Deutsche Bank (DB) 20-F 2004 FY Annual report (foreign)

As filed with the Securities and Exchange Commission on March 24, 2005

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 20-F

	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
	or
X	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
	or
	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-15242

Deutsche Bank Aktiengesellschaft

(Exact name of Registrant as specified in its charter)

Deutsche Bank Corporation

(Translation of Registrant’s name into English)

Federal Republic of Germany

(Jurisdiction of incorporation or organization)

Taunusanlage 12, 60325 Frankfurt am Main, Germany

(Address of Registrant’s principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
Ordinary Shares, no par value	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act.

NONE
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

NONE
(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

Ordinary Shares, no par value           517,269,673
(as of December 31, 2004)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X           No 

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17             Item 18 X

TABLE OF CONTENTS

EX-4.1: MATERIAL CONTRACT

EX-4.2: MATERIAL CONTRACT

EX-4.3: MATERIAL CONTRACT

EX-4.4: MATERIAL CONTRACT

EX-8.1: LIST OF SUBSIDIARIES

EX-12.1: CERTIFICATION

EX-12.2: CERTIFICATION

EX-13.1: CERTIFICATION

EX-13.2: CERTIFICATION

EX-14.1: LEGAL OPINION

EX-15.1: CONSENT OF KPMG

Table of Contents

Table of Contents	ii
PART I		1
Item 1: Identity of Directors, Senior Management and Advisers		1
Item 2: Offer Statistics and Expected Timetable		1
Item 3: Key Information		1
Selected Financial Data		1
Dividends		5
Exchange Rate and Currency Information		6
Long-Term Credit Ratings		7
Capitalization and Indebtedness		7
Reasons for the Offer and Use of Proceeds		7
Risk Factors		7
Item 4: Information on the Company		12
History and Development of the Company		12
Business Overview		12
Our Group Divisions		16
Corporate and Investment Bank Group Division		16
Private Clients and Asset Management Group Division		20
Corporate Investments Group Division		24
Corporate Center		26
Competitive Environment		26
Regulation and Supervision		27
Organizational Structure		41
Property, Plant and Equipment		41
Information Required by Industry Guide 3		42
Item 5: Operating and Financial Review and Prospects		43
Overview		43
Significant Accounting Policies and Critical Accounting Estimates		43
Effects of 1999/2000 German Tax Reform Legislation and Accounting for Income Taxes		47
Operating Results		49
Results of Operations by Segment (2004 vs. 2003)		56
Group Divisions		59
Comparison between 2003 and 2002		70
Liquidity and Capital Resources		73
Off-balance Sheet Arrangements with Unconsolidated Entities		74
Tabular Disclosure of Contractual Obligations		75
Research and Development, Patents and Licenses		75
Recently Adopted Accounting Pronouncements		76
New Accounting Pronouncements		77
Item 6: Directors, Senior Management and Employees		79
Directors and Senior Management		79
Board Practices of the Board of Managing Directors		86
Group Executive Committee		86
Compensation		87
Employees		90
Share Ownership		91
Item 7: Major Shareholders and Related Party Transactions		95
Major Shareholders		95
Related Party Transactions		96
Interests of Experts and Counsel		98

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Item 8: Financial Information	99
Consolidated Statements and Other Financial Information	99
Significant Changes	102
Item 9: The Offer and Listing	103
Offer and Listing Details	103
Plan of Distribution	104
Markets	105
Selling Shareholders	106
Dilution	106
Expenses of the Issue	106
Item 10: Additional Information	107
Share Capital	107
Memorandum and Articles of Association	107
Material Contracts	107
Exchange Controls	107
Taxation	107
Dividends and Paying Agents	111
Statement by Experts	111
Documents on Display	111
Subsidiary Information	111
Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk	112
Risk Management	112
Item 12: Description of Securities other than Equity Securities	141
PART II	142
Item 13: Defaults, Dividend Arrearages and Delinquencies	142
Item 14: Material Modifications to the Rights of Security Holders and Use of Proceeds	142
Item 15: Controls and Procedures	142
Item 16A: Audit Committee Financial Expert	142
Item 16B: Code of Ethics	143
Item 16C: Principal Accountant Fees and Services	143
Item 16E: Purchases of Equity Securities by the Issuer and Affiliated Purchasers	144
PART III	146
Item 17: Financial Statements	146
Item 18: Financial Statements	146
Item 19: Exhibits	146
Signatures	147
Financial Statements	F-1
Supplemental Financial Information	S-1

iii

Deutsche Bank Aktiengesellschaft, which we also call Deutsche Bank AG, is a stock corporation organized under the laws of the Federal Republic of Germany. Unless otherwise specified or required by the context, in this document, references to “we”, “us”, and “our” are to Deutsche Bank Aktiengesellschaft and its consolidated subsidiaries.

Due to rounding, numbers presented throughout this document may not add up precisely to the totals we provide and percentages may not precisely reflect the absolute figures.

Our registered address is Taunusanlage 12, 60325 Frankfurt am Main, Germany, and our telephone number is +49-69-910-00.

Cautionary Statement Regarding Forward-Looking Statements

We make certain forward-looking statements in this document with respect to our financial condition and results of operations. In this document, forward-looking statements include, among others, statements relating to:

– our implementation of our strategic initiatives;

– the development of aspects of our results of operations;

– our expectations of the impact of risks that affect our business, including the risks of loss on our credit exposures and risks relating to changes in interest and currency exchange rates and in asset prices; and

– other statements relating to our future business development and economic performance.

In addition, we may from time to time make forward-looking statements in our periodic reports to the United States Securities and Exchange Commission on Form 6-K, annual and interim reports, invitations to Annual General Meetings and other information sent to shareholders, offering circulars and prospectuses, press releases and other written materials. Our Board of Managing Directors, Supervisory Board, officers and employees may also make oral forward-looking statements to third parties, including financial analysts.

Forward-looking statements are statements that are not historical facts, including statements about our beliefs and expectations. We use words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “estimate”, “project”, “should”, “potential”, “reasonably possible”, “plan” and similar expressions to identify forward-looking statements.

By their very nature, forward-looking statements involve risks and uncertainties, both general and specific. We base these statements on our current plans, estimates, projections and expectations. You should therefore not place too much reliance on them. Our forward-looking statements speak only as of the date we make them, and we undertake no obligation to update any of them in light of new information or future events.

We caution you that a number of important factors could cause our actual results to differ materially from those we describe in any forward-looking statement. These factors include, among others, the following:

– changes in general economic and business conditions;

– changes and volatility in currency exchange rates, interest rates and asset prices;

– changes in governmental policy and regulation, and political and social conditions;

– changes in our competitive environment;

– the success of our acquisitions, divestitures, mergers and strategic alliances;

– our success in implementing our Business Realignment Program and realizing the benefits anticipated therefrom; and

– other factors, including those we refer to in “Item 3: Key Information — Risk Factors” and elsewhere in this document and others to which we do not refer.

Use of Non-GAAP Financial Measures

This document contains non-U.S. GAAP financial measures. Non-U.S. GAAP financial measures are measures of our historical or future performance, financial position or cash flows that contain adjustments that exclude or include amounts that are included or excluded, as the case may be, from the most directly comparable measure calculated and presented in accordance with U.S. GAAP in our financial statements. Examples of our non-U.S. GAAP financial measures are: operating cost base,

iv

underlying pre-tax profit, underlying cost/income ratio, average active equity and underlying pre-tax return on equity. For descriptions of these non-U.S. GAAP financial measures and the adjustments made to the most directly comparable U.S. GAAP financial measures to obtain them, please refer to Note [28] to our consolidated financial, which is incorporated by reference herein.

Use of Internet Addresses

This document contains inactive textual addresses of Internet websites operated by us and third parties. Reference to such websites is made for informational purposes only, and information found at such websites is not incorporated by reference into this document.

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PART I

Item 1: Identity of Directors, Senior Management and Advisers

Not required because this document is filed as an annual report.

Item 2: Offer Statistics and Expected Timetable

Not required because this document is filed as an annual report.

Item 3: Key Information

Selected Financial Data

We have derived the data we present in the tables below from our audited consolidated financial statements for the years presented. You should read all of the data in the tables below together with the consolidated financial statements and notes included in “Item 18: Financial Statements” and the information we provide in “Item 5: Operating and Financial Review and Prospects.” Except where we have indicated otherwise, we have prepared all of the consolidated financial information in this document in accordance with generally accepted accounting principles in the United States (which we refer to as U.S. GAAP). Our group division and segment data come from our management reporting systems and are not necessarily based on, or prepared in accordance with, U.S. GAAP. For a discussion of the major differences between our management reporting systems and our consolidated financial statements under U.S. GAAP, see “Item 5: Operating and Financial Review and Prospects – Results of Operations by Segment.”

In reading our income statement data, you should note that the financial accounting treatment under U.S. GAAP for changes in German income tax rates results in a negative impact on our results of operations in 2004, 2003, 2002 and 2001, and a large positive impact in 2000. These tax rate changes, which were enacted in 2000 and 1999, were:

– significant reductions, effective in 1999 and 2001, in the corporate income tax rate; and

– the reduction to zero, effective in 2002, of the tax rate applicable to capital gains on the sale of certain equity securities.

These reductions in tax rates resulted in significant decreases in our deferred taxes payable, with a corresponding reduction in our income tax expense for 2000. In 2001, 2002, 2003 and 2004 when we sold securities that had accumulated deferred tax provisions within other comprehensive income, we reversed that deferred tax provision, which resulted in a significant increase in income tax expense.

We more fully explain the financial accounting treatment of these tax rate changes in “Item 5: Operating and Financial Review and Prospects – Effects of 1999/2000 German Tax Reform Legislation and Accounting for Income Taxes.”

The financial accounting treatment of the tax rate changes led to approximately€ 9.3 billion of our€ 13.5 billion net income in 2000. If we exclude the effect of tax rate changes, our net income would have been approximately€ 4.2 billion in 2000. Due to sales of equity securities for which there were accumulated deferred tax provisions in other comprehensive income, it was necessary to reverse€ 120 million,€ 215 million,€ 2.8 billion and€ 995 million of those provisions as income tax expense in 2004, 2003, 2002 and 2001, respectively. During these years, our net income was€ 2.5 billion,€ 1.4 billion,€ 397 million and€ 167 million, respectively. Without the additional income tax expense we describe above, and also without the cumulative effect of accounting changes we describe below, our net income would have been€ 2.6 billion,€ 1.4 billion,€ 3.2 billion and€ 1.4 billion in 2004, 2003, 2002 and 2001, respectively. We recommend that you consider our net income excluding the impact of

1

the changes in income tax rates and the reversing effect and the cumulative effect of accounting changes when you compare 2004, 2003, 2002, 2001 and 2000 to one another and to earlier and future periods.

In 2003, as a result of the application of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), we recorded a€ 140 million gain, net of tax, as a cumulative effect of a change in accounting principles in our Consolidated Statement of Income. Also in 2003, we adopted SFAS No. 150, “Accounting for Certain Instruments with Characteristics of Both Liabilities and Equity” (“SFAS 150”) and recorded an after-tax gain of€ 11 million. The requirements of SFAS 150 also resulted in a reduction in shareholders’ equity of€ 2.9 billion during 2003. Upon adoption of the requirements of SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) as of January 1, 2002, we discontinued the amortization of goodwill with a net carrying amount of€ 8.7 billion and we recognized a€ 37 million tax-free gain as a cumulative effect of a change in accounting principles in our Consolidated Statement of Income. In addition, in 2001, we adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) and in that year recorded an expense of€ 207 million, after tax, as a cumulative effect of a change in accounting principles in our Consolidated Statement of Income.

2

Income Statement Data

in€ m. and U.S.$ m. (except per share data)	2004		1	2004			2003			2002			2001			2000
Net interest revenues	$	7,015			5,182			5,847			7,186			8,620			7,028
Provision for loan losses	$	503			372			1,113			2,091			1,024			478
Net interest revenues after provision for loan losses	$	6,512			4,810			4,734			5,095			7,596			6,550
Commissions and fee revenues	$	12,869			9,506			9,332			10,834			10,727			11,693
Trading revenues, net	$	8,375			6,186			5,611			4,024			6,031			7,625
Other noninterest revenues	$	1,413			1,044			478			4,503			4,163			8,133
Total net revenues	$	29,169			21,546			20,155			24,456			28,517			34,001
Compensation and benefits	$	13,839			10,222			10,495			11,358			13,360			13,526
Goodwill impairment2/impairment of intangibles	$	26			19			114			62			871			771
Restructuring activities	$	541			400			(29	)		583			294			125
Other noninterest expenses	$	9,309			6,876			6,819			8,904			12,189			12,710
Total noninterest expenses	$	23,715			17,517			17,399			20,907			26,714			27,132
Income before income tax expense and cumulative effect of accounting changes	$	5,454			4,029			2,756			3,549			1,803			6,869
Income tax expense	$	1,945			1,437			1,327			372			434			2,643
Income tax expense (benefit) from the 1999/2000 change in effective tax rate and the reversing effect	$	162			120	3		215	3		2,817	3		995	3		(9,287	)3
Income before cumulative effect of accounting changes, net of tax	$	3,347			2,472	3		1,214	3		360	3		374	3		13,513	3
Cumulative effect of accounting changes, net of tax4		–			–			151			37			(207	)		–
Net income4	$	3,347			2,472	3		1,365	3		397	3		167	3		13,513	3
Basic earnings per share5
Income before cumulative effect of accounting changes, net of tax	$	6.80			5.02	3		2.17	3		0.58	3		0.60	3		22.00	3
Cumulative effect of accounting changes, net of tax4		–			–			0.27			0.06			(0.33	)		–
Net income4	$	6.80			5.02	3		2.44	3		0.64	3		0.27	3		22.00	3
Diluted earnings per share6
Income before cumulative effect of accounting changes, net of tax	$	6.13			4.53	3		2.06	3		0.57	3		0.60	3		21.72	3
Cumulative effect of accounting changes, net of tax4		–			–			0.25			0.06			(0.33	)		–
Net income4	$	6.13			4.53	3		2.31	3		0.63	3		0.27	3		21.72	3
Dividends paid per share7	$	2.03			1.50			1.30			1.30			1.30			1.15

1	Amounts in this column are unaudited. We have translated the amounts solely for your convenience at a rate of U.S.$ 1.3538 per€, the noon buying rate on December 31, 2004.
2	Goodwill amortization in 2001 and 2000.
3	These figures reflect the income tax expense (benefit) from changes in 1999 and 2000 effective tax rates pursuant to German tax law and the reversing effect. We describe these changes and their effects in “Item 5: Operating and Financial Review and Prospects – Effects of 1999/2000 German Tax Reform Legislation and Accounting for Income Taxes.”
4	In 2003, 2002 and 2001, these figures reflect the cumulative effect of changes in accounting principle. We describe these changes and their effects on our Consolidated Statement of Income in Note [2] to our consolidated financial statements.
5	We calculate basic earnings per share for each period by dividing our net income by the weighted average number of common shares outstanding.
6	We calculate diluted earnings per share for each period by dividing our net income by the weighted average number of common shares and potential dilutive common shares outstanding.
7	Dividends we declared and paid in the year.

Balance Sheet Data

in€ m. and U.S.$ m.	2004		1	2004		2003		2002		2001		2000
Total assets	$	1,137,284			840,068		803,614		758,355		918,222		928,994
Loans, net	$	184,583			136,344		144,946		167,303		259,838		274,660
Deposits	$	446,035			329,469		306,154		327,625		374,089		350,552
Long-term debt	$	144,681			106,870		97,480		104,055		166,908		154,484
Common shares	$	1,884			1,392		1,490		1,592		1,591		1,578
Total shareholders’ equity	$	35,069			25,904		28,202		29,991		40,193		43,683
Tier I risk-based capital (BIS*)2	$	25,353			18,727		21,618		22,742		24,803		23,504
Total risk-based capital (BIS*)2	$	38,735			28,612		29,871		29,862		37,058		39,343

*	Bank for International Settlements.
1	Amounts in this column are unaudited. We have translated the amounts solely for your convenience at a rate of U.S.$ 1.3538 per€, the noon buying rate on December 31, 2004.
2	We derived and reported the BIS figures in accordance with U.S. GAAP. The figures for 2000 were originally reported in accordance with International Accounting Standards (now called International Financial Reporting Standards, or IFRS). These 2000 figures are restated and reported in accordance with U.S. GAAP for comparison purposes, and are unaudited. For further information, see “Item 4: Information on the Company – Regulation and Supervision – Regulation and Supervision in Germany – Principal Laws and Regulators - Financial Statements and Audits.”

3

Certain Key Ratios and Figures

In reading the post-tax return on average total shareholders’ equity, adjusted average total shareholders’ equity (which we call average active equity), post-tax return on average total assets and price/earnings ratio appearing below, you should note the effects on our net income of the financial accounting treatment under U.S. GAAP for income tax rate changes we describe above. The table on the next page presents these figures excluding these effects.

	2004			2003			2002
Return on average total shareholders’ equity (post-tax)1		9.09	%2		4.72	%2		1.08	%2
Return on average active equity (post-tax)3		9.98	%2		4.99	%2		1.27	%2
Return on average total assets (post-tax)4		0.28	%2		0.16	%2		0.04	%2
Equity to assets ratio5		3.08	%2		3.31	%2		3.97	%2
Cost/income ratio6		79.9	%		81.8	%		78.8	%
Employees7:
In Germany		27,093			29,878			33,844
Outside Germany		38,324			37,804			43,598
Branches:
In Germany		831			845			936
Outside Germany		728			731			775
Market price:
High	€	77.77		€	66.04		€	82.65
Low	€	52.37		€	32.97		€	35.60
End of year	€	65.32		€	65.70		€	43.90
Price/earnings ratio8 (at year-end)		14.42	2		28.44	2		69.68	2

1	Net income as a percentage of average month-end shareholders’ equity.
2	These figures reflect income tax expense of€ 120 million in 2004, income tax expense of€ 215 million in 2003 and income tax expense of€ 2.8 billion in 2002 resulting from the reversal of 1999/2000 credits for tax rate changes pursuant to German tax law. We describe these changes and their effects in “Item 5: Operating and Financial Review and Prospects – Effects of 1999/2000 German Tax Reform Legislation and Accounting for Income Taxes.” The table on the next page presents these figures excluding these effects.
3	Net income as a percentage of adjusted average month-end shareholders’ equity. We calculate this adjusted measure of our return on average total shareholders’ equity to make it easier to compare us to our competitors. We refer to this adjusted measure as our “post-tax return on average active equity.” This is not a measure of performance provided for in U.S. GAAP, however, and you should not compare our ratio to other companies’ ratios without considering the differences in calculation of these ratios. The items for which we adjust our ratio result primarily from our portfolio of shareholdings in publicly-listed industrial companies. We have held most of our larger participations for over 20 years, and are reducing these holdings over time. For further information on our industrial holdings, see “Item 4: Information on the Company – Our Group Divisions – Corporate Investments Group Division.” We realize gains or losses on these securities only when we sell them. These securities are also responsible for most of the accounting effects of the income tax rate changes we describe above. Accordingly, the adjustments we make to our average total shareholders’ equity to derive our average active equity are to exclude average unrealized net gains on securities available for sale, net of applicable tax effects. In addition we adjust our average total shareholders’ equity for the effect of our paying a dividend once a year following approval at the Annual General Meeting. The following table shows the adjustments we make to our average total shareholders’ equity to calculate our average active equity:

in€ m.	2004			2003			2002
Average total shareholders’ equity		27,194			28,940			36,789
Average unrealized net gains on securities available for sale, net of applicable tax effects		(1,601	)		(810	)		(4,842	)
Average dividends		(815	)		(756	)		(701	)
Average active equity		24,778		��	27,374			31,246

4	Net income as a percentage of average total assets.
5	Average shareholders’ equity as a percentage of average total assets for each year.
6	Total noninterest expenses as a percentage of net interest revenues before provision for loan losses, plus noninterest revenues.
7	Number of full-time equivalent employees as of the end of each period.
8	Market price per share at year-end divided by diluted earnings per share.

Our net income included the material effects of reversing income tax credits related to 1999 and 2000 tax law changes, as described in “Item 5: Operating and Financial Review and Prospects – Effects of 1999/2000 German Tax Reform Legislation and Accounting for Income Tax”, and the cumulative effect of accounting changes as described in Note [2] to our consolidated financial statements. The following table shows our net income excluding these effects:

in€ m.			Per share		Per share					Per share			Per share						Per share			Per share
(except per share amounts)	2004		(basic)		(diluted)		2003			(basic)			(diluted)			2002			(basic)			(diluted)
Net income		2,472		5.02		4.53		1,365			2.44			2.31			397			0.64			0.63
Add (deduct):
Reversal of 1999/2000 credits for tax rate changes		120		0.24		0.23		215			0.39			0.36			2,817			4.58			4.50
Cumulative effect of accounting changes, net of tax		–		–		–		(151	)		(0.27	)		(0.25	)		(37	)		(0.06	)		(0.06	)
Net income before reversal of 1999/2000 credits for tax rate changes and cumulative effect of accounting changes, net of tax		2,592		5.26		4.76		1,429			2.56			2.42			3,177			5.16			5.07

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Dividends

The following table shows in euro and in U.S. dollars the dividend per share for the years ended December 31, 2004, 2003, 2002, 2001 and 2000. We declare our dividends at our Annual General Meeting following each year. Our dividends are based on the results of Deutsche Bank as prepared in accordance with German accounting principles. Because we declare our dividends in euro, the amount an investor actually receives in any other currency depends on the exchange rate between the euro and that currency at the time the euros are converted into that currency.

The table does not reflect German withholding tax that will apply to payments made to non-German residents. These are the German withholding tax rates that apply to our dividend payments made to German taxpayers or to non-German residents:

– dividends that we paid before 2002 were subject to German withholding tax at an aggregate rate of 26.375% (consisting of a 25% withholding tax and a 1.375% surcharge); and

– dividends that we paid in 2002 and thereafter will, as a result of changes in German tax law, be subject to German withholding tax at an aggregate rate of 21.1% (consisting of a 20% withholding tax and a 1.1% surcharge).

Residents of countries that have entered into an income tax convention with Germany may be eligible to receive a refund from the German tax authorities of a portion of the amount withheld. For dividends paid before 2002, residents of the United States who are fully eligible for benefits under the income tax convention entered into between the United States and Germany were entitled to receive a refund from the German tax authorities equal to 16.375% of those dividends. For dividends paid in 2002 and thereafter, those U.S. residents were entitled to receive a refund equal to 6.1% of those dividends.

For dividends we paid before 2002, U.S. residents who received a refund from the German tax authorities were treated for U.S. federal income tax purposes as though they had received an additional dividend of 5.88% of the dividend we actually paid. For example, for a declared dividend of 100, U.S. residents were treated for U.S. federal income tax purposes as though they received a dividend of 105.88. For dividends paid in 2002 and thereafter, U.S. residents were not treated as though they received the additional dividend.

For U.S. federal income tax purposes, the dividends we pay will not be eligible for the dividends received deduction generally allowed for dividends received by U.S. corporations from other U.S. corporations.

See “Item 10: Additional Information – Taxation” for more information on the tax treatment of our dividends beginning in 2002.

	Dividends per		Dividends per		Payout ratio2, 3
	share1		share
2004 (proposed)	$	2.30	€	1.70		33	%
2003	$	1.89	€	1.50		61	%
2002	$	1.36	€	1.30		203	%
2001	$	1.16	€	1.30		481	%
2000	$	1.22	€	1.30		6	%

1	For your convenience, we present dividends in U.S. dollars for each year by translating the euro amounts at the noon buying rate described below under -“Exchange Rate and Currency Information” on the last business day of that year.
2	We define our payout ratio as the dividends we paid per share in respect of each year as a percentage of our basic earnings per share for that year.
3	In reading our payout ratios for each year, you should note the effects we describe above on our net income of the financial accounting treatment under U.S. GAAP for income tax rate changes and also of the cumulative effects of accounting changes. We describe the tax rate changes and their effects in “Item 5: Operating and Financial Review and Prospects – Effects of 1999/2000 German Tax Reform Legislation and Accounting for Income Taxes.” We describe the accounting changes and their cumulative effects in Note [2] to our consolidated financial statements.

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Exchange Rate and Currency Information

Germany’s currency is the euro. For your convenience, we have translated some amounts denominated in euro appearing in this document into U.S. dollars. Unless otherwise stated, we have made these translations at U.S.$ 1.3538 per euro, the noon buying rate for euros on December 31, 2004. The “noon buying rate” is the rate the Federal Reserve Bank of New York announces for customs purposes as the buying rate for foreign currencies in the City of New York on a particular date. You should not construe any translations as a representation that the amounts could have been exchanged at the rate used on December 31, 2004 or any other date.

The noon buying rate for euros on December 31, 2004 may differ from the actual rates we used in the preparation of the financial information in this document. Accordingly, U.S. dollar amounts appearing in this document may differ from the actual U.S. dollar amounts that we originally translated into euros in the preparation of our financial statements.

Fluctuations in the exchange rate between the euro and the U.S. dollar will affect the U.S. dollar equivalent of the euro price of our shares quoted on the German stock exchanges and, as a result, are likely to affect the market price of our shares on the New York Stock Exchange. These fluctuations will also affect the U.S. dollar value of cash dividends we may pay on our shares in euros. Past fluctuations in foreign exchange rates may not necessarily be predictive of future fluctuations.

The following table shows the period-end, average, high and low noon buying rates for the euro. In each case, the period-end rate is the noon buying rate announced on the last business day of the period.

in U.S.$ per€	Period-end		Average		1	High		Low
2005
March (through March 18)		1.3311		–			1.3465		1.3127
February		1.3274		–			1.3274		1.2773
January		1.3049		–			1.3476		1.2954
2004
December		1.3538		–			1.3625		1.3224
November		1.3259		–			1.3288		1.2703
October		1.2746		–			1.2783		1.2271
September		1.2417		–			1.2417		1.2052
2004		1.3538		1.2478			1.3625		1.1802
2003		1.2597		1.1411			1.2597		1.0361
2002		1.0485		0.9499			1.0485		0.8594
2001		0.8901		0.8909			0.9535		0.8370
2000		0.9388		0.9207			1.0335		0.8270

¹ We calculated the average rates for each year using the average of the noon buying rates on the last business day of each month during the year. We did not calculate average exchange rates within months.

On March 18, 2005, the noon buying rate was U.S.$ 1.3311 per euro.

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Long-Term Credit Ratings

We believe that maintaining our credit quality is a key part of the value we offer to our clients and shareholders. Below are our long-term credit ratings:

	Dec 31, 2004	Dec 31, 2003	Dec 31, 2002
Moody’s Investors Service, New York1	Aa3	Aa3	Aa3
Standard & Poor’s, New York2	AA-	AA-	AA-
Fitch Ratings, New York3	AA-	AA-	AA-

1	Moody’s defines the Aa3 rating as denoting bonds that are judged to be high quality by all standards. Moody’s rates Aa bonds lower than the best bonds (which it rates Aaa) because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risk appear somewhat greater than Aaa securities. The numerical modifier 3 indicates that Moody’s ranks the obligation in the lower end of the Aa category.
2	Standard and Poor’s defines its AA rating as denoting an obligor that has a very strong capacity to meet its financial commitments. The AA rating is the second-highest category of Standard and Poor’s ratings. Standard and Poor’s notes that an AA rated obligor differs from the highest rated obligors only in small degree. The minus sign shows relative standing within the AA rating category.
3	Fitch Ratings defines its AA rating as very high credit quality. Fitch Ratings uses the AA rating to denote a very low expectation of credit risk. According to Fitch Ratings, AA-ratings indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. Category AA is Fitch Ratings second-highest rating category.

As of the date of this document, there has been no change in any of the above ratings.

Each rating reflects the view of the rating agency only at the time it gave us the rating, and you should evaluate each rating separately and look to the rating agencies for any explanations of the significance of their ratings. The rating agencies can change their ratings at any time if they believe that the circumstances so warrant. You should not view these long-term credit ratings as recommendations to buy, hold or sell our securities.

Capitalization and Indebtedness

Not required because this document is filed as an annual report.

Reasons for the Offer and Use of Proceeds

Not required because this document is filed as an annual report.

Risk Factors

An investment in our shares involves a number of risks. You should carefully consider the following information about the risks we face, together with the other information in this document when you make investment decisions involving our shares.

Market Declines and Volatility can Materially Adversely Affect our Revenues and Profits.

In recent years we have increased our exposure to the financial markets as we have emphasized growth in our investment banking activities, including trading activities, and de-emphasized growth in our traditional lending business. Accordingly, we believe that we are more at risk from adverse developments in the financial markets than we were when we derived a larger percentage of our revenues from traditional lending activities. Market declines can cause our revenues to decline, and, if we are unable to reduce our expenses at the same pace, can cause our profitability to erode. Volatility can sometimes also adversely affect us.

An overall market downturn can adversely affect our business and financial performance. Market downturns can occur not only as a result of purely economic factors, but also as a result of war, acts of terrorism, natural disasters or other similar events.

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We may incur significant losses from our trading and investment activities due to market fluctuations.

We enter into and maintain large trading and investment positions in the fixed income, equity and currency markets, primarily through our Corporate Banking & Securities Corporate Division. We describe these activities in “Item 4: Information on the Company – Our Group Divisions – Corporate and Investment Bank Group Division.” We also have made significant investments in individual companies through our Corporate Investments Group Division, which we describe in “Item 4: Information on the Company – Our Group Divisions – Corporate Investment Group Division”. We also maintain smaller trading and investment positions in other assets. Many of these trading positions include derivative financial instruments.

In each of the product and business lines in which we enter into these kinds of positions, part of our business entails making assessments about the financial markets and trends in them. The revenues and profits we derive from many of our positions and our transactions in connection with them are dependent on market prices. When we own assets, market price declines can expose us to losses. Many of the more sophisticated transactions we describe in our discussions of our Corporate Banking & Securities Corporate Division are designed to profit from price movements and differences among prices. If prices move in a way we have not anticipated, we may experience losses. Also, when markets are volatile – characterized by rapid changes in price direction – the assessments we have made may prove to lead to lower revenues or profits, or losses, on the related transactions and positions.

In addition, we sometimes commit capital and take market risk to facilitate certain capital markets transactions and doing so can result in losses as well as income volatility.

Protracted market declines can reduce liquidity in the markets, making it harder to sell assets and possibly leading to material losses.

In some of our businesses, protracted market movements, particularly asset price declines, can reduce the level of activity in the market or reduce market liquidity. These developments can lead to material losses if we cannot close out deteriorating positions in a timely way. This may especially be the case for assets we hold for which there are not very liquid markets to begin with. Assets that are not traded on stock exchanges or other public trading markets, such as derivatives contracts between banks, may have values that we calculate using models other than publicly-quoted prices. Monitoring the deterioration of prices of assets like these is difficult and could lead to losses we did not anticipate.

Even where losses are for our clients’ accounts, they may fail to repay us, leading to material losses for us, and our reputation can be harmed.

While our clients would be responsible for losses we incur in taking positions for their accounts, we may be exposed to additional credit risk as a result of their need to cover the losses. Our business may also suffer if our clients lose money and we lose the confidence of clients in our products and services.

Our investment banking revenues may decline in adverse market or economic conditions.

Our investment banking revenues, in the form of financial advisory and underwriting fees, directly relate to the number and size of the transactions in which we participate and are susceptible to adverse effects from sustained market downturns. These fees and other revenues are generally linked to the value of the underlying assets and therefore decline as asset values decline. In particular, our revenues and profitability could sustain material adverse effects from a significant reduction in the number or size of debt and equity offerings and merger and acquisition transactions.

We may generate lower revenues from brokerage and other commission- and fee-based businesses.
Market downturns are likely to lead to declines in the volume of transactions that we execute for our clients and, therefore, to declines in our noninterest revenues. In addition, because the fees that we charge for managing our clients’ portfolios are in many cases based on the value or performance of those portfolios, a market downturn that reduces the value of our clients’ portfolios or increases the

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amount of withdrawals would reduce the revenues we receive from our asset management and private banking businesses.

Even in the absence of a market downturn, below-market performance by our mutual funds may result in increased withdrawals and reduced inflows, which would reduce the revenue we receive from our asset management business.

Our nontraditional credit businesses materially add to our traditional banking credit risks.

Like other banks and providers of financial services, we are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations. Many of the businesses we engage in beyond the traditional banking businesses of deposit-taking and lending also expose us to credit risk.

In particular, many of the businesses we have engaged in through our Corporate Banking & Securities Corporate Division entail credit transactions, frequently ancillary to other transactions. Nontraditional sources of credit risk can arise, for example, from:

– holding securities of third parties;

– entering into swap or other derivative contracts under which counterparties have obligations to make payments to us;

– executing securities, futures, currency or commodity trades that fail to settle at the required time due to nondelivery by the counterparty or systems failure by clearing agents, exchanges, clearing houses or other financial intermediaries; and

– extending credit through other arrangements.

Parties to these transactions, such as trading counterparties, may default on their obligations to us due to bankruptcy, political and economic events, lack of liquidity, operational failure or other reasons. We describe our credit risk and the methods we use to monitor it in “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk – Risk Management – Credit Risk.”

If we are unable to implement our Business Realignment Program (BRP), we may be unable to achieve
cost savings and to increase our return on equity, and our future earnings and share price may be
materially and adversely affected.

Beginning in 2002, we undertook a variety of measures that have enabled us to reduce costs, lower our risk profile, increase efficiency and raise our profitability. To further pursue these objectives, we announced the Business Realignment Program (BRP) in the fourth quarter of 2004. The BRP covers five key initiatives: aligning our sales and trading platforms, aligning our corporate banking efforts, reorganizing our Asset Management Business Division, adding regional focus in Germany and other regions as well as streamlining our infrastructure. We may be unable to achieve cost savings and to increase our return on equity, and our future earnings and share price may be materially and adversely affected, should we fail to implement the BRP initiatives or should the BRP initiatives that are implemented fail to produce the anticipated benefits. A number of internal and external factors could prevent the implementation of these initiatives or the realization of their anticipated benefits, including changes in the markets in which we are active, global, regional and national economic conditions and increased competition for business and employees. We describe our BRP initiatives and their anticipated benefits, as well as factors that could affect the success of these initiatives, in ''Item 4: Information on the Company – Business Overview – Our Business Strategy’’ and ''Item 5: Operating and Financial Review and Prospects – Operating Results – Executive Summary.’’

The size of our clearing operations exposes us to a heightened risk of material losses should these
operations fail to function properly.

We have very large clearing and settlement businesses. While many other banks and financial institutions operate large clearing businesses, we believe that the sheer scope of ours heightens the risk that we, our customers or other third parties could lose substantial sums if our systems fail to operate properly for even short periods. This will be the case even where the reason for the interruption is external to us. In such a case, we might suffer harm to our reputation even if no material amounts of money are

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lost. This could cause customers to take their business elsewhere, which could materially harm our revenues and our profits.

Our risk management policies, procedures and methods may leave us exposed to unidentified or
unanticipated risks, which could lead to material losses.

We have devoted significant resources to developing our risk management policies, procedures and assessment methods and intend to continue to do so in the future. Nonetheless, our risk management techniques and strategies may not be fully effective in mitigating our risk exposure in all economic market environments or against all types of risk, including risks that we fail to identify or anticipate. Some of our qualitative tools and metrics for managing risk are based upon our use of observed historical market behavior. We apply statistical and other tools to these observations to arrive at quantifications of our risk exposures. These tools and metrics may fail to predict future risk exposures. These risk exposures could, for example, arise from factors we did not anticipate or correctly evaluate in our statistical models. This would limit our ability to manage our risks. Our losses thus could be significantly greater than the historical measures indicate. In addition, our quantified modeling does not take all risks into account. Our more qualitative approach to managing those risks could prove insufficient, exposing us to material unanticipated losses. See “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk” for a more detailed discussion of the policies, procedures and methods we use to identify, monitor and manage our risks. If existing or potential customers believe our risk management is inadequate, they could take their business elsewhere. This could harm our reputation as well as our revenues and profits.

We may have difficulty in identifying and executing acquisitions, and both making acquisitions and
avoiding them could materially harm our results of operations and our share price.

We consider business combinations from time to time. Even though we review the companies we plan to acquire, it is generally not feasible for these reviews to be complete in all respects. As a result, we may assume unanticipated liabilities, or an acquisition may not perform as well as expected. Were we to announce or complete a significant business combination transaction, our share price could decline significantly if investors viewed the transaction as too costly or unlikely to improve our competitive position. In addition, we might have difficulty integrating any entity with which we combine our operations. Failure to complete announced business combinations or failure to integrate acquired businesses successfully into ours could materially adversely affect our profitability. It could also affect investors’ perception of our business prospects and management, and thus cause our share price to fall. It could also lead to departures of key employees, or lead to increased costs and reduced profitability if we felt compelled to offer them financial incentives to remain.

If we avoid entering into additional business combination transactions or fail to identify attractive companies to acquire, market participants may, especially in the current climate of consolidation, perceive us negatively. We may also be unable to expand our businesses, especially into new business areas, as quickly or successfully as our competitors if we do so through organic growth alone. These perceptions and limitations could cost us business and harm our reputation.

We may have difficulties selling noncore assets at favorable prices, or at all.

As part of our efforts to focus on our core businesses, we may seek to sell certain noncore assets. Unfavorable business or market conditions may make it difficult for us to sell such assets at favorable prices, or may preclude such a sale altogether.

Events at companies in which we have invested may make it harder to sell our holdings and result in
material losses irrespective of market developments.

We have made significant investments in individual companies, primarily through our Corporate Investments Group Division. Where we have done so, the effect of losses and risks at those companies may restrict our ability to sell our shareholdings and may reduce the value of our holdings considerably, including the value thereof reflected in our financial statements, or require us to take charges to our

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earnings, even where general market conditions are favorable. Our larger, less liquid interests held in our Corporate Investments Group Division are particularly vulnerable given the size of these exposures.

Intense competition, especially in our home market of Germany, where we have the largest single
concentration of our businesses, could materially hurt our revenues and profitability.

Competition is intense in all of our primary business areas in Germany and the other countries in which we conduct large portions of our business, including other European countries and the United States. If we are unable to respond to the competitive environment in Germany or in our other major markets with attractive product and service offerings that are profitable for us, we may lose market share in important areas of our business or incur losses on some or all of our activities. In addition, downturns in the German economy could add to the competitive pressure, through, for example, increased price pressure and lower business volumes for us and our competitors.

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Item 4: Information on the Company

History and Development of the Company

The legal and commercial name of our company is Deutsche Bank Aktiengesellschaft. The original Deutsche Bank was founded in Berlin in 1870 as a joint stock company principally dedicated to financing foreign trade. To support this business, after its founding, Deutsche Bank expanded by opening branches in Bremen, Yokohama, Shanghai, Hamburg and London. This international growth was supported by Deutsche Bank’s establishment of the German Overseas Bank (Deutsche Ueberseeische Bank) in 1886 and by Deutsche Bank’s taking a stake in the newly created German Asian Bank (Deutsch-Asiatische Bank) in 1889. To complement its international activities, Deutsche Bank developed a strong domestic presence in Germany by accepting cash deposits and developing relationships with large corporations. Beginning in the 1880s, Deutsche Bank began underwriting securities of these large corporations, with particular emphasis on the electrical engineering and steel industries. In the 1890s, Deutsche Bank expanded its domestic presence by opening new branches and acquiring smaller regional banks.

In 1929, following a long period of retrenchment after World War I, Deutsche Bank merged with the second largest bank in Germany, Disconto-Gesellschaft. The merged company operated under the name Deutsche Bank und Disconto-Gesellschaft until 1937, at which time it reverted to the Deutsche Bank name.

In 1952, Deutsche Bank disincorporated and split into three separate institutions (Norddeutsche Bank Aktiengesellschaft, Rheinisch-Westfälische Bank Aktiengesellschaft, and Süddeutsche Bank Aktiengesellschaft) pursuant to a 1952 law limiting the scope of credit institutions. These three institutions later reunified. Deutsche Bank Aktiengesellschaft, as it is known today, is a stock corporation organized under the laws of Germany.

The merger of the three institutions and our corporate name were entered into the Commercial Register of the District Court in Frankfurt am Main on May 2, 1957. We operate under the German Stock Corporation Act(Aktiengesetz).We are registered under registration number HRB 30 000. Our registered address is Taunusanlage 12, 60325 Frankfurt am Main, Germany, and our telephone number is +49-69-910-00. Our agent in the United States is: James T. Byrne, Jr., Deutsche Bank Americas, c/o Office of the Secretary, 60 Wall Street, Mail Stop NYC60-4006, New York, NY 10005.

We have made no material capital expenditures or divestitures since January 1, 2004.

Since January 1, 2004, there have been no public takeover offers by third parties with respect to our shares and we have made no public takeover offers in respect of other companies’ shares.

Business Overview

Our Organization

Headquartered in Frankfurt, Germany, we are the largest bank in Germany, and one of the largest financial institutions in Europe and the world, as measured by total assets of€ 840 billion as of December 31, 2004. As of this date, we employed 65,417 people on a full-time equivalent basis, operating in 74 countries out of 1,559 facilities worldwide, of which 53% were in Germany. We offer a wide variety of investment, financial and related products and services to private individuals, corporate entities and institutional clients around the world.

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In order to best serve our clients and manage our own investments, we are organized into three group divisions, two of which are further sub-divided into corporate divisions. As of December 31, 2004, our group divisions were:

– The Corporate and Investment Bank(CIB), comprising two corporate divisions:

– Corporate Banking & Securities (CB&S)

– Global Transaction Banking (GTB)

– Private Clients and Asset Management(PCAM), comprising two corporate divisions:

– Asset and Wealth Management (AWM)

– Private & Business Clients (PBC)

– Corporate Investments(CI)

In addition to the three group divisions, our organization includes a Corporate Center (CC), which supports cross-divisional management and leadership.

We have operations or dealings with existing or potential customers in almost every country in the world. These operations and dealings include:

– subsidiaries and branches in many countries;

– representative offices in many other countries; and

– one or more representatives assigned to serve customers in almost every other country.

The following table shows our net revenues by geographical region, based on our management reporting systems:

in€ m.	2004			20031			20021
Germany
CIB		2,319			2,539			2,770
PCAM		4,393			4,318			5,451
Total Germany		6,712			6,857			8,221
Rest of Europe
CIB		4,522			5,032			4,066
PCAM		2,173			2,176			2,295
Total Rest of Europe2		6,695			7,209			6,361
North America (primarily U.S.)
CIB		4,390			4,603			4,899
PCAM		1,201			1,473			1,460
Total North America		5,591			6,076			6,359
South America
CIB		72			128			146
PCAM		–			1			16
Total South America		73			130			162
Asia-Pacific
CIB		2,027			1,891			1,916
PCAM		262			248			277
Total Asia-Pacific		2,289			2,140			2,194
Corporate Investments		621			(921	)		2,998
Consolidation & Adjustments		(63	)		(223	)		253
Consolidated net revenues3		21,918			21,268			26,547

1	Reclassified to conform to the 2004 presentation.
2	The United Kingdom accounted for over one-half of these revenues in 2004, 2003, and 2002. Rest of Europe also includes our African operations.
3	Consolidated total net revenues comprise interest revenues, interest expense and total noninterest revenues (including net commission and fee revenues). Revenues are attributed to countries based on the location in which the Group’s booking office is located. The location of a transaction on our books is sometimes different from the location of the headquarters or other offices of a customer and different from the location of our personnel who entered into or facilitated the transaction. Where we record a transaction involving our staff and customers and other third parties in different locations frequently depends on other considerations, such as the nature of the transaction, regulatory considerations and transaction processing considerations.

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Management Structure

We operate the three group divisions under the umbrella of a“virtual holding company.”We use this term to mean that, while we subject the group divisions to the overall responsibility of our Board of Managing Directors, which is supported by the Corporate Center, we do not have a separate legal entity holding these three group divisions and we nevertheless allocate substantial managerial autonomy to them. To support this structure, key governance bodies function as follows:

TheBoard of Managing Directorshas the overall responsibility for the management of Deutsche Bank, as provided by the German Stock Corporation Act. Its members are appointed and removed by theSupervisory Boardwhich is a separate corporate body. Our Board of Managing Directors focuses on strategic management, corporate governance, resource allocation, risk management and control.

TheGroup Executive Committee (GEC),established in 2002, comprises the members of the Board of Managing Directors and the Business Heads of our two client-facing group divisions, CIB and PCAM. Following a change to the responsibilities of the Business Heads of our group divisions in September 2004, one GEC member represents the management of our regions. The GEC is a body that is not required by the Stock Corporation Act. It serves as a tool to coordinate our businesses and regions. We believe this underscores our commitment to a virtual holding structure.

Within each group division, coordination and management functions are handled byOperating Committeesat the group division level andExecutive Committeesfor each of the individual business divisions.Functional Committeesassist the Board of Managing Directors in the management across businesses of specific support and control areas.

Our Business Strategy

Over the years 2002 and 2003, we fundamentally transformed Deutsche Bank by reducing costs, lowering our risk profile, increasing efficiency and raising our profitability. Nevertheless, we still had not fully leveraged our operational potential. In 2004, we built on the ongoing transformation and pursued four strategic priorities: maintaining strict cost, capital and risk discipline, capitalizing on our global leadership in CIB, delivering profitable growth in PCAM and establishing Deutsche Bank as the most reputable brand.

During 2004, we delivered sustained profit growth. We continued our ‘de-risking’ strategy by further reducing our problem loans, provisions for credit losses as well as our exposure to alternative assets while maintaining our strong capitalization with a BIS Tier I ratio in the upper half of our target range of 8–9%.

Our CIB Group Division consolidated its position as a leading player in Corporate and Investment Banking (based upon publicly available revenue information). We built on our improvements in the PCAM Group Division with our Private & Business Clients Corporate Division achieving€ 1 billion in pre-tax profit. Our Asset Management Business Division has reached positions among the world leaders in fixed income funds (source:Institutional Investor, combination of US/ European/ Asian 2004 rankings on year-end 2003 fixed income assets) and in real estate (source:Pensions & Investments, rankings of largest real estate investment managers as of June 30, 2004), and our DWS franchise is the leader in the European mutual fund retail market (source:FERI Fund Market Information, ranking of European Master Group Leaders as of December 31, 2004). Our Private Wealth Management Business Division successfully generated net new money inflows and increased its profitability.

