5 million had to be used for covering losses pro rata. 

In 2008, an agency agreement was concluded between LBB AG and RVG which regulates the preparation of IFRS consolidated 

financial statements by LBB AG for RVG and related compensation. The agency agreement relates to the first-time preparation of consolidated 

financial statements as at 31 December 2007 (including the opening balance sheet at the date of the acquisition of the LBB Holding AG 

shares on 8 August 2007) and the subsequent financial statements (Section 1 (4)). LBB receives compensation from RVG reimbursing all 

demonstrated agency agreement costs. The parties are in agreement that no costs should remain with LBB as a result of the agency 

agreement, but that LBB should not gain any profit through it either (Section 4 (1)). € 538 thousand was invoiced to RVG for the preparation 

of the 2007 RVG consolidated financial statements and the related services provided by LBB. 

RVG, the general partner of S-Erwerbsgesellschaft, has a standard current account with the Bank, that was previously used to only 

a limited extent (€ 17 thousand) for deposits. There were no reportable transactions in the reporting period. There were no banking relationships 

with S-Erwerbsgesellschaft or S-Beteiligungsgesellschaft as of the reporting date. 

In terms of the majority owner, the Holding’s related parties as defined by IAS 24 include the managing directors of RVG in addition 

to S-Erwerbsgesellschaft, S-Beteiligungsgesellschaft and RVG. 

A managing director of RVG has a standard current account with the Bank that was previously used to only a limited extent 

(€ 6 thousand) for deposits. 

The members of the management of RVG and their dependents did not conduct any other reportable transactions. 

Business and legal relationships with unconsolidated subsidiaries and companies over which the Group is able to exercise a 

significant influence 

Related parties are shown in the “List of investment holdings” (note 67) under “Consolidated and unconsolidated subsidiaries”. The list 

of shareholdings also includes companies over which the Group may exercise a significant influence. 

In the past financial year, the Group had business relationships with related parties as follows: 

Unconsolidated subsidiaries 


31.12.2008 31.12.2007 1) Change 

in % 

Assets 

Loans and advances to customers 461 222 >100 



31.12.2008 31.12.2007 1) Change 

in % 





There are allowances for impairment losses on unconsolidated subsidiaries in the amount of € 1.6 million (31 December 2007: € 2.0 million). 

Notes 

179

Other Notes 

The Group had business relationships with companies over which it is able to exercise a significant influence as follows: 

Associated companies 


31.12.2008 31.12.2007 1) Change 

in % 

Assets 

Loans and advances to banks 128 296 – 57 

Loans and advances to customers 146 302 – 52 

Financial assets recognised at fair value through profit or loss 15 32 – 53 

Financial assets 15 40 – 62 



31.12.2008 31.12.2007 1) Change 

in % 


Deposits by banks 31 27 15 


Financial liabilities recognised at fair value through profit or loss 20 20 0 


There are allowances for impairment losses on associated companies in the amount of € 0.3 million (31 December 2007: € 1.3 million). 

Joint ventures 


There is an indemnity guarantee for one associated company in the amount of € 55 million (31 December 2007: € 55 million). 

31.12.2008 31.12.2007 Change 

in % 

Assets 

Loans and advances to customers 14 15 – 7 


31.12.2008 31.12.2007 Change 

in % 


Amounts due to customers 1 0 x 

There are no allowances for impairment losses on joint ventures. 

The loans extended to unconsolidated subsidiaries and companies over which the Group is able to exercise a significant influence 

were granted at standard market terms and conditions. The Group’s net interest income includes the interest expenses and income arising 

from these business relationships. The net interest income of the group is affected by its business relationships with unconsolidated 

subsidiaries and companies over which it is able to exercise a significant influence in line with the volume of the respective loans and the 

standard interest charged thereon. 

180

Information on members of the Board of Management and the Supervisory Board 

The members of the Board of Management and the Supervisory Board of Landesbank Berlin Holding AG and Landesbank Berlin AG 

received the following remuneration: 

in € ’000 2008 2007 

Total remuneration of the Board of Management of LBB 1) 6,861 7,496 

of which total remuneration of the Board of Management of the Holding 2) 2,878 2,841 

Total remuneration of the Supervisory Board of the Holding 657 636 

Total remuneration of the Supervisory Board of LBB 268 262 

Payments to former members of the Board of Management or their surviving dependents 3) 8,046 6,160 

Provisions for pension obligations to these persons 86,735 90,661 

Provisions for pension obligations to active members of the Board of Management 

of LBB as at the end of the year 13,095 11,840 

including provisions for pension obligations to active members of the 

Board of Management of the Holding as at the end of the year 7,099 6,236 

Addition to the pension obligations to active members of the Board of Management of LBB 1,255 754 

including additions to the pension obligations to active members of the 

Board of Management of the Holding 863 822 

1) consisting of Mr. Vetter, Dr. Veit, Mr. Demolière, Dr. Evers, Mr. Kruschinski (until 30 June 2007), Mr. Kulartz and Mr. Müller 

2) consisting of Mr. Vetter and Dr. Veit 

3) including additional payments for prior years in 2008 

“Total remuneration” means “short-term benefits” in line with the standard; there are no “other long-term benefits”. 

There are no additional remuneration components offering a long-term incentive (subscription rights, other share-based payments 

etc.) for members of the Board of Management. 

In the event that members of the Board of Management are unable to work as a result of accident or illness, they are entitled to 

their full remuneration for a specific period. Members of the Board of Management are entitled to receive a pension after the end of their 

contractual relationship as a result of reaching their 65th birthday, due to occupational disability, at the end of their appointment or as a 

result of the contractual relationship being dissolved by the Bank unless this is triggered by good cause on the part of the Board of Management 

member (Article 626 of the German Civil Code). The employment contracts of two members of the Board of Management include 

provisions relating to their resignation as part of a change of control. Information on the pension commitments, claims to retirement benefits 

and other benefits after or due to the end of the employment relationship for the individual members of the Board of Management are 

shown in the Group management report as at 31 December 2008. 

