Deutsche Bank - International Financial Management

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In the coming future materially and adversely revenues as well as profits of the bank may get affected due to the adverse market conditions, unfavorable prices and volatility along with cautious investor and client sentiment.

The bank might also experience higher funding costs in case the additional tier-1 (AT1) securities and contingent convertible capital instruments cannot be serviced due to insufficient available distributable items (ADI) for Deutsche Bank AG in accordance with stand-alone entity reporting under HGB this could lead to.

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Regulatory reforms

The regulatory reforms enacted and proposed in response to weaknesses in the financial sector together with the increased regulatory scrutiny and discretion will impose material costs on us. This also creates significant uncertainty for us and may adversely affect our business plans and our ability to execute our strategic plans. Those changes that require us to maintain increased capital may significantly affect our business model, financial condition and result of operation as well as the competitive environment generally. Other regulatory reforms, such as bank levies, may also materially increase our forecasted operating costs. Regulatory reforms in respect of resolvability or resolution meas- ures may also impact our shareholders and creditors.

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Legal and regulatory proceedings

The bank is subject to a number of legal proceedings and regulatory investigations whose outcome is difficult to estimate. These proceedings may substantially and adversely affect their planned results of operations, financial condition and reputation.

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Risk management policies, procedures and methods as well as operational risks

The bank has devoted significant resources to develop their risk management policies, procedures and methods. Policies have been built with respect to market, credit, liquidity and operational risk. But in response to extreme market conditions or in response to emerging risks they may not be fully effective in mitigating their risk exposures.

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Strategy 2020

If the bank is unable to implement successfully our Strategy 2020, which is also subject to the previously mentioned factors like extreme market conditions and in emerging risks then they may be unable to achieve their financial objectives. There is a chance that the bank we may incur losses or low profitability or erosions of their capital base, and their financial condition. At the same time results of operations and share price may be materially and adversely affected.

Key Risk Metrics:

The following selected key risk ratios and corresponding metrics form part of the banks holistic risk management across individual risk types.

Common Equity Tier 1 Ratio (CET 1), Internal Capital Adequacy Ratio (ICA), Leverage Ratio (LR), Liquidity Coverage Ratio (LCR), and Stressed Net Liquidity Position (SNLP) as high-level metrics are fully integrated across strategic planning, risk appetite framework, stress testing, and recovery & resolution planning practices, which are reviewed and approved by the companies Management Board at least annually.

Apart from Internal Capital Adequacy Ratio and Total Economic Capital, the following ratios and metrics are based on the fully loaded CRR/CRD 4 rules.

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Opportunities Involved:

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Macro-economic and market conditions

If the economic conditions, such as the growth prospects, competitive conditions in the financial services industry and the interest rate environment improve beyond forecasted levels, this could lead to increasing revenues that may only be partially offset by additional costs.

This would thus improve both incomes before income taxes and cost-income ratio directly and subsequently improve regulatory measures such as CET 1 and leverage ratio.

On the other hand if market conditions, price levels, volatility and investor sentiment develop better than expected, this will positively impact Deutsche Bank’s revenues and profits.

Similarly, if the bank experiences higher levels of customer demand and market share than anticipated, this may positively affect the results of operations.

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Strategy 2020

Strategy 2020 seeks to enable the bank to become a simpler and more efficient, less risky, better capitalized and better run organization.

If implemented to a greater extent or under more favorable conditions than anticipated the Strategy 2020 will create further opportunities.

If businesses and processes improve beyond the companies planning assumptions then cost efficiencies can be realized sooner and to a greater extent than forecasted, this could also positively impact the results of operations.

Links Referred to:

https://en.wikipedia.org/wiki/European_System_of_Central[pic 6]

_Banks#Organization

https://annualreport.deutsche-bank.com/2015/ar/deutsche- bank- group/strategy-2020.html[pic 7]

https://www.db.com/ir/en/annual-reports.htm[pic 8]

. http://www.euromoney.com/Article/3532835/AT1- capitalCoCo-bonds-what-you-should-know.html