The Deutsche Bank brand is widely recognized throughout the world. By means of targeted, multi-media campaigns and in-depth research with our clients, we further strengthened our brand by increasing its awareness level and value, and reaffirmed our brand essence. We are a global bank with strong roots in our home market Germany, dedicated to excellence, constantly challenging the status quo to deliver superior solutions to our clients.

We delivered the benefits of ongoing ‘transformation’ to our shareholders, by both attractive dividends and continued share buybacks.

Thereby, we laid solid foundations for continued profitable growth in 2005 and beyond. Nevertheless, we believe that a position among the world’s leading banks by market capitalization is a strategic imperative for us. Acknowledging that profitability is a key driver of market value, we deem it critical to further grow our return on equity.

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In September 2004, we announced changes to the responsibilities of the heads of our Corporate Divisions which are represented on the Group Executive Committee (GEC). These new responsibilities, which are described in more detail in “Item 6: Directors, Senior Management and Employees – Group Executive Committee”, are designed to improve service to our clients by aligning complementary business lines and to strengthen the representation of Germany, and other key regions, at GEC level.

Following these changes, we announced the Business Realignment Program (BRP) and other measures in the fourth quarter 2004. The BRP covers five key initiatives with significant strategic and financial impact: aligning our sales and trading platforms, aligning our corporate banking efforts, reorganizing our Asset Management Business Division, adding regional focus in Germany and other regions as well as streamlining our infrastructure.

Aligning our sales and trading platforms.We have built a world-leading sales and trading platform (based upon publicly available revenue information), based on outstanding people, constant innovation in finding solutions for our clients, and a dynamic organization. Increasingly, clients are seeking integrated solutions which embrace both asset classes, equity and debt, while margin pressure in mature products and markets continues to grow. We will respond by integrating investor coverage platforms, and merging specific product units where synergies are greatest. We are also integrating our Emerging Markets platforms across debt and equity, our research model, and our manufacturing and distribution platform for retail customers.

Aligning our corporate banking efforts.Increasingly, corporate clients also require an integrated approach. In response, we will integrate our corporate coverage teams, serving our clients more efficiently, customizing our products more effectively around the particular needs of each client. This allows us to operate more cost-effectively, both in the business and in the supporting infrastructure units.

Reorganizing our Asset Management Business Division.Our primary focus in 2005 will be configuring an efficient organization to drive maximum cost-effectiveness and reduce operational complexity. In addition we plan to reposition our business mix by investing in high fee-generating product areas and by expanding DWS into other European countries and into Asia-Pacific. We will continue to focus on improving our investment performance, supported by the new Global CIO and investment platform. A comprehensive global strategic review of all Asset Management units is currently in process. Specifically, the review of the UK business is looking at all options, including organically growing the business or divesting all or part of it.

Adding regional focus in Germany and other regions.The newly-created Management Committee Germany, which includes representatives from all our businesses and key central functions, will play an important role in deepening our relationships with clients, fostering cross-selling, developing our franchise, and strengthening our dialogue with national, governmental, supervisory and industry-wide bodies in Germany. In addition to Germany, we have established comparable committees in the Americas, the Asia-Pacific region and Japan, as well as our key markets in Europe. These committees represent a key component in our objective to strengthen the regional dimension of our management worldwide.

Streamlining our infrastructure.The changes in our front office structure open up opportunities to further streamline our back office infrastructure. Our goal is to migrate to a new operating model, which leverages smartsourcing opportunities. Smartsourcing includes consolidation of decentralized operations units, outsourcing of processes or parts thereof and taking advantage of diverging cost levels in different locations, e.g., labor costs. We anticipate significant efficiencies in Global Technology and Operations, Credit Risk Management and other back office functions through streamlining and reengineering existing infrastructure and processes, aligned with focused investments in our control environment.

These initiatives are designed to drive revenue growth in targeted areas from both coverage and product synergies while simultaneously creating cost synergies from rationalization, process reengineering and outsourcing. The BRP, together with additional measures in the fourth quarter 2004, will involve a total headcount reduction of approximately 6,400 (on a full-time equivalent basis), who should be notified by the end of 2005. We anticipate that a significant portion of this reduction will arise in the CIB and PCAM Group Divisions as we integrate coverage and product units. The majority of the reduction will arise in infrastructure units. The transfer of jobs to more cost-effective locations will result in

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additional headcount of approximately 1,200. This gives a net reduction in our headcount of approximately 5,200. This figure includes the Efficiency and Investment Plan for Germany announced in December 2004.

Total expenses related to the BRP and additional measures recorded in the fourth quarter 2004 and expected in 2005 are estimated to be approximately€ 1.3 billion, of which€ 0.6 billion (€ 0,4 billion in restructuring and€ 0,2 billion in severance and office-space related charges) was already incurred in the fourth quarter 2004. However, we expect to achieve cost savings of approximately€ 1.2 billion in 2005 in relation to the BRP and the additional measures.

Our strategic objective is to build sustainable leadership positions in our core businesses and increase profitability. This, in turn, allows us to deliver superior returns to our shareholders, and strengthen our strategic autonomy, by placing Deutsche Bank among the world’s-leading financial institutions by market value.

Our Group Divisions

Group division is a term we use to describe the three highest-level divisions of our firm, which are the Corporate and Investment Bank Group Division (CIB), the Private Clients and Asset Management Group Division (PCAM) and the Corporate Investments Group Division (CI). The CIB and PCAM Group Divisions are divided into several corporate divisions, each of which may have several business divisions. The CI Group Division has several business divisions and does not use the intermediate corporate division designation.

As announced on September 21, 2004, we decided to reorganize selected areas of the group divisions CIB and PCAM. In addition, we centralized our business support areas which were formerly part of our group divisions and our Corporate Center into one infrastructure group. This infrastructure group will provide, besides the Corporate Center functions, business support services such as information technology, risk management, controlling and human resources to the entire organization. All changes took effect January 1, 2005. We explain the changes to the businesses of CIB and PCAM in more detail in the sections below. In the following discussion, however, we describe our three group divisions and the Corporate Center as they existed on December 31, 2004.

Corporate and Investment Bank Group Division

The Corporate and Investment Bank Group Division primarily serves global corporations, financial institutions and sovereign and multinational organizations. It also serves medium-sized corporate customers throughout Europe and public sector entities in Europe. This group division generated 61% of our net revenues in 2004, 67% in 2003 and 52% in 2002 (on the basis of our management reporting systems).

The Corporate and Investment Bank Group Division’s operations are predominantly in the world’s primary financial centers, including New York, London, Frankfurt, Tokyo, Singapore and Hong Kong. In 2004, nearly 85% of the revenues of the group division was from the United States and Europe, with most of the European business driven from Germany and the United Kingdom. The Asia-Pacific region accounted for most of the remainder, with activities spread out mainly among the more developed countries.

The businesses that comprise the Corporate and Investment Bank Group Division seek to reach and sustain a leading global position in corporate and institutional banking services, measured by financial performance, market share, reputation and customer franchise while making optimal usage of, and return on, our economic capital. The division also continues to exploit business synergies with the Private Clients and Asset Management Group Division and the Corporate Investments Group Division. The Corporate and Investment Bank Group Division’s activities and strategy are primarily client driven. Teams of specialists in each business division give clients access not only to their own products and services, but also to those of other businesses.

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At December 31, 2004, this group division included two corporate divisions, comprising the following business divisions:

– Corporate Banking & Securities Corporate Division

– Global Markets

– Global Equities

– Global Corporate Finance

– Loan Exposure Management Group

– Global Banking Division

– Global Transaction Banking Corporate Division

– Global Cash Management

– Global Trade Finance

– Trust and Securities Services

Since changes to the responsibilities of the GEC were announced, we have been working on revisions to our operating structure that became effective on January 1, 2005. Within CIB, our two corporate divisions (Corporate Banking & Securities Corporate Division and Global Transaction Banking Corporate Division) remain essentially unchanged. Within Corporate Banking & Securities Corporate Division we will combine our debt and equity sales and trading businesses into a new business division called Global Markets. Global Markets will have nine primary business lines and eight horizontally-integrated customer-facing groups, unified at a local level by strong regional management. A further new business division, Corporate Finance, will consist of most of the former Global Corporate Finance and Global Banking Division business units and will focus on providing advisory, equity and debt financing and structuring services to corporates and financial institutional clients. In addition, CIB’s Client Coverage functions are a key part of the division. The trading units formerly assigned to Global Corporate Finance (Distressed Debt and High Yield) are now part of Global Markets. Loan Trading and trading elements of the Commercial Mortgage Backed Securities business remain in Corporate Finance. Global Transaction Banking will be closely aligned with Corporate Finance, but will remain a separately managed corporate division, providing cash management, trade finance and trust and securities services. Corporate Finance and Global Transaction Banking will together be named Global Banking.

Corporate Banking & Securities Corporate Division

Corporate Division Overview
Corporate Banking & Securities is made up of the business divisions Global Markets, Global Equities, Global Corporate Finance, Loan Exposure Management Group and the Global Banking Division. They offer financial products worldwide ranging from the straightforward issuing of a first-class government fixed-income bond to the individually-structured problem solution for complex financial requirements.

In January 2004 we closed on the purchase of 40 percent stake in United Financial Group, a Moscow investment bank.

Effective January 2004 the deposit products activity within Global Banking Division was transferred to the GTB Corporate Division.

In 2004, we also transferred the London based Private Client Services (PCS) business unit from AWM to CB&S.

In August 2004, we signed an agreement with Berkshire Mortgage Finance L.P., a subsidiary of the Boston-based Berkshire Group, to acquire substantially all of their origination and servicing assets. The acquisition was closed in October 2004.

Products and Services
The Global Markets Business Division is responsible for origination, sales, structuring and trading activities across a wide range of debt, foreign exchange, commodities, derivative and money market products. The division aims to deliver creative solutions to the debt-raising, investing and hedging needs of customers, by being able to price and hedge any market risk that clients anywhere in the world may wish to assume or avoid.

The Global Equities Business Division provides clients with origination, sales, structuring and trading activities across a range of equity and equity-linked products, including equity derivatives and con-

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vertibles. The division offers services covering program trading and index arbitrage, structured equity transactions and equity prime services.

Within our Global Corporate Finance (GCF) Business Division, our clients are offered not only mergers and acquisition and general corporate finance advice together with leveraged debt and equity origination services, but also a variety of credit products and financial services. In addition, we also provide a variety of financial services to the public sector.

Within Global Markets, Global Equities and Global Corporate Finance, in addition to providing products and services to customers, we conduct proprietary trading, or trading on our own account. Most trading activity is undertaken in the normal course of facilitating client business. For example, to facilitate customer flow business, traders will maintain long positions (accumulating securities) and short positions (selling securities we do not yet own) in a range of securities and derivative products, reducing this exposure by hedging transactions where appropriate. While these activities give rise to market and other risk, we do not view this as proprietary trading. However, we also use the Bank’s capital to exploit market opportunities, and this is what we term proprietary trading.

We undertake designated proprietary trading in foreign exchange, fixed income, credit and equity products. Much of this proprietary trading activity takes the form of arbitrage. For example, in index arbitrage, we identify differences between the prices of exchange-traded derivatives (such as futures contracts on an equity index) and the underlying prices on the stock exchange of the individual stocks in the index. In convertible arbitrage, we identify volatility-related pricing differences between the market for convertible debt instruments and the cash and derivatives markets. In credit and equity arbitrage, we use statistics-driven trading strategies based on short-term market movements and indicators to manage our trading book so that the market value of our long positions remains roughly equal to the market value of short positions. We also undertake risk arbitrage, which is generally related to mergers and acquisitions, involving, for example, transactions such as buying a target company’s shares at the same time as selling the bidding company’s shares.

All our trading activities, including proprietary trading, are covered by our risk management procedures and controls which are described in detail in “Item 11: Quantitative and Qualitative Disclosures About Credit, Market and Other Risk – Risk Management – Market Risk – Value-at-Risk Analysis.”

The business division Loan Exposure Management Group (LEMG) has responsibility for the investment-grade loan book, excluding those of medium-sized German companies and those with original maturities of less than 180 days. LEMG actively manages the risk of the loan book through the implementation of a hedging regime on a selective basis. Since the second quarter of 2004 Global Banking Division Business Division transferred its German Mid Cap loan book to LEMG; the transfer included loans with an original maturity of greater than 360 days.

Global Banking Division (GBD) is the business division which includes relationship management functions related to multinational and medium-sized companies domiciled in Germany, as well as to corporate and institutional clients globally. In Germany, this business division also provides varied financial services to public sector customers. These customers include German federal states (Länder) and regional and local authorities in addition to public enterprises and institutions. GBD in Germany has the product responsibility for lending products such as loans and structured finance. Special financing solutions are provided by Asset Finance & Leasing including its subsidiaries Deutsche Immobilien Leasing GmbH and DB Export-Leasing GmbH as well as by Schiffshypothekenbank zu Lübeck AG. GBD outside Germany, not LEMG, has product responsibility for loans to corporate and institutional clients up to 180 days.

Distribution Channels and Marketing
In the Corporate Banking & Securities Corporate Division the focus of our relationship managers and sales teams is on our client relationships. We have structured our client coverage model so as to provide varying levels of standardized or dedicated service to our customers depending on their needs and level of complexity. Dedicated corporate bankers manage the client relationships with our corporate and financial institution clients. Complex and specific needs are served by corporate bankers and a dedicated client sales team.

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Global Transaction Banking Corporate Division

Corporate Division Overview
Global Transaction Banking is primarily engaged in the gathering, moving, safeguarding and controlling of assets for its clients throughout the world.

Global Transaction Banking provides processing, fiduciary and trust services to corporations, financial institutions and governments and their agencies and comprises the following business divisions:

– Global Cash Management;

– Global Trade Finance; and

– Trust and Securities Services

In January 2003 we closed the sale of substantial parts of our Global Securities Services business to State Street Corporation. The completion of the sale of the Italian and Austrian parts of the business occurred in the third quarter of 2003 in a separate but related transaction. In January 2004, we completed the acquisition of Dresdner Bank AG’s German domestic custody business which we successfully integrated by December 2004.

Effective January 2004 the deposit products activity within Global Banking Division was transferred to the GTB Corporate Division.

In July 2004, we sold our wholly owned subsidiary DB Payment Projektgesellschaft to the Betriebscenter fuer Banken Deutschland GmbH & Co KG (BCB), a subsidiary of Deutsche Postbank AG. Henceforth BCB provides payment transaction services to us for our German domestic and parts of our foreign payment transactions. Prior to the sale, DB Payment Projektgesellschaft had been managed within the infrastructure groups of the Private Client and Asset Management Group Division. The loss on sale was partly recognized within the Private & Business Clients Corporate Division and partly within the Global Transaction Banking Corporate Division.

Products and Services
The Global Cash Management Business Division caters to the needs of a diverse client base of corporates and financial institutions. With the provision of a comprehensive range of innovative and robust solutions, we handle the complexities of global and regional treasury including customer access, payment and collection services, liquidity management, information and account services and electronic bill presentation and payment solutions.

Within Global Trade Finance Business Division, our clients are offered a range of trade and risk management products, a full complement of innovative solutions for cross-border structured trade and export finance activities, together with a risk hedging platform utilizing foreign exchange, derivative, money market and OTC/commodity products.

The Trust and Securities Services Business Division provides Domestic Custody Services in 24 national markets as well as trust, payment and administration services for all kinds of debt and equity securities in major locations.

Distribution Channels and Marketing
The Global Transaction Banking Corporate Division markets, originates and distributes its own products and services. The marketing is carried out in conjunction with the relationship managers both in this corporate division and in the Corporate Banking & Securities Corporate Division.

The majority of our third-party customers are financial institutions, such as banks, mutual funds and retirement funds. In the United States, our main global cash services customers are multinational corporations, international banks, broker-dealers, fund managers and insurance companies. In Germany we also focus on middle-market corporations.

To reach potential clients, we attend industry conferences, advertise in trade publications and participate in market surveys. We also implement targeted sales techniques.

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Private Clients and Asset Management Group Division

The Private Clients and Asset Management Group Division primarily serves retail and small corporate customers as well as affluent and wealthy clients and provides asset management services to retail and institutional clients. This group division generated 37% of our net revenues in 2004, 39% of our net revenues in 2003, and 36% in 2002 (on the basis of our management reporting systems).

At December 31, 2004, this group division included the following corporate divisions:

– Asset and Wealth Management

– Private & Business Clients

The Asset and Wealth Management Corporate Division is comprised of the Asset Management Business Division and the Private Wealth Management Business Division, which includes private banking activities for high net worth clients, their families and selected institutions, as well as the Private Client Services business.

The Private & Business Clients Corporate Division serves retail and affluent clients as well as small corporate customers in our key markets of Germany, Italy and Spain, as well as in Belgium, Portugal, Poland and the Netherlands.

In June 2004 our wholly-owned subsidiary, european transaction bank ag (etb), which had been managed under the Private Client and Asset Management Group Division, was deconsolidated in the course of entering into a securities processing partnership with Xchanging Holdings, which assumed the operational management of the securities, funds and derivatives processing. The etb was transferred to Xchanging etb GmbH (formerly Zweite Xchanging GmbH), an equity method investment under the Corporate and Investment Bank Group Division.

As mentioned, in July 2004, we sold our wholly owned subsidiary DB Payment to a subsidiary of Deutsche Postbank AG. Prior to the sale, DB Payment had been managed within the infrastructure groups of the Private Client and Asset Management Group Division. The loss on sale was partly recognized within the Private & Business Clients Corporate Division and partly within the Global Transaction Banking Corporate Division.

Asset and Wealth Management Corporate Division

Corporate Division Overview
The Asset and Wealth Management Corporate Division operates our global asset management and private wealth management businesses. This division serves a range of retail, private and institutional clients, the latter including:

– insurance companies

– pension funds

– corporations

– governments

– charities

Our Asset and Wealth Management Corporate Division is comprised of the Asset Management Business Division covering Traditional Asset Management as well as Real Estate and Hedge Funds, which offer nontraditional or alternative products, and the Private Wealth Management Business Division. We are among the leading asset managers in the world based on total invested assets.

The acquisition of Scudder and RREEF in 2002 put us in the global bulge bracket of the active asset managers and the addition of Scudder’s retail fund business in the U.S. complements our position as a leader in the German retail business (Source:Bundesverband Investment und Asset Management e.V.as of February 17, 2004) through our DWS Investments franchise. Scudder’s institutional business also strongly complemented our existing institutional franchise, especially in the U.S. With our acquisition of RREEF, DB Real Estate is one of the world’s leading asset managers for real estate investments and real estate investment trusts (Source:Pension and Investmentsas of October 2004).

Other recent acquisitions and divestitures included, in 2003, the sale of most of our Passive Asset Management business to Northern Trust, the acquisition of Rued, Blass & Cie AG Bankgeschaeft, a Swiss private bank, and the transfer of a substantial part of our direct real estate private equity portfolio to a third-party fund. In 2004, we merged three Australian trusts – Deutsche Diversified Trust,

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Deutsche Office Trust and Deutsche Industrial Trust – into a new trust, DB RREEF Trust creating Australia’s fourth largest listed property trust. In connection with this transaction we also transferred our Australian fiduciary real estate trust management and property management business into a subsidiary, renamed DB RREEF Holdings, subsequently selling a 50% interest in DB RREEF Holdings. Later in 2004, we sold a portion of the private client unit of Scudder, Scudder Private Investment Counsel (PIC), to Legg Mason. In addition we completed the acquisition of the remaining minority interests in DWS Holding & Service GmbH. Also in 2004 we transferred the London based PCS business unit from AWM to CB&S. In 2005 we acquired asset manager Wilhelm von Finck AG as AWM continues to expand its Private Wealth Management franchise in Germany.

Effective January 1, 2005, Asset Management is organized into three distinct global product lines: Institutional Fixed Income and Equity, Mutual Funds including all DWS and Scudder mutual funds, and Alternative Investments, including Hedge Funds, Quantitative Strategies, Real Estate and Structured Products. The product-centric focus divides the old traditional asset management into its already existing products with slight modifications. The alternative investments of Hedge Funds and Real Estate remain primarily unchanged, while the emphasis on Quantitative Strategies and Structured Products has been increased with those two becoming a new alternative product offering.

Products and Services
AWM’s portfolio/fund management products include active fund management, passive/quantitative fund management, alternative investments and discretionary portfolio management.

The active fund management service offers management of client funds via mutual funds, commingled accounts, and separately managed accounts. Our fund managers invest in equity, fixed income, and balanced products that are global, regional, country or industry-specific.

The passive/quantitative fund management services provide a full suite of products, including those of a passive nature, to our customers through a preferred provider agreement with Northern Trust Corporation. We remain linked to the passive business within our German Passive Asset Management business, which was not part of the sale to Northern Trust, and with specialized passive products that we have chosen strategically to continue as investment management services.

Alternative Investments covers our real estate and hedge fund activities. We manage all of our real estate activities through DB Real Estate, which acquires and manages investments in institutional grade properties and real estate securities on behalf of our institutional and private clients worldwide. We specialize in managing core, value-enhancing and high-yield property investments as well as investments in publicly traded real estate securities and mezzanine loans. We offer several types of structures through which our clients may invest, including commingled funds, both closed and open-end, as well as investment programs that can be customized to meet an individual client’s specific needs. Our hedge fund activities are managed through DB Absolute Return Strategies (DB ARS), whose platform provides access to both Deutsche Bank and third-party hedge fund strategies, and offers both single-manager and multi-manager funds. Our selection process is designed to produce a pool of qualified managers in a range of sectors, strategies and styles. As an asset class, hedge funds are designed to provide attractive risk-adjusted returns in most market environments and offer portfolio diversification benefits to investors. We distribute our products globally to institutions and high net worth individuals.

The Private Wealth Management Business Division offers discretionary portfolio management, in which our specialized fund managers have discretion to manage clients’ investments within the clients’ general guidelines. The fund managers invest client funds in various investment products, such as stocks, bonds, mutual funds, hedge funds and other alternative investments including derivatives, where permitted.

AWM also provides brokerage services in which our relationship managers and client advisors provide investment advice to clients whose securities are deposited with us in accounts over which we do not exercise investment discretion. Our services also include advice on wealth management and growth, including tax-optimized investments and estate planning. Our investment advice covers stocks, bonds, mutual funds, hedge funds and other alternative investments, including derivatives where permitted. The relationship managers also advise their clients on the products of third parties.

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Our loans/deposits products include traditional deposit products (including current accounts, time deposits and savings accounts) and more specialized secured and unsecured lending. We offer our clients both standardized and more specialized finance and savings products.

We also offer payments, account and remaining financial services, processing and disposition of cash and non-cash payments in local currency, international payments, LCs, guarantees, and other cash transactions.

AWM generates revenues from other products, including direct real estate investments included in our alternative investments business, rental revenues and gains and losses earned on real estate deal flows and revenues that are not part of our core business, specifically, the gain on sale of businesses.

Distribution Channels and Marketing
In Germany and elsewhere in Europe (excluding the United Kingdom), we generally market our retail asset management products through our established internal distribution channels, and Private & Business Clients Corporate Division’s distribution channels. We also distribute our funds through other banks, insurance companies and independent investment advisors. We market our retail funds outside Europe and in the United Kingdom via our own Asset and Wealth Management distribution channels and through third-party distributors. Scudder Investments distributes its retail products to U.S. investors primarily through financial representatives, including brokers at regional firms, independent financial advisors and registered investment advisors. In addition, we distribute our funds directly to members of the American Association of Retired Persons (AARP) Investment Program.

We distribute products for institutional clients through our substantial sales and marketing network within Asset and Wealth Management and through third-party distribution channels. We also distribute these products through our other businesses, notably the Corporate and Investment Bank Group Division.

Within the traditional retail and institutional businesses, we have in place strong regional investment teams and businesses that understand the needs of their clients and the dynamics of their specific markets. While these teams are led by regional Chief Investment Officers, we remain committed to our global investment platform.

We distribute our alternative investment products predominantly to high net worth clients, institutions and retail customers worldwide through our sales and marketing network within Asset and Wealth Management and through third-party distribution channels.

Within our alternative investments business we employ global investment management teams that understand the needs of their clients and the dynamics of their specific markets. Within DB Absolute Return Strategies, the investment management teams are divided between single-manager and multi-manager strategies. DB Real Estate relies on direct client relations staff to provide clients and brokers with access to real estate investment options.

Our relationship managers in the private wealth management business work within target customer groups, assisting clients in developing individual investment strategies and creating enduring relationships with our clients.

In our private wealth management onshore business wealthy customers are served via our relationship manager network in the respective countries. Our customers also have access to our retail branch network and other general banking products we offer through our Private & Business Clients Corporate Division. The offshore business encompasses all of our clients who establish accounts outside their countries of residence. These customers are able to use our offshore services to access financial products that may not be available in their countries of residence.

In addition, the client advisors of the Private Client Services business focus on traditional brokerage offering and asset allocation, including a wide range of third party products.

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Private & Business Clients Corporate Division

Corporate Division Overview
The Private & Business Clients Corporate Division established one single business model across Europe with a focused, sales-driven management structure under the Deutsche Bank brand. Private & Business Clients serves retail and affluent clients as well as small corporate customers.

The principal divestiture impacting Private & Business Clients was the sale to Zurich Financial Services in 2002 of the greater part of our insurance business, most of which we held through Versicherungsholding der Deutschen Bank AG. As a result of the sale of our insurance business, including our subsidiaries in Germany, Spain, Italy, and Portugal, our reported insurance revenues and policyholder benefits and claims were reduced, and we generate commission income as we continue to be distributor of insurance products from our former subsidiaries to our retail and affluent clients in Germany, Italy and Spain.

Products and Services
Generally, similar banking products and services are offered throughout Europe, except that there are some variations from country to country to meet local market, regulatory and customer requirements.

In offering portfolio/fund management and brokerage services, we provide investment advice, brokerage services, discretionary portfolio management and securities custody services to our clients.

We provide loan and deposit services, with the most significant being building financing (including mortgages) and consumer and commercial loans, as well as traditional current accounts, savings accounts and time deposits. The building finance business, which includes mortgages and construction finance, is our single most significant lending business. We provide building finance loans primarily for private purposes, such as home financing. We also offer commercial mortgage loans. Most of our mortgages have an original fixed interest period of five or ten years. Loan and deposit products include also the home loan and savings business in Germany, offered through our subsidiary Deutsche Bank Bauspar AG.

PBC’s payments, account & remaining financial services comprise administration of current accounts in local and foreign currency as well as settlement of domestic and cross-border payments on these accounts. They also comprise the purchase and sale of payment media and the sale of insurance products, home loan and savings contracts and credit cards. In Italy Private & Business Clients issues credit cards and processes credit card payments under the Bankamericard brand.

Other products include primarily activities related to asset and liability management and our sold insurance business.

Distribution Channels and Marketing
To achieve a strong brand position across Europe, we market our services consistently throughout Europe. To make banking products and services more attractive to clients, we are seeking to optimize the accessibility and availability of our services. To do this, we look to self-service functions and technological advances to supplement our branch network with an array of access channels to its products and services. These channels consist of the following in-person and remote distribution points:

– Investment and Finance Centers.Investment and Finance Centers offer the entire range of products and advice

– Financial Agents.In most countries we market our retail banking products and services through self-employed financial agents.

– Call Centers.Call centers provide clients with remote services supported by automated systems. Remote services include access to account information, securities brokerage and other basic banking transactions.

– Internet.On our website we offer clients brokerage services, account information and product information on proprietary and third party investment products. These offerings are complemented with services that provide information, analysis tools and content to support the client in making independent investment decisions.

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– Self-service Terminals.These terminals support our branch network and allow clients to withdraw and transfer funds, receive custody account statements and make appointments with the Bank’s financial advisors.

We also have some country-specific distribution arrangements that are intended to supplement our local branch networks. In Germany, for example, we have a cooperation agreement with Deutsche Vermögensberatung AG (referred to as DVAG) whereby we can distribute our mutual funds and other banking products through DVAG’s independent distribution network in Germany. In order to complement our product range we have signed distribution agreements, whereby Private & Business Clients distributes the products of reputable product suppliers. These include an agreement with Zurich for insurance products, and a strategic alliance with eight fund companies for the distribution of their investment products.

Corporate Investments Group Division

The Corporate Investments Group Division manages much of the bank’s alternative assets portfolio and certain other debt and equity positions. The portfolio includes our private equity and venture capital investments, private equity fund investments, certain corporate real estate investments, certain credit exposures, our portfolio of industrial holdings, our holdings in EUROHYPO AG and Atradius N.V. and certain other non-strategic investments. Historically, our mission has been to provide financial, strategic, operational and managerial capital to enhance the values of the portfolio companies in which the group division has invested.

We believe that the group division enhances our portfolio management and risk management capability. The group division is currently in the course of reducing significantly its equity and other exposure. In this context a number of significant transactions were entered into during 2004, including the sale of our interest in the operations of maxblue Americas and the sale of certain fund investments.

The Corporate Investments Group Division included the following three business divisions in 2004:

TheDB Investor Business Divisionencompassed our substantial holdings in industrial corporations, primarily in Germany, of which many are held and managed through subsidiaries such as DB Industrial Holdings GmbH, DB Value GmbH and others.

ThePrivate Equity Business Divisioncomprised our proprietary private equity investing arm as well as certain client-related businesses.

TheOther Corporate Investments Business Divisionheld certain other investments.

Due to the continued reduction in exposures and the streamlining of management, the Corporate Investments Group Division structure was reorganized effective January 1, 2005, with the three former business divisions being amalgamated into a single business division.

Corporate Investments holds interests in a number of manufacturing and financial services corporations (our “Industrial Holdings”). The largest two of these Industrial Holdings, by market value at December 31, 2004, were interests of 10.4% in DaimlerChrysler AG and 2.5% in Allianz AG. Currently, over 99% of our Industrial Holdings are in German corporations. In 2004, our investment in DaimlerChrysler AG was reduced from 11.8% to 10.4%, our investment in DEUTZ AG was reduced from 10.5% to 4.5% and our investments in Fresenius AG and Motor-Columbus AG were sold.

In 2003, our investment in Allianz AG was reduced from 3.2% to 2.5%, and our investments in mg technologies ag and HeidelbergCement AG were sold.

In 2002 we sold our remaining stake in Munich Re, Buderus AG, RWE AG and Continental AG, and our investment in Südzucker AG was significantly reduced.

Rather than engaging in proprietary trading, which involves buying and selling securities on a day-to-day basis, Corporate Investments usually holds our investments in listed securities for several years. The majority of the larger shareholdings in listed companies have been in the portfolio for more than 20 years.

For further information on these holdings, the total market value of which was€ 5.5 billion at December 31, 2004, see “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk – Risk Management – Market Risk – Market Risk in Our Nontrading Portfolios.”

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Corporate Investments also holds certain private equity type investments that have been transacted both on behalf of clients and our own account, in private equity directly and through private equity funds, including venture capital opportunities and leveraged buy-out funds.

Morgan Grenfell Private Equity (MGPE) funds allow a number of external investors to invest in selected companies. MGPE actively acquires investments in companies and places them with the funds, which generally keep their investments for a period of years until the company is deemed fit for a public offering or a resale to an unrelated party. The Private Equity business is also an investor in the MGPE funds. Since April 2003, management and administration services in relation to the MGPE business have been provided by MidOcean Partners UK Advisors LLP, a partnership formed by certain members of the former Corporate Investments management team under the terms of a Secondment and Services Agreement.

Since January 2004, we have closed several transactions, reducing our Private Equity on-balance sheet exposure by approximately€ 700 million.

In 2003, the major divestiture was the sale of much of our late-stage portfolio to MidOcean Partners LP, a partnership formed by certain members of the former Corporate Investments management team, in a€ 1.5 billion transaction. Less significant transactions include the sale of our investment in Tele Columbus GmbH and in Tele Columbus Ost GmbH (formerly SMATcom GmbH), the reduction of our on-balance sheet exposure by approximately€ 110 million by securitization of Private Equity funds, approximately€ 350 million by the sale of certain fund investments, and several transactions which further reduced our venture capital exposure.

Other Corporate Investments additionally covers certain Deutsche Bank’s real estate holdings in Germany, many of which are occupied by Deutsche Bank AG.

Recent major real estate transactions include the sale in 2004 of a German real estate portfolio, which the Group will continue to occupy on a medium- to long-term basis, to Eurocastle Investment Limited, an investment company managed by Fortress Investment Group LLC. In 2003 the major transaction was the sale of a real estate portfolio to The Blackstone Group. Due largely to these sales real estate exposure decreased by approximately€ 500 million and€ 800 million, respectively.

Other Corporate Investments’ largest equity method investment is our 37.7% stake in EUROHYPO AG, which arose from the merger of DB’s former mortgage banking subsidiary with those of Dresdner Bank and Commerzbank AG in 2002 and related business transfers in 2003. In November 2004, EUROHYPO’s retail banking unit sold approximately 14,000 of its German nonperforming mortgage loans to a newly founded company, of which EUROHYPO owns 33% with a consortium led by Citibank holding the balance.

In 2004 we closed on the sale of our interest in the operations of maxblue Americas to Banco do Brazil, our joint venture partner in this investment. maxblue Americas is a brokerage providing a variety of advisory and investment management products and services through internet-based technology, investment centers and personal consultants.

In 2003 we signed contracts to relinquish our 34.6% stake in Gerling-Konzern-Versicherungs-Beteiligungs-AG (GKB) and to restructure, simultaneously with Swiss Re, Sal. Oppenheim and GKB, the ownership of Atradius N.V. (formerly Gerling NCM Credit and Finance AG), a global credit insurer. When the deal closed in 2003 our stake in Atradius N.V. was 38.4%. After a capital increase by Compania Espanola de Seguros y Reaseguros de Credito y Caution and Seguros Catalan Occidente in 2004, our stake in Atradius N.V. was diluted to 33.9%.

In 2003 we sold a 2.7% stake in SES Global S.A. and our entire stake in Greek EFG Eurobank Ergasias S.A.

In 2002 we sold our commercial finance business in North America to GE Commercial Finance, and our consumer finance business in North America to E*TRADE Bank.

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Corporate Center

Corporate Center comprises those functions that support, at the Group level, all of our business divisions. In particular, the Corporate Center assists the Board of Managing Directors with cross-divisional coordination. The purpose of our Corporate Center is not to generate revenues, but to house strategic functions in support of our Board of Managing Directors. Our Corporate Center includes functions such as the Group’s accounting, tax, treasury, risk management, human resources, corporate development and legal functions.

Competitive Environment

Competitors, Markets and Competitive Factors

The financial services industry – and all of our businesses – are intensely competitive, and we expect them to remain so. Our main competitors are other commercial banks, savings banks, other public sector banks, brokers and dealers, investment banking firms, insurance companies, investment advisors, mutual funds and hedge funds. We compete with some of our competitors globally and with some others on a regional, product or niche basis. We compete on the basis of a number of factors, including transaction execution, our products and services, innovation, reputation and price.

In Germany, our wholesale and retail business is influenced by a significant fragmentation of the banking sector into three pillars: private sector banks like us, public sector banks (Landesbankenand savings banks), and cooperative banks. The public sector banks and the cooperative banks cooperate closely with other banks within their respective pillar and thus operate as networks for most products. Consolidation in the German banking sector has therefore predominantly taken place within the three pillars. In addition, the different legal form of private sector banks, public sector banks and mutual banks impedes cross-pillar consolidation. By virtue of their legal form as public-law institutions, public sector banks may only be owned by municipalities and other public bodies and can rely on unlimited state guarantees in the form of a business continuation obligation(Anstaltslast)and a statutory ultimate guarantee obligation(Gewährträgerhaftung)by the public body or bodies that created them (mainly the GermanLänderand municipalities). On July 18, 2001, the European Commission and the German government agreed to discontinue these mechanisms in general after July 18, 2005, subject to transition rules for liabilities existing on that date. In the meantime, a discussion has evolved as to whether the traditional boundaries between the private sector banks, the public sector banks and the cooperative banks should be abandoned in whole or in part in order to improve the competitiveness of German banks within Europe and globally. We monitor this discussion closely and analyze carefully any potential business opportunities or challenges that might emerge in this context.

Our performance is largely dependent on the talents and efforts of highly-skilled individuals. Competition for qualified employees in the banking, securities and financial services industries is intense. We also compete for employees with companies outside of the financial services industry. Our continued ability to compete effectively in our businesses depends on our ability to attract new employees as necessary and to retain and motivate our existing employees.

Our reputation for financial strength and integrity is vital to our ability to attract and maintain customers. To keep our well-established reputation we have to adequately promote and market our brand. The loss of business that would result from damage to our reputation could affect our results of operations and financial condition.

We have generally experienced intensifying price competition in recent years. We are observing this pressure on pricing of loans, trading commissions, management fees, transaction spreads and many other areas. We believe that we may experience pricing pressure in these and other areas in the future as some of our competitors seek to obtain market share by reducing prices.

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Consolidation and Globalization

In recent years there has been substantial consolidation and convergence among companies in the financial services industry. In particular, a number of large commercial banks, insurance companies and other broad-based financial services firms have merged with other financial institutions. Many of these firms have the ability to offer a wide range of products, from loans, deposit-taking and insurance to brokerage, asset management and investment banking services, which may enhance their competitive position. They also have the ability to support investment banking and securities products with commercial banking, insurance and other financial services revenues in an effort to gain market share, which could result in pricing pressure in our businesses.

In the United States, one of our major markets, consolidation was further facilitated and accelerated by the passage of the Gramm-Leach-Bliley Act of 1999, which allowed commercial banks, securities firms and insurance firms to consolidate.

As indicated by a rebound in industry-wide mergers and acquisitions, especially in the banking, securities and financial services industries, the trend toward consolidation and convergence is expected to continue. This trend has significantly increased the capital base and geographic reach of our competitors and has hastened the globalization of the securities and other financial services markets. As a result, we have had to commit capital to support our international operations and to execute large global transactions.

Competition in Our Businesses

Corporate and Investment Bank Group Division
Our investment banking operation competes in domestic and international markets directly with numerous investment banking firms, investment advisors, brokers and dealers in securities and commodities, securities brokerage firms and certain commercial banks. Within Germany, our competitors include German private universal banks, regional banks, savings banks, public state banks and cooperative banks.

Private Clients and Asset Management Group Division
In the retail banking business we face intense competition from savings banks and cooperative banks, other universal banks, insurance companies, home loan and savings companies and other financial intermediaries. In Germany, savings and cooperative banks are our biggest group of competitors. These banks generally operate regionally. In other European countries, private universal banks and savings banks are our main competitors.

Our private wealth management business faces intensifying competition from the private banking and wealth management units of other global financial service companies and from investment banks.

Our main competitors in the asset management business are asset management subsidiaries of major financial services companies, mutual fund managers and institutional fund managers in Europe and the United States.

Regulation and Supervision

Our operations throughout the world are regulated and supervised by the central banks and regulatory authorities in each of the jurisdictions where we conduct operations. As we have operations in almost every country in the world, ranging from subsidiaries and branches in many countries down to representative offices in other countries, or employee representatives assigned to serve customers in yet others, we are regulated and supervised in virtually every country. Local authorities impose certain organizational, reserve and reporting requirements and controls (such as capital adequacy, depositor protection, activity limitations and other types of prudential supervision) on our banking and nonbanking operations. In addition, a number of countries in which we operate impose additional limitations on (or which affect) foreign or foreign-owned or controlled banks and financial services institutions, including:

– restrictions on the opening of local offices, branches or subsidiaries and the types of banking and nonbanking activities that may be conducted by those local offices, branches or subsidiaries;

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– restrictions on the acquisition of local banks or requirements of specified percentages of local ownership or specified numbers of local management personnel; and

– restrictions on investment and other financial flows in and out of the country.

Changes in the regulatory and supervisory regimes of the countries where we operate will determine, to some degree, our ability to expand into new markets, the services and products that we will be able to offer in those markets and how we structure specific operations.

The German Federal Financial Supervisory Authority(Bundesanstalt für Finanzdienstleistungsaufsicht,referred to as BaFin)is our principal supervisor on an unconsolidated (Deutsche Bank AG only) and on a consolidated basis (Deutsche Bank AG and the entities consolidated with it for German regulatory purposes). Additionally, many of our operations outside Germany are regulated by local authorities. Within countries that are member states of the European Union or other contracting states of the Agreement on the European Economic Area (Iceland, Liechtenstein and Norway), our branches generally operate under the so-called “European Passport.” Under the European Passport, our branches are subject to regulation and supervision primarily by the BaFin. The authorities of the host country are responsible for the regulation and supervision of the liquidity requirements and the markets of the host country. In the United States, our New York branch, as well as our principal U.S. subsidiary bank (Deutsche Bank Trust Company Americas (DBTCA), formerly Bankers Trust Company), are principally supervised by the New York State Banking Department and the Board of Governors of the Federal Reserve System.

In the following sections, we present a description of the supervision of our business by the authorities in Germany and the United States, which we view as the most significant for us, and more generally with respect to the other jurisdictions in which we operate. Beyond these countries, and the European Economic Area member states where the European Passport applies, local country regulations generally have limited impact on our operations that are unconnected with these countries.

Regulation and Supervision in Germany

Distinctive Features of the German Banking System
There are two general types of banks: universal banks and specialized banks. Universal banks are also known as full-service or multi-purpose banks. Universal banks, such as ourselves, engage not only in the deposit and lending business but also in investment banking, underwriting and securities trading, both for their own account and for their customers. Specialized banks, such as mortgage banks (Hypothekenbanken) or building societies (Bausparkassen), engage only in certain types of credit business or in specialized banking services. Financial services institutions, which primarily engage in the securities business, are different in nature from universal and specialized banks.

German law generally allows universal banks to engage in all the specialized banking activities that specialized banks perform, such as mortgage lending and public sector lending. They are generally not allowed to refinance mortgage loans and public sector loans by issuing mortgage bonds(Hypothekenpfandbriefe)and public sector bonds(Öffentliche Pfandbriefe).Pfandbriefeare a specialized type of debt security. They are collateralized by pools of loans secured by first mortgages or a pool of public sector loans and may only be issued by mortgage banks and public banks. In October 2004, the Federal Government introduced the bill of a Pfandbrief Act into parliament. This act would allow every German bank to issue Pfandbriefe, provided that it has obtained a specific license for this activity. Pfandbrief issuance activities would be subject to specific regulation and supervision with respect to the valuation and administration of the assets that serve as collateral. The Act would also abandon the limitations on the activities of mortgage banks. They would then be permitted to operate as universal banks. It is expected that the Pfandbrief Act will become effective later this year.

Principal Laws and Regulators
We are authorized to conduct general banking business and to provide financial services under, and subject to the requirements set forth in, the German Banking Act(Kreditwesengesetz).

We are subject to comprehensive regulation and supervision by the BaFin and theDeutsche Bundesbank(referred to as Bundesbank, the German central bank). The European Central Bank regu-

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lates us in regard to minimum reserves on deposits. We are materially in compliance with the German laws that are applicable to our business.

The German Banking Act

The German Banking Act contains the principal rules for German banks, including the requirements for a banking license, and regulates the business activities of German banks. The Banking Act defines a “banking institution”(Kreditinstitut)as an enterprise that engages in one or more of the activities defined in the Act as “banking business.” The Banking Act also applies to “financial services institutions”(Finanzdienstleistungsinstitute), which are enterprises that engage in one or more of the activities defined in the Act as “financial services”. Banking institutions and financial services institutions are subject to the licensing requirements and other provisions of the Banking Act.

The Banking Act and the rules and regulations adopted thereunder implement certain recommendations of the Basel Committee on Banking Supervision (which we refer to as the Basel Committee) the secretariat of which is provided by the Bank for International Settlements (which we refer to as the BIS), as well as certain European Union directives relating to banks. These directives address issues such as accounting standards, regulatory capital, risk-based capital adequacy, consolidated supervision, the monitoring and control of large exposures, the establishment of branches within the European Union and the creation of a single European Union-wide banking market with no internal barriers to cross-border banking services. The Agreement on the European Economic Area extends this single market to Iceland, Liechtenstein and Norway.

In June 2004, the Basel Committee adopted revised recommendations for international capital adequacy standards widely referred to as the Basel II capital framework. The two principal features of the new framework are (1) to align capital requirements more closely with the underlying risks and (2) to introduce a capital charge for operational risk (comprising, among other things, risks related to certain external factors, as well as to technical errors and errors of employees). The framework has to be implemented in the various countries that participate in the Basel Committee by year-end 2006. We may have to maintain higher levels of capital for bank regulatory purposes, which could increase our financing costs.

The German Securities Trading Act

Under the German Securities Trading Act(Wertpapierhandelsgesetz), the BaFin regulates and supervises securities trading in Germany. The Securities Trading Act prohibits, among other things, insider trading with respect to securities admitted to trading or included in the over-the-counter market at a German exchange or the exchange in another country that is a member state of the European Union or another contracting state of the Agreement on the European Economic Area.

To enable the BaFin to carry out its supervisory functions, banking institutions are subject to comprehensive reporting requirements with respect to securities and derivatives transactions. The reporting requirements apply to transactions for the banking institution’s own account as well as for the account of its customers. The Securities Trading Act also contains rules of conduct. These rules of conduct apply to all businesses that provide securities services. Securities services include, in particular, the purchase and sale of securities or derivatives for others and the intermediation of transactions in securities or derivatives. The BaFin has broad powers to investigate businesses providing securities services to monitor their compliance with the rules of conduct and the reporting requirements. In addition, the Securities Trading Act requires an independent auditor to perform an annual audit of the securities services provider’s compliance with its obligations under the Securities Trading Act.

Regulation by the BaFin

The BaFin is a federal regulatory authority and reports to the German Federal Ministry of Finance. It was formed on May 1, 2002, and assumed the responsibilities of the German Banking Supervisory Authority, the German Securities Trading Supervisory Authority and the German Insurance Supervisory Authority. The BaFin issues regulations and guidelines that implement German banking laws and other laws affecting German banks.