Advances and loans granted to members of executive bodies by Landesbank Berlin AG: 


in € ’000 2008 2007 

to members of the Board of Management of LBB 344 388 

of which to members of the Board of Management of the Holding 18 0 

to members of the Supervisory Board of the Holding 2 98 

to members of the Supervisory Board of LBB 0 98 

The net amounts include annuity loans granted at market conditions and utilised overdraft facilities granted at employee conditions, as well 

as invoice amounts on credit card accounts. The changes result primarily from the settlement of annuity loans. 

There were no transactions such as land or property sales, services rendered or purchased, leases, loans or other transactions at 

non-market conditions with persons in key positions. 

Close family members of the Board of Management and the Supervisory Board have no influence on business decisions. 

The Holding publishes information on share transactions by its Board of Management on its Internet site under “Investor Relations”. 

It thereby satisfies the reporting requirements of Article 15a WpHG. 

Notes 

181

Other Notes 

Information for Article 314 (1) no. 6 a) sentence 5 HGB 

The members of the Board of Management received the following remuneration in financial year 2008: 

Members of the Board of Management Annual remuneration 

in € ’000 

Non-performancerelated 

remuneration 

Performance-related 

remuneration for 

financial year 2007 1) 

Other 

remuneration 2) 

Hans-Jörg Vetter (Holding, LBB) 1,074 650 26 1,750 

of which non-pensionable 521 

Dr. Thomas Veit (Holding, LBB) 695 400 33 1,128 


Total for members of executive bodies of LBB Holding 1,769 1,050 59 2,878 

Serge Demolière (LBB) 989 150 35 1,174 


Dr. Johannes Evers (LBB) 632 275 45 952 


Uwe Kruschinski 3) (LBB) 30 30 

Hans Jürgen Kulartz (LBB) 632 210 44 886 


Martin K. Müller (LBB) 604 300 37 941 


Remuneration expense 2008 Total (LBB) 4,626 2,015 220 6,861 

1) The amount shown is the performance-related part of the annual bonus for full performance of duties in financial year, the amount of which was determined by resolution 

of the Supervisory Board following presentation of the 2007 annual financial statements. Payment was made in the second quarter of 2008. 

2) Other remuneration relates to non-cash benefits (use of company car) of € 108 thousand and the so-called employer share of net amount (assumption of tax of cash 

benefits by the employer) of € 107 thousand. Drivers are also employed at normal rates. Other remuneration also includes payments received by Mr. Müller in the reporting year 

as the employer’s subsidy for health and long-term care insurance 

3) Mr. Uwe Kruschinski left office as at 30 June 2007. 

Disclosures in line with Article 314 (1) no. 6 a) sentences 6 to 9 HGB are included in the Group management report. 

The members of the Board of Management received the following remuneration in financial year 2007: 

Members of the Board of Management Annual remuneration 

in € ’000 

Non-performancerelated 

remuneration 

Performance-related 

remuneration for 

financial year 2006 1) 

Other 

remuneration 2) 

Hans-Jörg Vetter (Holding, LBB) 1,068 675 26 1,769 


Dr. Thomas Veit (Holding, LBB) 689 350 33 1,072 


Total for members of executive bodies of LBB Holding 1,757 1,025 59 2,841 

Serge Demolière (LBB) 986 270 34 1,290 


Dr. Johannes Evers (LBB) 627 300 46 973 


Uwe Kruschinski 3) (LBB) 331 185 17 533 


Hans Jürgen Kulartz (LBB) 627 245 45 917 


Martin K. Müller (LBB) 604 300 38 942 


Remuneration expense 2007 Total (LBB) 4,932 2,325 239 7,496 

1) The amount shown is the performance-related part of the annual bonus for full performance of duties in financial year, the amount of which was determined by resolution 

of the Supervisory Board following presentation of the 2006 annual financial statements. Payment was made in the second quarter of 2007. 

2) Other remuneration relates to non-cash benefits (use of company car) of € 116 thousand and the so-called employer share of net amount (assumption of tax of cash 

benefits by the employer) of € 119 thousand. Drivers are also employed at normal rates. Other remuneration also includes payments received by Mr. Müller in the reporting year 

as the employer’s subsidy for health and long-term care insurance 

3) Mr. Uwe Kruschinski left office as at 30 June 2007. 

182 

Total 

Total

Disclosures in line with Article 314 (1) no. 6 a) sentences 6 to 9 HGB are included in the Group management report. 

Total remuneration of members of the Holding Supervisory Board for work on Supervisory Boards of the Holding Group: 