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The BaFin supervises the operations of German banks on an unconsolidated and a consolidated basis to ensure that they are in compliance with the Banking Act and other applicable German laws and regulations. It places particular emphasis on compliance with capital adequacy and liquidity requirements, large exposure limits and restrictions on certain activities imposed by the Banking Act and related regulations.

Regulation by the Bundesbank

The Bundesbank supports the BaFin and closely cooperates with it. The cooperation includes the ongoing review and evaluation of reports submitted by us and of our audit reports as well as examinations to assess the adequacy of our capital base and risk management systems. In this supervisory role the Bundesbank follows the guidelines issued by the BaFin acting in concert with the Bundesbank. The Bundesbank is also responsible for the collection and analysis of statistics and reports from German banks.

Nevertheless, these two institutions have distinct functions. While the BaFin has the sole authority to issue administrative orders(Verwaltungsakte)binding on German banks, it is required to consult with the Bundesbank before it issues general regulations(Verordnungen). In addition, the BaFin must obtain the Bundesbank’s consent before it issues any general regulations or guidelines that would affect the Bundesbank’s operations, such as the Principles on Own Funds and Liquidity of Credit Institutions(Grundsätze über die Eigenmittel und Liquidität der Kreditinstitute), which relate to capital adequacy (Grundsatz Ior “Principle I”) and liquidity (Grundsatz IIor “Principle II”).

The European Central Bank Minimum Reserve Requirements

The European Central Bank sets the minimum reserve requirements for institutions that engage in the customer deposit and lending business. These minimum reserves must equal a certain percentage of the institutions’ liabilities resulting from certain deposits, plus the issuance of bonds and money market instruments. Liabilities to European Monetary Union national central banks and to other European Monetary Union banking institutions that are themselves subject to the minimum reserve requirements are not included in this calculation.

Capital Adequacy Requirements

German capital adequacy principles are based on the principle of risk adjustment. German capital adequacy principles, as set forth in Principle I, address capital adequacy requirements for both counterparty risk(Adressenausfallrisiko)and market price risk(Marktrisiko). German banks are required to cover counterparty and market risks with Tier I capital (Kernkapitalor “core capital”) and Tier II capital (Ergänzungskapitalor “supplementary capital”) (together,haftendes Eigenkapitalor “regulatory banking capital”). They may also cover market price risk with Tier III capital(Drittrangmittel)and (to the extent not required to cover counterparty risk) with regulatory banking capital. The calculation of regulatory banking capital and Tier III capital is set forth below.

Principle I requires each German bank to maintain a solvency ratio(Eigenkapitalquote)of regulatory banking capital to risk-weighted assets(gewichtete Risikoaktiva)of at least 8%. Risk-weighted assets include financial swaps, financial forward transactions, options and other off-balance sheet items. We further explain the calculation of risk-weighted assets below. The solvency ratio rules implement European Union directives, which in turn, are based on the recommendations of the Basel Committee at the BIS.

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Regulatory Banking Capital and Risk-Weighted Assets
Regulatory banking capital, the numerator of the solvency ratio, is defined in the Banking Act for banks, such as ourselves, that are organized as stock corporations, as consisting principally of the following items:

Tier I capital:

– Paid-in Subscribed Capital(not including capital with respect to preferred shares with cumulative dividend rights).

– Capital Reserves.

– Earnings (Revenues) Reserves.

– Fund for General Banking Risks.A bank may record this fund on the liability side of its balance sheet to reflect special risks inherent in the banking business. A bank must use its reasonable commercial judgment in making this determination.

– Silent Partnership Interests (stille Beteiligungen).Silent partnership interests are hybrid participations in the business of a bank. Such interests are subject to certain conditions, including a minimum term of five years (or ten years for purposes of BIS capital rules), noncumulative dividends, participation in the bank’s losses and subordination to the rights of all creditors in the event of insolvency or liquidation of the bank.

Own shares held by the bank, losses and certain intangible assets are subtracted from the Tier I capital calculation.

Tier II capital (limited to the amount of Tier I capital):

– Paid-in Subscribed Capital.This is capital with respect to preferred shares with cumulative dividend rights.

– Profit-participation Rights (Genussrechte). These rights are subject to certain conditions, including a minimum term of five years, participation in the bank’s losses and subordination to the rights of all nonsubordinated creditors in the event of insolvency or liquidation of the bank.

– Longer-term Subordinated Debt.(Limited to 50% of the amount of Tier I capital) This debt is subject to certain criteria, including a minimum term of five years and subordination to the rights of all nonsubordinated creditors in the event of insolvency or liquidation of the bank.

– Reserves Pursuant to Section 6b of the German Income Tax Law (Einkommensteuergesetz). A bank may include 45% of these reserves in regulatory banking capital. However, any reserves included in regulatory banking capital must have been created from the proceeds of the sale of real property, property rights equivalent to real property or buildings.

– Reserves for General Banking Risks.A bank may record certain receivables on its balance sheet at a lower value than would be permitted for industrial and other nonbanking entities. Such receivables include loans and securities that are neither investment securities nor part of the trading portfolio. The bank may record these receivables at a lower value if the use of a lower value is advisable, in its reasonable commercial judgment, to safeguard against the special risks inherent in the banking business. Reserves for general banking risks may not exceed 4% of the book value of the receivables and securities recorded.

– Certain Unrealized Reserves.These may include up to 45% of the difference between the book value and the lending value(Beleihungswert)of land and buildings, and up to 35% of the difference between the book value of unrealized reserves (including provisioning reserves) and the sum of the market value of securities listed on a stock exchange and the published redemption price of shares issued by certain securities or real estate funds. A bank may include these reserves in Tier II capital only if its Tier I capital amounts to at least 4.4% of its risk-weighted assets. Reserves may be included in Tier II capital only up to a maximum amount of 1.4% of risk-weighted assets.

Capital components that meet the above criteria and which a bank has provided to another bank, financial services institution or financial enterprise which is not consolidated with the bank for regulatory purposes, are subtracted from the bank’s regulatory banking capital if the bank holds more than 10% of

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the capital of such other bank, financial services institution or financial enterprise or to the extent the aggregate book value of such investments exceeds 10% of the bank’s regulatory banking capital.

The calculation of risk-weighted assets, the denominator of the solvency ratio, is set forth in Principle I. Assets are assigned to one of five basic categories of relative credit risk based on the debtor and the type of collateral, if any, securing the respective assets. Each category has a risk-classification multiplier (0%, 10%, 20%, 50% and 100%). The balance sheet value of each asset is then multiplied by the risk-classification multiplier for the asset’s category. The resulting figure is the risk-weighted value of the asset.

Off-balance sheet items, such as financial guarantees, letters of credit, swaps and other financial derivatives, are subject to a two-tier adjustment. First, the value of each item is determined. The value of each item is multiplied by one of three risk-classification multipliers (20%, 50% and 100%) depending on the type of instrument. In the second step, the off-balance sheet item is assigned to one of the five credit risk categories set forth above for balance sheet items. Selection of an appropriate risk multiplier is based on the type of counterparty or debtor and the type of collateral, if any, securing the asset. The adjusted value of the off-balance sheet item is then multiplied by the risk multiplier to arrive at the risk-weighted value of the off-balance sheet item.

Tier III Capital and Market Price Risk

Principle I also sets forth the principles governing capital adequacy requirements for market price risk. The market price risk positions of a bank include the following:

– foreign exchange positions;

– commodities positions;

– certain trading book positions, including those involving counterparty risk, interest rate risk and share price risk; and

– options positions.

The net risk-weighted market price risk positions must be covered by Own Funds(Eigenmittel)that are not required to cover counterparty risk. Own Funds consist of regulatory banking capital (Tier I plus Tier II capital) and Tier III capital. The calculation of risk-weighted market price risk positions must be made in accordance with specific rules set forth in Principle I or, at the request of a bank, in whole or in part in accordance with the bank’s internal risk rating models approved by the BaFin.

At the close of each business day, a bank’s total net risk-weighted market price risk positions must not exceed the sum of:

– the difference between the bank’s regulatory banking capital and 8% of its aggregate amount of risk-weighted risk assets; and

– the bank’s Tier III capital.

Tier III capital consists of the following items:

– Net Profits.Net profits are defined as the proportionate profit of a bank which would result from closing all trading book positions at the end of a given day minus all foreseeable expenses and distributions and minus losses resulting from the banking book which would likely arise upon a liquidation of the bank, unless such losses must be deducted from the bank’s regulatory banking capital pursuant to an order of the BaFin.

– Short-term Subordinated Debt.This debt must meet certain criteria, including a minimum term of two years, subordination to the rights of all nonsubordinated creditors in the event of insolvency or liquidation of the bank and suspension of the payment of interest and principal if such payment would result in a breach of the Own Funds requirements applicable to the bank.

Net profits and short-term subordinated debt qualify as Tier III capital only up to an amount which, together with the supplementary capital not required to cover risks arising from the banking book (as described below), does not exceed 250% of the core capital not required to cover risks arising from the banking book.

The Banking Act defines the banking book as all positions and transactions that are not part of the trading book. The trading book is defined as consisting primarily of the following:

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– financial instruments that a bank holds in its portfolio for resale or that a bank acquires to exploit existing or expected spreads between the purchase and sale price or price and interest rate movements;

– positions and transactions for the purpose of hedging market price risks arising from the trading book and related refinancing transactions;

– transactions subject to the designation of the counterparty(Aufgabegeschäfte);

– payment claims in the form of fees, commissions, interest, dividends and margins directly linked to trading book positions; and

– repurchase, lending and similar transactions related to trading book positions.

Banks must set internal criteria according to which they allocate positions and transactions to the trading book and notify such criteria to the BaFin and the Bundesbank.

Consolidated Regulation and Supervision
The Banking Act’s provisions on consolidated supervision require that each group of institutions(Institutsgruppe)and each financial conglomerate (Finanzkonglomerat) taken as a whole meets the Own Funds requirements. Under the Banking Act, a group of institutions consists of a bank or financial services institution, as the parent company, and all other banks, financial services institutions, financial enterprises and bank service enterprises in which the parent company holds more than 50% of the capital or voting rights or on which the parent company can otherwise exert a controlling influence. Special rules apply to joint venture arrangements that result in the joint management of another bank, financial services institution, financial enterprise or bank service enterprise by a bank and one or more third parties. A financial conglomerate is a group of companies in which the parent company is directly or indirectly through a subsidiary engaged in the financial sector, at least one group company is active in the banking and securities sector, and at least one group company is active in the insurance sector, provided that the consolidated and aggregated activities of the group in both the banking and securities sector and in the insurance sector are material.

Capital Requirements under the Basel Capital Accord
We have agreed with the BaFin to calculate and report our consolidated capital adequacy ratios in direct application of the recommendations made by the Basel Committee in 1988 (which we call the Basel Capital Accord) in addition to the calculation and reporting requirements in accordance with the Banking Act as described above. The Basel Capital Accord provides that banks shall maintain (on a consolidated basis) a risk-based core capital ratio of at least 4% and a risk-based regulatory banking capital ratio of at least 8%. In some respects (for example, for the treatment of goodwill and commercial real estate loans), the calculation of these ratios is different from the calculation under the Banking Act.

Liquidity Requirements

The Banking Act requires German banks and certain financial services institutions to invest their funds so as to maintain adequate liquidity at all times. Principle II prescribes these specific liquidity requirements applicable to banks and to certain financial services institutions. The liquidity requirements set forth in Principle II are based on a comparison of the remaining terms of certain assets and liabilities. Principle II requires maintenance of a ratio(Liquiditätskennzahlor “one-month liquidity ratio”) of liquid assets to liquidity reductions expected during the month following the date on which the ratio is determined of at least one. German banks and certain financial services institutions are required to report the one-month liquidity ratio and estimated liquidity ratios for the next eleven months to the BaFin on a monthly basis. The liquidity requirements set forth in Principle II do not apply on a consolidated basis.

Limitations on Large Exposures

The Banking Act and the Large Exposure Regulation(Grosskredit- und Millionenkreditverordnung) limit a bank’s concentration of credit risks on an unconsolidated and a consolidated basis through restrictions on large exposures(Grosskredite). The large exposure rules distinguish between the following two types of institutions:

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– banks and groups of institutions with minor trading book positions that are not subject to the rules relating to the trading book (see “Capital Adequacy Requirements”) (non-trading book institutions); and

– banks and groups of institutions that are subject to the rules relating to the trading book (trading book institutions).

Deutsche Bank AG is a trading book institution.

Banking Book Large Exposures and Aggregate Book Large Exposures
The large exposure rules contain separate restrictions for large exposures related to the banking book (banking book large exposures) and aggregate large exposures (aggregate book large exposures) of a bank or group of institutions.

Banking book large exposures are exposures incurred in the banking book and related to a single client (and clients affiliated with it) that equal or exceed 10% of a bank’s or group’s regulatory banking capital. Individual banking book large exposures must not exceed 25% of the bank’s or group’s regulatory banking capital (20% in the case of exposures to affiliates of the bank that are not consolidated for regulatory purposes).

Aggregate book large exposures are created when the sum of banking book exposures and the exposures incurred in the trading book related to a client, and clients affiliated with it, (trading book large exposures) equals or exceeds 10% of the bank’s or group’s Own Funds. The 25% limit (20% in the case of unconsolidated affiliates), calculated by reference to a bank’s or group’s Own Funds, also applies to aggregate book large exposures. Exposures incurred in the trading book include:

– the net amount of long and short positions in financial instruments involving interest rate risk (interest net positions);

– the net amount of long and short positions in financial instruments involving equity price risk (equity net positions); and

– the counterparty risk arising from positions in the trading book.

In addition to the above limits, the total of all banking book large exposures must not exceed eight times the bank’s or group’s regulatory banking capital, and the total of all aggregate book large exposures must not exceed in the aggregate eight times the bank’s or group’s Own Funds.

A bank or group of institutions may exceed these ceilings only with the approval of the BaFin and subject to increased capital requirements for the amount of the large exposure that exceeds the ceiling.

Furthermore, total trading book exposures to a single client (and clients affiliated with it) must not exceed five times the bank’s or group’s Own Funds, to the extent such Own Funds are not required to meet the capital adequacy requirements with respect to the banking book. Total trading book exposures to a single client (and clients affiliated with it) in excess of the aforementioned limit are not permitted.

Limitations on Significant Participations

The Banking Act places limitations on the investments of deposit-taking banks, such as ourselves, in enterprises outside the financial and insurance industry, where such investment (called a “significant participation”):

– directly or indirectly amounts to 10% or more of the capital or voting rights of an enterprise; or

– would give the owner significant influence over the management of the enterprise.

Participations that meet the above requirements are not counted as significant participations if the bank does not intend for the participation to establish a permanent relationship with the enterprise in which the participation is held. For purposes of calculating significant participations, all indirect participations held by a bank through one or more subsidiaries are fully attributed to the parent bank.

The nominal value (as opposed to book value or price paid) of a bank’s significant participation in an enterprise must not exceed 15% of the bank’s regulatory banking capital. Furthermore, the aggregate nominal value of all significant participations of a bank must not exceed 60% of the bank’s regulatory banking capital. A bank may exceed those ceilings only with the approval of the BaFin. The bank is required to support the amount of the significant participation or participations that exceed a ceiling with regulatory banking capital on a one-to-one basis.

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The limitations on significant participations also apply on a consolidated basis.

Financial Statements and Audits

As required by the German Commercial Code(Handelsgesetzbuch), we prepare our non-consolidated financial statements in accordance with German GAAP. German GAAP for banks primarily reflect the Commercial Code and the Regulation on Accounting by Credit Institutions and Financial Services Institutions(Verordnung über die Rechnungslegung der Kreditinstitute und Finanzdienstleistungsinstitute)which in turn implement EU Directives on accounting. The Regulation on Accounting by Credit Institutions and Financial Services Institutions requires a uniform format for the presentation of financial statements for all banks.

Compliance with the capital adequacy requirements of the German Banking Act, the liquidity requirements, large exposure rules and other requirements of the German Banking Act are based on financial statements prepared in accordance with German GAAP.

Pursuant to the German Commercial Code, exchange-listed companies, such as us, are permitted to prepare their consolidated financial statements in accordance with certain internationally recognized accounting principles, such as International Accounting Standards, or IAS, now called International Financial Reporting Standards, or IFRS, and U.S. GAAP. These statutory rules, however, apply only until and including the financial year 2004. Until the financial year 2000 we prepared our consolidated annual financial statements in accordance with IAS. From the financial year 2001 on we have prepared our consolidated annual financial statements in accordance with U.S. GAAP. In July 2002, the European Union issued a Regulation which requires companies governed by the law of a European Union member state to prepare their financial statements from and including the financial year 2005 onwards in accordance with IFRS, if their securities are admitted to trading on a regulated market in the European Union. The member states may postpone the application of this Regulation until 2007 for companies like us which have their securities also listed outside the European Union and apply other internationally recognized accounting standards like U.S. GAAP.

Compliance with the capital adequacy ratios pursuant to the Basel Capital Accord (see “Capital Adequacy Requirements – Capital Requirements under the Basel Capital Accord”) is based on financial statements prepared for consolidation purposes. Therefore, our compliance with such capital adequacy ratios until the end of 2000 is based on financial statements prepared in accordance with IAS and since 2001 is based on financial statements prepared in accordance with U.S. GAAP. We anticipate that such compliance will be based on financial statements prepared in accordance with IFRS once we apply the EU Regulation of July 2002.

Under German law, we are required to be audited annually by a certified public accountant(Wirtschaftsprüfer). The accountant is appointed at the shareholders’ meeting. However, the supervisory board mandates the accountant and supervises the audit. The BaFin must be informed of and may reject the accountant’s appointment.

The Banking Act requires that a bank’s auditor informs the BaFin of any facts that come to the accountant’s attention which would lead it to refuse to certify or to limit its certification of the bank’s annual financial statements or which would adversely affect the financial position of the bank. The auditor is also required to notify the BaFin in the event of a material breach by management of the articles of association or of any other applicable law.

The auditor is required to prepare a detailed and comprehensive annual audit report(Prüfungsbericht)for submission to the bank’s supervisory board, the BaFin and the Bundesbank.

Reporting Requirements

The BaFin and the Bundesbank require German banks to file comprehensive information in order to monitor compliance with the German Banking Act and other applicable legal requirements and to obtain information on the financial condition of banks.

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Internal Auditing

The BaFin requires every German bank to have an effective internal auditing department. The internal auditing department must be adequate in size and quality and must establish adequate procedures for monitoring and controlling the bank’s activities.

Banks are also required to have a written plan of organization that sets forth the responsibilities of the employees and operating procedures. The bank’s internal audit department is required to monitor compliance with the plan.

Enforcement of Banking Regulations; Investigative Powers

Investigations and Official Audits
The BaFin conducts audits of banks on a random basis, as well as for cause. It may require banks to furnish information and documents in order to ensure that the bank is complying with the Banking Act and its regulations. The BaFin may conduct investigations without having to state a reason for its investigation.

The BaFin may also conduct investigations at a foreign entity that is part of a bank’s group for regulatory purposes in order to verify data on consolidation, large exposure limitations and related reports. Investigations of foreign entities are limited to the extent that the law of the jurisdiction where the entity is located restricts such investigations.

The BaFin may attend meetings of a bank’s supervisory board and shareholders’ meetings. It also has the authority to require that such meetings be convened.

Enforcement Powers
The BaFin has a wide range of enforcement powers in the event it discovers any irregularities. It may remove the bank’s managers from office, transfer their responsibilities in whole or in part to a special commissioner or prohibit them from exercising their current managerial capacities. If a bank’s Own Funds are inadequate or if a bank does not meet the liquidity requirements and the bank fails to remedy the deficiency within a certain period, then the BaFin may prohibit or restrict the bank from distributing profits or extending credit. This prohibition also applies to the parent bank of a group of institutions in the event that the Own Funds of the group are inadequate on a consolidated basis. If a bank fails to meet the liquidity requirements, the BaFin may also prohibit the bank from making further investments in illiquid assets.

If a bank is in danger of defaulting on its obligations to creditors, the BaFin may take emergency measures to avert default. These emergency measures may include:

– issuing instructions relating to the management of the bank;

– prohibiting the acceptance of deposits and the extension of credit;

– prohibiting or restricting the bank’s managers from carrying on their functions; and

– appointing supervisors.

If these measures are inadequate, the BaFin may revoke the bank’s license and, if appropriate, order the closure of the bank.

To avoid the insolvency of a bank, the BaFin may prohibit payments and disposals of assets, close the bank’s customer services, and prohibit the bank from accepting any payments other than payments of debts owed to the bank. Only the BaFin may file an application for the initiation of insolvency proceedings against a bank.

Violations of the German Banking Act may result in criminal and administrative penalties.

Deposit Protection in Germany

The Deposit Guarantee Act
The Law on Deposit Insurance and Investor Compensation(Einlagensicherungs- und Anlegerentschädigungsgesetz, the Deposit Guarantee Act)provides for a mandatory deposit insurance system in Germany. It requires that each German bank participate in one of the licensed government-controlled investor compensation institutions (Entschädigungseinrichtungen). The investor compensation institutions are supervised by the BaFin.Entschädigungseinrichtung deutscher Banken GmbHacts as the investor compensation institution for private sector banks such as us.

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The investor compensation institutions collect and administer the contributions of the member banks and settle the compensation claims of investors in accordance with the Deposit Guarantee Act. In the event a bank’s financial condition leaves the bank permanently unable to repay deposits or perform its obligations under securities transactions, the Deposit Guarantee Act authorizes creditors of the bank to make claims against the bank’s investor compensation institution. Certain entities, such as banks, financial institutions(Finanzinstitute), insurance companies, investment funds, the Federal Republic of Germany, the German federal states, municipalities and medium-sized and large corporations, are not eligible to make such claims.

Investor compensation institutions are liable only for obligations resulting from deposits and securities transactions that are denominated in euro or the currency of a contracting state to the Agreement on the European Economic Area. Investor compensation institutions are not liable for obligations represented by instruments in bearer form or negotiable by endorsement. Investor compensation institutions’ liabilities for failed banks are limited to 90% of the aggregate value of each creditor’s deposits with the bank and to 90% of the aggregate value of obligations arising from securities transactions. The maximum liability of an investor compensation institution to any one creditor is limited to€ 20,000.

Banks are obliged to make annual contributions to the investor compensation institution in which they participate. An investor compensation institution must levy special contributions on the banks participating therein or take up loans, whenever it is necessary to settle compensation claims by such institution in accordance with the Deposit Guarantee Act. The investor compensation institution may exempt a bank from special contributions in whole or in part if full payments of such contributions are likely to render such bank unable to repay its deposits or perform its obligations under securities transactions. The amount of such contribution will then be added proportionately to the special contributions levied on the other participating banks.

Voluntary Deposit Protection System
Liabilities to creditors that are not covered under the Deposit Guarantee Act may be covered by one of the various protection funds set up by the banking industry on a voluntary basis. We take part in the Deposit Protection Fund of the Association of German Banks(Einlagensicherungsfonds des Bundesverbandes deutscher Banken e.V.). The Deposit Protection Fund covers liabilities to customers up to an amount equal to 30% of the bank’s core capital and supplementary capital (to the extent that supplementary capital does not exceed 25% of core capital). Liabilities to other banks and other specified institutions, and obligations of banks represented by instruments in bearer form, are not covered. To the extent the Deposit Protection Fund makes payments to customers of a bank, it will be subrogated to their claims against the bank.

Banks that participate in the Deposit Protection Fund make regular contributions to the fund based on their liabilities to customers, and may be required to make special contributions up to the amount of their regular contributions to the extent requested by the Deposit Protection Fund to enable it to fulfill its purpose.

Regulation and Supervision in the United States

Our operations are also subject to extensive federal and state banking and securities regulation and supervision in the United States. We engage in U.S. banking activities directly through our New York branch. We also control several U.S. banking subsidiaries, including DBTCA and U.S. broker-dealers, such as Deutsche Bank Securities Inc. as well as several U.S. nondeposit trust companies and nonbanking subsidiaries.

Regulatory Authorities
We and our U.S. operations are subject to regulation, supervision and examination by the Federal Reserve Board as our U.S. “umbrella supervisor” since Deutsche Bank AG is a bank holding company under the U.S. Bank Holding Company Act of 1956 (as amended; we refer to this Act as the Bank Holding Company Act) by virtue of, among other things, our ownership of DBTCA. Our New York branch is also supervised by the New York State Banking Department.

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DBTCA is a state-chartered bank and is a member of the Federal Reserve System, the deposits of which are insured by the Federal Deposit Insurance Corporation (referred to as the FDIC). As such, DBTCA is subject to regulation, supervision and examination by both the Federal Reserve Board and the New York Banking Department and to relevant FDIC regulation. Deposits with our New York branch are not insured (or eligible for deposit insurance) by the FDIC. Our federally-chartered banking operations are also subject to regulation, supervision and examination by the Office of the Comptroller of the Currency. We and certain of our subsidiaries are also subject to regulation, supervision and examination by the state banking regulators of certain of the states in which we conduct banking operations, including New York, Delaware, Connecticut, New Jersey and Texas.

Restrictions on Activities
Federal and state banking laws and regulations restrict our ability to engage, directly or indirectly through subsidiaries, in nonbanking activities in the United States. The Gramm-Leach-Bliley Act of 1999 significantly modified these restrictions. Prior to the Gramm-Leach-Bliley Act, the Bank Holding Company Act restricted us from acquiring U.S. companies engaged in nonbanking activities unless the Federal Reserve Board determined that those activities were a proper incident to banking, managing or controlling banks, or that another exemption applied. Moreover, prior Federal Reserve System approval was required to engage in new activities and to make nonbanking acquisitions in the United States. Following the Gramm-Leach-Bliley Act, qualifying bank holding companies and foreign banks that become financial holding companies may engage in a substantially broader range of nonbanking activities in the United States, including securities, merchant banking, insurance and other financial activities, in many cases without prior notice to, or approval from, the Federal Reserve System or any other U.S. banking regulator. The Gramm-Leach-Bliley Act does not authorize banks or their affiliates to engage in commercial activities that are not financial in nature.

Certain provisions of the Bank Holding Company Act governing the acquisition of U.S. banks were not affected by the Gramm-Leach-Bliley Act. Accordingly, as was the case prior to enactment of the Gramm-Leach-Bliley Act, we are required to obtain the prior approval of the Federal Reserve System before directly or indirectly acquiring the ownership or control of more than 5% of any class of voting shares of any U.S. bank or bank holding company. Under the Bank Holding Company Act and regulations issued by the Federal Reserve System, our U.S. banking operations (including our New York branch and DBTCA) are also restricted from engaging in certain “tying” arrangements involving products and services.

Under the Gramm-Leach-Bliley Act and related Federal Reserve Board regulations, we became a financial holding company effective March 2000. To qualify as a financial holding company, we were required to certify and demonstrate that we and our depository institutions in the U.S. were “well capitalized” and “well managed” and that DBTCA and certain of our other U.S. subsidiary banks met certain requirements under the Community Reinvestment Act. These standards, as applied to us, are comparable to the standards U.S. domestic banking organizations must satisfy to qualify as financial holding companies. In particular, we and our U.S. depository institutions are required to maintain capital ratios comparable to that of a well-capitalized U.S. bank, including a Tier I risk-based capital ratio of at least 6% and a total risk-based capital ratio of at least 10%. In addition, we and our U.S. depository institutions must remain well managed. If in the future we or one of the U.S. depository institutions controlled by us cease to be well-capitalized or well-managed, or otherwise fail to meet any of the requirements for financial holding company status, then, depending on which requirement we fail to meet, we may be required to discontinue newly-authorized financial activities or terminate our U.S. banking operations. Our ability to undertake acquisitions permitted to financial holding companies could also be adversely affected.

The Gramm-Leach-Bliley Act and the regulations issued thereunder contain a number of other provisions that could affect our operations and the operations of all financial institutions. One of the new provisions relates to the financial privacy of consumers.

In addition, the so-called “push-out” provisions of the Gramm-Leach-Bliley Act narrow the exclusion of banks (including U.S. branches of foreign banks, such as our New York branch) from the definitions of “broker” and “dealer” under the Securities Exchange Act of 1934. The rules of the Securities and

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Exchange Commission narrowing the exclusion of banks from the definition of “dealer” became effective on September 30, 2003, while those narrowing the exclusion of banks from the definition of “broker” are proposed to become effective on January 1, 2006. As a result of these rules, certain securities activities conducted by DBTCA and our New York branch have been or will be restructured or transferred to one or more U.S. registered broker-dealer subsidiaries.

In addition, under U.S. federal banking laws, state-chartered banks (such as DBTCA) and state-licensed branches and agencies of foreign banks (such as our New York branch) may engage only in activities that would be permissible for their federally chartered or licensed counterparts, unless the FDIC (in the case of DBTCA) or the Federal Reserve Board (in the case of our New York branch) were to determine that the additional activity would pose no significant risk to the FDIC’s Bank Insurance Fund (in the case of DBTCA) and is consistent with sound banking practices (in the case of DBTCA and our New York branch). United States federal banking laws also subject state branches and agencies to the same single-borrower lending limits that apply to federal branches or agencies, which generally are the same as the lending limits applicable to national banks. These single-borrower lending limits are based on the worldwide capital of the entire foreign bank.

Under the International Banking Act of 1978, as amended, the Federal Reserve Board may terminate the activities of any U.S. office of a foreign bank if it determines that the foreign bank is not subject to comprehensive supervision on a consolidated basis in its home country (unless the home country is making demonstrable progress toward establishing such supervision), or that there is reasonable cause to believe that such foreign bank or its affiliate has violated the law or engaged in an unsafe or unsound banking practice in the United States and, as a result of such violation or practice, the continued operation of the U.S. office would be inconsistent with the public interest or with the purposes of federal banking laws.

Our New York Branch
Our New York branch is licensed by the New York Superintendent of Banks to conduct a commercial banking business. Under the New York State Banking Law and regulations, our New York branch is required to maintain eligible high-quality assets with banks in the State of New York in an amount equal to 1% of its liabilities (excluding liabilities to other offices and our subsidiaries), as security for the protection of depositors and certain other creditors. The amount of assets required to be pledged is subject to a maximum of U.S.$ 400,000,000 in the case of foreign banking corporations that have been designated as “well-rated” by the New York State Superintendent of Banks, as our New York branch has been. Should our New York Branch cease to be “well-rated” by the New York State Superintendent of Banks we may need to maintain substantial additional amounts of eligible assets with banks in the State of New York.

The New York State Banking Law also empowers the Superintendent of Banks to establish asset maintenance requirements for branches of foreign banks, expressed as a percentage of each branch’s liabilities. The presently designated percentage is 0%, although the Superintendent may impose additional asset maintenance requirements upon individual branches on a case-by-case basis. No such requirement has been imposed upon our New York branch.

The New York State Banking Law authorizes the Superintendent of Banks to take possession of the business and property of a New York branch of a foreign bank under circumstances involving violation of law, conduct of business in an unsafe manner, impairment of capital, suspension of payment of obligations, or initiation of liquidation proceedings against the foreign bank at its domicile or elsewhere. In liquidating or dealing with a branch’s business after taking possession of a branch, only the claims of creditors which arose out of transactions with a branch are to be accepted by the Superintendent of Banks for payment out of the business and property of the foreign bank in the State of New York, without prejudice to the rights of the holders of such claims to be satisfied out of other assets of the foreign bank. After such claims are paid, the Superintendent of Banks will turn over the remaining assets, if any, to the foreign bank or its duly appointed liquidator or receiver.

Under the New York State Banking Law, our New York branch is generally subject to the same limits on lending to a single borrower, expressed as a ratio of capital, that apply to a New York state-chartered bank, except that for our New York branch such limits are based on our worldwide capital.

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Deutsche Bank Trust Company Americas
DBTCA, like other FDIC-insured banks, is required to pay assessments to the FDIC for deposit insurance under the FDIC’s Bank Insurance Fund (calculated using a risk-based assessment system). These assessments are based on deposit levels and other factors.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (referred to as FDICIA) provides for extensive regulation of depository institutions (such as DBTCA and its direct and indirect parent companies), including requiring federal banking regulators to take “prompt corrective action” with respect to FDIC-insured banks that do not meet minimum capital requirements. For this purpose, FDICIA establishes five tiers of institutions: “well capitalized”, “adequately capitalized”, “undercapitalized”, “significantly undercapitalized” and “critically undercapitalized”. As an insured bank’s capital level declines and the bank falls into lower categories (or if it is placed in a lower category by the discretionary action of its supervisor), greater limits are placed on its activities and federal banking regulators are authorized (and, in many cases, required) to take increasingly more stringent supervisory actions, which could ultimately include the appointment of a conservator or receiver for the bank (even if it is solvent). In addition, FDICIA generally prohibits an FDIC-insured bank from making any capital distribution (including payment of a dividend) or payment of a management fee to its holding company if the bank would thereafter be undercapitalized. If an insured bank becomes undercapitalized, it is required to submit to federal regulators a capital restoration plan guaranteed by the bank’s holding company. The guarantee is limited to 5% of the bank’s assets at the time it becomes undercapitalized or, should the undercapitalized bank fail to comply with the plan, the amount of the capital deficiency at the time of failure, whichever is less. If an undercapitalized bank fails to submit an acceptable plan, it is treated as if it were “significantly undercapitalized”. Significantly undercapitalized banks may be subject to a number of restrictions, including requirements to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and restrictions on accepting deposits from correspondent banks. Critically undercapitalized depository institutions are subject to appointment of a receiver or conservator. Since the enactment of FDICIA, DBTCA has been categorized as “well capitalized” under Federal Reserve System regulations.

Other
In the United States, our U.S.-registered broker-dealers are regulated by the Securities and Exchange Commission. Broker-dealers are subject to regulations that cover all aspects of the securities business, including:

– sales methods;

– trade practices among broker-dealers;

– use and safekeeping of customers’ funds and securities;

– capital structure;

– recordkeeping;

– the financing of customers’ purchases; and

– the conduct of directors, officers and employees.

In addition, our principal U.S. SEC-registered broker dealer subsidiary, Deutsche Bank Securities Inc., is a member of and regulated by the New York Stock Exchange and is regulated by the individual state securities authorities in the states in which it operates. The U.S. government agencies and self-regulatory organizations, as well as state securities authorities in the United States having jurisdiction over our U.S. broker-dealer affiliates, are empowered to conduct administrative proceedings that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer or its directors, officers or employees.

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Regulation and Supervision in Other Jurisdictions

Our operations elsewhere in the world are subject to regulation and control by local supervisory authorities, including local central banks and monetary authorities, which supplement the home country supervision exercised by the BaFin.

For our branches within the European Economic Area, our primary regulator remains the BaFin pursuant to the “European Passport” we summarize above. Where we operate a branch outside the European Economic Area we do so under two licenses: our German banking license and a license from the host country. We may conduct businesses in the host country only to the extent that our German banking license and the host country’s license both permit them. When we operate a subsidiary outside Germany, the subsidiary holds whichever license is required by local law.

Organizational Structure

We operate our business along the structure of our three group divisions. Deutsche Bank AG is the direct or indirect holding company for our subsidiaries. The following table sets forth the significant subsidiaries we own, directly or indirectly. We used the three-part test for significance set out in Section 1-02 (w) of Regulation S-X under the U.S. Securities Exchange Act of 1934. We do not have any other subsidiaries we believe are material based on other, less quantifiable, factors, except that we have provided information on Taunus Corporation’s principal subsidiaries to give you an idea of Taunus’ business. We own 100% of the equity and voting interests in these significant subsidiaries.

Subsidiary	Place of Incorporation
Taunus Corporation1	Delaware, United States
Deutsche Bank Trust Company Americas2	New York, United States
Deutsche Bank Securities Inc.3	Delaware, United States
Deutsche Bank Privat- und Geschäftskunden Aktiengesellschaft4	Frankfurt am Main, Germany
DWS Holding & Service GmbH5	Frankfurt am Main, Germany
DWS Investment GmbH6	Frankfurt am Main, Germany

1	This company is a holding company for most of our subsidiaries in the United States.
2	This company is a subsidiary of Taunus Corporation. Deutsche Bank Trust Company Americas is a New York State-chartered bank which originates loans and other forms of credit, accepts deposits, arranges financings and provides numerous other commercial banking and financial services.
3	This company is a subsidiary of Taunus Corporation. Deutsche Bank Securities Inc. is a U.S. SEC-registered broker dealer and a member of, and regulated by, the New York Stock Exchange. It is also regulated by the individual state securities authorities in the states in which it operates.
4	The company serves private individuals, affluent clients and small business clients with banking products.
5	This company is a German limited liability company and operates as an umbrella company for DWS Investment GmbH and a number of other European mutual fund management companies located in Luxembourg, France, Austria, Switzerland, Italy, Poland and Russia.
6	This company, in which DWS Holding & Service GmbH owns 100% of the equity and voting interests, is a limited liability company that operates as a mutual fund manager.

Property, Plant and Equipment

On December 31, 2004, we operated in 74 countries out of 1,559 facilities around the world, of which 53% were in Germany. We lease a majority of our offices and branches under long term agreements.

On December 31, 2004, we had premises and equipment with a total book value of approximately€ 5.2 billion. Included in this amount were land and buildings with a carrying value of approximately€ 3.6 billion, of which approximately€ 1.9 billion was for our own operations and approximately€ 1.7 billion was held for investment purposes.

In December 2004 we announced the closing of an agreement to sell a portfolio of 109 properties in Germany, which were mainly occupied by the bank, to Eurocastle Investment Limited, an investment company managed by Fortress Investment Group LLC, for approximately€ 300 million. The portfolio consisted of business premises totaling approximately 300,000 square meters. The properties were mainly located in the centers of small to mid-sized cities throughout Germany. The bank will continue to occupy most of the properties on a medium- to long-term basis.

We continue to review our property requirements worldwide taking into account our recently announced cost containment measures as well as growth initiatives in selected businesses.

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See Note [36] to our consolidated financial statements regarding the damage to our property resulting from the September 11 terrorist attacks.

Information Required by Industry Guide 3

Please see “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk – Credit Loss Experience and Allowance for Loan Losses”, Note [5] to the consolidated financial statements and pages S-1 through S-11 of the supplemental financial information, which pages are incorporated by reference herein, for information required by Industry Guide 3.

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Item 5: Operating and Financial Review and Prospects

Overview

The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes to them included in Item 18 of this document, on which we have based this discussion and analysis. Our consolidated financial statements for the years ended December 31, 2004, 2003 and 2002 have been audited by KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, as described in the “Report of Independent Registered Public Accounting Firm” on page F-2.

Significant Accounting Policies and Critical Accounting Estimates

We have prepared our consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies, as described in Note [1] to the Consolidated Financial Statements, are essential to understanding our reported results of operations and financial condition. Certain of these accounting policies require critical accounting estimates that involve complex and subjective judgments and the use of assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Such critical accounting estimates could change from period to period and have a material impact on financial condition, changes in financial condition or results of operations. Critical accounting estimates could also involve estimates where management could have reasonably used another estimate in the current accounting period. Actual results may differ from these estimates if conditions or underlying circumstances were to change.

We review the selection of these policies and the application of these critical accounting estimates with our Audit Committee. We have identified the following significant accounting policies that involve critical accounting estimates. The impact and any associated risks related to these policies on our business operations is discussed throughout “Item 5: Operating and Financial Review and Prospects” where such policies affect our reported and expected financial results.

Fair Value Estimates

Certain of our financial assets and liabilities are carried at fair value, including trading assets and liabilities, derivatives held for nontrading purposes, securities available for sale and investments held by designated investment companies. In addition, nonmarketable equity investments and investments in venture capital companies, in which the Group does not have a controlling financial interest or significant influence, are carried at historical cost net of declines in fair value below cost that are deemed to be other than temporary. Loans held for sale are carried at the lower of cost or market (LOCOM).

Fair value is defined as the price at which an asset or liability could be exchanged in a current transaction between knowledgeable unrelated willing parties, other than in a forced or liquidation sale. Since the fair value determined might differ from actual net realizable values, the fair value estimates are considered critical accounting estimates for our Corporate Banking & Securities Corporate Division, which trades certain over-the-counter derivatives, some of which may have long terms or complex structures that are valued using financial models. Fair value estimates are also critical for our Corporate Investments Group Division, which holds investments that are not actively traded.

Methods of Determining Fair Value
Quoted market prices in active markets are the most reliable measure of fair value. The majority of our securities carried at fair value are based on quoted market prices. However, quoted market prices for certain instruments, investments and activities, such as loans held for sale, non-exchange traded contracts and venture capital companies and nonmarketable equity securities may not be available.

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When quoted market prices are not available, values for financial assets and liabilities are determined based upon discounted cash flow analysis, comparison to similar observable market transactions, or the use of financial models. Discounted cash flow analysis is dependent upon estimated future cash flows and the discount rate used. Valuation using financial models is dependent upon parameters including time value, yield curve, volatility factors, correlation factors, prepayment speeds, default rates, loss severity, current market prices and transaction prices for underlying financial instruments. The valuation process to price financial instruments at fair value includes making adjustments to prices and financial model outputs to consider factors such as close out costs, liquidity and counterparty credit risk.

Where valuation of financial instruments is subjective due to the lack of observable market prices or inputs, management must apply judgment to make estimates and certain assumptions. For example, if prices or inputs to financial models are used for similar financial instruments, judgment is applied to make appropriate adjustments for differences in credit risk, liquidity or other factors. Where fair value is not based upon observable market prices or inputs we defer any trade date profit or loss.

Internal Controls Over Fair Value
To ensure the accuracy of our valuations, we have established certain internal control procedures over the valuation process. The price and parameter input verification process is a primary control over the front office valuation of financial instruments, which is performed either through independent pricing, independent price verification or alternative procedures.

Independent pricingoccurs where the prices or parameter inputs are sourced directly from the market by Controlling. This is the preferred method of valuation control and Controlling performs checks on the ongoing data quality including automated checks for stale and missing prices.

Where prices and parameters are input by the front office, Controlling performsindependent price verificationof these inputs against available independent market sources.

The majority of the Group’s trading portfolio (including securities and derivatives) and available for sale portfolio are subject to independent pricing or independent price verification procedures.

Where prices or parameter inputs are not observable, then the appropriateness of fair value is subject toalternative procedures. Such procedures include assessing the valuations against appropriate proxy instruments, performing sensitivity analysis and considering other benchmarks. These procedures require the application of management judgment.

Other valuation controls include review and analysis of daily profit and loss, validation of valuation through close out profit and loss and Value-at-Risk back-testing. For further discussion on our Value-at-Risk Analysis, see “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk – Market Risk – Value-at-Risk-Analysis.” Where fair value is based on financial models, the assumptions and techniques within the models are independently validated by a specialist group within Controlling.

Allowance for Loan Losses

We maintain an allowance for loan losses that represents our estimate of probable losses in our loan portfolio. Determining the allowance for loan losses requires significant management judgments and assumptions. The components of the allowance for loan losses are a specific loss component and an inherent loss component consisting of the country risk allowance, the smaller-balance standardized homogeneous loan loss allowance and the other inherent loss allowance. We believe that the accounting estimate related to the allowance for loan losses is a critical accounting estimate because the underlying assumptions used for both the specific and inherent loss components of the allowance can change from period to period. Such changes may materially affect our results of operations. The estimate for the allowance for loan losses is a critical accounting estimate for our Corporate Banking & Securities and Private & Business Clients Corporate Divisions.

The specific loss component is the allowance for losses on loans for which management believes that it is probable that we will be unable to collect all of the principal and interest due under the loan agreement. This component comprises the largest portion of our allowance and requires consideration of various underlying factors which include, but are not limited to, the financial strength of our custom-

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ers, the expected future cash flows, fair value of underlying collateral or the market price of the loan. We regularly re-evaluate all credit exposures that have already been specifically provided for, as well as all credit exposures that appear on our watchlist. Our assumptions are either validated or revised accordingly based on our re-evaluation.

Some of the underlying factors used in determining the inherent loss component, include, but are not limited to, historical loss experience and political, economic and other relevant factors. We determine our country risk allowance based on historical loss experience and current market data affecting a country’s financial condition. Our smaller-balance standardized homogeneous portfolio is evaluated for inherent loss on a collective basis and an allowance is established based on analyses of historical loss experience for each product type according to criteria such as past due status and collateral recovery values. The other inherent loss allowance represents our estimate of losses inherent in the portfolio that have not yet been individually identified and reflects the imprecisions and uncertainties in estimating our loan loss allowances.

Significant changes in any of these factors could materially affect our provision for loan losses. For example, if our current assumptions about expected future cash flows used in determining the specific loss component differ from actual results, we may need to make additional provisions for loan losses. In addition, the forecasted financial strength of any given customer may change due to various circumstances, such as future changes in the global economy or new information becoming available as to financial strength that may not have existed at the date of our estimates. This new information may require us to adjust our current estimates and make additional provisions for loan losses.

Our provision for loan losses totaled€ 372 million,€ 1.1 billion and€ 2.1 billion for the years ended December 31, 2004, 2003 and 2002, respectively.

For further discussion on our allowance for loan losses, see “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk – Risk Management – Credit Loss Experience and Allowance for Loan Losses” and Notes [7] and [8] to the consolidated financial statements.

Impairment of Assets other than Loans

Certain assets, including equity method and other direct investments (including venture capital companies and nonmarketable equity securities), securities available for sale, goodwill and other intangible assets, are subject to impairment review. We record impairment charges when we believe an asset has experienced an other-than-temporary decline in fair value, or its cost may not be recoverable. Based on our impairment reviews related to these assets, we recorded total impairment charges of€ 135 million in 2004,€ 1.5 billion in 2003 and€ 1.1 billion in 2002. Future impairment charges may be required if triggering events occur, such as adverse market conditions, suggesting deterioration in an asset’s recoverability or fair value. Assessment of timing of when such declines become other than temporary and/or the amount of such impairment is a matter of significant judgment.

Equity method investments, other equity interests and securities available for sale are evaluated for impairment on a quarterly basis, or more frequently if events or changes in circumstances indicate that these investments are impaired. For example, indications that these investments are impaired could include specific conditions in an industry or geographical area or specific information regarding the financial condition of the company, such as a downgrade in credit rating. If information becomes available after we make our evaluation, we may be required to recognize an other-than-temporary impairment in the future. Because the estimate for other-than-temporary impairment could change from period to period based upon future events that may or may not occur, we consider this to be a critical accounting estimate. Our impairment reviews for equity method investments, other equity interests and securities available for sale resulted in impairment charges of€ 96 million in 2004,€ 1.3 billion in 2003 and€ 1.0 billion in 2002. For additional information on securities available for sale, see Note [5] to the consolidated financial statements and for equity method investments and other equity interests, see Note [6] to the consolidated financial statements.

Goodwill and other intangible assets are tested for impairment on an annual basis, or more frequently if events or changes in circumstances, such as an adverse change in business climate, indicate that these assets may be impaired. The fair value determination used in the impairment assessment requires estimates based on quoted market prices, prices of comparable businesses, present

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value or other valuation techniques, or a combination thereof, necessitating management to make subjective judgments and assumptions. Because these estimates and assumptions could result in significant differences to the amounts reported if underlying circumstances were to change, we consider this estimate to be critical. As of December 31, 2004 and 2003, goodwill had a carrying amount of€ 6.4 billion and€ 6.7 billion, respectively, and other intangible assets had a carrying amount of€ 1.1 billion at each year-end. Evaluation of impairment of these assets is a significant estimate for multiple divisions. In 2004, an impairment charge of€ 19 million was recorded related to intangible assets in Asset and Wealth Management Corporate Division following the termination of certain investment agreements. In 2003, a goodwill impairment loss of€ 114 million related to the Private Equity reporting unit was recorded following decisions relating to the private equity fee-based business including the transfer of certain businesses to the Asset and Wealth Management Corporate Division. In 2002, an impairment charge for goodwill was recorded after an assessment for impairment was made due to a change in the estimated fair value as a result of holding a significant portion of our Private Equity reporting unit for sale in our Corporate Investments Group Division. For further discussion on goodwill and other intangible assets, see Note [12] to the consolidated financial statements.

Deferred Tax Assets Valuation Allowance

We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carryforwards and tax credits. At December 31, 2004 and December 31, 2003 our consolidated gross deferred tax assets were€ 24.7 billion and€ 15.6 billion, respectively, and our consolidated gross deferred tax liabilities were€ 22.3 billion and€ 12.3 billion, respectively. A valuation allowance is maintained for deferred tax assets that we estimate are more likely than not to be unrealizable based on available evidence at the time the estimate is made. Determining the valuation allowance requires significant management judgments and assumptions. In determining the valuation allowance, we use historical and forecasted future operating results, based upon approved business plans, including a review of the eligible carryforward periods, tax planning opportunities and other relevant considerations. Each quarter, we reevaluate our estimate related to the valuation allowance, including our assumptions about future profitability. At December 31, 2004 and December 31, 2003 our valuation allowance was€ 888 million and€ 964 million, respectively.

We believe that the accounting estimate related to the valuation allowance is a critical accounting estimate because the underlying assumptions can change from period to period. For example, tax law changes or variances in future projected operating performance could result in a change in the valuation allowance. If we were not able to realize all or part of our net deferred tax assets in the future, an adjustment to our deferred tax assets valuation allowance would be charged to income tax expense in the period such determination was made.

As a result of reviews of the factors discussed above related to the adequacy of the valuation allowance, our income tax expense for the years ended December 31 included a credit of€ 7 million for 2004 and charges of approximately€ 99 million and€ 254 million for 2003 and 2002, respectively. The credit in 2004 was due mainly to an increase in expected realization of operating loss carryforwards and tax credits available to reduce future tax expense.

For further discussion on our deferred taxes and valuation allowance, see Note [26] to the consolidated financial statements.

Legal, Regulatory and Tax Contingencies

The use of estimates is important in determining provisions for potential losses that may arise from litigation and regulatory proceedings and tax audits. We estimate and provide for potential losses that may arise out of litigation and regulatory proceedings and tax audits to the extent that such losses are probable and can be estimated, in accordance with SFAS No. 5, “Accounting for Contingencies.” Significant judgment is required in making these estimates and our final liabilities may ultimately be materially different.

Our total liability in respect of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after considering, among other factors, the pro-

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gress of each case, our experience and the experience of others in similar cases, and the opinions and views of legal counsel. Given the inherent difficulty of predicting the outcome of our litigation matters, particularly in cases in which claimants seek substantial or indeterminate damages, we cannot estimate losses or ranges of losses for cases where there is only a reasonable possibility that a loss may have been incurred. See “Item 8: Financial Information – Legal Proceedings” and Note [35] to our consolidated financial statements for information on our judicial, regulatory and arbitration proceedings.

Effects of 1999/2000 German Tax Reform Legislation and Accounting for Income Taxes

You should note in reviewing our results of operations that the financial accounting treatment under U.S. GAAP for income tax rate changes resulted in a negative impact on our results of operations in 2004, 2003, 2002 and 2001. These impacts totaled an expense of€ 120 million in 2004,€ 215 million in 2003,€ 2.8 billion in 2002 and€ 995 million in 2001. We therefore recommend that you also consider our net income for 2004, 2003, 2002 and 2001 excluding the effect of the impact of changes in income tax rates when you compare 2004, 2003, 2002 and 2001 to one another and to earlier and future periods.

Two important tax law changes occurred in 1999 and 2000 that affected and will continue to affect our net income. In 1999, the German government reduced the corporate income tax rate on retained profits from 45% to 40%. In October 2000, the German government enacted comprehensive tax reform legislation.

The comprehensive tax reform legislation in 2000 contained two major changes relevant to our corporate taxation:

– The corporate income tax rate declined, beginning on January 1, 2001, to 25% for all corporate profits. Until the end of 2000, the rates were 40% for retained profits and 30% for distributed profits.

– The tax rate applicable to capital gains on the sale of equity securities eligible under the legislation was, beginning on January 1, 2002, reduced to zero. Until that date, the tax rate that applied to capital gains on these sales was the same as the tax rate applicable to ordinary income.

The following is a description of the accounting treatment for the 1999/2000 income tax rate changes and their effects on our results of operations.

U.S. GAAP requires us to record all unrealized gains on available for sale securities, net of the related deferred tax provisions, in other comprehensive income. The deferred tax provisions are based on the excess of the fair value of these securities over our tax basis in them. At the end of each reporting period, we record deferred tax provisions and related deferred taxes payable based on the change in the unrealized gain for that period using the effective income tax rate we expect will apply in the period we expect to realize the gain. Since both the unrealized gains and the related deferred tax provision are recorded in other comprehensive income, neither the unrealized gains nor the deferred tax provision affects net income in that period.

U.S. GAAP also requires that, in a period that includes the date on which new tax rates are enacted, companies must adjust all of the deferred tax assets and liabilities they have recorded. These adjustments to deferred tax assets and liabilities reflect the new effective tax rates that will apply in the periods in which the temporary differences that led to the creation of the deferred items are expected to be reversed. The changes in tax law we describe above required us to make these types of adjustments in 1999 and 2000. Because our available for sale securities included an extensive portfolio of eligible equity securities that had appreciated substantially in value, we had a significant amount of related deferred tax liabilities. These deferred tax liabilities were substantially reduced as a result of this 2000 legislation. The elimination of the German tax on the capital gains on sales of eligible equity securities is responsible for the majority of the€ 9.3 billion income tax benefit we recognized in 2000.

Our industrial holdings represent most of the eligible equity securities. We acquired many of these industrial holdings, most of which we classify as available for sale securities under U.S. GAAP, many years ago, and most of them have appreciated in value considerably over that time. Since we intend to sell these industrial holdings in the most tax-efficient and commercially prudent manner possible, the

47

estimated effective tax rate we applied to these unrealized gains when the new tax rate changes were enacted was essentially zero. As a result, most of the reductions in deferred tax liabilities associated with unrealized gains on our eligible equity securities related to our industrial holdings.

Although we recorded the deferred tax provisions directly to other comprehensive income for unrealized gains on available for sale securities, U.S. GAAP nevertheless required that this adjustment to the related deferred tax liabilities for a change in expected effective income tax rates be recorded as an adjustment of income tax expense in the period the tax rate change is enacted.

The adjustments to deferred tax liabilities related to eligible equity securities, however, did not result in an adjustment to the deferred tax provisions that had accumulated in other comprehensive income. These accumulated provisions remain in other comprehensive income until the related securities are sold, and they are then recognized as tax expense in the period of the sale. As such, certain possible effects of our accounting for income tax rate changes related to our eligible equity securities on our results of operations are as follows:

– When we sell each eligible equity security, we recognize tax expense in the period of its sale equal to that investment security’s share of the deferred tax provisions that had accumulated in other comprehensive income on the tax rate change dates. The amount we had accumulated in other comprehensive income related to our eligible equity securities was approximately€ 2.7 billion on December 31, 2004 and€ 2.8 billion on December 31, 2003.

– This means that, regardless of the size of the realized gains, if any, on subsequent sales of these eligible equity securities, there will be significant income tax expense in the periods of the sales. This expense will offset part or all of that gain or add to any loss when calculating net income.

– Although we have recognized in 2000 a significant deferred tax benefit as a result of the tax rate changes related to eligible equity securities and will record significant deferred tax expense in the years these securities are sold, realized gains on sales of these securities in 2001, 2002, 2003 and 2004 have not resulted in any taxes actually payable in cash. In other words, all of the deferred tax benefit and expense amounts were noncash items. In addition, when we reverse the related deferred tax provisions through the income tax expense line item, there will be no effect on our total shareholders’ equity. This is because the deferred tax provisions, which we accumulate in other comprehensive income, and retained earnings, where the income tax expense will have its effect, are both components of shareholders’ equity.

The following table presents the level as of year-end of unrealized gains and related effects in available for sale equity securities of DB Investor, which held most of our portfolio of industrial holdings and which reflects both the significant reductions in market prices since the effective date of the tax rate change and dispositions of industrial holdings. Since the deferred tax amount relating to the securities not sold has been frozen based on the level of market prices in 1999 and 2000, the deferred tax amount relating to the tax rate changes in Germany currently exceeds the amount of related unrealized gains of the available for sale equity securities of DB Investor.

in€ bn.	2004			2003			2002			2001		2000
Market value		5.4			6.3			5.3			14.1		17.5
Cost		4.0			4.6			5.0			5.7		5.6
Unrealized gains in other comprehensive income		1.4			1.7			0.3			8.4		11.9
Less: deferred tax relating to 1999 and 2000 tax rate changes in Germany		2.7			2.8			2.9			5.5		6.5
Other comprehensive income (loss), net		(1.3	)		(1.1	)		(2.6	)		2.9		5.4

As a consequence, the accounting for income tax rate changes related to eligible equity securities may result in significant impacts on our results of operations in periods in which we sell these securities. This effect is illustrated in 2004, 2003, 2002 and 2001 when we sold portions of our eligible equity securities. The gains resulting from most of these sales were not subject to tax. We reversed the deferred taxes which had accumulated in other comprehensive income, through December 31, 2000, in respect of these securities. We recognized these reversals as tax expense of€ 120 million in 2004,€ 215 million in 2003,€ 2.8 billion in 2002 and€ 995 million in 2001.

48

Neither the release of the deferred tax liability with an impact on the income statement nor the reversal of the offset amount in other comprehensive income with an impact on the income statement has an economic effect. They do not affect the bank’s tax position vis-à-vis the tax authorities. The initial release did not lead to a tax refund from the tax authorities and likewise, the sale and the reversal of the offset amount will not create a tax liability to the tax authorities. The only tax payable is on 5% of any gain as a result of the 2004 Tax Reform Act which was enacted in December 2003. Under the Act, effective starting in 2004, corporations will effectively become subject to tax on 5% of capital gains from the disposal of foreign and domestic shareholdings irrespective of holding percentage and holding period; losses from a shareholding disposal continue to be non-tax deductible.

Neither the initial release of the deferred tax liability nor the unrealized gains and losses from securities available for sale is included in regulatory core capital or in the calculation of our adjusted return on equity. The entire procedure is a U.S. GAAP specific accounting requirement. We believe that the economic effects of the tax rate changes are not appropriately reflected in the individual periods up to and including the period of the sale.

Operating Results

You should read the following discussion and analysis in conjunction with the consolidated financial statements.

Executive Summary

In 2004, the global economy was more stable than in 2002 or 2003, despite high oil prices, continued depreciation of the U.S. dollar against the euro and continued concerns over security. We saw strong momentum in the Americas and in the fast-growing Asian economies. On the other hand, growth in the mature Eurozone economies was slower – notably in Germany. In the banking industry, volumes in some of our core businesses remained well below the peak year of 2000. We saw sustained pressure on margins – particularly in more commoditized products, such as foreign exchange. In this environment, we delivered against our targets with a record year in Private & Business Clients (PBC) and in Debt Sales & Trading revenues. We also continued to strengthen our strategic positioning, in Germany and internationally.

Income before income tax expense increased from€ 2.8 billion in 2003 to€ 4.0 billion, after restructuring charges of€ 400 million related to the Business Realignment Program we launched in the fourth quarter of 2004. We reported a pre-tax return on average active equity of 16% – a substantial improvement over 10% in 2003 (pre-tax return on average total shareholders’ equity was 15% and 10%, respectively, for such years). Net income for 2004 increased by 81% to€ 2.5 billion compared to€ 1.4 billion in 2003, and basic earnings per share increased 106% to€ 5.02.

Compared to 2003, total net revenues excluding the provision for loan losses increased by€ 650 million, or 3%, to€ 21.9 billion. Positive revenue factors include improved returns from equity method investments, net gains from investment and premises sales, record total revenues of€ 6.3 billion from Sales & Trading (debt and other products), which includes net interest, trading and fee revenues, and Origination and Advisory revenues, which grew to€ 1.9 billion. The largest negative factors were lower revenues from proprietary activities in Sales & Trading (equity), a decline in gains on the sale of non-core businesses and the negative impact of exchange rate movements on our non-euro-denominated revenues.

Our total noninterest expenses were€ 17.5 billion compared to€ 17.4 billion in 2003. Noninterest expenses in 2004 included restructuring expenses of€ 400 million. Severance payments were€ 282 million in 2004 compared to€ 702 million in 2003. Reductions in noninterest expenses due to headcount reductions and other additional measures as well as due to the aforementioned exchange rate movements were offset by higher performance-related bonuses reflecting performance improvements in 2004. Noninterest expenses in 2004 also included charges associated with the settlement agreement of the WorldCom litigation.

49

Ongoing improvements in the credit environment, together with rigor in the bank’s credit risk management activities and releases related to previously impaired loans resulted in lower provisions for credit losses and in an improvement of the quality of the loan book. For the year 2004, provisions for loan losses were€ 372 million, down 67% from€ 1.1 billion in 2003. Furthermore, at the end of 2004, problem loans were€ 4.8 billion, down 27% from€ 6.6 billion at the end of 2003.

Looking forward, we expect to benefit from the investments made in our core businesses and from our planned cost savings. Our Business Realignment Program reflects a number of specific initiatives to better integrate business coverage and product units. These initiatives include realigning our sales and trading platforms in Global Markets, closely aligning our corporate finance, corporate banking and transaction banking activities, reorganizing Asset Management, adding regional focus in Germany and other regions, and streamlining our infrastructure.

Financial Results

The following table presents our condensed consolidated statement of income for 2004, 2003 and 2002:

									2004 increase (decrease)						2003 increase (decrease)
									from 2003						from 2002
in€ m.	2004		2003			2002			in€			in %			in€			in %
Net interest revenues		5,182		5,847			7,186			(665	)		(11	)		(1,339	)		(19	)
Provision for loan losses		372		1,113			2,091			(741	)		(67	)		(978	)		(47	)
Net interest revenues after provision for loan losses		4,810		4,734			5,095			76			2			(361	)		(7	)
Commissions and fee revenues		9,506		9,332			10,834			174			2			(1,502	)		(14	)
Trading revenues, net		6,186		5,611			4,024			575			10			1,587			39
Net gains on securities available for sale		235		20			3,523			215			N/M			(3,503	)		(99	)
Net income (loss) from equity method investments		388		(422	)		(887	)		810			N/M			465			52
Other noninterest revenues		421		880			1,867			(459	)		(52	)		(987	)		(53	)
Total noninterest revenues		16,736		15,421			19,361			1,315			9			(3,940	)		(20	)
Total net revenues		21,546		20,155			24,456			1,391			7			(4,301	)		(18	)
Compensation and benefits		10,222		10,495			11,358			(273	)		(3	)		(863	)		(8	)
Goodwill impairment/impairment of intangibles		19		114			62			(95	)		(83	)		52			84
Restructuring activities		400		(29	)		583			429			N/M			(612	)		N/M
Other noninterest expenses		6,876		6,819			8,904			57			1			(2,085	)		(23	)
Total noninterest expenses		17,517		17,399			20,907			118			1			(3,508	)		(17	)
Income before income tax expense and cumulative effect of accounting changes		4,029		2,756			3,549			1,273			46			(793	)		(22	)
Income tax expense		1,437		1,327			372			110			8			955			257
Reversal of 1999/2000 credits for tax rate changes		120		215			2,817			(95	)		(44	)		(2,602	)		(92	)
Income before cumulative effect of accounting changes, net of tax		2,472		1,214			360			1,258			104			854			237
Cumulative effect of accounting changes, net of tax		–		151			37			(151	)		N/M			114			N/M
Net income		2,472		1,365			397			1,107			81			968			244

N/M   –  Not meaningful

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Our net income included the effects of reversing income tax credits related to 1999 and 2000 tax law changes, as described in “Effects of 1999/2000 German Tax Reform Legislation and Accounting for Income Tax” and the cumulative effect of accounting changes as described in Note [2] to our consolidated financial statements. The following table shows our net income excluding these effects:

			Per share		Per share					Per share			Per share						Per share			Per share
in€ m. (except per share amounts)	2004		(basic)		(diluted)		2003			(basic)			(diluted)			2002			(basic)			(diluted)
Net income		2,472		5.02		4.53		1,365			2.44			2.31			397			0.64			0.63
Add (deduct):
Reversal of 1999/2000 credits for tax rate changes		120		0.24		0.23		215			0.39			0.36			2,817			4.58			4.50
Cumulative effect of accounting changes, net of tax		–		–		–		(151	)		(0.27	)		(0.25	)		(37	)		(0.06	)		(0.06	)
Net income before reversal of 1999/2000 credits for tax rate changes and cumulative effect of accounting changes, net of tax		2,592		5.26		4.76		1,429			2.56			2.42			3,177			5.16			5.07

Net income above included pre-tax gains of€ 140 million in 2004,€ 222 million in 2003 and€ 3.3 billion in 2002 on sales of securities that generated the reversal of the 1999/2000 credits for tax rate changes.

Net Interest Revenues

The following table sets forth data related to our net interest revenues:

							2004 increase (decrease)						2003 increase (decrease)
							from 2003						from 2002
in€ m. (except percentages)	2004		2003		2002		in€			in %			in€			in %
Total interest revenues		28,023		27,583		35,781		440			2			(8,198	)		(23	)
Total interest expenses		22,841		21,736		28,595		1,105			5			(6,859	)		(24	)
Net interest revenues		5,182		5,847		7,186		(665	)		(11	)		(1,339	)		(19	)
Average interest-earning assets1		751,557		736,046		781,134		15,511			2			(45,088	)		(6	)
Average interest-bearing liabilities1		695,094		683,127		729,643		11,967			2			(46,516	)		(6	)
Gross interest yield2		3.73%		3.75%		4.58%	(0.02 ppt)				(1	)	(0.83 ppt)				(18	)
Gross interest rate paid3		3.29%		3.18%		3.92%	0.11 ppt				3		(0.74 ppt)				(19	)
Net interest spread4		0.44%		0.57%		0.66%	(0.13 ppt)				(23	)	(0.09 ppt)				(14	)
Net interest margin5		0.69%		0.79%		0.92%	(0.10 ppt)				(13	)	(0.13 ppt)				(14	)

ppt – Percentage points
1	Average balances for each year are calculated based upon month-end balances.
2	Gross interest yield is the average interest rate earned on our average interest-earning assets.
3	Gross interest rate paid is the average interest rate paid on our average interest-bearing liabilities.
4	Net interest spread is the difference between the average interest rate earned on average interest-earning assets and the average interest rate paid on average interest-bearing liabilities.
5	Net interest margin is net interest revenues expressed as a percentage of average interest-earning assets.

Net interest revenues in 2004 were€ 5.2 billion, a decline of€ 665 million from 2003. A significant factor in the decline was the impact of lower loans outstanding. Although total average interest earning assets increased by€ 16 billion, or 2%, in 2004, the average volume of loans, the assets on which we generally earn the highest rate and wide spreads, decreased by€ 21 billion to€ 144 billion. The reduction of our loan exposure was primarily due to soft demand in the corporate loan book, including the German MidCap business. This was partly offset by greater loan volumes in the retail business. The development in loans year-to-year is the main reason that our overall rate earned in 2004 declined by 2 basis points while our rate paid increased by 11 basis points, in an environment of slightly increasing rates.

In addition, there were a number of other individual factors reflected in our net interest revenues in 2004. In absolute terms, increased average volumes in trading assets and liabilities generated the most significant increase in interest revenues and interest expenses, respectively. Interest and dividend income from securities available for sale and other investments decreased, partly due to less

51

dividend income from our smaller industrial holdings portfolio. Interest revenues in 2004 included€ 131 million related to tax refunds resulting from ongoing audits of prior period tax returns.

The development of our net interest revenues is also influenced to a significant extent by the accounting treatment of some of our derivatives transactions. We enter into nontrading derivative transactions as economic hedges of the interest rate risks of our nontrading assets and liabilities. Some of these derivatives qualify as hedges for accounting purposes while others do not. When derivative transactions qualify as hedges for accounting purposes, the interest arising from the derivatives appear in interest revenues and expense, where they compensate the interest flows from the assets and liabilities they are intended to hedge. When derivatives do not qualify for hedge accounting treatment, the interest flows that arose from the derivatives during any period all appear in trading revenues for that period.

Trading revenues, net

The following table sets forth data related to our trading revenues:

									2004 increase (decrease)						2003 increase (decrease)
									from 2003						from 2002
in€ m. (except percentages)	2004		2003			2002			in€			in %			in€			in %
CIB – Sales & Trading (equity)		2,192		2,491			513			(298	)		(12	)		1,977			385
CIB – Sales & Trading (debt and other products)		3,666		3,481			3,583			185			5			(102	)		(3	)
Other trading revenues		328		(361	)		(72	)		689			N/M			(289	)		(401	)
Total trading revenues, net		6,186		5,611			4,024			575			10			1,587			39

N/M  –  not meaningful

The decline in trading revenues from CIB – Sales & Trading (equity) was driven by lower returns from proprietary activities, which were partly offset by higher revenues from derivatives and the prime services business.

Trading revenues from Sales & Trading (debt and other products) increased, driven by our market-leading positions in high-value, structured products such as interest rate derivatives, credit derivatives and distressed debt.

Other trading revenues in 2004 primarily included returns from customer-related foreign exchange business in Global Trade Finance and PCAM, mark-to-market gains of€ 69 million related to AWM’s guaranteed value mutual funds business and losses of€ 231 million from credit default swaps used to hedge our investment-grade loan exposure.

In 2003 returns from customer-related foreign exchange business were below 2004 level. In addition, other trading revenues in 2003 included losses of€ 285 million from credit default swaps used to hedge our investment-grade loan exposure, losses of€ 143 million on hedges of our industrial holdings portfolio, losses related to foreign currency effects on certain liabilities in CIB and mark-to-market losses from hedging capital of certain foreign subsidiaries.

Our trading and risk management businesses include significant activities in interest rate instruments and related derivatives. Under U.S. GAAP, interest revenues earned from trading assets (e.g., coupon and dividend income), and the costs of funding net trading positions are part of net interest revenues. Our trading activities can periodically shift revenues between trading revenues and interest revenues, depending on a variety of factors, including risk management strategies. In order to provide a more business-focused commentary, we discuss the combined net interest and trading revenues by group division and by product within the Corporate and Investment Bank, rather than by type of revenues generated.

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The following table sets forth data relating to our combined net interest and trading revenues by group division and product within Corporate and Investment Bank:

										2004 increase (decrease)						2003 increase (decrease)
										from 2003						from 2002
in€ m.	2004			2003			2002			in€			in %			in€			in %
Net interest revenues		5,182			5,847			7,186			(665	)		(11	)		(1,339	)		(19	)
Trading revenues, net		6,186			5,611			4,024			575			10			1,587			39
Total net interest and trading revenues		11,368			11,458			11,210			(90	)		(1	)		248			2
Breakdown by Group Division/CIB product1
Sales & Trading (equity)		1,591			2,286			1,185			(695	)		(30	)		1,101			93
Sales & Trading (debt and other products)		5,370			5,367			5,281			4			0			86			2
Total Sales & Trading		6,961			7,652			6,466			(691	)		(9	)		1,187			18
Loan products2		701			664			1,342			37			6			(678	)		(50	)
Transaction services		828			830			1,082			(2	)		(0	)		(252	)		(23	)
Remaining products3		(246	)		(340	)		(388	)		94			28			48			12
Total Corporate and Investment Bank		8,244			8,807			8,502			(563	)		(6	)		305			4
Private Clients and Asset Management		2,920			2,814			2,860			105			4			(45	)		(2	)
Corporate Investments		118			(11	)		(31	)		128			N/M			20			66
Consolidation & Adjustments		87			(153	)		(121	)		241			N/M			(32	)		(27	)
Total net interest and trading revenues		11,368			11,458			11,210			(90	)		(1	)		248			2

N/M –  Not meaningful
1	Note that this breakdown reflects net interest and trading revenues only. For a discussion of the group divisions’ total revenues by product please refer to “Results of Operations by Segment”.
2	Includes the traditional net interest spread on loans as well as the results of credit default swaps used to hedge our investment-grade loan exposure in 2003 and 2004.
3	Includes origination, advisory and other products.

Corporate and Investment Bank (CIB).Combined net interest and trading results from sales and trading products decreased by€ 691 million to€ 7.0 billion. The decrease was largely attributable to a sharp fall of revenues from proprietary activities within Sales & Trading (equity), partly offset by growth in structured equity products, in particular derivatives and prime services. In loan products, net interest and trading revenues increased by€ 37 million mainly due to lower losses on credit risk hedge positions, offset by the effect of further reductions in the average size of the loan portfolio. Net interest and trading revenues from remaining products were€ 94 million higher than in 2003. The increase was mainly attributable to charges in 2003 which related to foreign currency effects on certain corporate liabilities.

Private Clients and Asset Management (PCAM).Combined net interest and trading revenues increased by€ 105 million compared to 2003. Factors contributing to this increase were higher PBC loan volumes and lower re-financing and hedge costs associated with AWM’s real estate portfolio.

Corporate Investments (CI).The increase primarily reflected trading losses of€ 143 million in 2003 related to the hedging of our industrial holdings portfolio. The result also reflects lower dividend income, partly offset by lower refinancing costs as a result of the sale of industrial holdings.

Consolidation & Adjustmentsin 2004 included€ 131 million of interest income on tax refunds resulting from ongoing audits of prior period tax returns. The remaining increase compared to 2003 primarily reflected lower mark-to-market losses related to the hedging of capital of certain foreign subsidiaries.

Provision for Loan Losses

Our provision for loan losses reflects charges to and releases from the allowance we carry for credit losses on loans. The allowance consists of a specific loss component, which relates to specific loans, and an inherent loss component. The inherent loss component consists of a country risk allowance, an allowance for smaller-balance standardized homogeneous loans and an other inherent loss component to cover losses in our loan portfolio that have not yet been individually identified, and reflects the imprecisions and uncertainties in estimating our loan loss allowance.

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Our provision for loan losses in 2004 was€ 372 million, a decline of€ 741 million or 67% from 2003, reflecting the improved credit environment witnessed throughout the year, supported by some significant releases and a continuation of our strict credit discipline. In 2004, 73% of our provision related to our smaller-balance standardized homogeneous loan portfolio.

For further information on the provision for loan losses see “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk – Credit Loss Experience and Allowance for Loan Losses”.

Noninterest Revenues, Excluding Trading Revenues

									2004 increase (decrease)						2003 increase (decrease)
									from 2003						from 2002
in€ m.	2004		2003			2002			in€			in %			in€			in %
Commissions and fee revenues1		9,506		9,332			10,834			174			2			(1,502	)		(14	)
Insurance premiums		123		112			744			11			10			(632	)		(85	)
Net gains on securities available for sale		235		20			3,523			215			N/M			(3,503	)		(99	)
Net income (loss) from equity method investments		388		(422	)		(887	)		810			N/M			465			52
Other noninterest revenues		298		768			1,123			(470	)		(61	)		(355	)		(32	)
Total noninterest revenues, excluding trading revenues		10,550		9,810			15,337			740			8			(5,527	)		(36	)

N/M –   Not meaningful
1	Includes

Commissions and fees from fiduciary activities:
Commissions for administration	281	240	632	41		17		(392	)	(62	)
Commissions for assets under management	2,847	2,968	3,214	(121	)	(4	)	(246	)	(8	)
Commissions for other securities business	83	65	80	18		28		(15	)	(19	)
Total	3,211	3,273	3,926	(62	)	(2	)	(653	)	(17	)
Commissions, broker’s fees, mark-ups on securities underwriting and other securities activities:
Underwriting and advisory fees	1,793	1,638	1,743	155		9		(105	)	(6	)
Brokerage fees	1,918	1,926	2,576	(8	)	0		(650	)	(25	)
Total	3,711	3,564	4,319	147		4		(755	)	(17	)
Fees for other customer services	2,584	2,495	2,589	89		4		(94	)	(4	)
Total commissions and fee revenues	9,506	9,332	10,834	174		2		(1,502	)	(14	)

Commissions and Fee Revenues.Total commissions and fee revenues increased by€ 174 million in 2004 compared with 2003. Underwriting and advisory fees increased by€ 155 million, mainly attributable to improved results from equity origination, high-yield issuances and leveraged lending in CIB. The increase of€ 89 million in fees for other customer services was driven by greater sales of insurance products due largely to changes in German tax legislation. The decrease of€ 62 million in commissions and fees from fiduciary activities mainly resulted from lower assets under management in our institutional AM business, lower performance fees in AM’s hedge funds business and the impact of the strength of the euro on our U.S. dollar-based revenues.

Net Gains on Securities Available for Sale.Results in 2004 included several disposal gains of which the most significant was a€ 118 million net gain related to the reduction of our stake in DaimlerChrysler AG. In 2003, several smaller gains in the€ 30-120 million range were almost offset by other-than-temporary impairment charges on various investments, mainly in our industrial holdings portfolio.

Net Income (Loss) from Equity Method Investments.The majority of net income from equity method investments in 2004 was almost equally attributable to investments related to structured transactions in CIB’s sales & trading areas and to private equity and other investments in CI. A smaller portion of 2004’s income related to real estate investments in AWM. The largest components of the loss in 2003 were the complete write-off on our investment in Gerling-Konzern Versicherungs-Beteiligungs-AG (€ 490 million) and losses on private equity investments in CI. Partly offsetting these losses was income from investments related to structured transactions in CIB’s sales & trading businesses and gains from AWM’s real estate investments.

Other Noninterest Revenues.Total other noninterest revenues declined by€ 470 million in 2004 compared to 2003. The decline primarily resulted from a€ 583 million gain from the sale of substantial parts of the Global Securities Services business in 2003. Partially offsetting this effect were higher returns from loans held for sale in 2004.

54

Noninterest Expenses

The following table sets forth information on our noninterest expenses:

								2004 increase (decrease)						2003 increase (decrease)
								from 2003						from 2002
in€ m.	2004		2003			2002		in€			in %			in€			in %
Compensation and benefits		10,222		10,495			11,358		(273	)		(3	)		(863	)		(8	)
Other noninterest expenses1		6,616		6,709			8,145		(93	)		(1	)		(1,436	)		(18	)
Policyholder benefits and claims		260		110			759		150			136			(649	)		(86	)
Goodwill impairment/impairment of intangibles		19		114			62		(95	)		(83	)		52			84
Restructuring activities		400		(29	)		583		429			N/M			(612	)		N/M
Total noninterest expenses		17,517		17,399			20,907		118			1			(3,508	)		(17	)

N/M –  Not meaningful
1	Includes:

Net occupancy expense of premises	1,258	1,251	1,291	7		1		(40	)	(3	)
Furniture and equipment	178	193	230	(15	)	(8	)	(37	)	(16	)
IT costs	1,726	1,913	2,188	(187	)	(10	)	(275	)	(13	)
Agency and other professional service fees2	824	836	1,001	(12	)	(1	)	(165	)	(16	)
Communication and data services	599	626	792	(27	)	(4	)	(166	)	(21	)
Other expenses2	2,031	1,890	2,643	141		7		(753	)	(28	)
Total other noninterest expenses	6,616	6,709	8,145	(93	)	(1	)	(1,436	)	(18	)

² Litigation & registration related legal fees and operational risk related legal fees have been reclassified from other expenses to agency and other professional service fees. Prior periods have been restated to reflect this change.

Compensation and Benefits.The decline of€ 273 million in 2004 compared to 2003 reflected several partly offsetting factors:

– Severance payments of€ 282 million in 2004 decreased by€ 420 million compared to 2003 with more than 60% of the decline attributable to PBC.

– Salaries showed a net decrease reflecting headcount reductions and sales of non-core businesses, partly offset by the effects of headcount increases in selected growth businesses.

– The strength of the euro had a beneficial impact on our compensation and benefits.

– Performance-related compensation increased in 2004 mainly due to improved operating results in our CB&S businesses and, to a lesser extent, a reduction of the proportion of deferred share awards used in the our compensation model.

Other Noninterest Expenses.IT costs decreased in 2004 by€ 187 million mainly reflecting cost containment efforts, deconsolidation and outsourcing effects, and also a stronger euro. This decrease was partly offset by higher costs for payment and clearing services, mainly on service agreements with the purchaser of our former subsidiary, DB Payments, and other providers in Germany.

Policyholder benefits and claims.The increase in 2004 was due to newly established provisions, including charges associated with the settlement agreement of the WorldCom litigation, partly offset by releases for certain other self-insured risks.

Goodwill Impairment/Impairment of Intangibles.The current year included an impairment loss of€ 19 million in Asset and Wealth Management following the termination of certain investment management agreements in the U.K. A charge of€ 114 million in CI following decisions related to the private equity fee-based business was recorded in 2003.

Restructuring Activities.In the fourth quarter 2004 we announced our Business Realignment Program which included a restructuring charge of€ 400 million in 2004. This reflected restructuring initiatives in our businesses and infrastructure functions, affecting approximately 1,200 staff. For further information on restructuring activities see Note [29] to our consolidated financial statements.

Income Tax Expense

Income tax expense was€ 1.6 billion in 2004, nearly unchanged from 2003. Each year includes the impact of German income tax rate changes that were enacted in 1999, 2000, and 2003. Tax expense of€ 120 million in 2004 and€ 215 million in 2003 was related to the reversal of deferred taxes included in other comprehensive income at December 31, 2000, due to actual sales of equity securities. There will be further reversals of tax expense in future years as additional equity securities are sold. In addition, the German tax law changes in 2003 resulted in a tax expense of€ 154 million in 2003. The actual effective tax rates including the impact of German tax rate changes were 39% and 56% in 2004 and 2003, respectively. Excluding the effect of changes in German tax rates, our effective tax rates were

55

36% in 2004 and 43% in 2003, with the higher effective tax rate in 2003 due mainly to greater non-deductible write-downs on equity method investments.

Results of Operations by Segment (2004 vs. 2003)

The following discussion shows the result of our business segments, the Corporate and Investment Bank Group Division, the Private Clients and Asset Management Group Division and the Corporate Investments Group Division. See Note [28] to the consolidated financial statements for information regarding

– our organizational structure;

– effects of significant acquisitions and divestitures on segmental results;

– changes in the format of our segment disclosure;

– a discussion of the framework of our management reporting systems;

– consolidating and other adjustments to the total results of operations of our business segments;

– definitions of non-GAAP financial measures that are used with respect to each segment, and

– the rationale for excluding items in deriving the measures.

The following tables show information regarding our business segments. The criterion for segmentation into divisions is our organizational structure as it existed at December 31, 2004. For further discussion of our business segments, see “Item 4: Information on the Company” and Note [28] to the consolidated financial statements. We prepared these figures in accordance with our management reporting systems.

2004	Corporate and			Private Clients			Corporate			Total			Consolidation			Total
	Investment			and Asset			Investments			Management			& Adjustments			Consolidated
in€ m. (except percentages)	Bank			Management						Reporting
Net revenues2		13,331			8,030			621			21,981			(63	)		21,918
Provision for loan losses		89			264			19			372			–			372
Provision for off-balance sheet positions		(65	)		(1	)		–			(65	)		–			(65	)
Total provision for credit losses		24			263			19			307
Operating cost base1		10,245			6,212			414			16,871
Policyholder benefits and claims		–			50			–			50			210			260
Minority interest		5			1			(1	)		4			(1	)		3
Restructuring activities		299			98			3			400			–			400
Goodwill impairment/impairment of intangibles		–			19			–			19			–			19
Total noninterest expenses3		10,549			6,380			416			17,344			238			17,582
Income (loss) before income taxes4		2,757			1,387			185			4,330			(301	)		4,029
Add (deduct):
Net (gains) losses from businesses sold/ held for sale		(31	)		(8	)		(38	)		(76	)
Significant equity pick-ups/net (gains) from investments		–			–			(148	)		(148	)
Net (gains) on securities available for sale/industrial holdings including hedging		–			–			(176	)		(176	)
Net (gains) on the sale of premises		–			–			(20	)		(20	)
Restructuring activities		299			98			3			400
Goodwill impairment/impairment of intangibles		–			19			–			19
Underlying pre-tax profit (loss)		3,026			1,497			(194	)		4,328
Cost/income ratio in %		79			79			67			79			N/M			80
Underlying cost/income ratio in %		77			78			174			78
Assets5		729,872			113,818			16,442			832,933			7,135			840,068
Risk-weighted positions (BIS risk positions)		139,124			65,677			10,242			215,044			1,743			216,787
Average active equity6		12,867			6,718			3,933			23,519			1,259			24,778
Return on average active equity in %		21			21			5			18			N/M			16
Underlying return on average active equity in %		24			22			(5	)		18

N/M –  Not meaningful
1	Includes:

Severance payments 170 101 1 272 10 282

2	Net interest revenues and noninterest revenues
3	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
4	Before cumulative effect of accounting changes.
5	The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on the group division level. The same approach holds true for the sum of group divisions compared to Total Management Reporting.
6	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.

56

2003	Corporate and			Private Clients			Corporate			Total			Consolidation			Total
	Investment			and Asset			Investments			Management			& Adjustments			Consolidated
in€ m. (except percentages)	Bank			Management						Reporting
Net revenues2		14,193			8,217			(921	)		21,490			(223	)		21,268
Provision for loan losses		752			325			36			1,113			–			1,113
Provision for off-balance sheet positions		(45	)		(3	)		(2	)		(50	)		–			(50	)
Total provision for credit losses		707			321			35			1,063
Operating cost base1		9,963			6,699			681			17,343
Policyholder benefits and claims		–			21			–			21			89			110
Minority interest		13			15			(31	)		(3	)		–			(3	)
Restructuring activities		(29	)		(1	)		–			(29	)		–			(29	)
Goodwill impairment		–			–			114			114			–			114
Total noninterest expenses3		9,947			6,735			763			17,445			3			17,449
Income (loss) before income taxes4		3,539			1,162			(1,719	)		2,982			(225	)		2,756
Add (deduct):
Net (gains) losses from businesses sold/ held for sale		(583	)		(51	)		141			(494	)
Significant equity pick-ups/net losses from investments		–			–			938			938
Net losses on securities available for sale/industrial holdings including hedging		–			–			184			184
Net losses on the sale of premises		–			–			107			107
Restructuring activities		(29	)		(1	)		–			(29	)
Goodwill impairment		–			–			114			114
Underlying pre-tax profit (loss)		2,926			1,109			(236	)		3,800
Cost/income ratio in %		70			82			N/M			81			N/M			82
Underlying cost/income ratio in %		73			82			152			78
Assets5		681,722			124,606			18,987			795,818			7,796			803,614
Risk-weighted positions (BIS risk positions)		137,615			63,414			13,019			214,048			1,625			215,672
Average active equity6		14,192			7,225			4,900			26,317			1,057			27,374
Return on average active equity in %		25			16			(35	)		11			N/M			10
Underlying return on average active equity in %		21			15			(5	)		14

N/M –  Not meaningful
1	Includes:

Severance payments 260 395 20 675 27 702

2	Net interest revenues and noninterest revenues
3	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
4	Before cumulative effect of accounting changes.
5	The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on the group division level. The same approach holds true for the sum of group divisions compared to Total Management Reporting.
6	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.

57

2002	Corporate and		Private Clients			Corporate			Total			Consolidation			Total
	Investment		and Asset			Investments			Management			& Adjustments			Consolidated
in€ m. (except percentages)	Bank		Management						Reporting
Net revenues2		13,797		9,499			2,998			26,295			253			26,547
Provision for loan losses		1,712		224			155			2,091			(1	)		2,091
Provision for off-balance sheet positions		31		(1	)		(11	)		18			(1	)		17
Total provision for credit losses		1,742		223			144			2,110
Operating cost base1		10,908		7,125			1,228			19,261
Policyholder benefits and claims		–		685			–			685			75			759
Minority interest		8		32			3			43			2			45
Restructuring activities		341		240			1			583			–			583
Goodwill impairment		–		–			62			62			–			62
Total noninterest expenses3		11,258		8,082			1,293			20,633			257			20,890
Income (loss) before income taxes4		797		1,195			1,561			3,552			(3	)		3,549
Add (deduct):
Net (gains) from businesses sold/ held for sale		–		(511	)		(18	)		(529	)
Significant equity pick-ups/net losses from investments		–		–			1,197			1,197
Net (gains) on securities available for sale/industrial holdings including hedging		–		–			(3,659	)		(3,659	)
Change in measurement of other inherent loss allowance		200		–			–			200
Restructuring activities		341		240			1			583
Goodwill impairment		–		–			62			62
Underlying pre-tax profit (loss)		1,338		924			(857	)		1,405
Cost/income ratio in %		82		85			43			78			N/M			79
Underlying cost/income ratio in %		79		86			N/M			85
Assets5		642,127		109,394			26,536			750,238			8,117			758,355
Risk-weighted positions (BIS risk positions)		155,160		59,493			19,219			233,872			3,606			237,479
Average active equity6		17,511		7,266			6,466			31,243			2			31,246
Return on average active equity in %		5		16			24			11			N/M			11
Underlying return on average active equity in %		8		13			(13	)		4

N/M –  Not meaningful
1	Includes:

Severance payments 261 136 19 416 55 471

2	Net interest revenues and noninterest revenues
3	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
4	Before cumulative effect of accounting changes.
5	The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on the group division level. The same approach holds true for the sum of group divisions compared to Total Management Reporting.
6	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.

58

Group Divisions

Corporate and Investment Bank Group Division

The following table sets forth the results of our Corporate and Investment Bank Group Division for the years ended December 31, 2004, 2003 and 2002, in accordance with our management reporting systems:

in€ m. (except percentages)	2004			2003			2002
Net revenues:
Sales & Trading (equity)		2,486			3,118			2,506
Sales & Trading (debt and other products)		6,299			6,077			5,582
Origination (equity)		499			485			354
Origination (debt)		916			806			683
Advisory		488			465			546
Loan products		1,142			1,193			1,804
Transaction services		1,862			1,914			2,643
Other		(361	)		136			(322	)
Total net revenues		13,331			14,193			13,797
Therein: Net interest and trading revenues		8,244			8,807			8,502
Provision for credit losses:
Provision for loan losses		89			752			1,712
Provision for off-balance sheet positions		(65	)		(45	)		31
Total provision for credit losses		24			707			1,742
Noninterest expenses1:
Operating cost base		10,245			9,963			10,908
Minority interest		5			13			8
Restructuring activities		299			(29	)		341
Goodwill impairment		–			–			–
Total noninterest expenses1		10,549			9,947			11,258
Therein: Severance payments		170			260			261
Income before income taxes		2,757			3,539			797
Add (deduct):
Net (gains) losses from businesses sold/held for sale		(31	)		(583	)		–
Change in measurement of other inherent loss allowance		–			–			200
Restructuring activities		299			(29	)		341
Goodwill impairment		–			–			–
Underlying pre-tax profit		3,026			2,926			1,338
Cost/income ratio in %		79%			70%			82%
Underlying cost/income ratio in %		77%			73%			79%
Assets		729,872			681,722			642,127
Risk-weighted positions (BIS risk positions)		139,124			137,615			155,160
Average active equity2		12,867			14,192			17,511
Return on average active equity in %		21%			25%			5%
Underlying return on average active equity in %		24%			21%			8%

1	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
2	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.

In the following paragraphs, we discuss the contribution of the individual corporate divisions to the overall results of the Corporate and Investment Bank Group Division.

59

Corporate Banking & Securities Corporate Division
The following table sets forth the results of our Corporate Banking & Securities Corporate Division for the years ended December 31, 2004, 2003 and 2002, in accordance with our management reporting systems:

in€ m. (except percentages)	2004			2003			2002
Net revenues:
Sales & Trading (equity)		2,486			3,118			2,506
Sales & Trading (debt and other products)		6,299			6,077			5,582
Origination (equity)		499			485			354
Origination (debt)		916			806			683
Advisory		488			465			546
Loan products		1,142			1,193			1,804
Other		(392	)		(447	)		(322	)
Total net revenues		11,437			11,697			11,154
Provision for credit losses:
Provision for loan losses		80			750			1,706
Provision for off-balance sheet positions		(66	)		8			83
Total provision for credit losses		14			759			1,788
Noninterest expenses1:
Operating cost base		8,670			8,220			8,701
Minority interest		5			13			8
Restructuring activities		272			(23	)		316
Goodwill impairment		–			–			–
Total noninterest expenses1		8,947			8,211			9,025
Therein: Severance payments		154			194			243
Income before income taxes		2,477			2,727			341
Add (deduct):
Net (gains) losses from businesses sold/held for sale	–				–			–
Change in measurement of other inherent loss allowance	–				–			200
Restructuring activities		272			(23	)		316
Goodwill impairment		–			–			–
Underlying pre-tax profit		2,749			2,704			856
Cost/income ratio in %		78%			70%			81%
Underlying cost/income ratio in %		76%			70%			78%
Assets		720,546			693,414			629,975
Risk-weighted positions (BIS risk positions)		128,027			127,449			142,211
Average active equity2		11,481			12,776			15,342
Return on average active equity in %		22%			21%			2%
Underlying return on average active equity in		24%			21%			6%

1	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
2	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.