Members of the Supervisory Board Annual remuneration LBB Holding Group 

in € ’000 2008 2007 

Dr. h. c. Klaus G. Adam 1) 6) – 54 

Heinrich Haasis 2) 7) 81 25 

Bärbel Wulff 64 64 

Dr. h. c. Axel Berger 1) 6) – 27 

Dietmar P. Binkowska 2) 3) 7) 8) 29 11 

Gregor Böhmer 2) 7) 42 13 

Dagmar Brose 15 15 

Thomas Dobkowitz 1) – 10 

Hans Jörg Duppré 2) 15 5 

Dr. Michael Endres 1) 6) – 22 

Christina Förster 26 26 

Artur Grzesiek 4) 9) 3 – 

Dr. Thomas Guth 1) 6) – 17 

Sascha Händler 26 26 

Jürgen Hilse 2) 7) 36 11 

Claus Friedrich Holtmann 2) 7) 32 10 

Michael Jänichen 38 33 

Daniel Kasteel 26 26 

Thomas Mang 2) 7) 32 10 

Astrid Maurer 26 26 

Prof. Dr. Hannes Rehm 1) – 10 

Andreas Rohde 26 26 

Senator Dr. Thilo Sarrazin 5) 10) – 27 

Peter Schneider 2) 7) 26 9 

Friedrich Schubring-Giese 2) 15 5 

Dr. Heinz-Gerd Stein 1) 6) – 21 

Joachim Tonndorf 25 25 

Dr. Harald Vogelsang 2) 7) 32 10 

Frank Wolf 42 34 

Senator Harald Wolf 5) 10) – 17 

Bernd Wrede 1) 6) – 21 

Total 657 636 

plus sales tax 102 95 

Total expense 759 731 

1) Member of the Supervisory Board of the Holding until 31 August 2007 

2) Member of the Supervisory Board of the Holding since 1 September 2007 

3) Member of the Supervisory Board of the Holding until 21 November 2008 

4) Member of the Supervisory Board of the Holding since 24 November 2008 

5) Member of the Supervisory Board of the Holding until 28 August 2007 

6) Member of the Supervisory Board of LBB until 31 August 2007 

7) Member of the Supervisory Board of LBB since 1 September 2007 

8) Member of the Supervisory Board of LBB until 21 November 2008 

9) Member of the Supervisory Board of LBB since 24 November 2008 

10) Member of the Supervisory Board of LBB until 28 August 2007 


Notes 

183

Other Notes 

65 Number of employees 

Average number of employees in the financial year by group: 

2008 2007 

Full-time 5,117 5,117 

Part-time 1,325 1,348 

Trainees and apprentices 261 208 

Total 6,703 6,673 

66 Events after 31 December 2008 

As at 31 December 2008, valuation models were applied in calculating the fair value of numerous financial instruments. This was because 

the extreme market situation, primarily characterised by inactive markets, meant that in these cases it was practically impossible to determine 

the fair value on the basis of listed prices or by means of estimates based on most recent transactions or currently available market prices. 

As far as possible and wherever available, observable market data was applied. 

Our evaluation of the current non-typical market situation – which was dominated by a sharp decline in trading activities and sometimes 

even a complete lack of trades, as well as increased volatility together with a rise in credit spreads – remains unchanged. Despite a 

noticeable increase in activities on the primary market, financial markets are still highly unsettled. We are seeing ongoing low market volume 

on the secondary market, a high bid / offer spread, little willingness to implement actual transactions, and quotations from different sources 

which sometimes vary widely from one another or are themselves contradictory. This means that no price quotes / only indicative price quotes 

are available. The markets in Germany, in particular the previous issuing activities, are also heavily influenced by state rescue measures, 

which can only be used for limited market assessments. 

The sale of the retail banking business of the Luxembourg-based subsidiary Landesbank Berlin International S.A. as agreed upon in 

the contract of 1 October 2008, was concluded in January 2009 with the receipt of purchase price payment and the transfer of assets and 

obligations. 

184

67 List of investment holdings 

Company, registered office 


Total share 

held by the 

Group 

in % 

of which 

indirectly 

in % 

Voting rights 

held by the 

Group 

in % 

Equity 2) 

in € ’000 


Result 2) 

in € ’000 

Consolidated subsidiaries (IAS 27) 

BankenService GmbH Unternehmensgruppe Landesbank Berlin, 

Berlin 5) 100.0 100.0 100.0 – 4,784 2,434 

Berlin Hyp Immobilien GmbH, Berlin 1) 5) 100.0 100.0 100.0 700 – 5 

Berlin-Hannoversche Hypothekenbank Aktiengesellschaft, Berlin 5) 90.4 90.4 90.4 547,060 46,228 

Crown Court I LLC, Wilmington / Delaware 5) 16) 100.0 100.0 100.0 – 141,969 – 135,247 

Crown Court Property London Ltd., London 5) 17) Gartenstadt Stahnsdorf GmbH & Co. Projektentwicklungs KG i. L., 

100.0 100.0 100.0 16,183 216 

Berlin 5) 6) GfBI Gesellschaft für Beteiligungen und Immobilien mbH, 

48.5 48.5 48.5 – 50,459 – 44 

Berlin 1) 5) 100.0 100.0 100.0 34,707 807 

GfBI Immobilien Solutions GmbH, Berlin 5) Grundstücksgesellschaft “Berlin” mit beschränkter Haftung, 

100.0 100.0 100.0 5,093 1,169 

Berlin 1) 5) Grundstücksgesellschaft Bad Freienwalde / Gardelegen GbR, 

100.0 94.9 100.0 6,158 – 412 

Berlin 5) 76.5 76.5 76.1 – 21,539 – 1,376 

Grundstücksgesellschaft Lehrter Straße GbR, Berlin 5) 99.9 99.9 99.9 – 8,087 – 297 

Hohenzollerndamm 134 GbR, Berlin 5) 100.0 95.0 100.0 16,450 450 

Landesbank Berlin AG, Berlin 5) 100.0 0.0 100.0 2,031,164 407,602 

Landesbank Berlin International S.A., Luxembourg 5) 100.0 100.0 100.0 129,333 – 17,325 

Landesbank Berlin Investment GmbH, Berlin 5) 100.0 0.0 100.0 10,566 136 

LBB Finance (Ireland) plc, Dublin 5) LBB Grundstücks-Gesellschaft mbH der Landesbank Berlin AG, 

100.0 100.0 100.0 1,319 72 

Berlin 1) 5) 100.0 100.0 100.0 5,865 – 159 

LBB-Immobilien-Service GmbH, Berlin 1) 5) 100.0 100.0 100.0 1,103 0 

LBB Re Luxembourg S.A., Luxembourg 5) 100.0 100.0 100.0 4,462 1,462 

netbank Aktiengesellschaft, Hamburg 5) Versicherungsservice GmbH Unternehmensgruppe 