Comparison between 2004 and 2003
Income before income taxesdecreased by€ 250 million to€ 2.5 billion for the year ended December 31, 2004. This decrease was attributable to lower net revenues and increased noninterest expenses, partly offset by lower provision for credit losses. Noninterest expenses in 2004 included a charge for restructuring activities taken in the fourth quarter as a consequence of the Business Realignment Program announced in September 2004. Underlying pre-tax profit, at€ 2.7 billion, was similar to 2003.

Net revenuesof€ 11.4 billion in 2004 were€ 259 million lower than net revenues of€ 11.7 billion in 2003, and include the impact of a more than 9% decline in the average value of the U.S. dollar against the euro over the year.

60

Sales and trading (debt and other products) revenues were a record€ 6.3 billion in 2004,€ 222 million higher than 2003. This performance was driven by market-leading positions in high-value, structured products such as interest rate derivatives, securitized products, credit derivatives, high-yield and distressed debt, where our work in these areas has won us awards from major industry publications such asRiskandInternational Financial Review. Significant volume growth in other products, particularly foreign exchange, helped offset ongoing margin erosion, with customer activity continuing to predominate.

Sales and trading (equity) revenues of€ 2.5 billion were€ 632 million lower than in 2003. The reduction was largely attributable to a sharp fall in revenues from proprietary activities. Offsetting this decline was continued strong growth in structured equity products, in particular derivatives and prime services.

Revenues from origination and advisory of€ 1.9 billion were€ 146 million higher than in 2003. Origination (equity) produced a solid performance. The focus of the business remains one of innovation while at the same time minimizing unprofitable transactions. In origination (debt), high-yield issuance and leveraged lending, particularly in the U.S., also performed well. In advisory, the mergers and acquisitions market improved throughout the year, with announced volumes up globally and in all regions versus 2003.

Revenues from loan products at€ 1.1 billion were only marginally lower than in 2003, partly as a consequence of further reductions in the average size of the loan portfolio over the period.

Theprovision for credit lossesamounted to€ 14 million in 2004 compared to€ 759 million in 2003. This reflects the improved credit environment witnessed throughout the year and enhanced credit discipline, as well as releases related to previously impaired loans.

Noninterest expensesin 2004 were€ 8.9 billion, an increase of€ 736 million compared to€ 8.2 billion reported in 2003. Restructuring activities of€ 272 million were included for plans initiated in the fourth quarter of 2004. In 2003,€ 23 million of restructuring provision previously charged in 2002 was released subsequent to the full implementation of these plans. Excluding these restructuring activities in both years, noninterest expenses in 2004 would have increased by€ 441 million. A significant part of this increase was due to performance-related compensation, including the impact of the change in the equity compensation model.

Thecost/income ratioincreased by 8 percentage points in 2004 to 78%, resulting from both the reduced revenues and increased noninterest expenses noted above.

61

Global Transaction Banking Corporate Division
The following table sets forth the results of our Global Transaction Banking Corporate Division for the years ended December 31, 2004, 2003 and 2002, in accordance with our management reporting systems:

in€ m. (except percentages)	2004			2003			2002
Net revenues		1,893			2,497			2,643
Provision for credit losses:
Provision for loan losses		9			2			6
Provision for off-balance sheet positions		1			(53	)		(52	)
Total provision for credit losses		11			(51	)		(46	)
Noninterest expenses1:
Operating cost base		1,574			1,743			2,207
Minority interest		–			–			–
Restructuring activities		28			(6	)		26
Goodwill impairment		–			–			–
Total noninterest expenses1		1,602			1,737			2,233
Therein: Severance payments		16			66			18
Income before income taxes		280			811			456
Add (deduct):
Net (gains) losses from businesses sold/held for sale		(31	)		(583	)		–
Restructuring activities		28			(6	)		26
Goodwill impairment		–			–			–
Underlying pre-tax profit		277			222			482
Cost/income ratio in %		85%			70%			84%
Underlying cost/income ratio in %		85%			91%			84%
Assets		16,639			16,709			25,098
Risk-weighted positions (BIS risk positions)		11,097			10,166			12,949
Average active equity2		1,386			1,416			2,169
Return on average active equity in %		20%			57%			21%
Underlying return on average active equity in %		20%			16%			22%

1	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
2	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.

Comparison between 2004 and 2003
Income before income taxesdecreased by€ 531 million to€ 280 million for the year ended December 31, 2004. In 2003, we sold a substantial part of our Global Securities Services (GSS) business to State Street Corporation generating a gain of€ 583 million on the sale. In 2004 we recognized a further gain of€ 55 million on the sale relating to the GSS sale and a charge of€ 24 million, representing GTB’s share of the loss on the sale of DB Payments. Excluding the net gains on sales,net revenueswould have decreased marginally by€ 51 million mainly as a result of the absence of revenues from the disposed businesses.

Theprovision for credit losseswas a charge of€ 11 million in 2004, compared to a net release of€ 51 million in 2003.

Noninterest expensesof€ 1.6 billion decreased by€ 135 million, or 8%, from 2003. Expenses in 2004 included€ 28 million for restructuring plans initiated in the fourth quarter 2004. In 2003,€ 6 million relating to provisions for restructuring taken in 2002 were released subsequent to the full implementation of these plans. The decrease in noninterest expenses mainly reflected the lower expense base due to the disposal of GSS in the first quarter 2003.

Thecost/income ratioof 85% was 15 percentage points higher than in 2003 mainly due to the effects of the gains on sale as noted above. After adjusting for these gains and the restructuring activities, the underlying cost/income ratio improved by 6 percentage points from 91% to 85%.

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Private Clients and Asset Management Group Division

The following table sets forth the results of our Private Clients and Asset Management Group Division for the years ended December 31, 2004, 2003 and 2002, in accordance with our management reporting systems:

in€ m. (except where indicated)	2004			2003			20021
Net revenues:
Portfolio/fund management		2,526			2,615			2,733
Brokerage		1,659			1,591			1,512
Loans/deposits		2,358			2,330			2,425
Payments, account & remaining financial services		915			823			843
Other		571			858			1,986
Total net revenues		8,030			8,217			9,499
Therein: Net interest and trading revenues		2,920			2,814			2,860
Provision for credit losses:
Provision for loan losses		264			325			224
Provision for off-balance sheet positions		(1	)		(3	)		(1	)
Total provision for credit losses		263			321			223
Noninterest expenses2:
Operating cost base		6,212			6,699			7,125
Policyholder benefits and claims		50			21			685
Minority interest		1			15			32
Restructuring activities		98			(1	)		240
Goodwill impairment/impairment of intangibles		19			–			–
Total noninterest expenses2		6,380			6,735			8,082
Therein: Severance payments		101			395			136
Income before income taxes		1,387			1,162			1,195
Add (deduct):
Net (gains) losses from businesses sold/held for sale		(8	)		(51	)		(511	)
Restructuring activities		98			(1	)		240
Goodwill impairment/impairment of intangibles		19			–			–
Underlying pre-tax profit		1,497			1,109			924
Cost/income ratio in %		79%			82%			85%
Underlying cost/income ratio in %		78%			82%			86%
Assets		113,818			124,606			109,394
Risk-weighted positions (BIS risk positions)		65,677			63,414			59,493
Average active equity3		6,718			7,225			7,266
Return on average active equity in %		21%			16%			16%
Underlying return on average active equity in %		22%			15%			13%
Invested assets (in€ bn.)4		828			865			1,016

1	For 2002, our insurance and related business, which we sold in that year, contributed€ 1,282 million in net revenues,€ 104 million in operating cost base,€ 650 million in policyholder benefits and claims,€ 6 million in minority interest,€ 760 million in noninterest expenses (of which€ 1 million constituted severance payments) and€ 513 million of income before taxes, and had a cost/income ratio of 60%. Excluding this sold insurance business PCAM’s 2002 results would have included€ 8,226 million in net revenues,€ 7,021 million in operating cost base,€ 35 million in policyholder benefits and claims,€ 26 million in minority interest,€ 7,322 million in noninterest expenses (of which€ 135 million constituted severance payments) and€ 681 million of income before income taxes, and would have had a cost/income ratio of 89%.
2	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
3	See Note [28] for a description of how average active equity is allocated to the divisions.
4	Numbers are restated for revised invested assets definition. We define invested assets as (a) assets we hold on behalf of customers for investment purposes and/or (b) client assets that are managed by us. We manage invested assets on a discretionary or advisory basis, or these assets are deposited with us.

In the following paragraphs, we discuss the contribution of the individual corporate divisions to the overall results of Private Clients and Asset Management Group Division.

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Asset and Wealth Management Corporate Division
The following table sets forth the results of our Asset and Wealth Management Corporate Division for the years ended December 31, 2004, 2003 and 2002, in accordance with our management reporting systems:

in€ m. (except where indicated)	2004			2003			2002
Net revenues:
Portfolio/fund management (AM)		2,040			2,195			2,165
Portfolio/fund management (PWM)		300			281			341
Total portfolio/fund management		2,339			2,476			2,506
Brokerage		668			654			677
Loans/deposits		132			128			167
Payments, account & remaining financial services	18				12			9
Other		334			559			366
Total net revenues		3,491			3,830			3,724
Provision for credit losses:
Provision for loan losses		(6	)		2			23
Provision for off-balance sheet positions		–			(3	)		–
Total provision for credit losses		(6	)		(1	)		23
Noninterest expenses1:
Operating cost base		2,925			3,094			3,245
Policyholder benefits and claims		50			21			35
Minority interest		1			13			25
Restructuring activities		88			–			–
Goodwill impairment/impairment of intangibles		19			–			–
Total noninterest expenses1		3,083			3,128			3,304
Therein: Severance payments		51			78			86
Income before income taxes		415			702			397
Add (deduct):
Net (gains) losses from businesses sold/held for sale	(32		)		(55	)		(8	)
Restructuring activities		88			–			–
Goodwill impairment/impairment of intangibles		19			–			–
Underlying pre-tax profit		490			647			389
Cost/income ratio in %		88%			82%			89%
Underlying cost/income ratio in %		86%			82%			88%
Assets		34,945			48,138			37,642
Risk-weighted positions (BIS risk positions)		11,424			12,170			11,803
Average active equity2		5,038			5,694			5,667
Return on average active equity in %		8%			12%			7%
Underlying return on average active equity in		10%			11%			7%
Invested assets (in€ bn.)3		679			715			869

AM –  Asset Management
PWM –  Private Wealth Management
1	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
2	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.
3	Numbers are restated for revised invested assets definition. We define invested assets as (a) assets we hold on behalf of customers for investment purposes and/or (b) client assets that are managed by us. We manage invested assets on a discretionary or advisory basis, or these assets are deposited with us.

Comparison between 2004 and 2003
Income before income taxesof our Asset and Wealth Management Corporate Division was€ 415 million in 2004, a decrease of€ 288 million from 2003. This decrease reflects the effects of a restructuring charge of€ 88 million in the fourth quarter 2004, a€ 19 million impairment loss on intangibles related to the termination of certain investment management agreements in the U.K. and€ 23 million lower net gains from businesses sold. In 2004 we had net gains of€ 32 million on the sales

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of the Australian real estate business and Scudder Private Investment Counsel, and in 2003 net gains of€ 55 million were generated from the sale of most of our Passive Asset Management business. Excluding these items, income before income taxes would have decreased by€ 158 million primarily due to a gain on the sale of real estate private equity assets to the Global Real Estate Opportunity fund in 2003.

Net revenueswere€ 3.5 billion in 2004, a decrease of€ 339 million, or 9%, compared to 2003. This decline was partially the result of the above-mentioned gains, as well as declines in portfolio fund management revenues which were not offset by increases in other revenue categories.

In 2004 portfolio/fund management revenues of€ 2.0 billion in our Asset Management Business Division declined by€ 155 million, or 7%, from 2003. This decrease mainly reflects difficult market conditions, particularly in alternative assets, the impact of the strengthening of the euro, and the effect of invested asset net outflows. The decline was partially offset by the continued success of our German mutual fund company, DWS, which further improved its market share of net mutual fund inflows to over 50% as measured by the German Investment Association, BVI.

Portfolio/fund management revenues in our Private Wealth Management Business Division increased by€ 18 million, or 7%, to€ 300 million, mainly caused by the enhanced performance in discretionary products.

Brokerage revenues of€ 668 million increased€ 14 million, or 2%, primarily due to an upswing in transaction-based revenues and successful product launches in alternative investments, especially in Asia, as well as specialized structured products. The strong euro partially offset some of the revenue increase generated in U.S. dollars.

Loans/deposits revenues of€ 132 million increased by€ 4 million, or 3%, especially due to the sale of margin lending products as clients sought to enhance portfolio performance.

Revenues from other products of€ 334 million were€ 225 million, or 40%, lower than in 2003 primarily due to the aforementioned gain from the sale of our real estate private equity assets and lower gains on sale of businesses. The remaining decrease was the result of lower earnings from equity method investments, particularly in real estate.

Noninterest expenseswere€ 3.1 billion in 2004, a decrease of€ 45 million, or 1%, from 2003 despite the aforementioned restructuring charge and impairment loss. The decrease was due mainly to declines in most categories of compensation and benefits, particularly severance and bonus payments. Noninterest expenses also benefited comparatively from the impact of the strengthening of the euro.

Thecost/income ratiowas 88% in 2004. The increase of 6 percentage points compared to 2003 is mainly due to the aforementioned decline in revenues, while expenses decreased at a lower rate.

Invested assetsdecreased by€ 36 billion to€ 679 billion in 2004. Net outflows within the Asset Management Business Division were€ 42 billion during 2004, largely in the institutional business in the UK, in the Americas retail business and in the institutional business in Asia, which accounted for€ 20 billion,€ 6 billion and€ 5 billion of the net outflow, respectively, or a combined 75% of the total net outflow. Net inflows of€ 6 billion in the Private Wealth Management Business Division were mainly due to positive developments in Asia/Pacific and Switzerland and in the offshore business. In addition, positive market movements were largely offset by the negative impact of the strengthening of the euro.

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Private & Business Clients Corporate Division
The following table sets forth the results of our Private & Business Clients Corporate Division for the years ended December 31, 2004, 2003 and 2002, in accordance with our management reporting systems:

in€ m. (except where indicated)	2004			2003			2002
Net revenues:
Portfolio/fund management		187			139			227
Brokerage		991			937			835
Loans/deposits		2,226			2,202			2,258
Payments, account & remaining financial services	898				811			834
Other		237			299			1,620
Total net revenues		4,539			4,388			5,775
Provision for credit losses:
Provision for loan losses		270			322			201
Provision for off-balance sheet positions		(1	)		(1	)		(1	)
Total provision for credit losses		269			322			200
Noninterest expenses2:
Operating cost base		3,287			3,605			3,880
Policyholder benefits and claims		–			–			650
Minority interest		–			2			7
Restructuring activities		10			(1	)		240
Goodwill impairment		–			–			–
Total noninterest expenses2		3,297			3,607			4,778
Therein: Severance payments		50			317			50
Income before income taxes		973			459			797
Add (deduct):
Net (gains) losses from businesses sold/held for sale	24				4			(503	)
Restructuring activities		10			(1	)		240
Goodwill impairment		–			–			–
Underlying pre-tax profit		1,007			462			535
Cost/income ratio in %		73%			82%			83%
Underlying cost/income ratio in %		72%			82%			84%
Assets		78,930			78,477			74,039
Risk-weighted positions (BIS risk positions)		54,253			51,244			47,690
Average active equity3		1,681			1,531			1,599
Return on average active equity in %		58%			30%			50%
Underlying return on average active equity in %		60%			30%			33%
Invested assets (in€ bn.)4		150			150			148
Loan volume (in€ bn.)5		69			66			64
Deposit volume (in€ bn.)5		63			64			66

1	For 2002, our insurance business, which we sold in that year, contributed€ 1,274 million in net revenues,€ 104 million in operating cost base,€ 650 million in policyholder benefits and claims,€ 6 million in minority interest,€ 760 million in noninterest expenses (of which€ 1 million constituted severance payments) and€ 513 million of income before income taxes, and had a cost/income ratio of 60%. Excluding this sold insurance business PBC’s 2002 results would have included€ 4,501 million in net revenues,€ 3,777 million in operating cost base,€ 1 million in minority interest,€ 4,018 million in noninterest expenses (of which€ 48 million constituted severance payments) and€ 284 million of income before income taxes, and would have had a cost/income ratio of 89%.
2	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
3	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.
4	Numbers are restated for revised invested assets definition. We define invested assets as (a) assets we hold on behalf of customers for investment purposes and/or (b) client assets that are managed by us. We manage invested assets on a discretionary or advisory basis, or these assets are deposited with us.
5	Numbers are restated for revised client business volume definition.

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Comparison between 2004 and 2003
Income before income taxesof our Private & Business Clients Corporate Division increased by€ 514 million to€ 973 million in 2004. Excluding the effects of a loss of€ 24 million on the sale of DB Payments attributable to PBC and restructuring expenses of€ 10 million, income before income taxes would have been over€ 1 billion. With this record result, PBC achieved its ambitious goal in 2004. Pre-tax return on average active equity almost doubled year-over-year to 58%.

Net revenuesincreased by€ 151 million, or 3%, compared to 2003. The increase was driven by higher sales of investment and insurance products, the latter impacted by changes in German tax legislation.

Portfolio/fund management and brokerage revenues increased by€ 47 million and€ 54 million, respectively. Due to successful product initiatives, such as real estate fund placements and sales of structured products, we were able to broaden our client base and increase client business volume.

Loans/deposits revenues increased by€ 24 million largely driven by higher loan volumes.

Payments, account and remaining financial services revenues increased by€ 87 million, mainly due to greater revenues from the intermediation of insurance products, which benefited largely from changes in German tax legislation.

Revenues from other products of€ 237 million in 2004 decreased by€ 62 million compared to the prior year primarily due to the aforementioned loss of€ 24 million on the sale of DB Payments in 2004 and gains of€ 55 million on sales of securities available for sale in 2003. Excluding these effects, revenues from other products would have increased by€ 18 million, mainly related to our activities in asset and liability management.

Provision for credit lossesdecreased to€ 269 million in 2004 reflecting lower default rates, particularly with regard to our portfolio of mortgages and commercial installment loans.

Noninterest expenseswere€ 3.3 billion in 2004, a decrease of€ 310 million, or 9%, as compared to 2003. This decrease is mainly attributable to the decrease of€ 267 million in severance payments.

The cost/income ratiowas 73% in 2004. This significant improvement of 9 percentage points compared to 2003 reflects the lower severance mentioned above and higher revenues, especially from the intermediation of insurance products.

Invested assetsin 2004 were€ 150 billion, the same as in 2003. Within the asset classes, lower deposit volumes were offset by higher securities volumes, which benefited from performance returns as securities markets recovered.

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Corporate Investments Group Division

The following table sets forth the results of our Corporate Investments Group Division for the years ended December 31, 2004, 2003 and 2002, in accordance with our management reporting systems:

in€ m. (except percentages)	2004			2003			2002
Net revenues		621			(921	)		2,998
Therein: Net interest and trading revenues		118			(11	)		(31	)
Provision for credit losses:
Provision for loan losses		19			36			155
Provision for off-balance sheet positions		–			(2	)		(11	)
Total provision for credit losses		19			35			144
Noninterest expenses1:
Operating cost base		414			681			1,228
Minority interest		(1	)		(31	)		3
Restructuring activities		3			–			1
Goodwill impairment		–			114			62
Total noninterest expenses1		416			763			1,293
Therein: Severance payments		1			20			19
Income (loss) before income taxes		185			(1,719	)		1,561
Add (deduct):
Net (gains) losses from businesses sold/held for sale	(38		)		141			(18	)
Significant equity pick-ups/net (gains) losses from investments	(148		)		938			1,197
Net (gains) losses on securities available for sale/
industrial holdings incl. hedging		(176	)		184			(3,659	)
Net (gains) losses on sale of premises		(20	)		107			–
Restructuring activities		3			–			1
Goodwill impairment		–			114			62
Underlying pre-tax loss		(194	)		(236	)		(857	)
Cost/income ratio in %		67%			N/M			43%
Underlying cost/income ratio in %		174%			152%			N/M
Assets		16,442			18,987			26,536
Risk-weighted positions (BIS risk positions)		10,242			13,019			19,219
Average active equity2		3,933			4,900			6,466
Return on average active equity in %		5%			(35)%			24%
Underlying return on average active equity in %		(5)%			(5)%			(13)%

N/M –  Not meaningful
1	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
2	See Note [28] to the consolidated financial statements for a description of how average active equity is allocated to the divisions.

Comparison between 2004 and 2003
Our Corporate Investments Group Division reported anincome before income taxesof€ 185 million in 2004 compared to a loss before income taxes of€ 1.7 billion in 2003.

Net revenueswere€ 621 million in 2004, an increase of€ 1.5 billion compared to 2003. Net revenues in 2004 included net gains of€ 176 million on sales of securities available for sale and from our industrial holdings portfolio. The largest transaction was the reduction of our investment in DaimlerChrysler AG from 11.8% to 10.4%, which resulted in a net gain of€ 118 million. The reduction of our investment in DEUTZ AG from 10.5% to 4.5% and the sale of our investments in Fresenius AG and Motor-Columbus AG also contributed to the overall net gains on securities available for sale and our industrial holdings portfolio in 2004. Net revenues in 2003 included net losses of€ 184 million on sales of securities available for sale and from our industrial holdings portfolio, primarily related to impairments deemed other-than-temporary on our positions in EFG Eurobank Ergasias S.A., Fiat S.p.A. and mg technologies ag as well as losses on nontrading derivatives hedging our industrial holdings portfolio. Subsequently these charges were partially offset by gains on the sale of our interests in EFG Euro-

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bank Ergasias S.A. and mg technologies ag, as well as gains from sales reducing our holding in Allianz AG and the sale of HeidelbergCement AG.

In 2004, net revenues included net gains of€ 38 million from sold businesses related to our remaining North American commercial and consumer finance business. In 2003, net revenues included net losses of€ 141 million related to sold businesses, mainly Tele Columbus and parts of our remaining North American commercial and consumer finance business. Net revenues in 2004 also reflected net gains of€ 20 million from the disposal of premises and net gains of€ 148 million from significant equity method and other investments, including a€ 52 million gain from the sale of our 49% stake in DSI Financial Solutions Pte Ltd. Net revenues in 2003 also reflected net losses of€ 107 million from the sale of premises and net losses of€ 938 million from significant equity method and other investments, including€ 490 million for the complete write-off of our equity method investment in Gerling-Konzern Versicherungs-Beteiligungs-AG. The remaining variance in net revenues in 2004 compared to 2003 was attributable to reduced revenues from deconsolidating Center Parcs in the first quarter of 2003, Tele Columbus in the third quarter of 2003 and maxblue Americas in the first quarter of 2004, as well as to lower dividend income from our reduced industrial holdings portfolio.

Theprovision for credit losseswas€ 19 million in 2004 compared to€ 35 million in 2003 with the€ 15 million decline due to the reduction of credit exposure in our remaining North American financial services business.

Totalnoninterest expensesdecreased in 2004 to€ 416 million from€ 763 million in 2003. The reduction primarily resulted from the sales of the aforementioned businesses. Noninterest expenses included several negative factors, including€ 173 million of vacant office space costs, sublease losses and other costs of eliminating excess space resulting from headcount reductions and the sale of businesses. In 2003, noninterest expenses included€ 174 million of these space disposition charges as well as goodwill impairment charges of€ 114 million subsequent to decisions regarding the private equity fee-based businesses.

At year-end 2004, the alternative assets portfolio of the Corporate Investments Group Division had a carrying value of€ 1.6 billion, of which 38% was private equity direct investments, 27% was real estate investments and 35% was private equity indirect and other investments. We continue to monitor the portfolio on a quarterly basis for any potential impairment. If the public equity and high-yield financing markets were to deteriorate, we might determine that further write-downs and valuation adjustments are necessary.

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Consolidation & Adjustments

The following table sets forth consolidation and other adjustments to the total results of operations of our business segments, based on our management reporting system, to the consolidated financial statements prepared in accordance with U.S. GAAP.

in€ m.	2004			2003			2002
Net revenues		(63	)		(223	)		253
Provision for loan losses		–			–			(1	)
Provision for off-balance sheet positions		–			–			(1	)
Noninterest expenses1		238			3			257
Therein: Severance payments		10			27			55
(Loss) before income taxes2		(301	)		(225	)		(3	)
Assets		7,135			7,796			8,117
Risk-weighted positions (BIS risk positions)		1,743			1,625			3,606
Average active equity		1,259			1,057			2

1	Excludes provision for off-balance sheet positions.
2	Before cumulative effect of accounting changes.

For a discussion of consolidation and other adjustments to our business segment results see Note [28] to the consolidated financial statements.

Comparison between 2003 and 2002

Overall operating results

Income before income tax expenses and cumulative effect of accounting changes was€ 2.8 billion in 2003 and€ 3.5 billion in 2002. Net income for 2003 more than tripled to€ 1.4 billion compared to€ 397 million in 2002, and basic earnings per share increased 281% to€ 2.44.

Total net revenues, excluding the provision for loan losses, declined by€ 5.3 billion, or 20%, to€ 21.3 billion. This decrease was due mainly to lower gains from sales of our industrial holdings and, to a lesser extent, the negative impact of exchange rate movements on our non-euro-denominated revenues, especially U.S. dollar revenues. Excluding these negative effects, revenues would have increased, largely due to the strength of our sales and trading businesses.

Total noninterest expenses were€ 17.4 billion in 2003, a decline of 17% from 2002. The aforementioned exchange rate movements and sales of non-core businesses had a beneficial effect on expenses but, with the exception of performance-related bonuses and severance expenses, almost all cost categories decreased.

Income tax expense in 2003 was€ 1.5 billion compared to€ 3.2 billion in 2002. The main impacts of the aforementioned tax rate changes were tax expense of€ 215 million in 2003 and€ 2.8 billion in 2002 due to the reversal of deferred taxes accumulated in other comprehensive income that were recorded as tax expense when the equity securities to which the deferred taxes relate were sold. In addition, 2003 included€ 154 million related to the 2003 change in German tax rates. The effective tax rates including the impact of changes in German tax rates were 56% in 2003 and 90% in 2002. The effective tax rates excluding changes in tax rates were 43% in 2003 and 10% in 2002, with the increase due to increased non-deductible investment write-downs and lower tax-exempt capital gains in 2003.

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Total net revenues

The aforementioned€ 5.3 billion decline in total net revenues excluding the provision for loan losses is due to several factors:

– 2002 results included€ 3.5 billion more in gains from sale from our industrial holdings portfolio by CI, mainly holdings of Munich Re, and to a lesser extent Allianz AG and Deutsche Börse AG,

– net interest revenues were down by€ 1.3 billion primarily due to the sale or merger of businesses and assets, the decrease in our loan book as we continued to decrease our overall risk positions and the negative effect of lower interest rates on our reinvested deposit balances,

– a€ 1.5 billion decrease in commissions and fee revenues was due mainly to the following activities in CIB: the sale of our Global Securities Services business in early 2003 and, to a lesser extent, lower transaction volume in the Sales & Trading (equity) cash business and reduced advisory fee activity, and

– insurance premiums declined by€ 632 million, offset by a similar decrease in policyholder benefits and claims, due to the sale of most of our insurance business in early 2002.

The major offset to these comparative declines was in revenues from our sales and trading products, which increased by€ 1.1 billion, reflecting improved trading revenues from equity derivatives, convertibles, and DB Advisors. Also contributing to the comparative improvement was a material negative result from a single block trade in 2002.

Provision for Loan Losses

Our provision for loan losses was€ 1.1 billion in 2003, a 47% decline from 2002, reflecting the overall improving credit quality of our corporate loan book, as evidenced by the increase in the portion of our loans carrying an investment-grade rating. The provision in 2003 was taken against various industry sectors, principally Utilities and Manufacturing & Engineering. The provision in 2002 was due primarily to address the downturn in the telecommunications industry and the deterioration of certain industry sectors in our German portfolio and the Americas.

Total noninterest expenses

In addition to the favorable exchange rate and deconsolidation effects, the€ 3.5 billion decrease in total noninterest expenses was also due to the following factors:

– declines in compensation and benefits in all divisions due to both headcount reductions and lower pension expenses, since expected returns increased following the transfer of a majority of the German pension plans into a segregated trust in December 2002,

– lower provisions for litigation and off-balance sheet credit exposure, as well as reduced minority interest expenses,

– reduced restructuring expenses because 2002 included€ 583 million for initiatives in all divisions that affected 4,100 staff, and

– a€ 649 million decrease in policyholder benefits & claims which was largely offset by reduced insurance premiums, as mentioned above.

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Results of Operation by Segment (2003 vs. 2002)

Corporate and Investment Bank Group Division

Income before income taxes of€ 3.5 billion was€ 2.7 billion higher than in 2002. The Corporate Banking & Securities Corporate Division was up by€ 2.4 billion and the Global Transaction Banking Corporate Division was up by€ 355 million. Major variances were:

– higher sales and trading revenues in CB&S, up€ 1.1 billion, because of improved trading revenues from equity products, and interest rate and credit derivatives,

– a decline of€ 1.0 billion in provision for credit losses owing to an overall improvement in credit quality of our loan book,

– the comparative benefit of a single block trade in CB&S with significant negative effect on trading and origination results in 2002,

– a€ 583 million gain from the sale of GSS in 2003, recorded in GTB,

– declines in almost all expense categories, due to favorable exchange rate movements, sales of businesses, and cost containment initiatives, although actual performance-related bonuses increased, and

– restructuring expenses in 2002 but not 2003, with finalization of the plan in 2003.

Private Clients and Asset Management Group Division

Income before income taxes of€ 1.2 billion was almost 3% below the results for 2002. A€ 305 million increase in the Asset and Wealth Management Corporate Division was more than offset by a decline of€ 338 million in the Private & Business Clients Corporate Division. Major variances were:

– the comparative decline in Private & Business Clients due to the€ 503 million gain from the sale of most of our insurance business in 2002,

– a gain in AWM of€ 55 million from the sale of most of our Passive Asset Management business in 2003,

– the higher revenues in AWM included in 2003 related to the 2002 Scudder/RREEF acquisitions, 2003 Rued, Blass & Cie AG Bankgeschaeft acquisition, and increased revenues from our Alternative Investments business, and

– expense reductions due to sale of businesses, effects from restructurings and severance-related activities, exchange rate movements, and pension and other expenses.

Corporate Investments Group Division

The group division reported a loss before income taxes of€ 1.7 billion in 2003 compared to an income before income taxes of€ 1.6 billion in 2002. The major comparative variances were:

– a€ 3.8 billion negative swing in results from sales and impairment charges on our securities available for sale and industrial holdings portfolio. Significantly, 2002 included a€ 2.6 billion gain on the sale of our remaining position in Munich Re,

– a€ 259 million reduction in losses from equity method and other investments, largely reflecting lower losses on our now written-off investment in Gerling-Konzern Versicherungs-Beteiligungs-AG,

– a loss of€ 141 million on businesses sold in 2003 compared to much larger, but offsetting, gains and losses in 2002, and

– a€ 530 million decline in total noninterest expenses that is mainly the net effect of benefits from the disposal of various businesses and charges related to eliminating office space no longer required because of headcount reductions and the sale of businesses.

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Liquidity and Capital Resources

Liquidity and capital are managed by Group Treasury, both from the perspective of our consolidated group (Corporate Treasury) as well as through regional treasuries. These financial resources are allocated to business portfolios applying a methodology called Value Based Management, which favors the portfolios with the highest positive impact on our profitability and shareholder value. In this context, Corporate Treasury continued the capital reallocation among business portfolios.

Corporate Treasury develops and implements our capital strategy including the issuance and repurchases of shares. We are committed to maintain our sound capitalization. The overall capital demand and supply are constantly monitored for the various notions of capital, such as book equity based on U.S. GAAP accounting standards, regulatory capital based on BIS and economic capital driving the capital usage of the business portfolios. Our target for the BIS Tier I capital ratio is to stay at the upper end of the 8-9% range.

Milestones in capital management in 2004 have been the completion of the second share buy-back program and the start of a third program. Under the second program, which was completed in June 2004, 58.2 million shares were repurchased, of which 38 million shares were irrevocably retired in June 2004. The remaining shares were mainly used for equity compensation programs. Based on the renewed authority granted at the 2004 Annual General Meeting to buy back up to 10% of total shares issued until November 2005, the third buy-back program was launched in July 2004. The program aims to return excess capital to shareholders and to support return on equity and earnings per share. As in the previous program, it is intended to use the repurchased shares both to reduce the share capital and service possible equity-based compensation programs. Buy-backs were mainly funded from surplus capital and current earnings. As of December 31, 2004, 26.2 million shares (approximately 4.8% of our share capital) were repurchased under the third program.

In September 2004, we redeemed Deutsche Bank Capital Funding Trust II (U.S.$ 220 million) and Deutsche Bank Capital Funding Trust III (€ 500 million) hybrid Tier I issues to take advantage of attractive capital markets conditions. The retired Tier I capital had been pre-funded at the end of 2003 by issuing hybrid Tier I capital. Total outstanding hybrid Tier I capital as of December 31, 2004 amounted to€ 3.0 billion.

Regional treasuries focus on liquidity risk management and issuance of liability products in accordance with the funding plan for our consolidated group. They control the demand side of liquidity through unsecured funding and cash flow reports. Furthermore, investor concentration and liability roll-off reports are prepared to analyze the sources of funds and to identify trends within our refinancing base. This information allows for adjustments with respect to our funding strategy. In total, Treasury issued approximately€ 14 billion of capital market instruments in various currencies and regions in 2004.

Treasury applies stress testing to all local liquidity profiles to quantify the potential effects of external and internal events on our funding capability. The stress testing is based on expected cash flows and covers various scenarios including systemic shocks as well as unfavorable rating changes.

To balance business needs with resource availability, all corporate divisions have a seat on the Asset and Liability Committees (ALCO), both from a Group and regional perspective. In particular, the Group ALCO makes proposals to our Board of Managing Directors with respect to decisions on financial resources, including the allocation of capital and liquidity to the divisions.

Certain of our subsidiaries are subject to legal and regulatory requirements requiring them to maintain capital at specified levels, restricting the amount of dividends they may declare to us or restricting their ability to make loans or advances to us. See “Item 4: Information on the Company-Regulation and Supervision.” In developing, implementing and testing our liquidity and capital strategy, we take such legal and regulatory requirements into account and seek to ensure that such requirements are not likely to have a material impact on our ability to meet our expected cash obligations. In our opinion, our working capital is sufficient for our present requirements.

For a detailed discussion of our liquidity risk management, see “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk – Risk Management – Liquidity Risk.”

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Off-balance Sheet Arrangements with Unconsolidated Entities

We carry out certain business activities via arrangements with unconsolidated entities. We may provide financial support or otherwise be exposed to risks of loss as a result of these arrangements, typically through guarantees that we provide or subordinated retained interests that we hold. The purposes, risks, and effects of these arrangements are described below. Also, see Note [31] to the consolidated financial statements for disclosure of total outstanding guarantees and lending-related commitments entered into in the normal course of business which give rise to off-balance sheet credit risk.

We provide financial support related to off-balance sheet activities chiefly in connection with asset securitizations, commercial paper programs, commercial real estate leasing vehicles and guaranteed value mutual funds that we manage and that we do not consolidate. With the adoption of FIN 46 and FIN 46(R), some of the vehicles related to these activities have been consolidated and some remain unconsolidated. See Note [2] to the consolidated financial statements for further information regarding the adoption of FIN 46 and FIN 46(R). We are addressing only the unconsolidated portion of these activities in this section. See Note [9] to the consolidated financial statements for financial information regarding both the consolidated and unconsolidated portions of these activities.

We may provide financial support in connection with asset securitizations by retaining a subordinated interest in the assets being securitized. In an asset securitization, we sell financial assets to a securitization vehicle that funds its purchase by issuing debt (asset-backed securities) to investors. We have no control over the securitization vehicle after the sale, and our creditors and we have no claim on the assets that we have sold. Similarly, the investors and the securitization vehicle have no recourse to our other assets if the loans go into default. Asset-backed securities are attractive to investors in what is a deep and liquid market that lowers borrowing costs and increases credit availability to businesses and to consumers.

The securitization vehicles we use in these transactions pose limited liquidity risks since the payments to investors are directly tied to the payments received from the vehicles’ assets and are unaffected by changes in our own credit rating or financial situation. A sudden drop in investor demand for asset-backed securities could cause us to restrict our lending thereafter for the types of loans we typically securitize, but we are not dependent on securitizations as a source of funding and such a market shift would not pose any significant additional liquidity risk not already considered in our risk analyses. To the extent we hold senior or subordinated debt issued by a securitization vehicle we have credit risk that is considered as part of our credit risk assessments or market valuations. Note [9] to the consolidated financial statements provides additional information regarding the extent of our retained interests in securitizations and the volume of our asset securitization activities.

Commercial paper programs represent a way for third parties to securitize their financial assets. In commercial paper programs, we do not securitize any of our own financial assets, but act as administrative agent. As administrative agent, we facilitate the sale of loans, other receivables, or securities from various third parties to an unconsolidated special purpose entity. We may also facilitate the transfer of the loans and securities that represent collateral provided by the third parties in return for loans granted by the unconsolidated entity. The entity then issues collateralized commercial paper to the market. In these situations, the commercial paper issuer is restricted from purchasing assets from or making loans to us. Rating agencies typically rate such commercial paper in the highest short-term category because of the collateral and credit support normally provided by a financial institution.

Unlike securitization vehicles, commercial paper programs do pose liquidity risk since the commercial paper issued is short-term whereas the issuer’s assets are longer term. We take on this risk whenever we provide a liquidity support facility to the issuer. In 2003, a methodology to incorporate these contingent liabilities in our liquidity risk framework (including stress testing) was developed and approved by the Group Asset and Liability Committee.

We may also guarantee the assets of the issuer as part of the facility, giving us secondary credit risk with the first loss taken by the third parties who sold their assets to the entity.

We sponsor commercial real estate leasing vehicles and closed-end funds where third party investors essentially provide senior financing for the purchase of commercial real estate, which is leased to

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other third parties. We typically provide subordinated financing, which exposes us to real estate market risk, and we receive fees for our administrative services.

In the case of guaranteed value mutual funds managed by ourselves, the value of the mutual funds units is being guaranteed. These mutual funds are investment vehicles that were established to provide returns to investors in the vehicles.

The extent of the financial support we provide for certain of the arrangements described above is disclosed in Note [9] to the consolidated financial statements in the disclosure of the Group’s maximum exposure to loss as a result of its involvement with unconsolidated variable interest entities in which the Group holds a significant variable interest. The risks from these arrangements are included in our overall assessments of credit, liquidity and market risks.

Tabular Disclosure of Contractual Obligations

The table below shows the cash payment requirements from specified contractual obligations outstanding as of December 31, 2004:

Contractual obligations	Payment due by period
		Total		Less than		1-3 years		3-5 years		More than
in€ m.				1 year						5 years
Long-term debt obligations			106,870		15,032		24,781		25,802		41,255
Capital (finance) lease obligations			1,037		73		366		92		506
Operating lease obligations			3,028		533		816		569		1,110
Purchase obligations			4,000		762		1,163		823		1,252
Long-term deposits			25,370		–		8,097		7,227		10,046
Other long-term liabilities			10,748		271		2,034		1,003		7,440
Total			151,053		16,671		37,257		35,516		61,609

Operating lease obligations exclude the benefit on noncancelable sublease rentals of€ 682 million. Purchase obligations reflect minimum payments due under long-term real-estate-related obligations, and long-term outsourcing agreements that require payments of either€ 10 million or more in one year or€ 15 million or more over the entire life of the agreement. Long-term deposits exclude contracts with a remaining maturity of less than one year. Other long-term liabilities consist primarily of obligations to purchase common shares, and insurance policy reserves which are classified in the “More than 5 years” column since the obligations are long term in nature and actual payment dates cannot be specifically determined. See the following notes to the consolidated financial statements for further information: Note [11] regarding lease obligations, Note [15] regarding deposits, Note [17] regarding long-term debt, Note [18] regarding obligation to purchase common shares and Note [24] regarding insurance-related liabilities.

Research and Development, Patents and Licenses

Not applicable.

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Recently Adopted Accounting Pronouncements

EITF 04-8

In October 2004, the Financial Accounting Standards Board (FASB) ratified the consensus reached in Emerging Issues Task Force (EITF) Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings Per Share” (“EITF 04-8”). EITF 04-8 requires contingently convertible debt instruments to be included in diluted earnings per share, if dilutive, regardless of whether the contingency has been met. EITF 04-8 is effective for reporting periods ending after December 15, 2004, and requires prior period earnings per share amounts to be restated for comparative purposes. The adoption of EITF 04-8 did not have a material impact on our consolidated financial statements.

EITF 02-14

In July 2004, the FASB ratified the consensus reached in EITF Issue No. 02-14, “Whether an Investor Should Apply the Equity Method of Accounting to Investments Other Than Common Stock” (“EITF 02-14”). EITF 02-14 concludes that an investor that has the ability to exercise significant influence over an investee should apply the equity method of accounting only when it has an investment in common stock and/or an investment that is in-substance common stock. EITF 02-14 addresses the determination of whether an investment is in-substance common stock but does not change existing guidance concerning the assessment of whether an investor has the ability to exercise significant influence over an investee. The consensus in EITF 02-14 is effective for reporting periods beginning after September 15, 2004. The adoption of EITF 02-14 did not have a material impact on our consolidated financial statements.

FSP 106-2

In May 2004, the FASB issued Staff Position No. 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP 106-2”), which superseded FSP 106-1 issued in January 2004. The Act, signed into law in the U.S. on December 8, 2003, introduces a prescription drug benefit as well as a subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to benefits provided under the Act. FSP 106-2, which is effective for reporting periods beginning after June 15, 2004, provides authoritative guidance on the accounting for the effects of the Act and disclosure guidance related to the federal subsidy provided by the Act. We determined that the effects of the Act were not a significant event requiring an interim remeasurement under SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions.” Consequently, as permitted by FSP 106-2, net periodic postretirement benefit cost for 2004 does not reflect the effects of the Act. The accumulated postretirement benefit obligation (“APBO”) for the postretirement benefit plan was remeasured at September 30, 2004 to reflect the effects of the Act, which resulted in a reduction of the APBO of approximately€ 36 million.

FSP 129-1

In April 2004, the FASB issued Staff Position No. 129-1, “Disclosure Requirements under FASB Statement No. 129, Disclosure of Information about Capital Structure, Relating to Contingently Convertible Securities” (“FSP 129-1”). FSP 129-1 requires the disclosure provisions of Statement 129 to apply to all existing and newly created contingently convertible securities and to their potentially dilutive effects on earnings per share. The disclosure requirements of FSP 129-1 did not have a material effect on our consolidated financial statements.

EITF 03-6

In March 2004, the FASB ratified the consensus reached in EITF Issue No. 03-6, “Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings Per Share” (“EITF 03-6”). EITF 03-6 clarifies what constitutes a participating security and requires the use of the two-class method for computing basic earnings per share when participating securities exist. EITF 03-6 is effec-

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tive April 1, 2004 and requires retroactive adjustment to earnings per share presented for prior periods. The adoption of EITF 03-6 did not have a material impact on our consolidated financial statements.

SAB 105

Effective April 1, 2004, the Group adopted Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments” (“SAB 105”). SAB 105 clarifies the requirements for the valuation of loan commitments that are accounted for as derivatives in accordance with SFAS 133. The adoption of SAB 105 did not have a material impact on our consolidated financial statements.

FIN 46(R) (Revised December 2003)

Effective March 31, 2004, the Group adopted the revised version of FIN 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51” (“FIN 46(R)”). The FASB modified FIN 46 to address certain technical corrections and implementation issues that had arisen. As a result of the adoption, total assets decreased by€ 12.5 billion due to the deconsolidation of guaranteed value mutual funds. The adoption had no impact on net income, however certain offsetting revenues and charges, chiefly trading revenues, net interest revenues and charges against other revenues, are no longer reported in the consolidated statement of income beginning April 1, 2004 due to the deconsolidations.

New Accounting Pronouncements

EITF 03-1 and FSP EITF 03-1-1

In March 2004, the FASB ratified the consensus reached in EITF Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments” (“EITF 03-1”). The decisions establish a common approach to evaluating other-than-temporary impairment for equity securities accounted for at cost, and debt and equity securities available for sale. In September 2004, the FASB issued a final FASB Staff Position, No. EITF 03-1-1 (“FSP EITF 03-1-1”), which delayed the effective date for the measurement and recognition guidance included in EITF 03-1. The disclosures required by EITF 03-1 have not been delayed and are required beginning December 31, 2004. Once the effective date of the measurement and recognition guidance has been confirmed, management will assess the impact EITF 03-1 will have on our consolidated financial statements.

FSP 109-2

In December 2004, the FASB issued Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”). The Act, which was signed into law in the U.S. on October 22, 2004, provides for, among other things, a reduced rate of U.S. tax on dividends received from foreign subsidiaries of U.S. taxpayers. FSP 109-2 provides additional time beyond the financial reporting period of the enactment to evaluate the effects of this provision of the Act for purposes of applying SFAS No. 109, “Accounting for Income Taxes.” We estimate that approximately€ 370 million may be eligible for repatriation under this provision. We are evaluating the effect of such a repatriation but do not expect that this provision will have a material impact on our consolidated financial statements.

SFAS 123 (Revised 2004)

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”). SFAS 123(R) replaces SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”. The new standard requires companies to recognize compensation cost relating to share-based payment transactions in their financial statements. That cost is to be measured based on the fair value of the equity or liability instruments issued. Starting January 1, 2003, we accounted for our share-based compensation awards under the fair value method prescribed under SFAS 123. The method was applied prospectively for all employee awards granted, modified or settled after January 1, 2003. Currently, we use a Black-Scholes option pricing model to estimate the fair value of stock options granted to employ-

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ees and expect to continue to use this option valuation model upon the adoption of SFAS 123(R). SFAS 123(R) also includes some changes regarding the timing of expense recognition, the treatment of forfeitures and the re-measurement of liability classified awards at their current fair value. SFAS 123(R) is effective for reporting periods beginning after June 15, 2005. Management is currently evaluating the transition method to be used and the impact SFAS 123(R) will have on our consolidated financial statements.

SOP 03-3

In December 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer” (“SOP 03-3”). SOP 03-3 addresses the accounting for differences between contractual and expected cash flows for loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. The SOP prohibits the creation of an allowance for loan losses in the initial accounting for all loans within its scope. The SOP also limits the income that can be recognized and specifies the accounting for future changes in expected cash flows on the acquired loans or securities. SOP 03-3 is effective for loans or debt securities acquired in fiscal years beginning after December 15, 2004. SOP 03-3 is not expected to have a material impact on our consolidated financial statements.

IFRS

EU and German regulations require the Group to adopt International Financial Reporting Standards (IFRS) for purposes of preparing consolidated financial statements filed with EU and German regulatory authorities beginning no later than fiscal year 2007 (with 2006 comparative amounts presented). Financial statements prepared according to IFRS are accepted in SEC filings provided a reconciliation to certain U.S. GAAP financial statement amounts is disclosed.

The adoption of IFRS will not result in any adjustment to U.S. GAAP amounts, however there are a number of differences between the two accounting regimes which will cause earnings and balance sheet amounts under IFRS and U.S. GAAP to differ, perhaps significantly. The special transition rules for this adoption require, with some exceptions, that the IFRS in effect at the reporting date be applied in the opening balance sheet. Because of this, future rule changes could have an impact on the opening IFRS balance sheet and thus the difference between U.S. GAAP and IFRS earnings or balance sheet amounts cannot be predicted at this time.

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Item 6: Directors, Senior Management and Employees

Directors and Senior Management

In accordance with the German Stock Corporation Act(Aktiengesetz), we have a Board of Managing Directors(Vorstand)and a Supervisory Board(Aufsichtsrat). The German Stock Corporation Act prohibits simultaneous membership on both the Board of Managing Directors and the Supervisory Board. The members of the Board of Managing Directors are the executive officers of our company. The Board of Managing Directors is responsible for managing our company and representing us in dealings with third parties. The Supervisory Board oversees the Board of Managing Directors and appoints and removes its members and determines their salaries and other compensation components, including pension benefits.

The Supervisory Board may not make management decisions. However, German law and our Articles of Association(Satzung)require the Board of Managing Directors to obtain the consent of the Supervisory Board for certain actions. The most important of these actions are:

– Granting general powers of attorney(Generalvollmachten). A general power of attorney authorizes its holder to represent the company in substantially all legal matters without limitation to the affairs of a specific office;

– Acquisition and disposal (including transactions carried out by a subsidiary) of real estate when the value of the object exceeds 1% of our regulatory banking capital(haftendes Eigenkapital);

– Granting loans and acquiring participations if the German Banking Act requires approval by the Supervisory Board. In particular, the German Banking Act requires the approval of the Supervisory Board if we grant a loan (to the extent legally permissible) to a member of the Board of Managing Directors or the Supervisory Board or one of our employees who holds a procuration(Prokura)or general power of attorney; and

– Acquisition and disposal (including transactions carried out by a subsidiary) of other participations, insofar as the object involves more than 2% of our regulatory banking capital; the Supervisory Board must be informed without delay of any acquisition or disposal of such participations involving more than 1% of our regulatory banking capital.

The Board of Managing Directors must submit regular reports to the Supervisory Board on our current operations and future business planning. The Supervisory Board may also request special reports from the Board of Managing Directors at any time.

Supervisory Board and Board of Managing Directors

In carrying out their duties, members of both the Board of Managing Directors and Supervisory Board must exercise the standard of care of a prudent and diligent business person, and they are liable to us for damages if they fail to do so. Both boards are required to take into account a broad range of considerations in their decisions, including our interests and those of our shareholders, employees and creditors. The Board of Managing Directors is required to respect the rights of shareholders to be treated on an equal basis and receive equal information. The Board of Managing Directors is also required to ensure appropriate risk management within our operations and to establish an internal monitoring system.

As a general rule under German law, a shareholder has no direct recourse against the members of the Board of Managing Directors or the Supervisory Board in the event that they are believed to have breached a duty to us. Apart from insolvency or other special circumstances, only we have the right to claim damages from members of either board. We may waive this right or settle these claims only if at least three years have passed since the alleged breach and if the shareholders approve the waiver or settlement at the shareholders’ meeting with a simple majority of the votes cast, and provided that opposing shareholders do not hold, in the aggregate, one tenth or more of our share capital and do not have their opposition formally noted in the minutes maintained by a German notary.

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Supervisory Board

Our Articles of Association require our Supervisory Board to have twenty members. In the event that the number of members on our Supervisory Board falls below twenty, the Supervisory Board maintains its authority to pass resolutions so long as at least ten members remain on the board. If the number of members remains below twenty, upon application to a competent court, the court may appoint replacement members to serve on the board until official appointments are made.

The German Co-Determination Act of 1976(Mitbestimmungsgesetz)requires that the shareholders elect half of the members of the supervisory board of large German companies, such as us, and that employees in Germany elect the other half. None of the current members of either of our boards were selected pursuant to any arrangement or understandings with major shareholders, customers or others.

Each member of the Supervisory Board generally serves for a fixed term of approximately five years. For the election of shareholder representatives, the shareholders’ meeting may establish that the terms of office of up to five members may begin or end on differing dates. Pursuant to German law, the term expires at the latest at the end of the Annual General Meeting that approves and ratifies such member’s actions in the fourth fiscal year after the year in which the Supervisory Board member was elected. Supervisory Board members may also be re-elected. The shareholders may, by a majority of the votes cast in a shareholders’ meeting, remove any member of the Supervisory Board they have elected in a shareholders’ meeting. The employees may remove any member they have elected by a vote of three-quarters of the employee votes cast.

The members of the Supervisory Board elect the chairperson and the deputy chairperson of the Supervisory Board. Traditionally, the chairperson is a representative of the shareholders, and the deputy chairperson is a representative of the employees. At least half of the members of the Supervisory Board must be present at a meeting or must have submitted their vote in writing to constitute a quorum. In general, approval by a simple majority of the members of the Supervisory Board present and voting is required to pass a resolution. In the case of a deadlock, the resolution is put to a second vote. In the case of a second deadlock, the chairperson casts the deciding vote.

The following table shows information on the current members of our Supervisory Board. The members representing our shareholders were elected at the Annual General Meeting on June 10, 2003, and the members representing our employees were elected on May 8, 2003. The information includes their ages as of December 31, 2004, the years in which they were first elected or appointed, the years when their terms expire, their principal occupation and their membership on other companies’ supervisory boards, other nonexecutive boards and other positions.

Member	Principal occupation	Supervisory board memberships
		and other directorships
Dr. rer.oec. Karl-Hermann Baumann Age: 69 First elected: 1998 Term expires: 2008	Chairman of the supervisory board of Siemens AG 2005, Munich, until January 2005	Supervisory board memberships: E.ON AG; Linde AG; Schering AG; ThyssenKrupp AG until January 2005
Dr. Rolf-E. Breuer Age: 67 First elected: 2002 Term expires: 2008	Chairman of the Supervisory Board	Supervisory board memberships: Bertelsmann AG; Deutsche Börse AG (chairman); E.ON AG; Compagnie de Saint-Gobain S.A.; Kreditanstalt für Wiederaufbau (KfW); Landwirtschaftliche Rentenbank Other experience: President of the Association of German Banks; German Financial Supervisory Authority (Administrative Council)
Dr. Karl-Gerhard Eick Age: 50 Appointed by the court: 2004 Term expires: 2008	Deputy Chairman of the board of managing directors of Deutsche Telekom AG, Bonn	Supervisory board memberships: DeTe Immobilien Deutsche Telekom Immobilien und Service GmbH; T-Mobile International AG; T-Online International AG; T-Systems International GmbH; GMG Generalmietgesellschaft mbH (chairman); Sireo Real Estate Asset Management GmbH (chairman); FC Bayern München AG

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Member	Principal occupation	Supervisory board memberships
		and other directorships
Heidrun Förster* Age: 57 First elected: 1993 Term expires: 2008	Deputy Chairperson of the Supervisory Board; Chairperson of the staff council of Deutsche Bank Privat- und Geschäftskunden AG, Berlin
Klaus Funk* Age: 57 First elected: 1999 Term expires: 2008	Chairman of the staff council of Deutsche Bank Privat- und Geschäftskunden AG, Frankfurt am Main
Ulrich Hartmann Age: 66 First elected: 2003 Term expires: 2008	Chairman of the supervisory board of E.ON AG, Düsseldorf	Supervisory board memberships: Deutsche Lufthansa AG, Hochtief AG; IKB Deutsche Industriebank AG (chairman); Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft Other nonexecutive directorships: ARCELOR; Henkel KGaA (member of the shareholders’ committee)
Sabine Horn* Age: 43 First elected: 1998 Term expires: 2008	Deutsche Bank AG
Rolf Hunck* Age: 59 First elected: 2003 Term expires: 2008	Deutsche Bank AG	Supervisory board memberships: Deutsche Bank Trust AG; Fibula Finanz AG; HCI Kapital AG since January 2005
Sir Peter Job Age: 63 Appointed by the court: 2001 Term expires: 2008		Supervisory board memberships: Bertelsmann AG Other nonexecutive directorships: GlaxoSmithKline Plc (GSK); Schroders Plc; Tibco Software Inc.; Instinet Inc.; Shell Transport and Trading Plc
Prof. Dr. Henning Kagermann Age: 57 First elected: 2000 Term expires: 2008	Chairman and CEO of SAP AG, Walldorf	Supervisory board memberships: DaimlerChrysler Services AG; Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft
Ulrich Kaufmann* Age: 58 First elected: 1988 Term expires: 2008	Chairman of the staff council of Deutsche Bank AG, Düsseldorf
Prof. Dr. Paul Kirchhof Age: 61 Appointed by the court: 2004 Term expires: 2008	Professor, Ruprecht-Karls-University, Heidelberg	Supervisory board memberships: Allianz Lebensversicherungs-AG
Henriette Mark* Age: 47 First elected: 2003 Term expires: 2008	Chairperson of the staff council of Deutsche Bank AG, Munich and Southern Bavaria
Margret Mönig-Raane* Age: 56 First elected: 1996 Term expires: 2008	Vice President of the Unified Services Union, Berlin	Other nonexecutive directorships: BHW Holding AG (member of the advisory board); Kreditanstalt für Wiederaufbau (KfW) (administrative council)
Gabriele Platscher* Age: 47 First elected: 2003 Term expires: 2008	Deutsche Bank Privat- und Geschäftskunden AG	Supervisory board memberships: Deutsche Bank Privat- und Geschäftskunden AG, BVV Versicherungsverein des Bankgewerbes a.G.

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Member	Principal occupation	Supervisory board memberships
		and other directorships
Karin Ruck* Age: 39 First elected: 2003 Term expires: 2008	Deutsche Bank AG	Supervisory board memberships: Deutsche Bank Privat- und Geschäftskunden AG
Tilman Todenhöfer Age: 61 Appointed by the court: 2001 Term expires: 2008	Managing Partner of Robert Bosch Industrietreuhand KG, Stuttgart	Supervisory board memberships: Robert Bosch GmbH; Robert Bosch Int. Beteiligungen AG (president of the board of administration); Carl Zeiss AG since July 2004 (chairman); Schott AG since July 2004 (chairman)
Dipl.-Ing. Dr.-Ing. E.h. Jürgen Weber Age: 63 First elected: 2003 Term expires: 2008	Chairman of the supervisory board of Deutsche Lufthansa AG, Cologne	Supervisory board memberships: Allianz Lebensversicherungs-AG, Bayer AG, Deutsche Post AG; Thomas Cook AG (chairman), Voith AG; Loyalty Partner GmbH (chairman); Tetra Laval Group
Dipl.-Ing. Albrecht Woeste Age: 69 First elected: 1993 Term expires: 2008	Chairman of the Shareholders’ Committee of Henkel KGaA Düsseldorf	Supervisory board memberships: Henkel KGaA (chairman); Allianz Lebensversicherungs-AG Other nonexecutive directorships: IKB Deutsche Industriebank (member of the advisory board); R. Woeste & Co. GmbH & Co KG (chairman of the advisory board)
Leo Wunderlich* Age: 55 First elected: 2003 Term expires: 2008	Chairman of the staff council of Deutsche Bank

* Employee-elected member of the Supervisory Board.

Dr. Michael Otto was a member of the Supervisory Board until July 29, 2004 and was replaced by Dr. Karl-Gerhard Eick. Dr. Ulrich Cartellieri was a member of the Supervisory Board until November 28, 2004 and was replaced by Prof. Dr. Paul Kirchhof.

The Supervisory Board has the authority to establish, and appoint its members to standing committees. The Supervisory Board may delegate certain of its powers to these committees. Our Supervisory Board has established the following four standing committees:

– TheChairman’s Committeeis responsible for deciding the terms of the service contracts and other contractual arrangements between us and members of our Board of Managing Directors. In particular, the Chairman’s Committee determines salaries and other compensation components, including pension benefits, for the Board of Managing Directors. Moreover, the Chairman’s Committee is responsible for the statutorily required approval of certain contracts between us and members of the Supervisory Board and Board of Managing Directors, the approval of ancillary activities of members of the Board of Managing Directors, including the acceptance of mandates at other companies, and the handling of other contractual business with active and former members of the Board of Managing Directors pursuant to Section 112 of the Stock Corporation Act. It also prepares the Supervisory Board decisions with respect to corporate governance. The current members of the Chairman’s Committee are Dr. Rolf-E. Breuer (Chairman), Heidrun Förster, Ulrich Hartmann and Ulrich Kaufmann. The Chairman’s Committee held 5 meetings in 2004.

– TheAudit Committeemandates the independent auditors that the Annual General Meeting elects. In particular, the Audit Committee sets the compensation of the independent auditors and may determine priorities for the audit. The Audit Committee reviews our interim reports, as well as our financial statements, taking into account the results of the audits, discusses the reports on the limited reviews of the quarterly financial statements with the auditor and other reviews that the independent auditors have performed. It discusses changes of accounting or auditing practices and is also responsible for the handling of complaints regarding accounting, internal accounting controls and auditing matters. Additionally, engagements of the auditors to perform non-audit services are required to be approved pursuant to policies and procedures adopted by the Audit Committee, as described further in “Item 16C: Principal Accountant Fees and Services.” The current members of the Audit

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Committee are Dr. Karl-Hermann Baumann (Chairman), Dr. Rolf-E. Breuer, Dr. Karl-Gerhard Eick, Heidrun Förster, Sabine Horn and Rolf Hunck. The Audit Committee held 5 meetings in 2004.

– TheRisk Committeehas delegated authority to approve the extension of credit where applicable law or our Articles of Association require the approval of the Supervisory Board. The Risk Committee is only authorized to approve investments in other companies of between 2% and 3% of our regulatory banking capital. Investments above this threshold that require the Supervisory Board’s approval must be approved by the Supervisory Board as a body, not just by the Committee. In addition, the Board of Managing Directors provides the Risk Committee with information on market, legal and reputational risks, credit exposures and related circumstances which are of special importance due to the risks or liabilities attached to them or for any other reason. The current members of the Risk Committee are Dr. Rolf-E. Breuer (Chairman), Dr. Karl-Hermann Baumann and Prof. Henning Kagermann. The current deputy members are Sir Peter Job and Ulrich Hartmann. The Risk Committee held 6 meetings in 2004.

– TheMediation Committeeis responsible for making proposals to the Supervisory Board on the appointment or dismissal of members of the Board of Managing Directors in those cases where the Supervisory Board is unable to reach a two-thirds majority decision with respect to the appointment or dismissal. In voting on such proposals, members of the Board of Managing Directors are dismissed or appointed by a simple majority of the votes cast. The current members of the Mediation Committee are Dr. Rolf-E. Breuer (Chairman), Heidrun Förster, Ulrich Hartmann and Henriette Mark. The Mediation Committee did not hold any meetings in 2004.

The business address of the members of the Supervisory Board is the same as our business address, Taunusanlage 12, 60325 Frankfurt am Main, Germany.

Board of Managing Directors

Our Articles of Association require the Board of Managing Directors to have at least three members. The Supervisory Board appoints, removes and supervises the members of the Board of Managing Directors. Our Board of Managing Directors currently has four members. The Supervisory Board may also appoint deputy members to the Board of Managing Directors, however, there are currently no deputy members. The members of the Board of Managing Directors elect the spokesperson of the Board of Managing Directors.

The Supervisory Board appoints the members of the Board of Managing Directors for a maximum term of five years. They may be re-appointed or have their term extended for one or more terms of up to a maximum of five years each. The Supervisory Board may remove a member of the Board of Managing Directors prior to the expiration of his or her term for good cause.

Pursuant to our Articles of Association, two members of the Board of Managing Directors, or one member of the Board of Managing Directors together with a holder of procuration(Prokurist), may represent us for legal purposes. AProkuristis an attorney-in-fact who holds a legally defined power under German law, which cannot be restricted with respect to third parties. However, pursuant to German law, the Board of Managing Directors itself must resolve on certain matters as a body. In particular, it may not delegate strategic planning, coordinating or controlling responsibilities to individual members of the Board of Managing Directors.

Other responsibilities of the Board of Managing Directors are:

– Appointing key personnel;

– Making decisions regarding significant credit exposures or other risks which have not been delegated to individual risk management units in accordance with the terms of reference(Geschäftsordnung) for the Board of Managing Directors and terms of reference for our Group Risk Committee;

– Calling shareholders’ meetings;

– Filing petitions to set aside shareholders’ resolutions;

– Preparing and executing shareholders’ resolutions; and

– Reporting to the Supervisory Board.

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According to German law, our Supervisory Board represents us in dealings with members of the Board of Managing Directors. Therefore, no member of the Board of Managing Directors may enter into any agreement with us without the prior consent of our Supervisory Board.

The following paragraphs show information on the current members of the Board of Managing Directors. The information includes their ages as of December 31, 2004, the year in which they were appointed and the year in which their term expires, their current positions or area of responsibility and the positions they have held with us and with other companies in the last five years. The business address of the members of our Board of Managing Directors is the same as our business address, Taunusanlage 12, 60325 Frankfurt am Main, Germany.

Dr. Josef Ackermann

Age: 56

First Appointed: 1996

Term Expires: 2006

Dr. Josef Ackermann joined Deutsche Bank as a member of the Board of Managing Directors in 1996. On May 22, 2002, Dr. Ackermann assumed his current position as Spokesman of the Board of Managing Directors and Chairman of our Group Executive Committee.

Before taking over his responsibilities at Deutsche Bank, Dr. Ackermann worked for Credit Suisse. Between 1993 and 1996 he served as President of its Executive Board, following his appointment to that board in 1990. Dr. Ackermann began his career at Credit Suisse in 1977, where he held a variety of positions in Corporate Banking, Foreign Exchange/Money Markets and Treasury, Investment Banking and Multinational Services. He worked in London and New York, as well as at several locations in Switzerland. While at Credit Suisse, Dr. Ackermann was also a lecturer in economics at the University of St. Gallen in Switzerland.

Dr. Ackermann’s educational history includes studies in economics and social sciences. He received his doctorate degree (Dr.oec.) at the University of St. Gallen.

Dr. Ackermann engages in the following principal business activities outside our company: He is a member of the supervisory boards of Bayer AG, Deutsche Lufthansa AG, Linde AG and Siemens AG (second deputy chairman).

In February 2003, the Düsseldorf Public Prosecutor filed charges against Dr. Ackermann and other former members of the Supervisory Board and of the Board of Managing Directors of Mannesmann AG with the Düsseldorf District Court. The complaint contained allegations of a breach of trust in connection with payments to former members of the Management Board and other managers of Mannesmann following the takeover of Mannesmann by Vodafone in spring 2000. On September 19, 2003, the District Court in Düsseldorf(Landgericht Düsseldorf)accepted the case and ordered a trial which commenced on January 21, 2004. At the close of the trial on July 22, 2004, the District Court acquitted Dr. Ackermann as well as all the other defendants. The Düsseldorf Public Prosecutor filed notice of appeal with the Federal Supreme Court (Bundesgerichtshof). Our Supervisory Board has declared that it supports Dr. Ackermann’s defense and that it views the charges in question to be unjustified.

Dr. Clemens Börsig

Age: 56

First Appointed: 2001

Term Expires: 2010

Dr. Clemens Börsig joined our Board of Managing Directors in January 2001. He has worked with us since 1999, when he joined us as our Chief Financial Officer. He is also our Chief Risk Officer and responsible for our corporate governance.

From 1997 to 1999, Dr. Börsig worked for RWE AG, in Essen, Germany, as a member of the management board and as chief financial officer. Prior to this position, he was employed by Robert Bosch GmbH in Stuttgart, Germany, where he was hired in 1985 as the head of Corporate Planning and Controlling. In 1990, he was appointed to the management board at Bosch. From 1977 to 1985, Dr. Börsig held a number of positions at Mannesmann Group in Düsseldorf, Germany, including head of Corporate Planning at Mannesmann-Kienzle GmbH and chief financial and administrative officer at Mannes-

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mann-Tally. From 1973 to 1977, he was an assistant professor at the Universities of Mannheim and Munich.

Dr. Börsig’s educational history includes studies in business administration and mathematics. He graduated with a Ph.D. in Business Administration from the University of Mannheim.

Dr. Börsig engages in the following principal business activities outside our company: He is a supervisory board member at Heidelberger Druckmaschinen AG and deputy chairman of the supervisory board of EUROHYPO AG since September 2004. He also holds a nonexecutive directorship at Foreign & Colonial Eurotrust Plc.

Dr. Tessen von Heydebreck

Age: 59

First Appointed: 1994

Term Expires: 2006

Dr. Tessen von Heydebreck joined our Board of Managing Directors in 1994. From 1994 to 1996, he was a deputy member of the Board of Managing Directors. Dr. von Heydebreck is our Chief Administrative Officer.

Dr. von Heydebreck’s career with us began in 1974 with positions in Hamburg and Bremen, Germany. In 1977, Dr. von Heydebreck moved to our former head office in Düsseldorf, where he served as executive assistant to a member of the Board of Managing Directors. From 1981 to 1983, he was a member of the management in our branch in Emden, Germany. He served as regional head in Bremen, Germany, from 1983 to 1990 and as regional head in Hamburg, Germany, from 1990 to 1994.

Dr. von Heydebreck studied law at Göttingen University and the University of Freiburg. After passing the First and the Second State Examinations in law, he completed a doctorate in law at Göttingen University.

Dr. von Heydebreck engages in the following principal business activities outside our company: He is a supervisory board member at BASF AG, Duerr AG and BVV Versicherungsverein des Bankgewerbes a.G. and was a supervisory board member of Deutsche Euroshop AG until June 2004 and Gruner + Jahr AG & Co. KG until August 2004. He held a nonexecutive directorship at EFG Eurobank Ergasias S.A. until May 2004.

Hermann-Josef Lamberti

Age: 48

First Appointed: 1999

Term Expires: 2009

Hermann-Josef Lamberti joined our Board of Managing Directors in 1999. He joined us in 1998 as an executive vice president. Mr. Lamberti is our Chief Operating Officer.

Prior to joining Deutsche Bank, Hermann-Josef Lamberti worked at IBM for 14 years. He began his career at the company in 1985, where he concentrated on controlling and internal application development. He was soon entrusted with management positions in the company’s German branches specializing in the banking and insurance industries. In 1993, he was appointed General Manager of Personal Software Division at IBM Europe in Paris, where he was the head of software sales for Europe, the Middle East and Africa. In 1995, Hermann-Josef Lamberti moved to IBM in the US, where he was Vice President for Marketing and Brand Management with responsibility for IBM’s global mainframes sales. He returned to Germany in 1997 to take up the position of Chairman of the Senior Management of IBM Germany in Stuttgart.

Hermann-Josef Lamberti studied business administration in Cologne and Dublin before commencing his professional career in the financial sector. He graduated with a master’s degree in Business Administration in 1981. He subsequently worked for Touche Ross in Toronto, where he was involved in Auditing and Consulting. He also worked in the Foreign Exchange department at Chemical Bank in Frankfurt.

Mr. Lamberti engages in the following principal business activities outside our company: He is a member of the supervisory board or similar bodies of Schering AG, Fiat S.p.A., Carl Zeiss Stiftung until

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June 2004, Carl Zeiss AG from July 2004, e-millennium 1 GmbH & Co. KG (chairperson), Euroclear plc, Euroclear Bank S.A./N.V. until December 2004 and Euroclear S.A./N.V. since January 2005.

Board Practices of the Board of Managing Directors

Our Board of Managing Directors has adopted terms of reference for the conduct of its affairs. These terms of reference have been presented to the Supervisory Board for information. The terms of reference provide that the individual responsibilities of the members of the Board of Managing Directors are determined by our business allocation plan. The terms of reference stipulate that, notwithstanding the functional responsibilities of the operating committees of our Group divisions and of the functional committees, the members of the Board of Managing Directors each have an individual responsibility for the divisions or functions to which they are assigned, as well as for those committees of which they are members and the subsidiaries allocated to those divisions.

In addition to managing our company, some of the members of our Board of Managing Directors also supervise and advise our affiliated companies. As permitted by German law, some of the members also serve as members of the supervisory boards of other companies.

Section 161 of the German Stock Corporation Act (Aktiengesetz) requires that the board of managing directors and supervisory board of any German exchange-listed company declare annually that the recommendations of the Government Commission on the German Corporate Governance Code have been adopted by the company or which recommendations have not been so adopted. These recommendations go beyond the requirements of German law. The Declaration of Conformity of our Board of Managing Directors and Supervisory Board dated October 28, 2004 is available on our Internet website at http://www.deutsche-bank.com/corporate-governance.

Also, to assist us in avoiding conflicts of interest, the members of our Board of Managing Directors have generally undertaken not to assume chairmanships of supervisory boards of companies outside our consolidated group.

Group Executive Committee

The Group Executive Committee, established in 2002, is a body that is not required by the Stock Corporation Act. It comprises the members of the Board of Managing Directors, the Business Heads of our Group Divisions, CIB and PCAM, and, as of September 21, 2004, a representative for the management of our regions. The Group Executive Committee serves as a tool to coordinate our businesses and regions.

The responsibilities of the Group Executive Committee are as follows:

– Provide ongoing information to the Board of Managing Directors on business developments and particular transactions;

– Regular review of our business segments;

– Consultation with and furnishing advice to the Board of Managing Directors on strategic decisions; and

– Preparation of decisions to be made by the Board of Managing Directors.

On September 21, 2004, the Board of Managing Directors appointed a member of the Group Executive Committee “Head of Regions” to whom the current regional CEOs will report. This new role aims to strengthen the regional management functions around the globe thus improving the cooperation between the regions and the global businesses for the benefit of our customers.

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Compensation

Supervisory Board

The compensation of Supervisory Board members is set forth in our Articles of Association, which our shareholders amend from time to time at their annual meetings. Such compensation provisions were last amended at our Annual General Meeting on June 10, 2003.

For 2004, the following compensation policies apply. The compensation generally consists of a fixed remuneration of€ 30,000 per year (plus value-added tax (Umsatzsteuer)) and a dividend-based bonus of€ 1,000 per year for every full or fractional€ 0.05 increment by which the dividend we distribute to our shareholders exceeds€ 0.15 per share. We increase both the fixed remuneration and the dividend-based bonus of each Supervisory Board member by 25% for each committee on which the Supervisory Board member sits, except that for the chair of a committee the rate of increment is 50% and if the committee chairman is not identical with the Supervisory Board chairperson the rate of increment is 75%. These amounts are based on the premise that the respective committee has met during the financial year. We pay the chairperson three times the total compensation of a regular member, and we pay the deputy chairperson one and a half times the total compensation of a regular member. The members of the Supervisory Board also receive an annual remuneration linked to our long-term success; this remuneration varies in size depending on how the ratio between the total return on our shares – based on share price development, dividend and capital actions – and the average total return of shares of a group of peer companies currently consisting of Citigroup Inc., Credit Suisse Group, J. P. Morgan Chase & Co., Merrill Lynch & Co. Inc. and UBS AG, has developed in the three financial years immediately preceding the year for which the remuneration is paid. If the ratio lies between –10% and +10% each member receives an amount of€ 15,000; if our shares outperform the peer group by 10% to 20%, the payment increases to€ 25,000; and in case of a more than 20% higher performance it rises to€ 40,000. The members of the Supervisory Board receive a meeting fee of€ 1,000 for each meeting of the Supervisory Board and its committees in which they take part. In addition, in our interest, the members of the Supervisory Board will be included in any financial liability insurance policy held in an appropriate amount by us, with the corresponding premiums being paid by us.

We also reimburse members of the Supervisory Board for all cash expenses and any value-added tax(Umsatzsteuer)they incur in connection with their roles as members of the Supervisory Board. Employee-elected members of the Supervisory Board also continue to receive their employee benefits. For Supervisory Board members who served on the board for only part of the year, we pay a fraction of their total compensation based on the number of months they served, rounding up or down to whole months.

We compensate our Supervisory Board members after the end of each fiscal year. In January 2005, we paid each Supervisory Board member the fixed portion of their remuneration for their services in 2004 and their meeting fees. The remuneration linked to our long-term success was defined to be zero. In addition, we will pay each of them for their services in 2004 a dividend-based bonus after the Annual General Meeting in May 2005. The following table shows the individual remuneration of the members of the Supervisory Board for their services in 2004 (excluding value-added tax), assuming that the Annual General Meeting in May 2005 approves the envisaged dividend of€ 1.70 per share.

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Members of the Supervisory Board	Compensation for fiscal year 2004
in€	Fixed		Variable		Meeting fee		Total
Dr. Rolf-E. Breuer		127,500		131,750		20,000		279,250
Heidrun Förster		60,000		62,000		14,000		136,000
Dr. Karl-Hermann Baumann		60,000		62,000		15,000		137,000
Dr. Ulrich Cartellieri3		48,125		49,729		16,000		113,854
Dr. Karl-Gerhard Eick2		13,125		13,563		1,000		27,688
Klaus Funk		30,000		31,000		4,000		65,000
Ulrich Hartmann		38,125		39,396		8,000		85,521
Sabine Horn		37,500		38,750		9,000		85,250
Rolf Hunck		37,500		38,750		8,000		84,250
Sir Peter Job		37,500		38,750		9,000		85,250
Prof. Dr. Henning Kagermann		30,625		31,646		4,000		62,271
Ulrich Kaufmann		37,500		38,750		9,000		85,250
Prof. Dr. Paul Kirchhof4		2,500		2,583		–		5,083
Henriette Mark		30,000		31,000		4,000		65,000
Margret Mönig-Raane		30,000		31,000		4,000		65,000
Dr. Michael Otto1		17,500		18,083		3,000		38,583
Gabriele Platscher		30,000		31,000		4,000		65,000
Karin Ruck		30,000		31,000		4,000		65,000
Tilman Todenhöfer		30,000		31,000		4,000		65,000
Dipl.-Ing. Dr.-Ing. E.h. Jürgen Weber		30,000		31,000		4,000		65,000
Dipl.-Ing. Albrecht Woeste		30,000		31,000		4,000		65,000
Leo Wunderlich		30,000		31,000		4,000		65,000
Total		817,500		844,750		152,000		1,814,250

1	Member until July 29, 2004.
2	New member since August 3, 2004.
3	Member until November 28, 2004.
4	New member since November 30, 2004.

As mentioned above, most of the employee-elected members of the Supervisory Board are employed by us. In addition, Dr. Breuer and Dr. Cartellieri were formerly employed by us. The aggregate compensation we and our consolidated subsidiaries paid to such members as a group during the year ended December 31, 2004 for their services as employees or status as former employees (including retirement, pension and deferred compensation) was€ 3,160,198.

During 2004 we set aside€ 0.1 million for pension, retirement or similar benefits for the members of the Supervisory Board who are employed by us.

Board of Managing Directors

The Chairman’s Committee of the Supervisory Board has functional responsibility for determining the structure and size of the compensation of the members of the Board of Managing Directors. In particular, the Chairman’s Committee determines salaries and other compensation elements for the Board of Managing Directors.

We have entered into service agreements with members of our Board of Managing Directors. These agreements established the following two principal elements of compensation:

Salary. The members of the Board of Managing Directors receive a salary which is disbursed in monthly installments. It is determined on the basis of an analysis of salaries paid to executive directors at a selected group of comparable international companies.

Cash Bonus.As part of the variable compensation we pay annual cash bonuses to members of our Board of Managing Directors based on achievement of the planned return on equity of the Group.

Mid-Term-Incentive (“MTI”).As further part of the variable compensation we grant a performance-based mid-term-incentive which reflects, for a rolling two year period, the ratio between our total shareholder return and the corresponding average figure for a peer group. The mid-term-incentive payment

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consists of a cash component (1/3) and equity-based awards (2/3) which contain long-term risk elements under the DB Global Partnership Plan.

The aggregate remuneration, including performance-based compensation, earned by the members of our Board of Managing Directors for the year ended December 31, 2004 was€ 25,101,614. This aggregate remuneration was comprised of the following:

in€	2004
Salary	3,550,000
Bonuses, mid-term-incentive (cash and equity-based)	20,901,900
Other remuneration1	649,714
Total remuneration	25,101,614

¹ Insurance premiums, payments in kind and taxes.

The members of our Board of Managing Directors received as part of the mid-term-incentive share-based awards, the ultimate value of which to the members of the Board of Managing Directors will depend on the price of Deutsche Bank shares. The units of each portion of this share-based compensation are described below.

DB Equity Units.In February 2005, we awarded an aggregate of 138,713 deferred share awards to members of our Board of Managing Directors. These shares are scheduled to be delivered on August 1, 2008.

For further information on the terms of our DB Global Partnership Plan, pursuant to which DB Equity Units are issued, see Note [20] to the consolidated financial statements.

Pursuant to the service contracts we have entered into with each of the members of our Board of Managing Directors, the board members are entitled to receive certain transitional payments upon termination of their board membership. If a member is terminated other than for cause, he or she is entitled to receive a severance payment generally consisting of his or her base salary for the remaining term of the service contract, as well as an amount corresponding to the member’s average annual bonus and MTI paid in the three years preceding the termination.

Our board members as of December 31, 2004 received the following remuneration for the year 2004:

Members of the Board	Annual cash compensation				Equity-based MTI		Total
of Managing Directors							Compensation
					Value of share-
in€	Salary		Cash bonus/cash MTI		based awards*
Dr. Josef Ackermann		1,150,000		5,016,000		3,915,000		10,081,000
Dr. Clemens Börsig		800,000		2,235,300		1,755,000		4,790,300
Dr. Tessen v. Heydebreck		800,000		2,235,300		1,755,000		4,790,300
Hermann-Josef Lamberti		800,000		2,235,300		1,755,000		4,790,300

* The number of DB Equity Units granted to each member was determined by dividing such euro amounts by€ 66.18, the closing price of our shares on the grant date (February 1, 2005). The number of DB Equity Units granted to each member was as follows: Dr. Josef Ackermann 59,157, Dr. Clemens Börsig 26,519, Dr. Tessen v. Heydebreck 26,519, and Hermann-Josef Lamberti 26,519.

In addition to the above amounts that we paid to members of the Board of Managing Directors in 2004, we paid former members of the Board of Managing Directors or their surviving dependents an aggregate of€ 17,918,080 in 2004. During 2004 we set aside€ 1,087,064 for pension, retirement or similar benefits for our Board of Managing Directors.

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Employees

As of December 31, 2004, we employed a total of 65,417 staff members as compared to 67,682 as of December 31, 2003 and 77,442 as of December 31, 2002. We calculate our employee figures on a full-time equivalent basis, meaning we include proportionate numbers of part-time employees.

The following table shows our numbers of full-time equivalent employees as of December 31, 2004, 2003, and 2002:

Employees1	Dec 31, 2004		Dec 31, 2003		Dec 31, 2002
Germany		27,093		29,878		33,844
Europe (outside Germany)2		19,538		19,403		21,538
Asia-Pacific		6,458		5,976		6,102
North America3		11,954		11,920		15,356
South America		374		504		601
Total employees		65,417		67,682		77,442

1	Full-time equivalent employees; in 2004, the employees of representative offices previously shown in the host country were assigned to the home country; numbers for 2003 (48 employees) and 2002 (68 employees) have been reclassified to reflect this.
2	Includes an immaterial number of employees in Africa.
3	Primarily the United States.

The number of our employees decreased by 2,266 to 65,417 during the year. Approximately half of this reduction was caused by the divestment of subsidiaries, in particular european transaction bank (etb) and DB Payments. The remaining reduction primarily resulted from natural staff fluctuation.

The proportion of employees working in Germany as a percentage of our total staff fell from 44.1% to 41.4%, primarily due to the deconsolidation of the above-mentioned German subsidiaries.

The following charts show the relative proportions of employees in our Group Divisions and our Corporate Center as of December 31, 2004, 2003 and 2002. (Proportions for 2003 and 2002 according to structure as of 2004; due to the further development of our organizational structure, DB Services employees (which represented 7% of our employees as of December 31, 2002) were moved to the Group Divisions as of January 1, 2003; proportions for 2002 have been reclassified to reflect this.)

Labor Relations

In Germany, labor unions and employers’ associations generally negotiate collective bargaining agreements on salaries and benefits for employees below the management level. Many companies in Germany, including we and our material German subsidiaries, are members of employers’ associations and are bound by collective bargaining agreements.

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Each year, our employers’ association, theArbeitgeberverband des privaten Bankgewerbes e.V., ordinarily renegotiates the collective bargaining agreements that cover many of our employees. The current agreement reached in July 2004 (after only 3 sessions of intensive bargaining) terminates on May 31, 2006. The agreement includes no pay raise from June until August 2004, a 2.0% pay raise from September 1, 2004 to August 31, 2005 and another 1.6% pay raise from September 1, 2005. Additionally, unions and employers agreed on a so-called “hardship clause”, which allows making the collective bargaining agreement more responsive to the needs of the individual company (e. g., reduced benefits when the economic situation is difficult). Further aspects of the agreement relate to an increasing part of total compensation being agreed for flexibility according to performance criteria and on corporate results. Furthermore, an initiative to raise the quota of apprentices in the banking sector was agreed as well as several improvements in the master tariff agreement - including an extension of regulations governing work on Saturdays, part-time retirement arrangements, early retirement and employment protection.

Our employers’ association negotiates with the following unions:

– ver.di (Vereinigte Dienstleistungsgewerkschaft), a union formed in July 2001 resulting from the merger of five unions, including the former bank unionsDeutsche Angestellten GewerkschaftandGewerkschaft Handel, Banken und Versicherungen

– Deutscher Bankangestellten Verband (DBV)

– Deutscher Handels-und Industrieangestellten Verband (DHV)

German law prohibits us from asking our employees whether they are members of labor unions. Therefore, we do not know how many of our employees are members of unions. Approximately 15 to 20% of the employees in the German banking industry are organized into unions. We estimate that less than 15% of our employees in Germany are unionized. On a worldwide basis, we estimate that approximately 15% of our employees belong to labor unions.

Share Ownership

Board of Managing Directors

As of February 28, 2005, the current members of our Board of Managing Directors held the following numbers of our shares, DB Equity Units and Performance Options:

Members of the Board	Number of shares			Number of		Number of
of Managing Directors				DB Equity Units		Performance Options
Dr. Josef Ackermann		114,420			177,499		100,374
Dr. Clemens Börsig		10,250	1		83,921		63,684
Dr. Tessen von Heydebreck		10,000			85,172		64,919
Hermann-Josef Lamberti		21,558			85,172		64,919
Total		156,228			431,764		293,896

¹ Excluding 150 Deutsche Bank shares, pooled in a family held partnership, in which Dr. Clemens Börsig has an interest of less than 25%.

The current members of our Board of Managing Directors held an aggregate of 156,228 of our shares on February 28, 2005, amounting to approximately 0.03% of our outstanding share capital on that date.

The table below shows information regarding the 431,764 DB Equity Units held by the current members of our Board of Managing Directors as of February 28, 2005:

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Numbers of DB Equity Units	Vesting Date	Delivery Date
58,827	February 1, 2004	August 1, 2005
14,707	August 1, 2005	August 1, 2005
95,853	February 1, 2005	August 1, 2006
23,963	August 1, 2006	August 1, 2006
79,759	February 1, 2006	August 1, 2007
19,940	August 1, 2007	August 1, 2007
110,970	February 1, 2007	August 1, 2008
27,743	August 1, 2008	August 1, 2008

The table below shows information regarding the 293,896 Performance Options held by the current members of our Board of Managing Directors as of February 28, 2005. All Performance Options were granted under the DB Global Partnership Plan. Each Performance Option is accompanied by a Partnership Appreciation Right.

Number of	Strike Price in€		Vesting Date	Expiration Date
Performance Options
32,772		89.96	February 1, 2004	February 1, 2008
32,772		89.96	February 1, 2005	February 1, 2008
32,772		89.96	February 1, 2006	February 1, 2008
80,700		47.53	February 1, 2005	February 1, 2009
38,293		76.61	February 1, 2006	February 1, 2010
38,293		76.61	February 1, 2007	February 1, 2010
38,293		76.61	February 1, 2008	February 1, 2010

For more information on DB Equity Units, Performance Options and Partnership Appreciation Rights, all of which are granted under the DB Global Partnership Plan, see Note [20] to the consolidated financial statements.

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Supervisory Board
As of February 28, 2005, the current members of our Supervisory Board held the following numbers of our shares, share grants under our employee share plans and options on our shares:

Members of the Supervisory Board	Number of Shares		Number of Share Grants		Number of Options
Dr. Rolf-E. Breuer		20,107		29,013		57,310
Dr. rer.oec. Karl-Hermann Baumann		–		–		–
Dr. Karl-Gerhard Eick		–		–		–
Heidrun Förster		500		10		200
Klaus Funk		150		10		200
Ulrich Hartmann		–		–		–
Sabine Horn		35		10		100
Rolf Hunck		124		9,267		986
Sir Peter Job		–		–		–
Prof. Dr. Henning Kagermann		–		–		–
Ulrich Kaufmann		55		10		200
Prof. Dr. Paul Kirchhof		–		–		–
Henriette Mark		238		10		200
Margret Mönig-Raane		–		–		–
Dr. Michael Otto		–		–		–
Gabriele Platscher		699		10		100
Karin Ruck		70		10		120
Tilman Todenhöfer		–		–		–
Dipl.-Ing. Dr.-Ing. E.h. Jürgen Weber		300		–		–
Dipl.-Ing. Albrecht Woeste		–		–		–
Leo Wunderlich		672		10		200
Total		22,950		38,360		59,616

As of February 28, 2005, the members of the Supervisory Board held 22,950 shares, amounting to 0.0044% of our outstanding share capital on that date.

Some of the Supervisory Board members who are or were formerly employees received grants under our employee share plans entitling them to receive shares at specified future dates or granting them options to acquire shares at future dates. For a description of our employee share plans, please refer to Note [20] of the consolidated financial statements. Shares that have been delivered to such employees as a result of grants under the plans (including following the exercise of options granted thereunder), and that have not been disposed by them, are shown in the “Number of Shares” column in the table above, as are shares otherwise acquired by them. Shares granted under the plans that have not yet been delivered to such employees are shown in the “Number of Share Grants” column.

The share grants to Dr. Rolf-E. Breuer consist of 29,013 shares granted under the DB Global Partnership Plan as compensation during his prior service as Spokesman of our Board of Managing Directors, which are scheduled to be delivered to him on August 1, 2005. The share grants to Rolf Hunck include 9,257 shares granted under the Restricted Equity Units Plan as part of his compensation as an employee, which are scheduled to be delivered to him in portions on August 1, 2007, 2008 and 2009. The other grants reflected in the table were made to employee members of our Supervisory Board under the DB Global Share Plan 2004, and are scheduled to be delivered on November 1, 2005.

Dr. Rolf-E. Breuer holds a total of 57,310 Performance Options granted under the DB Global Partnership Plan as compensation during his prior service as Spokesman of our Board of Managing Directors. Dr. Breuer’s options have a strike price of€ 89.96, vesting dates of February 1, 2004, 2005 and 2006, and an expiration date of February 1, 2008. Rolf Hunck holds a total of 726 Performance Options granted under the DB Global Partnership Plan as part of his compensation as an employee, which were received in February 2002 and have a strike price of€ 89.96, vesting dates of February 1, 2004, 2005 and 2006, and an expiration date of February 1, 2008. Each Performance Option is accompanied by a Partnership Appreciation Right. Mr. Hunck also received 4,000 stock appreciation rights under the

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Stock Appreciation Rights Plan as part of his compensation as an employee, which were received in December 2000, have a strike price of€ 86.50 and are exercisable from January 12, 2005 through January 5, 2007. The other options reflected in the table were acquired via the voluntary participation of employee members of our Supervisory Board in the DB Global Share Plan. DB Global Share Plan options issued in 2001 generally have a strike price of€ 87.66, a vesting date of January 2, 2004 and an expiration date of November 13, 2007; those issued in 2002 generally have a strike price of€ 55.39, a vesting date of January 2, 2005 and an expiration date of November 13, 2008; those issued in 2003 generally have a strike price of€ 75.24, a vesting date of January 2, 2006 and an expiration date of December 11, 2009. All options are with respect to our ordinary shares.