75.0 75.0 75.0 28,742 – 4,787 

Landesbank Berlin, Berlin 1) 5) 100.0 100.0 100.0 960 – 6 

Special purpose entities (SIC 12) / Special funds – 

consolidated – (IAS 27 in conjunction with SIC 12) 

Check Point Charlie Ltd., London 5) 0.0 0.0 0.0 257 – 467 

Portfolio Purchasing Company 1 Ltd., London 5) 0.0 0.0 0.0 – 7,468 – 4,970 




RR II R-11004, City of Wilmington / Delaware 5) 14) 0.0 0.0 0.0 – – 















Notes 

Date of annual 

financial 

statements 

if not 

31.12.2008 

185

Other Notes 


Total share 

held by the 

Group 

in % 

of which 

indirectly 

in % 

Voting rights 

held by the 

Group 

in % 

Equity 2) 

in € ’000 

Result 2) 

in € ’000 


















































RR II R-846, City of Wilmington / Delaware 5) 14) 0.0 0.0 0.0 – 

– 

186 


financial 

statements 

if not 

31.12.2008


Special purpose entities (SIC-12) / Special funds – 

consolidated – (IAS 27 in conjunction with SIC 12) 

Total share 

held by the 

Group 

in % 

of which 

indirectly 

in % 

Voting rights 

held by the 

Group 

in % 

Equity 2) 

in € ’000 

Result 2) 

in € ’000 

ABN AMRO EMMA INKA, Dusseldorf 5) 100.0 100.0 0.0 34,869 1,307 

BB-TBG-Fonds, Berlin 5) 100.0 100.0 0.0 81,621 158 

BG-Asset-Fonds, Berlin 5) 100.0 100.0 0.0 19,046 381 

dbi Pimco Global Corporate Bond Fonds, Frankfurt / Main 5) 100.0 100.0 0.0 85,525 – 1,370 

DeAM EICO Fonds, Frankfurt / Main 5) 100.0 100.0 0.0 90,148 – 7,727 

DEKA - ABS Europe-Fonds, Frankfurt / Main 5) 100.0 100.0 0.0 59,435 – 14,033 

GSAM Global Corporate Bond Fonds INKA, Dusseldorf 5) 100.0 100.0 0.0 84,596 – 3,209 

LBB INKA Credit Plus, Dusseldorf 5) 100.0 100.0 0.0 57,865 – 36,892 

LBB-nb 08-Fonds, Berlin 5) 100.0 100.0 0.0 83,065 1,495 

LBB Prisma Unit Trust, Georgetown / Cayman Islands 5) 100.0 100.0 0.0 117,601 – 23,501 

UNIQA Global ABS Income Fund, Bregenz, Austria 5) 100.0 100.0 0.0 12,586 – 17,473 

WAMCO INKA Global Corporate Bond Fonds, Dusseldorf 5) 100.0 100.0 0.0 78,870 – 2,050 

Holdings in mutual funds 


FlexBond-Plus-INVEST, Berlin 5) 77.4 77.4 0.0 18,676 – 435 

Keppler-Global Alpha-LBB-INVEST, Berlin 5) 76.6 76.6 0.0 57,323 – 7,073 

VermögensStruktur Chance Inhaber-Anteile, Berlin 5) 87.4 87.4 0.0 33,162 – 2,642 


financial 

statements 

if not 

31.12.2008 

Nonconsolidated subsidiaries (IAS 27) 

Babefi-Holding GmbH i. L., Berlin 100.0 100.0 100.0 72 6 29.06.2007 

Bankenservice AO i. L., Moscow 100.0 100.0 100.0 n / a n / a 31.12.2007 

BB-Grundstücksgesellschaft mit beschränkter Haftung, Berlin 1) 100.0 94.9 100.0 51 0 31.12.2007 

BB-Leasing GmbH, Berlin 

DirektBankService GmbH Unternehmensgruppe Bankgesellschaft 

100.0 100.0 100.0 2,326 537 31.12.2007 

Berlin, Berlin 100.0 100.0 100.0 104 1 31.12.2007 

egs Entwicklungsgesellschaft Südhorn mbH, Berlin 94.0 94.0 94.0 – 1,677 – 500 31.12.2006 

Eurospeedway Lausitz Entwicklungs GmbH, Berlin 100.0 100.0 100.0 425 – 2 31.12.2006 

FAKT Immobilien Management-Verwaltungs GmbH, Berlin 100.0 100.0 100.0 – 418 – 444 31.12.2006 

FURIS Verwaltung GmbH & Co. Vermietungs-KG, Pöcking 6) 94.0 94.0 50.0 14 1 31.12.2006 

Gartenstadt Stahnsdorf GmbH i. L., Berlin 6) GfBI Beteiligungsmanagement GmbH 

49.0 49.0 49.0 3 – 1 01.01.2008 

(formerly: Bavaria Vertriebs GmbH), Berlin 100.0 100.0 100.0 100 0 31.12.2007 

GfBI Group Services GmbH, Berlin 

Grundstücksgesellschaft Weichselstraße GbR 

100.0 100.0 100.0 272 17 31.12.2007 

– STADT UND LAND-Fonds 1 –, Berlin 

Harpalus Verwaltungsgesellschaft mbH & Co. Vermietungs KG i. L., 

60.2 60.2 60.2 3,833 179 31.12.2007 

Munich 78.1 78.1 78.1 61 – 518 31.12.2007 

HaWe Verwaltungsgesellschaft mbH, Berlin 1) 100.0 100.0 100.0 26 0 31.12.2007 

HILOG Beteiligungs GmbH & Co. Mobilienleasing KG, Pöcking 5) 92.5 92.5 92.5 0 24,529 