Since October 30, 2004, the amended German law on directors’ dealings (Section 15a of the German Securities Trading Act (Wertpapierhandelsgesetz)) requires persons discharging managerial responsibilities within an issuer of financial instruments, and persons closely associated with them, to disclose their personal transactions in shares of such issuer and financial instruments based on them, especially derivatives, to the issuer and to the BaFin.

In accordance with our policy and the German law, we have disclosed directors’ dealings in our shares and financial instruments based on them, especially derivatives, in a document available on our Internet website at http://www.deutsche-bank.com/corporate-governance.

Employee Share Programs
For a description of our employee share programs, please refer to Note [20] to the consolidated financial statements.

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Item 7: Major Shareholders and Related Party Transactions

Major Shareholders

On December 31, 2004, our issued share capital amounted to€ 1,392,266,870 divided into 543,854,246 no par value ordinary registered shares.

On December 31, 2004, we had 467,603 registered shareholders. The majority of our shareholders are retail investors in Germany.

The following charts show our share distribution and the composition of our shareholders on December 31, 2004:

Other institutional investors and companies 69% Insurance companies, investment companies 13% Other private persons 10% wage and salary earners, pensioners* 8% Wage and salary earners, pensioners* 50% institutional investors 2% Other private persons 48%

* Including Deutsche Bank employees and pensioners

On February 28, 2005, a total of 45,938,239 of our shares were registered in the names of 1,781 shareholders resident in the United States. These shares represented 8.45% of our share capital on that date. On December 31, 2003, a total of 66,068,424 of our shares were registered in the names of 1,960 holders of record resident in the United States. These shares represented 11.35% of our share capital on that date.

The German Securities Trading Act(Wertpapierhandelsgesetz)requires investors in publicly-traded corporations whose investments reach certain thresholds to notify both the corporation and the BaFin of such change within seven days. The minimum disclosure threshold is 5% of the corporation’s outstanding voting share capital.

We are not aware of any single investor holding 5% or more of our shares as of February 28, 2005.

We are neither directly nor indirectly owned nor controlled by any other corporation, by any foreign government or by any other natural or legal person severally or jointly.

Pursuant to German law and our Articles of Association, to the extent that we may have major shareholders at any time, we may not give them different voting rights from any of the other shareholders holding the same class of shares.

We are aware of no arrangements the operation of which may at a subsequent date result in a change in control of our company.

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Related Party Transactions

We have business relationships with a number of the companies in which we own significant equity interests. We also have business relationships with a number of companies where members of our Board of Managing Directors also hold positions on boards of directors. Our business relationships with these companies cover many of the financial services we provide to our clients generally.

We believe that we conduct all of our business with these companies on terms equivalent to those that would exist if we did not have equity holdings in them or management members in common, and that we have conducted business with these companies on that basis in 2004 and prior years. None of these transactions is or was material to us.

Among our business with related party companies in 2004 there have been and currently are loans, guarantees and commitments. All of these lending-related credit exposures (excluding derivatives), which totaled€ 3.5 billion (of which€ 1.7 billion related to our equity method investment in EUROHYPO AG) as of February 28, 2005,

– were made in the ordinary course of business,

– were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and

– did not involve more than the normal risk of collectibility or present other unfavorable features.

We have not conducted material business with parties that fall outside of the definition of related parties, but with whom we or our related parties have a relationship that enables the parties to negotiate terms of material transactions that may not be available from other, more clearly independent, parties on an arm’s-length basis.

EUROHYPO
Following an agreement in principle reached in 2001, in the third quarter of 2002 we merged our mortgage bank subsidiary, EUROHYPO AG Europäische Hypothekenbank der Deutsche Bank AG (“Eurohypo Old”), with the mortgage bank subsidiaries of Dresdner Bank AG and Commerzbank AG, to form the new EUROHYPO AG (“EUROHYPO”). After the merger, we contributed part of our London-based real estate investment banking business to EUROHYPO in December 2002. In January 2003, our German commercial real estate financing division in Germany and Dresdner Bank AG’s U.S.-based real estate investment banking team were transferred to EUROHYPO. Subsequent to these transactions, we owned 37.7% of the outstanding share capital of EUROHYPO.

Two members of the supervisory board of EUROHYPO, including the Deputy Spokesman, are employees of Deutsche Bank. Additionally, two members of the Board of Managing Directors of EUROHYPO, including the Spokesman, were members of the management board of Eurohypo Old prior to the merger.

Besides our equity stake, which had a book value of€ 2.5 billion at December 31, 2004, we provide EUROHYPO with loans and commitments. Total loans and commitments (including derivative lines) as of December 31, 2004 were€ 4.3 billion, of which€ 2.2 billion were utilized at that date.

Deutsche Bank AG, Commerzbank AG and Dresdner Bank AG each granted EUROHYPO financial guarantees to protect EUROHYPO against losses resulting from loan loss provisions arising from loans each contributed to the new entity up to a fixed maximum amount for the period until December 31, 2006. While the maximum amount of the financial guarantees of Commerzbank AG and Dresdner Bank AG had already been utilized by the end of 2003, our financial guarantee, which had an initial maximum amount of€ 283 million, is still in force with an unutilized amount of€ 51 million as of December 31, 2004. Furthermore, we held fixed income securities issued by EUROHYPO, classified as securities available for sale, in the amount of€ 665 million as of December 31, 2004.

Under the agreement in principle referred to above, Deutsche Bank, Commerzbank AG and Dresdner Bank AG have agreed to certain transfer restrictions regarding their shares in EUROHYPO which are in force until December 31, 2008, including preemptive rights.

In March 2004, the major shareholders waived their rights to a dividend payment in respect of the fiscal year 2003 and EUROHYPO announced that it had taken a decision in March 2004 to establish additional general banking reserves allowable under German accounting rules (HGB). We account for

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our investment in EUROHYPO under the equity method and as such recognize in our income statement our proportional share of the after-tax earnings or losses of EUROHYPO as reported applying U.S. GAAP. In November 2004, EUROHYPO’s retail banking unit sold approximately 14,000 of its German nonperforming mortgage loans to a newly founded company, established for this purpose, of which EUROHYPO owns 33% and a Citibank-led consortium owns the balance.

Xchanging etb GmbH
Based on agreements reached in May 2004, we transferred our stake in etb to Xchanging etb GmbH (formerly Zweite Xchanging GmbH), which is located in Germany, and received in turn a 49% nonvoting capital stake in Xchanging etb GmbH. The remaining 51% is owned by Xchanging HoldCo No 3 Ltd (UK), a 100% subsidiary of Xchanging B.V. (NL) (‘Xchanging’). Founded in 1998, Xchanging is an internationally positioned business process outsourcer and back office services provider, with locations in UK, France, Germany, the United States and Asia. etb is in general a provider for security settlement services we founded in 1999. The change of control was realized at May 31/June 1, 2004 when Xchanging took over management control and full operational responsibility for etb.

One of the four executive directors of Xchanging etb GmbH is an employee of Deutsche Bank Group (a supervisory board does not yet exist at Xchanging etb GmbH). Additionally, one member of the supervisory board of etb is an employee of ours. Furthermore, two members of the management board of etb were members of the management board of etb prior to the change of control when it was our wholly-owned subsidiary.

The arrangements with etb (under the control of Xchanging) include a 12-year service agreement. This agreement is aimed to reduce our costs for the agreed security settlement services while maintaining control over services provided as well as the desired quality and performance. It also ensures significant investments of Xchanging in order to enhance processes and etb’s service delivery platform for additional new clients. In return for the services received, we provide services such as human resource, controlling, audit and corporate security to etb, as we did before the transfer. The volume of services received from etb in 2004 amounted to€ 130 million while the volume of services provided to etb in 2004 amounted to€ 43 million. We account for our investment in Xchanging etb GmbH under the equity method. Currently the Group intends to sell a 5% stake in Xchanging etb GmbH to a client of etb, who uses their services to a larger extent.

Related Party Nonaccrual Loans
Aside from our other shareholdings, we hold acquired equity interests in some of our clients arising from our efforts to protect our then-outstanding lending exposures to them.

The table below shows information on loans to related party companies that we have classified as nonaccrual as of December 31, 2004. As such, these nonaccrual loans may exhibit more than normal risk of collectibility or present other unfavorable features. The amounts outstanding disclosed for February 28, 2005 aggregate to€ 61 million, down€ 201 million or 77% from February 29, 2004. We hold a significant portion of the outstanding equity interests in customers B and D noted below and account for these equity interests in our financial statements using the equity method of accounting (as described in Note [1] to the consolidated financial statements). Our participating interests in customers A and C and Radio Movil Digital Americas, Inc. are 10% or more of their voting rights.

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	Amount outstanding as	Largest amount out-	Nature of the loan and transaction in which incurred
	of February 28, 2005	standing January 1, 2004
in€ m.		to February 28, 2005
Customer A	34	97	Comprised of a€ 33 million real estate finance loan bearing interest at 6.27% per annum and guarantees which were honored after the company filed for liquidation bearing no interest. The loan is payable on demand and interest accrual has been stopped.
Customer B	8	9	Former sale and leaseback transaction bearing interest at 5.2% per annum, for which we have demanded repayment and stopped accruing interest.
Customer C	1	4	Cash loan payable on demand, bearing interest at 8% per annum, for which interest accrual has been stopped.
Customer D	3	3	Long term refinancing of non-recourse lease, bearing interest at 6.9% per annum, maturing June 2019, for which interest accrual has been stopped.
Radio Movil Digital Americas, Inc.	15	18	Cash loan payable on demand, bearing interest at 12% per annum, for which interest accrual has been stopped.

We have not disclosed the names of the customers referred to by letters above because we have concluded that such disclosure would conflict with applicable privacy laws, such as customer confidentiality and data protection laws, and such customers have not waived application of these privacy laws. A legal opinion regarding such privacy laws is filed as Exhibit 14.1 hereto.

Interests of Experts and Counsel

Not required because this document is filed as an annual report.

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Item 8: Financial Information

Consolidated Statements and Other Financial Information

Consolidated Financial Statements
See “Item 18: Financial Statements” and our consolidated financial statements beginning on page F-3.

Legal Proceedings
Research Analyst Independence Investigations. On August 26, 2004, Deutsche Bank Securities Inc. (“DBSI”), Deutsche Bank’s U.S. broker-dealer subsidiary, reached a settlement with the U.S. Securities and Exchange Commission, the National Association of Securities Dealers, the New York Stock Exchange and state securities regulators (“U.S. securities regulators”) concerning investigations relating to research analyst independence. The U.S. securities regulators had previously settled similar charges with ten other investment banks. In settling the investigation, DBSI neither admitted nor denied the allegations, and agreed to pay: (i) U.S.$ 50 million, of which U.S.$ 25 million is a civil penalty and U.S.$ 25 million is for restitution to investors; (ii) U.S.$ 25 million over five years (starting in the first quarter of 2005) to provide third-party research to clients; (iii) U.S.$ 5 million over five years to fund investor education programs; and (iv) U.S.$ 7.5 million as a penalty in connection with late production of email in the course of the investigation. In addition, DBSI agreed to adopt certain reforms designed to bolster analyst independence. DBSI had previously implemented many of these reforms. Deutsche Bank has provided for the current exposures in its consolidated financial statements.

IPO Allocation Litigation:DBSI and its predecessor firms, along with numerous other securities firms, have been named as defendants in over 80 putative class action lawsuits pending in the United States District Court for the Southern District of New York. These lawsuits allege violations of securities and antitrust laws in connection with the allocation of shares in a large number of initial public offerings (“IPOs”) by issuers, officers and directors of issuers, and underwriters of those securities. DBSI is named in these suits as an underwriter. The purported securities class actions allege material misstatements and omissions in registration statements and prospectuses for the IPOs and market manipulation with respect to aftermarket trading in the IPO securities. Among the allegations are that the underwriters tied the receipt of allocations of IPO shares to required aftermarket purchases by customers and to the payment of undisclosed compensation to the underwriters in the form of commissions on securities trades, and that the underwriters caused misleading analyst reports to be issued. The antitrust claims allege an illegal conspiracy to affect the stock price based on similar allegations that the underwriters required aftermarket purchases and undisclosed commissions in exchange for allocation of IPO stocks. In the purported securities class actions, the motions to dismiss the complaints of DBSI and others were denied on February 13, 2003. Plaintiffs’ motion to certify 6 “test” cases as class actions in the securities cases was granted on October 13, 2004, and DBSI and other defendants have filed a petition for permission to appeal that decision to the Court of Appeals for the Second Circuit. Discovery in the securities cases is underway. In the purported antitrust class action, the defendants’ motion to dismiss the complaint was granted on November 3, 2003, and the plaintiffs subsequently appealed to the Court of Appeals for the Second Circuit. The appeal has been fully briefed and argued and the parties are awaiting a decision by the court.

Enron Litigation. Deutsche Bank AG and certain of its affiliates are collectively involved in more than 25 lawsuits arising out of their banking relationship with Enron Corp., its subsidiaries and certain Enron-related entities (“Enron”). These lawsuits include a series of purported class actions brought on behalf of shareholders of Enron, including the lead action captioned Newby v. Enron Corp. The consolidated complaint filed in Newby named as defendants, among others, Deutsche Bank AG, several other investment banking firms, a number of law firms, Enron’s former accountants and affiliated entities and individuals and other individual defendants, including present and former officers and directors of Enron, and it purported to allege claims against Deutsche Bank AG under federal securities laws. On December 20, 2002, the Court dismissed all of the claims alleged in the Newby action against

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Deutsche Bank AG. Plaintiffs in Newby filed a first amended consolidated complaint on May 14, 2003 and reasserted claims against Deutsche Bank AG under federal securities laws and also added similar claims against its subsidiaries DBSI and DBTCA. On March 29, 2004, the Court dismissed in part the claims alleged in the Newby action against the Deutsche Bank entities. Plaintiffs in Newby have filed a motion seeking reconsideration of the Deutsche Bank entities’ partial dismissal, which motion is pending. Also, an adversary proceeding has been brought by Enron in the bankruptcy court against, among others, Deutsche Bank AG and certain of its affiliates. In this adversary proceeding, Enron seeks damages from the Deutsche Bank entities, as well as the other defendants, for alleged aiding and abetting breaches of fiduciary duty by Enron insiders, aiding and abetting fraud and unlawful civil conspiracy, and also seeks return of alleged fraudulent conveyances and preferences and equitable subordination of their claims in the Enron bankruptcy. The Deutsche Bank entities’ motion to partially dismiss the adversary complaint is pending. In addition to Newby and the adversary proceeding described above, there are third-party actions brought by Arthur Andersen in Enron-related cases asserting contribution claims against Deutsche Bank AG, DBSI and many other defendants, and individual and putative class actions brought in various courts by Enron investors and creditors alleging federal and state law claims against the same entities named by Arthur Andersen, as well as DBTCA. Deutsche Bank entities, along with various investors, creditor plaintiffs, the Enron bankruptcy estate and various financial institutions, have participated in court-ordered mediation before the Honorable William C. Conner, Senior United States District Judge for the Southern District of New York.

WorldCom Litigation. Deutsche Bank AG and DBSI are defendants in more than 40 actions filed in federal and state courts arising out of alleged material misstatements and omissions in the financial statements of WorldCom Inc. DBSI was a member of the syndicate that underwrote WorldCom’s May 2000 and May 2001 bond offerings, which are among the bond offerings at issue in the actions. Deutsche Bank AG, London branch was a member of the syndicate that underwrote the sterling and euro tranches of the May 2001 bond offering. Plaintiffs are alleged purchasers of these and other WorldCom debt securities. The defendants in the various actions include certain WorldCom directors and officers, WorldCom’s auditor and members of the underwriting syndicates for the debt offerings. Plaintiffs allege that the offering documents contained material misstatements and/or omissions regarding WorldCom’s financial condition. The claims against DBSI and Deutsche Bank AG are made under federal and state statutes (including securities laws), and under various common law doctrines. The largest of the actions against Deutsche Bank AG and DBSI is a class action litigation in the U.S. District Court in the Southern District of New York, in which the class plaintiffs are the holders of a significant majority of the bonds at issue. On March 10, 2005, Deutsche Bank AG and DBSI reached a settlement agreement, subject to court approval, resolving the class action claims asserted against them, for a payment of approximately U.S.$ 325 million. The settlement of the class action claims does not resolve the individual actions brought by investors who chose to opt out of the federal class action. The financial effects of the class action settlement are reflected in our 2004 consolidated financial statements.

In the Matter of KPMG LLP Certain Auditor Independence Issues.On November 20, 2003, the SEC requested us to produce certain documents in connection with an ongoing investigation of certain auditor independence issues relating to KPMG LLP. We are cooperating with the SEC in its inquiry. KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft (KPMG DTG), a KPMG LLP affiliate, is our auditor. During all relevant periods, including the present, KPMG DTG has confirmed to us that KPMG DTG was and is “independent” from us under applicable accounting and SEC regulations.

Kirch Litigation. In May 2002, Dr. Leo Kirch personally and as an assignee initiated legal action against Dr. Breuer and Deutsche Bank AG alleging that a statement made by Dr. Breuer (then the Spokesman of Deutsche Bank’s Board of Managing Directors) in an interview with Bloomberg television on February 4, 2002 regarding the Kirch Group was in breach of laws and financially damaging to Kirch. On February 18, 2003, the Munich District Court No. I issued a declaratory judgment to the effect that Deutsche Bank AG and Dr. Breuer were jointly and severally liable for damages to Dr. Kirch, TaurusHolding GmbH & Co. KG and PrintBeteiligungs GmbH as a result of the interview statement. Upon appeal, the Munich Superior Court on December 10, 2003 reaffirmed the decision of the District Court against Deutsche Bank AG, whereas the case against Dr. Breuer was dismissed. Both Dr. Kirch and

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Deutsche Bank AG have filed motions with the Supreme Court in Civil Matters to set the judgment of the Superior Court aside. The Supreme Court is expected to hold a hearing on the appeals of both sides in fall 2005. To be awarded a judgment for damages against Deutsche Bank AG, Dr. Kirch would have to file a new lawsuit; in such proceedings he would have to prove that the statement caused financial damages and the amount thereof. In mid 2003 Dr. Kirch instituted legal action in the Supreme Court of the State of New York in which he seeks the award of compensatory and punitive damages based upon Dr. Breuer’s interview. Upon referral to the U.S. District Court for the Southern District of New York, the case was dismissed on September 24, 2004. Dr. Kirch appealed this decision.

Philipp Holzmann AG.Philipp Holzmann AG (“Holzmann”) is a major German construction firm which filed for insolvency in March 2002. We had been a major creditor bank and holder of an equity interest of Holzmann for many decades, and, from April 1997 until April 2000, a former member of our Board of Managing Directors was the Chairman of its Supervisory Board. When Holzmann had become insolvent at the end of 1999, a consortium of banks led by us participated in late 1999 and early 2000 in a restructuring of Holzmann that included the banks’ extension of a credit facility, participation in a capital increase and exchange of debt into convertible bonds. In March 2002, Holzmann and several of its subsidiaries, including in particular imbau Industrielles Bauen GmbH (“imbau”), filed for insolvency. As a result of this insolvency, the administrators for Holzmann and for imbau and a group of bondholders have informed us they may assert claims against us because of our role as lender to the Holzmann group prior to and after the restructuring and as leader of the consortium of banks which supported the restructuring. The purported claims include claims that amounts repaid to the banks constituted voidable preferences that should be returned to the insolvent entities and claims of lender liability resulting from the banks’ support for an allegedly infeasible restructuring. Although we are in ongoing discussions, we cannot exclude that some of the parties may file lawsuits against us. To date, the administrator for imbau filed a lawsuit against us in August 2004 alleging that payments received by us in respect of a loan made to imbau in 1997 and 1998 and in connection with a real estate transaction that was part of the restructuring constituted voidable preferences that should be returned to the insolvent entity. Additionally, Gebema N.V. filed a lawsuit in 2000 seeking damages against us alleging deficiencies in the offering documents based on which Gebema N.V. had invested in equity and convertible bonds of Holzmann in 1998.

Due to the nature of our business, we and our subsidiaries are involved in litigation, arbitration and regulatory proceedings in Germany and in a number of jurisdictions outside Germany, including the United States, arising in the ordinary course of our businesses. Such matters are subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. Although the final resolution of any such matters could have a material effect on our consolidated operating results for a particular reporting period, we believe that it should not materially affect our consolidated financial position.

Dividend Policy
We generally pay dividends each year, and expect to continue to do so in the near future. However, we may not pay dividends in the future at rates we have paid them in previous years. If we are not profitable, we may not pay dividends at all.

Under German law, our dividends are based on the results of Deutsche Bank AG as prepared in accordance with German accounting rules. Our Board of Managing Directors, which prepares the annual financial statements of Deutsche Bank AG on an unconsolidated basis, and our Supervisory Board, which reviews them, first allocate part of Deutsche Bank’s annual surplus (if any) to our statutory reserves and to any losses carried forward, as it is legally required to do. Then they allocate the remainder between profit reserves (or retained earnings) and balance sheet profit (or distributable profit). They may allocate up to one-half of this remainder to profit reserves, and must allocate at least one-half to balance sheet profit. We then distribute the full amount of the balance sheet profit of Deutsche Bank AG if the shareholders’ meeting resolves so. The shareholders’ meeting may resolve a non-cash distribution instead of or in addition to a cash dividend. However, we are not legally required to distribute our balance sheet profit to our shareholders to the extent that we have issued participatory

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rights (Genussrechte) or granted a silent participation (stille Gesellschaft) that accord their holders the right to a portion of our distributable profit.

We declare dividends at the Annual General Meeting and pay them once a year. If we issue a new class of shares, our Articles of Association permit us to declare a different dividend entitlement for the new class of shares. Although we expect to continue for the near future to pay dividends each year, we may not pay dividends at rates we have paid them in previous years or at all.

Significant Changes

There has been no significant change subsequent to December 31, 2004.

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Item 9: The Offer and Listing

Offer and Listing Details

Our share capital consists of ordinary shares issued in registered form without par value. Under German law, no par value shares are deemed to have a “nominal” value equal to the total amount of share capital divided by the number of shares. Our shares have a nominal value of€ 2.56 per share.

The principal trading market for our shares is the Frankfurt Stock Exchange. We maintain a share register in Frankfurt am Main and, for purpose of the trading our shares on the New York Stock Exchange, a share register in New York.

All shares on German stock exchanges trade in euro. The following table sets forth, for the calendar periods indicated, high, low and period-end prices and average daily trading volumes for our shares as reported by the Frankfurt Stock Exchange and the high, low and period-end quotation for the DAX^®(Deutscher Aktienindex)index, the principal German share index. All quotations are based on intraday prices. The DAX is a continuously updated, capital-weighted performance index of 30 major German companies. The DAX includes shares selected on the basis of stock exchange turnover and market capitalization. Adjustments to the DAX are made for capital changes, subscription rights and dividends, as well as for changes in the available free float.

	Our shares
	Price per share						Average daily		DAX®-Index
	High		Low		Period end		trading		High		Low		Period end
	(in€)		(in€)		(in€)		volume
							(in thousands
							of shares)
Monthly 2005
February		69.35		65.20		66.30		3,796.77		4,409.09		4,249.69		4,350.49
January		67.63		63.35		65.25		3,684.59		4,325.77		4,160.83		4,254.85
Monthly 2004
December		66.33		63.64		65.32		3,260.98		4,272.18		4,107.62		4,256.08
November		65.50		59.41		63.75		3,476.55		4,219.05		3,959.25		4,126.00
October		61.75		56.96		59.59		3,644.77		4,078.50		3,838.98		3,960.25
September		61.18		56.36		57.87		3,754.06		4,000.13		3,792.25		3,892.90
Quarterly 2004
Fourth Quarter		66.33		56.96		65.32		3,461.01		4,272.18		3,838.98		4,256.08
Third Quarter		65.35		52.37		57.87		3,831.65		4,101.52		3,618.58		3,892.90
Second Quarter		73.08		63.02		64.58		4,105.99		4,156.89		3,710.02		4,052.73
First Quarter		77.77		62.20		67.65		4,874.38		4,175.48		3,692.40		3,856.70
Quarterly 2003
Fourth Quarter		66.04		51.55		65.70		4,183.09		3,996.28		3,217.40		3,965.16
Third Quarter		59.95		51.20		52.25		4,451.45		3,676.88		3,119.35		3,256.78
Second Quarter		60.10		37.20		56.48		5,289.67		3,324.44		2,395.72		3,220.58
First Quarter		47.90		32.97		38.50		5,780.83		3,157.25		2,188.75		2,423.87
Annual
2004		77.77		52.37		65.32		4,066.27		4,272.18		3,618.58		4,256.08
2003		66.04		32.97		65.70		4,923.58		3,996.28		2,188.75		3,965.16
2002		82.65		35.60		43.90		4,703.89		5,467.31		2,519.30		2,892.63
2001		105.64		43.20		79.40		3,656.06		6,795.14		3,539.18		5,160.10
2000		103.27		68.75		89.51		2,790.71		8,136.16		6,110.26		6,433.61

Note: All data is based on Orderbuchstatistik (Xetra).

On February 28, 2005, the closing quotation of our shares on the Frankfurt Stock Exchange within the Xetra system (which we describe below) was€ 66.30 per share and the closing quotation of the DAX-Index was 4,350.49. Our shares represented 7.70% of the DAX-Index on that date.

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Since October 3, 2001 our shares have also traded on the New York Stock Exchange, trading under the symbol “DB”. The following table shows, for the periods indicated, high, low and period-end prices and average daily trading volumes for our shares as reported on the New York Stock Exchange Composite Tape:

	Our shares
	Price per share						Average daily
	High		Low		Period end		trading
	(in U.S.$)		(in U.S.$)		(in U.S.$)		volume
							(in number of
							shares)
Monthly 2005
February		89.16		85.59		87.90		81,416
January		89.08		82.67		84.99		78,875
Monthly 2004
December		89.35		84.54		89.01		75,364
November		86.68		75.85		84.80		83,310
October		76.52		72.92		76.15		83,476
September		75.20		68.83		71.94		84,690
Quarterly 2004
Fourth Quarter		89.35		72.92		89.01		80,633
Third Quarter		79.07		64.70		71.94		81,423
Second Quarter		87.55		76.10		79.11		79,389
First Quarter		94.99		77.60		83.48		117,032
Quarterly 2003
Fourth Quarter		82.62		61.70		82.21		74,527
Third Quarter		68.55		56.20		60.69		86,216
Second Quarter		70.34		41.24		64.42		97,933
First Quarter		49.49		36.44		42.11		129,015
Annual
2004		94.99		64.70		89.01		89,483
2003		82.62		36.44		82.21		96,537
2002		74.00		35.26		45.43		54,047
2001 (beginning October 3, 2001)		70.28		51.90		70.15		50,744

Our shares were also traded over-the-counter in the United States in the form of American Depositary Receipts until September 28, 2001, when our ADR Program was terminated. In 2000, the high, low and period-end prices of our American Depositary Receipts on the U.S. over-the-counter market were $ 95.00, $ 60.75 and $ 83.88, respectively. In 2001 through September 28, 2001, such prices were $ 98.00, $ 42.00 and $ 54.25, respectively.

For a discussion of the possible effects of fluctuations in the exchange rate between the euro and the U.S. dollar on the price of our shares, see “Item 3: Key Information – Exchange Rate and Currency Information.”

You should not rely on our past share performance as a guide to our future share performance.

Plan of Distribution

Not required because this document is filed as an annual report.

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Markets

As described above, the principal trading market for our shares is the Frankfurt Stock Exchange. Our shares are also traded on the New York Stock Exchange and on the seven other German stock exchanges (Berlin, Bremen, Düsseldorf, Hamburg, Hannover, Munich and Stuttgart), as well as on the Amsterdam, Brussels, London, Luxembourg, Paris, Tokyo, Vienna and Swiss stock exchanges. Standardized options on our shares trade on the German-Swiss Stock Exchange(Eurex), which is jointly owned and operated by Deutsche Börse AG and the Swiss Stock Exchange. Standardized options on our shares are also traded on the Paris stock exchange(Marché à Terme International de France) and the Amsterdam stock exchange(European Option Exchange).

Frankfurt Stock Exchange

Deutsche Börse AG operates the Frankfurt Stock Exchange, the most significant of the eight German stock exchanges. The Frankfurt Stock Exchange, including Xetra (as described below), accounted for more than 96.4% of the total turnover in exchange-traded shares in Germany in 2004 (including 90.3% of the total turnover which is accounted for by Xetra in 2004). According to the World Federation of Exchange, Deutsche Börse AG was the sixth largest stock exchange in the world in 2004 measured by total value of share trading (including investment funds), after the New York Stock Exchange, NASDAQ, London, Tokyo and Euronext.

As of December 31, 2004, the shares of 6,209 companies traded on the different market segments of the Frankfurt Stock Exchange. Of these, 816 were German companies and 5,393 were non-German companies.

The prices of actively-traded securities, including our shares, are continuously quoted on the Frankfurt Stock Exchange floor between 9:00 a.m. and 8:00 p.m., Central European time, each business day. Most securities listed on the Frankfurt Stock Exchange are traded on the auction market. Securities also trade in interbank dealer markets, both on and off the Frankfurt Stock Exchange. The price of securities on the Frankfurt Stock Exchange is determined by open outcry and noted by publicly commissioned stockbrokers. These publicly commissioned stockbrokers are members of the exchange but do not, as a rule, deal with the public.

The Frankfurt Stock Exchange publishes a daily official list of its quotations(Amtliches Kursblatt)for all traded securities. The list is available on the Internet at http://www.deutsche-boerse.com under the heading. “Market Data & Analytics – Statistics and Analysis-Spot-Market-Order Book Statistics-Xetra Close”.

Our shares trade on Xetra (Exchange Electronic Trading) in addition to trading on the auction market. Xetra is an electronic exchange trading platform operated by Deutsche Börse AG. Xetra is integrated into the Frankfurt Stock Exchange and is subject to its rules and regulations. Xetra is available daily between 9:00 a.m. and 5:30 p.m. Central European time to brokers and banks that have been admitted to Xetra by the Frankfurt Stock Exchange. Private investors are permitted to trade on Xetra through their banks or brokers.

Transactions on the Frankfurt Stock Exchange (including transactions through the Xetra system) are settled on the second business day following the transaction. Transactions off the Frankfurt Stock Exchange are also generally settled on the second business day following the transaction, although parties may agree on a different settlement time. Transactions off the Frankfurt Stock Exchange may occur in the case of large trades or if one of the parties is not German. The standard terms and conditions under which German banks generally conduct their business with customers require the banks to execute customer buy and sell orders for listed securities on a stock exchange unless the customer specifies otherwise.

The Frankfurt Stock Exchange can suspend trading if orderly trading is temporarily endangered or if necessary to protect the public interest. The BaFin monitors trading activities on the Frankfurt Stock Exchange and the other German stock exchanges.

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Selling Shareholders

Not required because this document is filed as an annual report.

Dilution

Not required because this document is filed as an annual report.

Expenses of the Issue

Not required because this document is filed as an annual report.

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Item 10: Additional Information

Share Capital

Not required because this document is filed as an annual report.

Memorandum and Articles of Association

For information regarding our Articles of Association, please refer to the discussion under the corresponding section of our Annual Report on Form 20-F for the year ended December 31, 2003, which discussion we hereby incorporate by reference into this document.

Material Contracts

In the usual course of our business, we enter into numerous contracts with various other entities. We have not, however, entered into any material contracts outside the ordinary course of our business within the past two years.

Exchange Controls

As in other member states of the European Union, regulations issued by the competent European Union authorities to comply with United Nations Resolutions have caused freeze orders on assets of certain legal and natural persons designated in such regulations. Currently, these European Union regulations relate to persons of or in Burma/Myanmar, Iraq, Liberia, Sudan, former Yugoslavia/Serbia, Zimbabwe, persons of or in connection with the Al-Qaida network or the Taliban and certain other persons and entities with a view to combat international terrorism.

With some exceptions, corporations or individuals residing in Germany are required to report to the Bundesbank any payment received from, or made to or for the account of, a nonresident corporation or individual that exceeds€ 12,500 (or the equivalent in a foreign currency). This reporting requirement is for statistical purposes.

Subject to the above-mentioned exceptions, there are currently no German laws, decrees or regulations that would prevent the transfer of capital or remittance of dividends or other payments to our shareholders who are not residents or citizens of Germany.

There are also no restrictions under German law or our Articles of Association concerning the right of nonresident or foreign shareholders to hold our shares or to exercise any applicable voting rights.

Taxation

The following is a summary of the material German and United States federal income tax consequences of the ownership and disposition of shares by you if you are a resident of the United States for purposes of the income tax convention between the United States and Germany (the “Treaty”) and you are fully eligible for benefits under the Treaty. You generally will be entitled to Treaty benefits if you are:

– the beneficial owner of shares (and of the dividends paid with respect to your shares);

– an individual resident of the United States, a U.S. corporation, or a partnership, estate or trust to the extent your income is subject to taxation in the United States in your hands or in the hands of your partners or beneficiaries;

– not also a resident of Germany for German tax purposes; and

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– not subject to an “anti-treaty shopping” article that applies in limited circumstances.

The Treaty benefits discussed below generally are not available to shareholders who hold shares in connection with the conduct of business through a permanent establishment, or the performance of personal services through a fixed base, in Germany. The summary does not discuss the treatment of those shareholders.

The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular shareholder, including tax considerations that arise from rules of general application or that are generally assumed to be known by shareholders. In particular, the summary deals only with shareholders that will hold shares as capital assets and does not address the tax treatment of shareholders that are subject to special rules, such as fiduciaries of pension, profit-sharing or other employee benefit plans, banks, insurance companies, dealers in securities or currencies, persons that hold shares as a position in a straddle, conversion transaction, synthetic security or other integrated financial transaction, persons that elect mark-to-market treatment, persons that own, directly or indirectly, ten percent or more of our voting stock and persons whose “functional currency” is not the U.S. dollar. The summary is based on laws, treaties and regulatory interpretations in effect on the date hereof, all of which are subject to change.

Shareholders should consult their own advisors regarding the tax consequences of the ownership and disposition of shares in light of their particular circumstances, including the effect of any state, local, or other national laws.

Taxation of Dividends

Changes in German tax law affect the tax treatment of dividends that we pay beginning in 2002. Dividends that we pay in 2002 and thereafter will be subject to German withholding tax at an aggregate rate of 21.1% (consisting of a 20% withholding tax and a 1.1% surcharge). Under the Treaty, you will be entitled to receive a refund from the German tax authorities of 6.1 in respect of a declared dividend of 100. For example, for a declared dividend of 100, you initially will receive 78.9, may claim a refund from the German tax authorities of 6.1 and, therefore, receive a total cash payment of 85 (i.e., 85% of the declared dividend). For U.S. tax purposes, you will be deemed to have received total dividends of 100.

The German rules provide that a dividend received by corporations, and half of the dividend received by individuals, will be exempt from German tax. Beginning in 2004, 5% of such dividends received by corporations from both domestic and foreign shareholdings is treated as non-deductible expense for corporation tax purposes. These rules apply regardless of whether a shareholder is a tax resident of Germany or a nonresident, if the shares form part of the assets of a permanent establishment or fixed base that the nonresident maintains in Germany. In any event, German withholding tax will be levied on the full amount of the cash dividend paid to you as described above.

The gross amount of dividends that you receive (including amounts withheld in respect of German withholding tax) generally will be subject to U.S. federal income taxation as foreign source dividend income, and will not be eligible for the dividends received deduction generally allowed to U.S. corporations. German withholding tax at the 15% rate provided under the Treaty will be treated as a foreign income tax that, subject to generally applicable limitations under U.S. tax law, is eligible for credit against your U.S. federal income tax liability or, at your election, may be deducted in computing taxable income. Thus, for a declared dividend of 100, you will be deemed to have paid German taxes of 15. You cannot claim credits for German taxes that would have been refunded to you if you had filed a claim for refund. Foreign tax credits will not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities. U.S. tax authorities have indicated an intention to use existing law and to issue new regulations to limit the creditability of foreign withholding taxes in certain situations, including where the burden of foreign taxes is separated inappropriately from the related foreign income. You should consult your tax advisor if you have questions about whether such rules may affect your ability to utilize foreign tax credits.

Subject to certain exceptions our dividends received by an individual before January 1, 2009 will be subject to U.S taxation at a maximum rate of 15%. This lower rate applies to our dividends only if the shares in respect of which such dividend is paid have been held by you for at least 61 days during the

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121 day period beginning 60 days before the ex-dividend date. Periods during which you hedge a position in your shares or related property may not count for purposes of the holding period test. Our dividends also would not be eligible for the lower rate if you elect to take the dividends into account as investment income for purposes of limitations on deductions for investment interest. You should consult your own tax advisor regarding the availability of the reduced dividend rate in light of your own particular circumstances.

If you receive a dividend paid in euros, you will recognize income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If dividends are converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. You may be required to recognize foreign currency gain or loss on the receipt of a refund in respect of German withholding tax (but not with respect to the portion of the Treaty refund that is treated as an additional dividend) to the extent the U.S. dollar value of the refund differs from the U.S. dollar equivalent of that amount on the date of receipt of the underlying dividend.

Refund Procedures

To claim the refund you must submit (either directly or, as described below, through the Depository Trust Company), within four years from the end of the calendar year in which the dividend is received, a claim for refund to the German tax authorities together with the original bank voucher (or certified copy thereof) issued by the paying entity documenting the tax withheld. Claims for refunds are made on a special German claim for refund form, which must be filed with the German tax authorities: Bundesamt für Finanzen, 53221 Bonn-Beuel, Germany. The German claim for refund forms may be obtained from the German tax authorities at the same address where the applications are filed, from the Embassy of the Federal Republic of Germany, 4645 Reservoir Road, N.W., Washington, D.C. 20007-1998 or from the Office of International Operations, Internal Revenue Service, 1325 K Street, N.W., Washington, D.C. 20225, Attention: Taxpayer Service Division, Room 900 or can be downloaded from the homepage of the Bundesamt für Finanzen (www.bff-online.de).

You must also submit to the German tax authorities a certification (on IRS Form 6166) with respect to your last filed U.S. federal income tax return. The certification may be obtained from the office of the Director of the Internal Revenue Service Center by filing a request for certification with the Internal Revenue Service, Philadelphia Service Center U.S Residency Certification Request, P.O. Box 16347, Philadelphia, PA 19114-0447. Requests for certification are to be made in writing or by faxing your request and must include your name, social security number or employer identification number, tax return form number, the address where the certification should be sent, the name of the country requesting the certification (Germany), and the tax year being certified. Generally, the tax year being certified would most likely reflect the period of your last filed tax return. If you desire a “current year” Form 6166, your Form 6166 request must include a penalties of perjury statement, which has been signed by you in the current year under penalties of perjury, certifying that 1) you are a resident of the United States currently, and 2) you will continue to be a resident of the United States for the remainder of the current, taxable year. For the purpose of requesting IRS Form 6166 you must use IRS Form 8802. Requests for certification can include a request to the Internal Revenue Service to send the certification directly to the German tax authorities. This certification is valid for three years.

A simplified refund procedure is available if you hold your shares through banks and brokers participating in the Depository Trust Company. These arrangements have been made on a trial basis and may be amended or revoked at any time in the future. If your bank or broker elects to participate in the simplified procedure, the Depository Trust Company will perform administrative functions necessary to claim the Treaty refund for you. In this case, your broker will report to the Depository Trust Company the number of shares that you hold together with the number of shares held by other holders that are also eligible to claim Treaty refunds. The Depository Trust Company will then prepare and file a combined claim for refund with the German tax authorities. The combined claim need not include evidence of your entitlement to Treaty benefits.

Under audit procedures that apply for up to four years, the German tax authorities may require banks and brokers to provide evidence regarding the entitlement of their clients to Treaty benefits. In

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the event of such an audit, brokers must submit to the German tax authorities a list containing names and addresses of the relevant holders of shares, and the official certification on IRS Form 6166 with respect to the last filed United States federal income tax return of those holders. Banks and brokers participating in the Depository Trust Company arrangements may require you to provide documentation evidencing your eligibility for Treaty benefits prior to any audit.

The German tax authorities will issue refunds denominated in euros. In the case of shares held through banks or brokers participating in the Depository Trust Company, the refunds will be issued to the Depository Trust Company, which will convert the refunds to U.S. dollars. The resulting amounts will be paid to banks or brokers for the account of holders.

If you hold your shares through a bank or broker who participates in the Depositary Trust Company that elects to participate in the simplified refund procedure, it could take at least three weeks for you to receive a refund after a combined claim for refund has been filed with the German tax authorities. If you file a claim for refund directly with the German tax authorities, it could take at least eight months for you to receive a refund. The length of time between filing a claim for refund and your receipt of that refund is uncertain and we can give you no assurances as to when you will receive the refund.

Taxation of Capital Gains

Under the Treaty, you will not be subject to German capital gains tax in respect of a sale or other disposition of shares. For U.S. federal income tax purposes, gain or loss realized by you on the sale or disposition of shares will be capital gain or loss, and will be long-term capital gain or loss if the shares were held for more than one year. The net amount of long-term capital gain realized by an individual generally is subject to taxation at a current maximum rate of 15% under recently enacted legislation. Any such gain generally would be treated as income arising from sources within the United States; any such loss would generally be allocated against U.S. source income. Your ability to offset capital losses against ordinary income is subject to limitations.

German Gift and Inheritance Taxes

Under the current estate, inheritance and gift tax treaty between the United States and Germany (the “Estate Tax Treaty”), a transfer of shares generally will not be subject to German gift or inheritance tax so long as the donor or decedent, and the heir, donee or other beneficiary, was not domiciled in Germany for purposes of the Estate Tax Treaty at the time the gift was made, or at the time of the decedent’s death, and the shares were not held in connection with a permanent establishment or fixed base in Germany.

The Estate Tax Treaty provides a credit against U.S. federal estate and gift tax liability for the amount of inheritance and gift tax paid in Germany, subject to certain limitations, in a case where shares are subject to German inheritance or gift tax and United States federal estate or gift tax.

Other German Taxes

There are presently no German net wealth, transfer, stamp or other similar taxes that would apply to you as a result of the receipt, purchase, ownership or sale of shares.

United States Information Reporting and Backup Withholding

Dividends and payments of the proceeds on a sale of shares, paid within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless you (1) are a corporation or other exempt recipient or (2) provide a taxpayer identification number and certify (on IRS Form W-9) that no loss of exemption from backup withholding has occurred.

Shareholders that are not U.S. persons generally are not subject to information reporting or backup withholding. However, a non-U.S. person may be required to provide a certification (generally on IRS Form W-8BEN) of its non-U.S. status in connection with payments received in the United States or through a U.S.-related financial intermediary.

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Dividends and Paying Agents

Not required because this document is filed as an annual report.

Statement by Experts

Not required because this document is filed as an annual report.

Documents on Display

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. In accordance with these requirements, we file reports and other information with the Securities and Exchange Commission. You may inspect and copy these materials, including this document and its exhibits, at the Commission’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission’s regional offices at 175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604, and at 233 Broadway, New York, New York, 10279. You may obtain copies of the materials from the Public Reference Room of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 at prescribed rates. You may obtain information on the operation of the Commission’s Public Reference Room by calling the Commission in the United States at 1-800-SEC-0330. Our Securities and Exchange Commission filings made after November 4, 2002 are also available over the Internet at the Securities and Exchange Commission’s website at http://www.sec.gov. In addition, you may visit the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005 to inspect material filed by us.

Our shares are listed on the New York Stock Exchange, which requires us, as a non-U.S. listed company, to publish a description of the significant ways in which our corporate governance practices differ from those followed by U.S. domestic listed companies under its listing standards. Our description of such differences is available on our Internet website at http://www.deutsche-bank.com/corporate-governance.

Subsidiary Information

Not applicable.

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Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk

Risk Management

The wide variety of our businesses requires us to identify, measure, aggregate and manage our risks effectively, and to allocate our capital among our businesses appropriately. We manage risk through a framework of risk principles, organizational structures and risk measurement and monitoring processes that are closely aligned with the activities of our Group Divisions.

Risk Management Principles

The following key principles underpin our approach to risk management:

– Our Board of Managing Directors provides overall risk management supervision for our consolidated Group as a whole. Our Supervisory Board regularly monitors our risk profile.

– We manage credit, market, liquidity, operational and business risks in a coordinated manner at all relevant levels within our organization.

– The structure of our risk management function is closely aligned with the structure of our Group Divisions.

– The risk management function is independent of our Group Divisions.

Risk Management Organization

Our Group Chief Risk Officer, who is a member of our Board of Managing Directors, is responsible for our credit, market, operational and business risk management activities within our consolidated Group. The Group Chief Risk Officer chairs our Group Risk Committee, which is responsible for planning, management and control of the aforementioned risks across our consolidated Group.

The Group Risk Committee has delegated some of its tasks to sub-committees, the most significant being the Group Credit Policy Committee. Among others it reviews credit policies, industry reports and country risk limit applications throughout the Group.

For each of our Group Divisions, risk management units are established with the mandate to:

– Ensure that the business conducted within each division is consistent with the risk appetite the Group Risk Committee has set;

– Formulate and implement risk policies, procedures and methodologies that are appropriate to the businesses within each division;

– Approve credit risk and market risk limits;

– Conduct periodic portfolio reviews to ensure that the portfolio of risks is within acceptable parameters; and

– Develop and implement risk management infrastructures and systems that are appropriate for each division.

Group Treasury is responsible for the management of liquidity risk. Our liquidity risk status as well as policies relating to the identification, measurement and management of liquidity risk are reviewed on a regular basis by our Group Asset and Liability Committee, which is chaired by the Board Member responsible for Treasury.

Our controlling, audit and legal departments support our risk management function. They operate independently both of the Group Divisions and of the risk management function. The role of the controlling department is to quantify the risk we assume and ensure the quality and integrity of our risk-related data. Our audit department reviews the compliance of our internal control procedures with internal and regulatory standards. Our legal department provides legal advice and support on topics including collateral arrangements and netting.

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Categories of Risk

The most important risks we assume are specific banking risks and risks arising from the general business environment.

Specific Banking Risks
Our risk management processes distinguish among four kinds of specific banking risks: credit risk, market risk, liquidity risk and operational risk.