IDL Beteiligungsgesellschaft mbH, Berlin 100.0 100.0 100.0 20 – 1 31.12.2007 

IDL Objektbeteiligungsgesellschaft mbH & Co. KG, Berlin 100.0 100.0 100.0 128 – 8 31.12.2007 

IDLG Immobiliendienstleistungen GmbH, Berlin 1) 100.0 100.0 100.0 2,275 0 31.12.2007 

LBB Reinsurance Ltd. i. L., Dublin 5) 100.0 100.0 100.0 0 569 

MIKOS Verwaltungs GmbH & Co. Vermietungs KG, Munich 94.0 94.0 55.3 24 – 1 31.12.2007 

SDZ Ostbrandenburg GmbH, Berlin 100.0 100.0 100.0 164 122 31.12.2007 

Wilkendorf Bau- und Projektentwicklungsgesellschaft mbH, Berlin 100.0 100.0 100.0 83 – 809 31.12.2007 

Notes 

187

Other Notes 


Special purpose entities (SIC 12), special purpose 

and publicly issued funds – nonconsolidated – 

(IAS 27v in conjunction with SIC 12) 

Total share 

held by the 

Group 

in % 

of which 

indirectly 

in % 

Voting rights 

held by the 

Group 

in % 

Equity 2) 

in € ’000 

Result 2) 

in € ’000 


financial 

statements 

if not 

31.12.2008 

Bavaria Immobilien Development GmbH & Co. Public Golf 

Wilkendorf KG, Berlin 4) vorl. 

0.0 0.0 0.0 0 – 125 31.12.2007 

Bavaria Immobilien Development GmbH & Co. Sandy-Lyle 

Wilkendorf KG, Berlin 4) vorl. 

0.0 0.0 0.0 0 – 712 31.12.2007 

Check Point Charlie Inc., London 0.0 0.0 0.0 0 – 17 31.12.2007 

Portfolio Purchasing Company RT1 Ltd., London 0.0 0.0 0.0 0 0 31.12.2007 




PPC Holdings Ltd., London 0.0 0.0 0.0 25 20 31.12.2007 

Starts (Ireland) PLC Series 2005-8, Ireland 0.0 0.0 0.0 n / a n / a 

Starts (Ireland) PLC Series 2007-11, Ireland 0.0 0.0 0.0 n / a n / a 

Joint ventures (IAS 31) – valued – 

BerlinOnline Stadtportal GmbH & Co. KG, Berlin 45.0 45.0 45.0 2,542 265 31.12.2006 

Joint ventures (IAS 31) – nonvalued – 

BerlinOnline Stadtportalbeteiligungsgesellschaft mbH, Berlin 45.0 45.0 45.0 28 1 31.12.2007 

BHS Berliner Hannoversche Software GmbH, Hanover 50.0 50.0 50.0 1,122 – 30 31.12.2007 

CidS! Computer in die Schulen gemeinnützige Gesellschaft mbH, 

Berlin 50.0 50.0 50.0 81 – 42 31.12.2007 

GbR TOCOTAX 0.0 0.0 33.3 0 – 140 31.12.2007 

Gesellschaft bürgerlichen Rechts Möllendorffstraße / Parkaue, 

Berlin 50.0 50.0 50.0 – 2,485 – 310 31.12.2007 

KARUS Beteiligungs GmbH & Co. Grundbesitz KG, Munich 3) 33.0 33.0 33.0 26 1 

NORD EK Norddeutsche Einkaufskoordination der Landesbank 

Berlin AG und der Norddeutsche Landesbank Girozentrale GbR, 

Berlin / Hanover 0.0 0.0 50.0 228 36 31.12.2007 

Associated companies (IAS 28) – valued – 

LBS Norddeutsche Landesbausparkasse Berlin-Hannover, 

Berlin / Hanover 7) 12.0 12.0 12.0 310,770 13,600 31.12.2007 

PEB Capital B. V. in liquidation, Hilversum 42.4 42.4 42.4 229 459 31.12.2007 

Special purpose entities (SIC 12) / special purpose and 

publicly issued funds – associated (IAS 28) – valued – 

LINGOHR-ALPHA-SYSTEMATIC-LBB-INVEST, Berlin 5) 17.3 17.3 0.0 0 6,623 

VermögensStruktur Wachstum Inhaber-Anteile, Berlin 49.4 49.4 0.0 40,058 0 30.06.2008 

Associated companies (IAS 28) – nonvalued – 

Apollon Immobilien Verwaltungs GmbH & Co. KG 

– Vierter IBV-Immobilienfonds für Deutschland –, Berlin 47.5 47.5 47.5 35,332 2,382 31.12.2007 

Apollon Immobilien Verwaltungsgesellschaft mbH, Berlin 30.0 30.0 30.0 67 4 31.12.2007 

Atos Worldline Processing GmbH, Frankfurt / Main 3) 13) 25.1 25.1 25.1 9,698 0 31.12.2007 

B + S Card Service GmbH, Frankfurt / Main 25.1 25.1 25.1 12,435 3,630 30.09.2007 

BBB Bürgschaftsbank zu Berlin-Brandenburg GmbH, Berlin 21.8 21.8 21.8 8,194 408 31.12.2007 

Gaia Immobilien Verwaltungs GmbH & Co. KG 

– Dritter IBV-Immobilienfonds International –, Berlin 8) 100.0 100.0 100.0 – 1 – 64 31.12.2006 

Gaia Immobilien Verwaltungs GmbH & Co. Objekt Bautzener 

Gesundbrunnen KG, Berlin 49.0 49.0 49.0 – 112 1,945 31.12.2007 

Gumes Verwaltung GmbH & Co. Objekt Rostock KG, Munich 39.6 39.6 20.0 26 0 31.12.2007 

InvestitionsBank des Landes Brandenburg, Potsdam 3) 7) 15) 25.0 25.0 14.3 189,315 5,495 31.12.2007 

Modernisierungsgesellschaft „Wohnen in Berlin-Charlottenburg, 

Fritschestraße 67“ GbR, Berlin 30.9 30.9 30.9 n / a n / a 31.12.2007 

Projektgesellschaft Forum Neukölln GbR mit auf das 

Gesellschaftsvermögen beschränkter Haftung, Berlin 0.0 0.0 40.0 0 0 31.12.2005 

Theseus Immobilien Management GmbH & Co. KG 

– Zweiter IBV-Immobilienfonds International –, Berlin 3) 26.8 26.8 26.8 37,866 – 1,635 31.12.2006 

WISUS Beteiligungs GmbH & Co. Zweite Vermietungs KG, Munich 49.0 49.0 36.3 – 3,346 140 31.12.2007 

188


Minimum holding of 20 % 

Total share 

held by the 

Group 

in % 

of which 

indirectly 

in % 

Voting rights 

held by the 

Group 

in % 

Equity 2) 

in € ’000 

Result 2) 

in € ’000 


financial 

statements 

if not 

31.12.2008 

Aufbau- und Dienstleistungsgesellschaft mbH Objekt- und 

Baubetreuung Mecklenburg-Vorpommern, Berlin 8) 9) 94.0 94.0 94.0 1,861 – 28 31.12.2007 

Bavaria Immobilien Projektsteuerungs GmbH & Co. 

Objekt Berlin-Mitte Leipziger Straße KG, Berlin 8) 9) 94.0 94.0 94.0 – 2,494 2,030 31.12.2005 

Friedrichsfelder Viertel Bauprojekt GmbH, Berlin 9) 47.6 47.6 47.6 72 9 31.12.2007 

Lausitzring Eurodrom Verwaltungs-GmbH, Klettwitz 10) 60.0 60.0 60.0 – 9 0 31.12.2007 

Lausitzring GmbH & Co. KG, Klettwitz 10) 70.0 70.0 70.0 – 84,324 2 31.12.2007 

Theseus Immobilien Management GmbH & Co. 

Objekt Leipziger Straße KG, Berlin 8) 9) 100.0 100.0 100.0 5 863 31.12.2007 

Wohnbau Tafelgelände Beteiligungs GmbH, Nuremberg 8) 9) 75.0 75.0 75.0 33 2 31.12.2006 

Wohnbau Tafelgelände GmbH & Co. KG, Nuremberg 8) 9) 75.0 75.0 75.0 602 – 597 31.12.2006 

Special purpose entities (SIC 12) / special purpose and 

publicly offered funds with minimum holding of 20 % 

E.I. Cap.-Welt-Kasko 100 PlusZins II, Luxembourg 11) 12) 75.1 75.1 0.0 37,815 229 31.07.2008 

E.I. Cap.-Welt-Kasko 95 Top Level, Luxembourg 11) 12) 71.9 71.9 0.0 15,885 0 31.07.2008 

Magna Africa Fund, London 11) 12) 32.4 32.4 0.0 150,909 15,144 31.12.2007 

OP Extra Bond Euro - hedged, Cologne 11) 22.3 22.3 0.0 299,809 12,941 31.12.2007 

S.A.M. Global II, Graz, Austria 11) 12) 66.2 66.2 0.0 75,222 2,570 30.09.2007 

S.A.M. Vermögensverwaltung Global, Graz, Austria 11) 12) 58.1 58.1 0.0 16,841 1,439 30.09.2007 

1) A control and / or profit and loss transfer agreement has been entered into with this company. 

2) Financial statement data in accordance with the German Commercial Code unless otherwise stated. 

3) Held for sale in accordance with IFRS 5 

4) Provisional annual financial statement figures as at 31 December 2007 

5) IFRS consolidation data 

6) Classified as subsidiaries due to power to govern financial and operating policies and / or appoint members of governing bodies (IAS 27.13) 

or beneficial ownership of majority of risks and rewards (SIC 12.10) 

7) Classified as associates due to significant influence in the form of representation on governing bodies or participation in determining financial and operating policies (IAS 28.7) 

8) Not a subsidiary due to lack of control (protected under detailed agreement) 

9) Not an associate due to lack of significant influence (venture capital, no constructive influence rebuttal of IAS 28.7) or through non-consolidated subsidiary 

10) Not classified as a subsidiary or associated company as insolvency administrators have been appointed 

11) Equity is the fund volume, result (net income for the year) is net result from income and expenses. 

12) Publicly offered fund; the issuing company is not part of the Group and the Group does not exercise control or a material influence over it 

13) The company has a profit transfer agreement with a majority third party 

14) Individual tranches of the “Tender Option Program“ of Crown Court I LLC; TOB total in € thousand: equity: –68,989; net profit / loss for the period: 116,600 

15) The investment was cancelled as at 31 December 2005; an action for declaratory judgment is pending 

ECB rates on 31 December 2008 

16) € 1 = USD 1.39170 

17) € 1 = GBP 0.95250 


Notes 

189

Other Notes 

List of companies with control and / or profit transfer agreements with Landesbank Berlin Holding AG 

Company Parent company 

Result 

before profit 

transfer 

in € ‘000 


financial 

statements 

if not 

31.12.2008 

Landesbank Berlin AG, Berlin Landesbank Berlin Holding AG 100,011 31.12.2007 

68 Corporate governance 

The declarations of conformity from the Board of Management and the Supervisory Board required in accordance with Article 161 of the 

German Stock Corporation Act relating to the German Corporate Governance Code were, and will continue to be, published by the Group’s 

listed public limited companies (Landesbank Berlin Holding AG, Berlin-Hannoversche Hypothekenbank AG) on their respective websites. 

190




Chairman 




Chairman 

President of the German Savings Banks 

and Giro Association (DSGV) 

Bärbel Wulff * 

Deputy Chairwoman 

Chair of the Works Council 


Dietmar P. Binkowska 

until 21 November 2008 


of NRW.BANK 

Gregor Böhmer 

Managing President of the 

German Savings Banks and 

Giro Association of Hesse-Thuringia 

Dagmar Brose * 

Consultant in the Finance division 


Hans Jörg Duppré 

President of the Deutscher Landkreistag 

(German County Association) 

Christina Förster * 

Financial Services Secretary, 


Artur Grzesiek 

since 24 November 2008 

Chairman of the Board of 

Management of Sparkasse Köln / Bonn 

Sascha Händler * 



Export finance customer adviser 


Jürgen Hilse 


of Kreissparkasse Göppingen 

Claus Friedrich Holtmann 

Managing President of the 

East German Savings Bank Association 

Michael Jänichen * 

Divisional Manager of Regional Corporate 

Banking at Landesbank Berlin AG 

Daniel Kasteel * 



Customer adviser for sales division east 

Thomas Mang 


of Lower Saxony 

Astrid Maurer * 



Women’s Officer, Landesbank Berlin AG 

Andreas Rohde * 



Peter Schneider 


of Baden-Württemberg 

Friedrich Schubring-Giese 


of Versicherungskammer Bayern 

Joachim Tonndorf * 

Former Financial Services Secretary, 


Dr Harald Vogelsang 


of HASPA Finanzholding 

and Hamburger Sparkasse AG 

Frank Wolf * 

Head of Financial Services Department, 


* Employee representatives 

Notes | Executive Bodies 

191

Responsibility Statement 

To the best of our knowledge and in accordance with the applicable reporting principles, the consolidated financial statements give a true 

and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the management report of the Group includes 

a fair review of the development and performance of the business and the position of the Group, together with a description of the principal 

opportunities and risks associated with the expected development of the Group for the remaining months of the financial year. 

Berlin, 4 March 2009 

The Board of Management 

Hans-Jörg Vetter Dr. Thomas Veit 

192

Auditors’ report 

“We have audited the consolidated financial statements – consisting of the balance sheet, the income statement, the presentation of recognised 

income and expenses, the cash flow statement and the notes to the consolidated financial statements – and the Group management report 

prepared by Landesbank Berlin Holding AG, Berlin, for the financial year from 1 January to 31 December 2008. The preparation of the 

consolidated financial statements and the Group management report in accordance with IFRS as adopted by the EU and the supplementary 

provisions of Article 315a (1) of the German Commercial Code is the responsibility of the Company’s Board of Management. Our responsibility 

is to express an opinion on the consolidated financial statements and the Group management report based on our audit. 

We conducted our audit of the consolidated financial statements in accordance with Article 317 of the German Commercial Code 

and the generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW). Those 

standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial 

position and results of operations in the consolidated financial statements prepared in accordance with the applicable accounting standards 

and in the Group management report are detected with reasonable assurance. Knowledge of the business activities and the economic 

and legal environment of the Group, as well as evaluations of possible misstatements, are taken into account in the determination of audit 

procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated 

financial statements and the Group management report are examined primarily on a test basis within the framework of the audit. 

The audit includes assessing the annual financial statements of those entities included in consolidation, the definition of the entities to be 

included in consolidation and the accounting and consolidation principles used and significant estimates made by the Board of Management, 

as well as evaluating the overall presentation of the consolidated financial statements and the Group management report. We believe that 

our audit provides a reasonable basis for our opinion. 

Our audit has not led to any reservations. 

In our opinion, based on the findings of our audit, the consolidated financial statements comply with IFRS as adopted by the EU 

and the supplementary provisions of Article 315a (1) of the German Commercial Code and give a true and fair view of the net assets, 

financial position and results of operations of the Group in accordance with these principles. On the whole, the Group management report, 

which is consistent with the consolidated financial statements, provides a suitable understanding of the Group’s position and suitably 

presents the opportunities and risks of future development.” 

Berlin, 5 March 2009 

PricewaterhouseCoopers 

Aktiengesellschaft 

Wirtschaftsprüfungsgesellschaft 

(Günter Borgel) (Mark Maternus) 

Auditor Auditor 

Responsibility Statement | Auditors’ report 

193

Important addresses 

194 


Alexanderplatz 2 

D-10178 Berlin 

Telephone: + 49 30 86 95 00 

Fax: + 49 30 86 95 09 

www.lbb-holding.de 




Telephone: + 49 30 86 98 01 

Fax: + 49 30 86 98 30 74 

www.lbb.de 

London branch 

LBB Landesbank Berlin London Branch 

1 Crown Court, 66 Cheapside 

GB-London EC2V 6 LR 

Telephone: + 44 20 75 72 62 00 

Fax: + 44 20 75 72 62 99 

Luxembourg branch 

LBB Landesbank Berlin 

30, Boulevard Royal 

L-2449 Luxembourg 

Telephone: + 352 46 89 39 0 

Fax: + 352 46 89 39 20 19 

Berliner Sparkasse 

Niederlassung der Landesbank Berlin AG 



Telephone: + 49 30 86 98 01 

Fax: + 49 30 86 98 30 74 

www.berliner-sparkasse.de 

A current list of Retail Banking, Regional 

Cor porate Banking, Investment and Real 

Estate Centres can be found on the Internet 

at www.berliner-sparkasse.de / Standorte.


Private Banking Bundesallee 171 D-10715 Berlin + 49 30 869 840 70 

Sales division south 

Neukölln, Schöneberg, Steglitz, 

Tempelhof, Zehlendorf 


Investments Uhlandstrasse 97 D-10715 Berlin + 49 30 869 747 624 

Sales division east 

Hellersdorf, Köpenick, Lichtenberg, 

Marzahn, Treptow 


Investments Frankfurter Allee 147 D-10365 Berlin + 49 30 869 742 694 

Sales division central 

Friedrichshain, Kreuzberg, 

Mitte, Prenzlauer Berg 


Investments Friedrichstrasse 185 –190 D-10117 Berlin + 49 30 869 746 547 

Sales division north 

Hohenschönhausen, Pankow, 

Reinickendorf, Wedding, Weißensee 


Investments Scharnweberstrasse 14 D-13405 Berlin + 49 30 / 869 747 865 

Sales division west 

Charlottenburg, Spandau, 

Tiergarten, Wilmersdorf 


Investments Berliner Strasse 40 / 41 D-10715 Berlin + 49 30 869 737 796 

Sales division Real Estate Centres Badensche Strasse 23 D-10715 Berlin + 49 30 869 840 51 


Head Regional Corporate Banking division Badensche Strasse 23 D-10715 Berlin + 49 30 869 843 89 

North Regional Corporate Banking division Berliner Strasse 40 / 41 D-10715 Berlin + 49 30 869 737 777 

South Regional Corporate Banking division / 

Brandenburg division 

Central Berlin Regional Corporate Banking 

division 


Badensche Strasse 23 D-10715 Berlin + 49 30 869 747 671 

Badensche Strasse 23 D-10715 Berlin + 49 30 869 746 575 

Regional Corporate Banking Centre division Badensche Strasse 23 D-10715 Berlin + 49 30 869 830 23 

BusinessLine division Brunnenstrasse 111 D-13355 Berlin + 49 30 869 869 869 

195



Berlin and Former East German States 

Housing Companies 

Former West German States 

Dusseldorf office 

Frankfurt / Main office 

Hamburg office 

Munich office 

International Division 

Consortium Financing / Syndication 

Foreign Investors 

Amsterdam office 

London office 

Prague office 

Warsaw office 

196 

Corneliusstrasse 7 



Königsallee 60 

Bockenheimer Anlage 2 

Neuer Wall 19 

Perusastrasse 7 




Schouwweg 13 A 

1 Crown Court 66, Cheapside 

Meteor Centre Office Park 

Sokolovská 100 / 94 

ul. Widok 8 




D-40212 Dusseldorf 

D-60322 Frankfurt / Main 

D-20354 Hamburg 

D-80333 München 




NL-2243 BB Wassenaar 

GB-London EC2V 6 LR 

CZ-18000 Prag 8 

PL-00-023 Warschau 

+ 49 30 259 955 80 

+ 49 30 259 955 86 

+ 49 30 259 957 90 

+ 49 211 839 22 01 

+ 49 69 150 66 11 

+ 49 40 286 658 921 

+ 49 89 291 949 10 

+ 49 30 259 957 10 

+ 49 30 259 955 95 

+ 49 30 259 996 65 

+ 31 70 514 665 7 

+ 44 20 757 264 93 

+ 420 2 360 801 50 

+ 48 22 690 656 5


Business Management 

Relationship Management 

Client Business 

Savings Banks and Genobanks 

Banks and Investment Managers 

Institutional Customers 

Credit 



Alexanderplatz 2 D-10178 Berlin + 49 30 245 625 65 

+ 49 30 245 929 03 

Alexanderplatz 2 D-10178 Berlin + 49 30 869 629 18 

+ 49 30 869 624 30 

+ 49 30 869 619 01 

+ 49 30 869 620 00 

+ 49 30 869 625 51 

+ 49 30 869 629 00 

Treasury und Trading Alexanderplatz 2 D-10178 Berlin + 49 30 245 624 07 

+ 49 30 245 665 01 

International business Alexanderplatz 2 D-10178 Berlin + 49 30 245 925 70 

197

198 

Berlin-Hannoversche 

Hypothekenbank AG 

Landesbank Berlin International S.A., 

Luxembourg 

LBB Finance 

(Ireland) plc, Dublin 

LBS Norddeutsche Landesbausparkasse 

Berlin-Hannover AöR, 

Berlin / Hanover 



Berliner Sparkasse* 

90.4 % Landesbank Berlin 

Investment GmbH 

25.1 % Atos Worldline Processing GmbH, 

Frankfurt / Main 

25.1 % B + S Card Service GmbH, 


12.0 % 75.0 % --1 Aktie netbank Aktiengesellschaft, 

Hamburg 

IDLG Immobiliendienstleistungen GmbH LBB-Immobilien-Service GmbH 

LBB Grundstücks-Gesellschaft mbH 

der Landesbank Berlin AG 


Unternehmensgruppe Landesbank Berlin 

BerlinOnline Stadtportal GmbH & Co. KG 

GfBI Gesellschaft für Beteiligungen 

und Immobilien mbH 

7.8 % Finanz Informatik GmbH & Co. KG, 


45.0 % Versicherungsservice GmbH 

Unternehmensgruppe Landesbank Berlin 

Major investments are shown. 

Investments of which no percentage is shown are wholly owned and 

based in Berlin, unless otherwise stated. 

* A branch of Landesbank Berlin AG Status: March 2009 

Banks and Finance Companies Real Estate Other Services

Imprint 

Published by 


Corporate Communications 



Designed and produced by 

HGB Hamburger Geschäftsberichte GmbH & Co. KG 

Photography 

Corbis 

Getty Images 

Mauritius 

plainpicture 

Printed by 

Broermann Offset-Druck GmbH, Troisdorf-Spich 

The German version of this report is definitive. 

ISSN 1868-3339




P. O: Box 11 08 01 


Telephone: + 49 30 86 95 00 

Fax: + 49 30 86 95 09 

Should you have any questions regar ding 

the Annual Report, please contact: 

Corporate Communications 

Christina Pries 

Telephone: + 49 30 86 96 63 89 

Fax: + 49 30 86 96 63 93 

E-mail: ir@lbb.de 

www.lbb-holding.de 

www.lbb.de

Corp Landesbank Berlin Holding

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