– Credit riskarises from all transactions that give rise to actual, contingent or potential claims against any counterparty, obligor or borrower (which we refer to collectively as “counterparties”). This is the largest single risk we face. We distinguish among three kinds of credit risk:

– Default riskis the risk that counterparties fail to meet contractual payment obligations.

– Country riskis the risk that we may suffer a loss, in any given country, due to any of the following reasons: a possible deterioration of economic conditions, political and social upheaval, nationalization and expropriation of assets, government repudiation of indebtedness, exchange controls and disruptive currency depreciation or devaluation. Country Risk includes transfer risk which arises when debtors are unable to meet their obligations owing to an inability to transfer assets to non-residents due to direct sovereign intervention.

– Settlement riskis the risk that the settlement or clearance of transactions will fail. It arises whenever the exchange of cash, securities and/or other assets is not simultaneous.

– Market riskarises from the uncertainty concerning changes in market prices and rates (including interest rates, equity prices, foreign exchange rates and commodity prices), the correlations among them and their levels of volatility.

– Liquidity riskis the risk arising from our potential inability to meet all payment obligations when they come due.

– Operational riskis the potential for incurring losses in relation to employees, project management, contractual specifications and documentation, technology, infrastructure failure and disasters, external influences and customer relationships. This definition includes legal and regulatory risk, but excludes business risk.

Business Risk
Business risk describes the risk we assume due to potential changes in general business conditions, such as our market environment, client behavior and technological progress. This can affect our earnings if we fail to adjust quickly to these changing conditions.

Insurance Specific Risk
We are not engaged in any activities that result in insurance specific risk material to the Group.

Risk Management Tools
We use a comprehensive range of quantitative tools and metrics for monitoring and managing risks. Some of these tools are common to a number of risk categories, while others are tailored to the particular features of specific risk categories.

As a matter of policy, we continually assess the appropriateness and the reliability of our quantitative tools and metrics in light of our changing risk environment. The following are the most important quantitative tools and metrics we currently use to measure, manage and report our risk:

– Expected Loss.We use expected loss as a measure of the default, transfer, and settlement risk elements of our credit risk. Expected loss is a measurement of the loss we can expect within a one-year period on our credit exposure, based on our historical loss experience. When calculating expected loss, we take into account credit risk ratings, collateral, maturities and statistical averaging procedures to reflect the risk characteristics of our different types of exposures and facilities. All parameter assumptions are based on statistical averages of our internal default and loss history as well as external benchmarks. We use expected loss as a tool of our risk management process and as part of our management reporting systems. We also use the applicable results of the expected loss calculations when establishing the other inherent loss allowance included in our financial

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	statements. Applicable results in this context are those that are used to estimate losses inherent in loans and contingent liabilities that are not already considered in the specific loss component of our allowance or our allowance for smaller-balance standardized homogeneous loans.
–	Economic Capital.Economic capital measures the amount of capital we need to absorb very severe unexpected losses arising from our exposures. “Very severe” in this context means that economic capital is set at a level to cover with a probability of 99.98% the aggregated unexpected losses within one year. We calculate economic capital for the default risk, transfer risk and settlement risk elements of credit risk, for market risk, for operational risk and for general business risk. We use economic capital to show an aggregated view of our risk position from individual business lines up to our consolidated Group level. We also use economic capital (as well as goodwill and other non-amortizing intangibles) in order to allocate our book capital among our businesses. This enables us to assess each business unit’s risk-adjusted profitability, which is a key metric in managing our financial resources in order to optimize the value generated for our shareholders. In addition, we consider economic capital, in particular for credit risk, when we measure the risk-adjusted profitability of our client relationships.
–	Value-at-Risk.We use the value-at-risk approach to derive quantitative measures for our trading book market risks under normal market conditions. Our value-at-risk figures play a role in both internal and external (regulatory) reporting. For a given portfolio, value-at-risk measures the potential future loss (in terms of market value) that, under normal market conditions, will not be exceeded with a defined confidence level in a defined period. The value-at-risk for a total portfolio represents a measure of our diversified market risk (aggregated using pre-determined correlations) in that portfolio.
–	Stress Testing.We supplement our analysis of market risk with stress testing. We perform stress tests because value-at-risk calculations are based on relatively recent historical data and only purport to estimate risk up to a defined confidence level. Therefore, they only reflect possible losses under relatively normal market conditions. Stress tests help us determine the effects of potentially extreme market developments on the value of our market risk sensitive exposures. We use stress testing to determine the amount of economic capital we need to allocate to cover our market risk exposure under extreme market conditions.
–	Regulatory Risk Reporting.German banking regulators assess our capacity to assume risk in several ways, which are described in more detail in “Item 4: Information on the Company – Regulation and Supervision” and Note [22] of the consolidated financial statements.

Credit Risk

Credit risk makes up the largest part of our risk exposures. We measure and manage our credit risk following the below principles:

– In all our Group Divisions consistent standards are applied in the respective credit decision processes.

– The approval of credit limits for counterparties and the management of our individual credit exposures must fit within our portfolio guidelines and our credit strategies, and each decision also involves a risk-versus-return analysis.

– Every extension of credit or material change to a credit facility (such as its tenor, collateral structure or major covenants) to any counterparty requires credit approval at the appropriate authority level.

– We assign credit approval authorities to individuals according to their qualifications, experience and training, and we review these periodically.

– We measure and consolidate all our credit exposures to each obligor on a global consolidated basis that applies across our consolidated Group. We define an “obligor” as a group of individual borrowers that are linked to one another by any of a number of criteria we have established, including capital ownership, voting rights, demonstrable control, other indication of group affiliation; or are jointly and severally liable for all or significant portions of the credit we have extended.

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Credit Risk Ratings
A primary element of the credit approval process is a detailed risk assessment of every credit exposure associated with an obligor. Our risk assessment procedures consider both the creditworthiness of the counterparty and the risks related to the specific type of credit facility or exposure. This risk assessment not only affects the structuring of the transaction and the outcome of the credit decision, but also influences the level of decision-making authority required to extend or materially change the credit and the monitoring procedures we apply to the ongoing exposure.

We have our own in-house assessment methodologies, scorecards and rating scale for evaluating the creditworthiness of our counterparties. Our granular 26-grade rating scale, which is calibrated on a probability of default measure based upon a statistical analysis of historical defaults in our portfolio, enables us to compare our internal ratings with common market practice and ensures comparability between different sub-portfolios of our institution. While we generally rate all our credit exposures individually, at times we rely on rating averages for measuring risk. When we assign our internal risk ratings, we compare them with external risk ratings assigned to our counterparties by the major international rating agencies, where possible.

Credit Limits
Credit limits set forth maximum credit exposures we are willing to assume over specified periods. They relate to products, conditions of the exposure and other factors. Our credit policies also establish special procedures (including lower approval thresholds and more senior approval personnel) for exceptional cases when we may assume exposures beyond established limits. These exceptions provide a degree of flexibility for unusual business opportunities, new market trends and other similar factors.

Monitoring Default Risk
We monitor all of our credit exposures on a continuing basis using the risk management tools described above. We also have procedures in place to identify at an early stage credit exposures for which there may be an increased risk of loss. Counterparties, that, on the basis of the application of our risk management tools, demonstrate the likelihood of problems, are identified well in advance so that we can effectively manage the credit exposure and maximize the recovery. The objective of this early warning system is to address potential problems while adequate alternatives for action are still available. This early risk detection is a tenet of our credit culture and is intended to ensure that greater attention is paid to such exposures. In instances where we have identified customers where problems might arise, the respective exposure is placed on a watchlist.

Loan Exposure Management Group
In 2003, we significantly modified our approach to managing risk in the corporate loan book within the Corporate and Investment Bank Group Division by creating the Loan Exposure Management Group (LEMG). As part of our overall framework of risk management, LEMG has assisted in managing credit risk within the investment-grade loan portfolio for all loans and lending-related commitments with an original maturity greater than 180 days (excluding medium-sized German companies). During 2004, this approach was extended to include loans and lending-related commitments to medium-sized investment- and noninvestment-grade German companies with an original maturity of greater than 360 days but excluding any legacy business.

Acting as a central pricing reference, LEMG provides the respective Corporate and Investment Bank Group Division businesses with an observed or derived capital market rate for loan applications; however, the decision of whether or not the business can enter into the loan remains with Credit Risk Management.

LEMG is concentrating on two primary initiatives within the new credit risk framework to further enhance risk management discipline, improve returns and use capital more efficiently:

– to reduce single-name and industry credit risk concentrations within the loan portfolio, and

– to manage credit exposures actively by utilizing techniques including loan sales, securitization via collateralized loan obligations, and single-name and portfolio credit default swaps.

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LEMG’s risk reduction activities are of increasing significance. As of year-end 2004, LEMG held credit derivatives including those embedded in credit linked notes with an underlying notional of€ 18.5 billion. This position totaled€ 14.0 billion as of December 31, 2003.

The credit derivatives used for our portfolio management activities are accounted for at fair value and do not qualify for hedge accounting under SFAS 133.

LEMG also mitigated the credit risk of€ 7.2 billion of loans and lending commitments as of December 31, 2004 by synthetic collateralized loan obligations for which the first loss piece has been sold. This represents an increase of 125% compared to December 31, 2003, when€ 3.2 billion of loans and lending commitments were included in synthetic collateralized loan obligations. Credit mitigation by way of synthetic collateralized loan obligations supported by financial guarantee contracts is especially important as it not only addresses the credit risk of the underlying positions but also eliminates the accounting asymmetry issue between the lending positions and credit default swaps, and allows us to manage the risk of illiquid positions.

Credit Exposure

We define our credit exposure as all transactions where losses might occur due to the fact that counterparties may not fulfill their contractual payment obligations. We calculate the gross amount of the exposure without taking into account any collateral, other credit enhancement or credit risk mitigating transactions. In the tables below, we show details about our main credit exposures categories, namely loans, contingent liabilities, over-the-counter (“OTC”) derivatives and tradable assets:

– “Loans” are net loans as reported on our balance sheet but before deduction of our allowance for loan losses.

– “Contingent Liabilities” consist of financial and performance guarantees, standby letters of credit and indemnity agreements.

– “OTC Derivatives” are our credit exposures from over-the-counter derivative transactions that we have entered into. On our balance sheet, these are included in trading assets and, for derivatives entered into for nontrading purposes, in other assets.

– “Tradable Assets” include bonds, loans and other fixed-income products that are in our trading assets as well as in securities available for sale.

Although we consider them in monitoring our credit exposures, the following are not included in the tables below: cash and due from banks, interest-earnings deposits with banks, and accrued interest receivables amounting to€ 29.5 billion at December 31, 2004 and€ 29.4 billion at December 31, 2003; forward committed repurchase and reverse repurchase agreements of€ 99.7 billion at December 31, 2004 and€ 62.8 billion at December 31, 2003; and lending-related commitments of€ 105.2 billion at December 31, 2004 and€ 88.9 billion at December 31, 2003. At December 31, 2004, 86% of our lending-related commitments were extended to counterparties rated at the equivalent of investment-grade debt ratings from the major international rating agencies.
The following table breaks down our main credit exposure categories by geographical region. For this table, we have allocated exposures to regions based on the country of domicile of our counterparties, irrespective of any affiliations the counterparties may have with corporate groups domiciled elsewhere.

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Credit risk profile by	Loans				Contingent liabilities				OTC derivatives				Tradable assets				Total
region
	Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,
in€ m.	2004		2003		2004		2003		2004		2003		2004		2003		2004		2003
Eastern Europe		1,568		1,372		418		491		607		588		3,282		2,840		5,875		5,291
Western Europe		112,139		120,136		18,840		16,283		36,486		35,428		88,450		87,969		255,915		259,816
Africa		288		395		168		192		300		224		1,000		1,086		1,756		1,897
Asia-Pacific		8,258		7,176		2,656		2,624		6,892		7,072		57,680		36,019		75,486		52,891
North America		14,911		17,038		7,469		6,752		15,820		15,495		87,749		94,632		125,949		133,917
Central and South America		1,522		2,075		326		195		688		571		4,607		3,850		7,143		6,691
Other1		3		35		18		–		874		1,093		2,258		2,073		3,153		3,201
Total		138,689		148,227		29,895		26,537		61,667		60,471		245,026		228,469		475,277		463,704

¹ Includes supranational organizations and other exposures that we have not allocated to a single region.

The following table breaks down our main credit exposure categories according to the industry sectors of our counterparties.

Credit risk profile by	Loans						Contingent liabilities				OTC derivatives				Tradable assets				Total
industry sector
	Dec 31,			Dec 31,			Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,
in€ m.	2004			2003			2004		2003		2004		2003		2004		2003		2004		2003
Banks and insurance		7,787			10,521			4,921		4,990		44,450		46,597		51,406		62,480		108,564		124,588
Manufacturing		13,270			16,155			8,028		7,834		1,837		1,997		15,919		18,241		39,054		44,227
Households		57,076			54,937			1,372		862		285		357		–		–		58,733		56,156
Public sector		3,278			2,309			1,630		377		5,838		3,984		140,614		104,648		151,360		111,318
Wholesale and retail trade		10,288			11,824			2,274		2,454		684		691		3,062		3,589		16,308		18,558
Commercial real estate activities		14,102			13,606			313		722		763		300		1,755		1,447		16,933		16,075
Other		32,888	1		38,875	1		11,357		9,298		7,810		6,545		32,270		38,064		84,325		92,782
Total		138,689			148,227			29,895		26,537		61,667		60,471		245,026		228,469		475,277		463,704

¹ Includes lease financing.

We also classify our credit exposure under two broad headings: corporate credit exposure and consumer credit exposure.

– Our corporate credit exposure consists of all exposures not defined as consumer credit exposure.

– Our consumer credit exposure consists of our smaller-balance standardized homogeneous loans, primarily in Germany, Italy and Spain, which include personal loans, residential and nonresidential mortgage loans, overdrafts and loans to self-employed and small business customers of our private and retail business.

Corporate Credit Exposure
The following table breaks down our main corporate credit exposure categories according to the creditworthiness categories of our counterparties.

This table illustrates the continued reduction in our corporate loan book, which mainly took place in Germany and, to a lesser extent, in the U.S., as well as a general improvement in the credit quality of our lending-related credit exposures. The change in the creditworthiness of our corporate loan book in 2004 compared to 2003 is primarily a consequence of our enhanced credit discipline and the improved credit environment witnessed throughout the year. This is evidenced by the portion of our corporate loan book carrying an investment-grade rating increasing from 58% at December 31, 2003 to 60% at December 31, 2004 with a corresponding reduction in the portion of our corporate loan book being classified as sub-investment grade.

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Creditworthiness	Loans				Contingent liabilities				OTC derivatives				Tradable assets				Total
category
	Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,
in€ m.	2004		2003		2004		2003		2004		2003		2004		2003		2004		2003
AAA–AA		12,363		12,167		3,209		2,992		27,885		27,014		133,839		126,010		177,296		168,183
A		10,852		13,871		8,045		5,627		18,194		17,195		32,217		33,383		69,308		70,076
BBB		22,794		26,265		10,242		7,886		10,087		11,750		38,264		32,676		81,387		78,577
BB		21,375		25,292		6,058		6,573		4,675		3,784		28,436		23,417		60,544		59,066
B		4,778		5,749		1,707		1,799		649		621		8,830		6,756		15,964		14,925
CCC and below		4,107		6,947		634		1,660		177		107		3,440		6,227		8,358		14,941
Total		76,269		90,291		29,895		26,537		61,667		60,471		245,026		228,469		412,857		405,768

Consumer Credit Exposure
The table below presents our total consumer credit exposure, consumer loan delinquencies in terms of loans that are 90 days or more past due, and net credit costs, which are the net provisions charged during the period, after recoveries. Loans 90 days or more past due and net credit costs are both expressed as a percentage of total exposure.

	Total exposure				90 days or more past due				Net credit costs
	(in€ m.)				as a % of total exposure				as a % of total exposure
	Dec 31, 2004		Dec 31, 2003		Dec 31, 2004		Dec 31, 2003		Dec 31, 2004		Dec 31, 2003
Consumer credit exposure Germany		47,395		45,167		2.20%		2.38%		0.42%		0.53%
Consumer and small business financing		10,060		10,550		2.48%		2.54%		1.36%		1.36%
Mortgage lending		37,335		34,617		2.12%		2.33%		0.17%		0.28%
Consumer credit exposure other Europe		15,025		12,769		1.21%		1.54%		0.47%		0.52%
Total consumer credit exposure		62,420		57,936		1.96%		2.19%		0.43%		0.53%

The volume of our consumer credit exposure rose by€ 4.5 billion, or 7.7%, from 2003 to 2004, driven mainly by the inclusion of DB Bauspar AG in the homogeneous portfolio contributing€ 1.4 billion and the growth of our portfolio in Italy (up by€ 1.4 billion) and Spain (up by€ 0.7 billion). Total net credit costs decreased from 0.53% of our total exposure in 2003 to 0.43% in 2004, driven by better customer performance. In Germany, loans delinquent by 90 days or more decreased from 2.38% to 2.20% reflecting decreased delinquencies in both consumer and small business financing as well as mortgage lending. The lower percentage of delinquent loans in other Europe is mainly a reflection of accelerated charge-offs in Poland and Italy due to refinement of processes and procedures.

Credit Exposure from Derivatives
To reduce our derivatives-related credit risk, we regularly seek the execution of master agreements (such as the International Swap Dealers Association contract for swaps) with our clients. A master agreement allows the offsetting of the obligations arising under all of the derivatives contracts that the agreement covers upon the counterparty’s default, resulting in one single net claim against the counterparty (called “close-out netting”). We also enter into “payment netting” agreements under which we net non-simultaneous settlement of cash flows, reducing our principal risk. We frequently enter into these agreements in our foreign exchange business.

For internal credit exposure measurement purposes, we only apply netting when we believe it is legally enforceable for the relevant jurisdiction and counterparty. Also, we enter into collateral support agreements to reduce our derivatives-related credit risk. These collateral arrangements generally provide risk mitigation through periodic (usually daily) margining of the covered portfolio or transactions and termination of the master agreement if the counterparty fails to honor a collateral call. As with netting, when we believe the collateral agreement is enforceable we reflect this in our exposure measurement.

As the replacement values of our portfolios fluctuate with movements in market rates and with changes in the transactions in the portfolios, we also estimate the potential future replacement costs of

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the portfolios over their lifetimes or, in case of collateralized portfolios, over appropriate unwind periods. We measure our potential future exposure against separate limits, which can be a multiple of the credit limit. We supplement our potential future exposure analysis with stress tests to estimate the immediate impact of extreme market events on our exposures (such as event risk in our Emerging Markets portfolio).

Treatment of Default Situations under Derivatives
Unlike in the case of our standard loan assets, we generally have more options to manage the credit risk in our OTC derivatives when movement in the current replacement costs of the transactions and the behavior of our counterparty indicate that there is the risk that upcoming payment obligations under the transactions might not be honored. In these situations, we are frequently able to obtain additional collateral or terminate the transactions or the related master agreement.

When our decision to terminate transactions or the related master agreement results in a residual net obligation of the counterparty, we restructure the obligation into a nonderivative claim and manage it through our regular workout process. As a consequence, we do not show any nonperforming derivatives.

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The following table shows the notional amounts and gross market values of OTC and exchange-traded derivative contracts we held for trading and nontrading purposes as of December 31, 2004.

Dec. 31, 2004	Notional amount maturity distribution								Positive market value		Negative market value			Net market value
	Within one		> 1 and		After five		Total
in€ m.	year		< 5 years		years
Interest-rate-related transactions:
OTC products:
FRAs		1,142,075		66,308		1,811		1,210,194		565		(884	)		(319	)
Interest rate swaps (single currency)		3,663,495		5,141,770		3,889,726		12,694,991		191,570		(189,289	)		2,281
Purchased interest rate options		469,424		405,518		465,565		1,340,507		25,540		–			25,540
Written interest rate options		362,540		459,100		495,247		1,316,887		–		(27,674	)		(27,674	)
Other interest rate trades		–		–		–		–		–		–			–
Exchange-traded products:
Interest rate futures		461,919		4,090		23		466,032		–		–			–
Purchased interest rate options		56,100		–		–		56,100		61		–			61
Written interest rate options		83,692		–		–		83,692		–		(38	)		(38	)
Sub-total		6,239,245		6,076,786		4,852,372		17,168,403		217,736		(217,885	)		(149	)
Currency-related transactions:
OTC products:
Forward exchange trades		413,924		24,583		2,339		440,846		7,466		(9,370	)		(1,904	)
Cross currency swaps		1,361,758		264,895		151,340		1,777,993		48,510		(44,234	)		4,276
Purchased foreign currency options		355,334		32,650		4,414		392,398		9,098		–			9,098
Written foreign currency options		359,385		38,198		2,588		400,171		–		(9,001	)		(9,001	)
Exchange-traded products:
Foreign currency futures		6,521		5		–		6,526		–		–			–
Purchased foreign currency options		907		–		–		907		20		–			20
Written foreign currency options		994		–		–		994		–		(16	)		(16	)
Sub-total		2,498,823		360,331		160,681		3,019,835		65,094		(62,621	)		2,473
Equity/index-related transactions:
OTC products:
Equity forward		77		13		–		90		–		(20	)		(20	)
Equity/index swaps		50,538		38,652		4,881		94,071		2,812		(3,841	)		(1,029	)
Purchased equity/index options		56,387		81,177		6,998		144,562		13,104		–			13,104
Written equity/index options		58,335		89,942		12,028		160,305		–		(14,850	)		(14,850	)
Exchange-traded products:
Equity/index futures		39,040		–		–		39,040		–		–			–
Equity/index purchased options		51,516		29,310		2,065		82,891		5,358		–			5,358
Equity/index written options		49,203		30,764		4,398		84,365		–		(5,398	)		(5,398	)
Sub-total		305,096		269,858		30,370		605,324		21,274		(24,109	)		(2,835	)
Credit derivatives		35,501		400,964		111,455		547,920		10,036		(15,260	)		(5,224	)
Other transactions:
OTC products:
Precious metal trades		22,499		22,772		4,017		49,288		2,743		(1,613	)		1,130
Other trades		72,627		57,171		1,555		131,353		7,653		(6,794	)		859
Exchange-traded products:
Futures		8,801		112	��	8		8,921		–		–			–
Purchased options		4,830		–		–		4,830		381		–			381
Written options		5,279		–		–		5,279		–		(383	)		(383	)
Sub-total		114,036		80,055		5,580		199,671		10,777		(8,790	)		1,987
Total OTC business		8,423,899		7,123,713		5,153,964		20,701,576		319,097		(322,830	)		(3,733	)
Total exchange-traded business		768,802		64,281		6,494		839,577		5,820		(5,835	)		(15	)
Total		9,192,701		7,187,994		5,160,458		21,541,153		324,917		(328,665	)		(3,748	)
Positive market values after netting agreements										67,486

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Country Risk

We manage country risk through a number of risk measures and limits, the most important being:

– Total Counterparty Exposure.All credit extended and OTC derivatives exposure to counterparties domiciled in a given country that we view as being at risk due to economic or political events (“country risk event”). It includes non-guaranteed subsidiaries of foreign entities and offshore subsidiaries of local clients.

– Transfer Risk Exposure.Credit risk arising where an otherwise solvent and willing debtor is unable to meet its obligations due to the imposition of governmental or regulatory controls restricting its ability either to obtain foreign exchange or to transfer assets to nonresidents (a “transfer risk event”). It includes all of our credit extended and OTC derivatives exposure from one of our offices in one country to a counterparty in a different country.

– Highly-Stressed Event Risk Scenarios.We use stress testing to measure potential market risk on our trading positions and view these as market risks.

Country Risk Ratings
Our country risk ratings represent a key tool in our management of country risk. They are established by an independent country risk research function within our Credit Risk Management function and include:

– Sovereign Rating.An estimate of the probability of the sovereign defaulting on its foreign or local currency obligations, respectively.

– Transfer Risk Rating.An estimate of the probability of a “transfer risk event” (usually as part of a country risk event).

– Event Risk Rating.For further details see “Market Risk” below.

All sovereign and transfer risk ratings are reviewed, at least annually, by the Group Credit Policy Committee. Our country risk research group also reviews, at least quarterly, our ratings for the major Emerging Markets countries. Ratings for countries that we view as particularly volatile, as well as all event risk ratings, are subject to continuous review.

We also regularly compare our internal risk ratings with the ratings of the major international rating agencies.

Country Risk Limits
We manage our exposure to country risk through a framework of limits. The bank specifically limits and monitors its exposure to Emerging Markets. For this purpose, Emerging Markets are defined as including all countries in Latin America (including the Caribbean), Asia (excluding Japan), Eastern Europe, the Middle East and Africa. Limits are reviewed at least annually, in conjunction with the review of country risk ratings. Country limits are set by either our Board of Managing Directors or by our Group Credit Policy Committee, pursuant to delegated authority.

Monitoring Country Risk
We charge our Group Divisions with the responsibility of managing their country risk within the approved limits. The regional units within Credit Risk Management monitor our country risk based on information provided by our controlling function. Our Group Credit Policy Committee also reviews data on transfer risk.

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Country Risk Exposure
The following tables show the development of total Emerging Markets net counterparty exposure (net of collateral), and the utilized Emerging Markets net transfer risk exposure (net of collateral) by region.

Emerging Markets Net Counterparty Exposure
in€ m.	Dec 31, 2004		Dec 31, 2003
Total Net Counterparty Exposure		7,085		7,296
Total Net Counterparty Exposure (excluding OTC Derivatives)		5,089		5,329

Excluding irrevocable commitments and exposures to non-Emerging Markets bank branches.

Emerging Markets Net Transfer Risk Exposure
in€ m.	Dec 31, 2004		Dec 31, 2003
Africa		336		361
Asia (excluding Japan)		998		1,243
Eastern Europe		598		641
Latin America		790		938
Middle East		877		1,070
Total Emerging Markets Net Transfer Risk Exposure		3,599		4,253

Excluding irrevocable commitments and exposures to non-Emerging Markets bank branches.

At December 31, 2004, our net transfer risk exposure to Emerging Markets (excluding irrevocable commitments and exposures to non-Emerging Markets bank branches) amounted to€ 3.6 billion, reduced by 15% or€ 654 million from December 31, 2003.

For a review of our cross border outstandings calculated in accordance with the rules of the Securities and Exchange Commission see “Foreign Outstandings” in our supplemental financial information.

Problem Loans

Our problem loans are comprised of nonaccrual loans, loans 90 days or more past due and still accruing and troubled debt restructurings. All loans where known information about possible credit problems of borrowers causes management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms are included in our problem loans.

Additionally, as of December 31, 2004, the Group had€ 83 million of loans held for sale that were non-performing. These amounts are not included in our total problem loans.

The following table presents the components of our 2004 and 2003 problem loans:

	Dec 31, 2004							Dec 31, 2003
	Impaired			Non-		Total		Impaired			Non-		Total
	loans		1	performing				loans		1	performing
				homogeneous							homogeneous
in€ m.				loans							loans
Nonaccrual loans		3,401			1,098		4,499		4,980			1,062		6,042
Loans 90 days or more past due and still accruing		26			221		247		74			306		380
Troubled debt restructurings		89			–		89		201			–		201
Total problem loans		3,516			1,319		4,835		5,255			1,368		6,623

¹ Loans for which we determine that it is probable that we will be unable to collect all principal and interest due according to the contractual terms of the loan agreements.

The€ 1.8 billion decrease in our total problem loans in 2004 is due to€ 1.4 billion of gross charge-offs, a€ 0.1 billion reduction as a result of exchange rate movements and a€ 0.3 billion net reduction of problem loans. Included in the€ 1.3 billion nonperforming smaller-balance standardized homogeneous loans, as of December 31, 2004, are€ 1.2 billion of loans that are 90 days or more past due as well as

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€ 0.1 billion of loans that are less than 90 days past due but in the judgment of management the accrual of interest should be ceased.

Our commitments to lend additional funds to debtors with problem loans amounted to€ 201 million as of December 31, 2004, of which€ 15 million had been committed to debtors whose loan terms have been modified in a troubled debt restructuring.

The following table illustrates our total problem loans split between German and non-German counterparties based on the country of domicile of our counterparty for the last two years.

in€ m.	Dec 31, 2004		Dec 31,2003
Nonaccrual loans:
German		3,146		3,448
Non-German		1,353		2,594
Total nonaccrual loans		4,499		6,042
Loans 90 days or more past due and still accruing:
German		236		335
Non-German		11		45
Total loans 90 days or more past due and still accruing		247		380
Troubled debt restructurings:
German		71		20
Non-German		18		181
Total troubled debt restructurings		89		201

Nonaccrual Loans
We place a loan on nonaccrual status if:

– the loan has been in default as to payment of principal or interest for 90 days or more and the loan is neither well secured nor in the process of collection, or

– the accrual of interest should be ceased according to management’s judgment as to collectibility of contractual cash flows.

When a loan is placed on nonaccrual status, any accrued but unpaid interest previously recorded is reversed against current period interest revenue. Cash receipts of interest on nonaccrual loans are recorded as either interest revenue or a reduction of principal according to management’s judgment as to collectibility of principal.

As of December 31, 2004, our nonaccrual loans totaled€ 4.5 billion, a net decrease of€ 1.5 billion, or 26%, from 2003. The net decrease in nonaccrual loans was mainly driven by charge-offs and net exposure reductions.

As of December 31, 2003, our nonaccrual loans totaled€ 6.0 billion, a net decrease of€ 4.1 billion, or 40%, from 2002. The net decrease in nonaccrual loans was due to charge-offs, deconsolidations, exchange rate movements, refinements in processes and procedures, net exposure reductions and improved credit quality.

Loans Ninety Days or More Past Due and Still Accruing
These are loans in which contractual interest or principal payments are 90 days or more past due but on which we continue to accrue interest. These loans are well secured and in the process of collection.

In 2004, our 90 days or more past due and still accruing interest loans decreased by€ 133 million, or 35% to€ 247 million. This decrease was mainly due to the placing of loans on nonaccrual status and charge-offs.

In 2003, our 90 days or more past due and still accruing interest loans totaled€ 380 million, a net decrease of€ 129 million, or 25% to 2002. This decrease was mainly due to the placing of loans on nonaccrual status.

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Troubled Debt Restructurings
Troubled debt restructurings are loans that we have restructured due to a deterioration in the borrower’s financial position comprising concessions that we would not otherwise consider.

If a borrower performs satisfactorily for one year under a restructured loan, we no longer consider that borrower’s loan to be a troubled debt restructuring, unless at the time of restructuring the new interest rate was lower than the market rate for similar credit risks.

In 2004, the volume of troubled debt restructurings decreased by€ 112 million or 56% to€ 89 million as of December 31, 2004. This decrease is mainly due to the placing of loans on nonaccrual status and a debt for securities swap.

In 2003, our troubled debt restructurings remained materially unchanged compared with December 31, 2002.

Credit Loss Experience and Allowance for Loan Losses
We establish an allowance for loan losses that represents our estimate of probable losses in our loan portfolio. The responsibility for determining our allowance for loan losses rests with Credit Risk Management. The components of this allowance are:

Specific Loss Component
The specific loss component relates to all loans deemed to be impaired, following an assessment of the counterparty’s ability to repay. A loan is considered to be impaired when we determine that it is probable that we will be unable to collect all interest and principal due in accordance with the terms of the loan agreement. We determine the amount, if any, of the specific provision we should make, taking into account the present value of expected future cash flows, the fair value of the underlying collateral or the market price of the loan.

We regularly re-evaluate all credit exposures that have already been specifically provided for, as well as all credit exposures that appear on our watchlists.

Inherent Loss Component
The inherent loss component relates principally to all other loans we do not consider impaired but which we believe to have incurred some inherent loss on a portfolio basis and is comprised of:

–	Country Risk Allowance
	We establish a country risk allowance for loan exposures in countries where according to management’s judgment a “transfer risk event” is probable. We determine the percentage rates for our country risk allowance on the basis of historical loss experience and current market data, such as economic, political and other relevant factors affecting a country’s financial condition. In making our decision we focus primarily on the transfer risk ratings that we assign to a country and the amount and type of collateral.
–	Smaller-Balance Standardized Homogeneous Loan Loss Allowance
	Our smaller-balance standardized homogeneous portfolio includes smaller-balance personal loans, residential and nonresidential mortgage loans, overdrafts, loans to self-employed and small business customers of our private and retail business. These loans are evaluated for inherent loss on a collective basis, based on analyses of historical loss experience from each product type according to criteria such as past due status and collateral recovery values. The resulting allowance encompasses the loss inherent both in performing loans, as well as in nonperforming loans within the smaller-balance standardized homogeneous loan portfolio.
–	Other Inherent Loss Allowance
	The other inherent loss allowance represents our estimate of losses inherent in our loan book that have not yet been individually identified, and reflects the imprecisions and uncertainties in estimating our loan loss allowances. This estimate of inherent losses excludes those exposures we have already considered when establishing our allowance for smaller-balance standardized homogeneous loans. It incorporates the expected loss results, which we generate as part of our economic capital calculations, outlined above.

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Charge-off Policy
We take charge-offs based on Credit Risk Management’s assessment when we determine that the loans are uncollectible. We generally charge off a loan when all economically sensible means of recovery have been exhausted. Our determination considers information such as the occurrence of significant changes in the borrower’s financial position such that the borrower can no longer pay the obligation, or that the proceeds from collateral will not be sufficient to pay the loan. For our smaller-balance standardized homogeneous loans we generally take charge-offs when a product specific past due status has been reached.

Allowance for Loan Losses
The following table illustrates the components of our allowance for loan losses by industry of the borrower, and the percentage of our total loan portfolio accounted for by those industry classifications, on the dates specified. The breakdown between German and non-German borrowers is based on the country of domicile of our borrowers.

in€ m. (except percentages)	Dec 31, 2004			Dec 31, 2003
German:
Specific loan loss allowance:
Banks and insurance		–	1%		38	3%
Manufacturing		271	5%		338	6%
Households (excluding mortgages)		55	11%		68	10%
Households – mortgages		17	19%		17	17%
Public sector		–	1%		–	1%
Wholesale and retail trade		161	3%		154	3%
Commercial real estate activities		345	8%		350	8%
Other		278	9%		378	9%
Specific German total		1,127			1,343
Inherent loss allowance		417			472
German total		1,544	57%		1,815	57%
Non-German:
Specific loan loss allowance		527			1,128
Inherent loss allowance		273			338
Non-German total		800	43%		1,466	43%
Total allowance for loan losses		2,345	100%		3,281	100%
Total specific allowance		1,654			2,471
Total inherent loss allowance		691			810
Total allowance for loan losses		2,345			3,281

Movements in the Allowance for Loan Losses
We record increases to our allowance for loan losses as an expense on our Consolidated Statement of Income. If we determine that we no longer require allowances we have previously established, we decrease our allowance and record the amount as a reduction of the provision on our Consolidated Statement of Income. Charge-offs reduce our allowance while recoveries increase the allowance without affecting the Consolidated Statement of Income.

The following table sets forth a breakdown of the movements in our allowance for loan losses for the periods specified.

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in€ m. (except percentages)	2004			2003
Allowance at beginning of year		3,281			4,317
Charge-offs
German:
Banks and insurance		3			3
Manufacturing		80			57
Households (excluding mortgages)		185			169
Households – mortgages		39			30
Public sector		–			–
Wholesale and retail trade		78			41
Commercial real estate activities		106			59
Lease financing		–			–
Other		231			217
German total		722			576
Non-German:
Excluding lease financing		672			1,318
Lease financing only		–			–
Non-German total		672			1,318
Total charge-offs		1,394			1,894
Recoveries
German:
Banks and insurance		1			–
Manufacturing		12			7
Households (excluding mortgages)		37			48
Households – mortgages		–			–
Public sector		–			–
Wholesale and retail trade		12			6
Commercial real estate activities		3			2
Lease financing		–			–
Other		37			36
German total		102			99
Non-German:
Excluding lease financing		50			67
Lease financing only		–			1
Non-German total		50			68
Total recoveries		152			167
Net charge-offs		1,242			1,727
Provision for loan losses		372			1,113
Other changes (currency translation and allowance related to acquisitions/divestitures)		(66	)		(422	)
Allowance at end of year		2,345			3,281
Percentage of total net charge-offs to average loans for the year		0.86%			1.04%

Our allowance for loan losses as of December 31, 2004 was€ 2.3 billion, 29% lower than the€ 3.3 billion at the end of 2003. The decrease in our allowance balance was principally due to charge-offs exceeding our net provisions.

Our gross charge-offs amounted to€ 1.4 billion in 2004, a decrease of€ 500 million, or 26%, from 2003 charge-offs. Of the charge-offs for 2004,€ 945 million were related to our corporate credit exposure, mainly driven by our American and German portfolios, and€ 449 million were related to our consumer credit exposure.

Our provision for loan losses in 2004 was€ 372 million, a decrease of€ 741 million or 67% from the prior year, reflecting the improved credit environment witnessed throughout the year, supported by some significant releases, and a continuation of our strict credit discipline. This amount was composed

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of both net specific and inherent loan loss provisions. In 2004, 73% of our provision related to our smaller-balance standardized homogeneous loan portfolio.

Our specific loan loss allowance was€ 1.7 billion as of December 31, 2004, a decrease of€ 817 million, or a 33% reduction from 2003. The change in our allowance includes a net specific loan loss provision of€ 134 million, which includes a€ 18 million net release for non-German clients. The provision was 85% lower than the previous year and was more than offset by net charge-offs of€ 889 million. Notably, the specific loan loss allowance is the largest component of our total allowance for loan losses.

Our inherent loan loss allowance totaled€ 691 million as of December 31, 2004, a decrease of€ 119 million, or 15%, from the level at the end of 2003. A major driver of the net reduction was€ 353 million net charge-offs in our smaller-balance standardized homogeneous loan portfolio, offset by€ 270 million net provision. Furthermore, in 2004 we recorded a net reduction of€ 35 million in our other inherent loss allowance.

Our allowance for loan losses as of December 31, 2003 was€ 3.3 billion, 24% lower than the€ 4.3 billion at the end of 2002. The decrease in our allowance balance was principally due to charge-offs exceeding our net provisions. This is as a result of exposures being provided largely in 2002 and subsequently written-off in 2003, predominantly in the telecommunications industry. Also,€ 422 million of the overall reduction in our allowance for loan losses can be attributed both to exchange rate movements and to deconsolidations.

Our gross charge-offs amounted to€ 1.9 billion in 2003, a decrease of€ 834 million, or 31%, from 2002 charge-offs. Of the charge-offs for 2003,€ 1.3 billion were related to our corporate credit exposure, mainly driven by our American and German portfolios, and€ 579 million were related to our consumer credit exposure.

Our provision for loan losses in 2003 was€ 1.1 billion, a decrease of 47% from the prior year, reflecting the overall improved credit quality of our corporate loan book as evidenced by the increase in the portion of our loans carrying an investment-grade rating. This amount was composed of both net specific and inherent loan loss provisions. The provision for the year was primarily due to specific loan loss provisions required against a wide range of industry sectors, the two largest being Utilities and Manufacturing and Engineering.

Our specific loan loss allowance was€ 2.5 billion as of December 31, 2003, a decrease of€ 673 million, or a 21% reduction from 2002. The change in our allowance includes a net specific loan loss provision of€ 918 million, 70% of which related to non-German clients. The provision was 53% lower than the previous year and was more than offset by net charge-offs of€ 1.2 billion. Notably, the specific loan loss allowance is the largest component of our total allowance for loan losses. Consequently, the net reduction in our specific loan loss allowance for 2003 is also driven by charge-offs exceeding our net provisions. This is a result of exposures being provided largely in 2002 and subsequently written-off in 2003, predominantly in the telecommunications industry. The overall reduction in our specific loan loss allowance can also be attributed to exchange rate movements and to deconsolidations.

Our inherent loan loss allowance totaled€ 810 million as of December 31, 2003, a decrease of€ 363 million, or 31%, from the level at the end of 2002. A major driver of the net reduction was€ 506 million net charge-offs in our smaller-balance standardized homogeneous loan portfolio, which included€ 240 million due to refinements of processes and procedures. The change also reflected a net provision for smaller-balance standardized homogeneous loans of€ 308 million. Furthermore, in 2003 we recorded a net reduction of€ 158 million in our other inherent loss allowance due to the ongoing reduction of our corporate loan exposure, including loan sales and deconsolidations, as well as the overall improved credit quality of our corporate loan book and effects from currency translations.

For a description of the factors which influenced additions to the allowance in earlier years, see page S-8 of the supplemental financial information, which is incorporated by reference herein.

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Non-German Component of the Allowance for Loan Losses

The following table presents an analysis of the changes in the non-German component of the allowance for loan losses. As of December 31, 2004, 34% of our total allowance was attributable to international clients.

in€ m.	2004			2003
Allowance at beginning of year		1,466			2,446
Charge-offs		672			1,318
Recoveries		50			68
Net charge-offs		622			1,250
Provision for loan losses		25			590
Other changes (currency translation and allowance related to acquisitions/divestitures)		(69	)		(320	)
Allowance at end of year		800			1,466

Allowance for off-balance sheet positions
The following table presents an analysis of the changes in our allowance for off-balance sheet positions.

in€ m.	2004			2003
Allowance at beginning of year		416			485
Provision for credit losses		(65	)		(50	)
Other changes (currency translation and allowance related to acquisitions/divestitures)		(6	)		(19	)
Allowance at end of year		345			416

Settlement Risk

Our trading activities may give rise to risk at the time of settlement of those trades. Settlement risk is the risk of loss due to the failure of a counterparty to honor its obligations to deliver cash, securities or other assets as contractually agreed.

For many types of transactions, we mitigate settlement risk by closing the transaction through a clearing agent, which effectively acts as a stakeholder for both parties, only settling the trade once both parties have fulfilled their sides of the bargain.

Where no such settlement system exists, as is commonly the case with foreign exchange trades, the simultaneous commencement of the payment and the delivery parts of the transaction is common practice between trading partners (free settlement). In these cases, we may seek to mitigate our settlement risk through the execution of bilateral payment netting agreements. We are also an active participant in industry initiatives to reduce settlement risks. Acceptance of settlement risk on free settlement trades requires approval from our credit risk personnel, either in the form of pre-approved settlement risk limits, or through transaction-specific approvals. We do not aggregate settlement risk limits with other credit exposures for credit approval purposes, but we take the aggregate exposure into account when we consider whether a given settlement risk would be acceptable.

Market Risk

Substantially all of our businesses are subject to the risk that market prices and rates will move and result in profits or losses for us. We distinguish among four types of market risk:

– Interest rate risk;

– Equity price risk;

– Foreign exchange risk; and

– Commodity price risk.

The interest rate and equity price risks consist of two components each. The general risk describes value changes due to general market movements, while the specific risk has issuer-related causes.

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Market Risk Management Framework
We assume market risk in both our trading and our nontrading activities. We assume risk by making markets and taking positions in debt, equity, foreign exchange, other securities and commodities as well as in equivalent derivatives.

We use a combination of risk sensitivities, value-at-risk, stress testing and economic capital metrics to manage market risks and establish limits. Economic capital is the metric we use to describe and aggregate all our market risks, both in trading and nontrading portfolios. Value-at-risk is a common metric we use in the management of our trading market risks.

Our Board of Managing Directors and Group Risk Committee, supported by Group Market Risk Management, which is part of our independent risk management function, set a Group-wide value-at-risk limit for the market risks in the trading book. Group Market Risk Management sub-allocates this overall limit to our Group Divisions. Below that, limits are allocated to specific business lines and trading portfolio groups and geographical regions.

Our value-at-risk disclosure for the trading businesses is based on our own internal value-at-risk model. In October 1998, the German Banking Supervisory Authority (now the BaFin) approved our internal value-at-risk model for calculating market risk capital for our general and specific market risk. It confirmed its approval in 2000 and the approval was renewed in 2002.

Our value-at-risk disclosure is intended to ensure consistency of market risk reporting for internal risk management, for external disclosure and for regulatory purposes. The overall value-at-risk limit for our Corporate and Investment Bank Group Division was€ 80 million in the time period from January 1 to March 9, 2004 and€ 90 million from March 10 to December 31, 2004 (with a 99% confidence level, as we describe below, and a one-day holding period). For the respective periods the value-at-risk limit for our consolidated Group trading positions was€ 82 million and€ 92 million. Four temporary excesses to the Group limit were approved by our Board of Managing Directors in 2004.

Specifics of Market Risk Reporting under German Banking Regulations
German banking regulations stipulate specific rules for market risk reporting, which concern in particular the consolidation of entities, the calculation of the overall market risk position, as well as the determination of which assets are trading assets and which are nontrading assets:

– Consolidation.For German regulatory purposes we do not consolidate entities other than credit institutions, financial services institutions, financial enterprises or bank service enterprises. However, we do consolidate a number of these companies under U.S. GAAP. These companies include our insurance companies and certain investment companies, which manage their market risks independently pursuant to their respective regulations. At year-end 2004, these companies held€ 10.0 billion of nontrading assets, whilst the amount of trading assets held was not material.

– Overall Market Risk Position.We do not include in our market risk disclosure the foreign exchange risk arising from currency positions that German banking regulations permit us to exclude from market risk reporting. These are currency positions which are fully deducted from, or covered by, equity capital recognized for regulatory reporting as well as shares in affiliated companies that we record in foreign currency and value at historical cost (structural currency positions). At year-end 2004, these positions had a total book value of€ 12.3 billion and were denominated mainly in U.S. dollars (64%), pounds sterling (17%) and Japanese yen (8%).

– Definition of Trading Assets and Nontrading Assets.We hold assets that are included in the value-at-risk of the trading units even though they are not trading assets under U.S. GAAP. These assets typically consist of tradable loans and money market loans and are assigned primarily to our Global Corporate Finance and Global Markets business divisions. At year-end 2004,€ 2.1 billion of loans were classified as trading assets for regulatory reporting. Conversely, we also have positions that are classified as nontrading assets for regulatory reporting even though they are trading assets under U.S. GAAP. At year-end 2004, these positions included derivatives classified as non-qualifying hedges under U.S. GAAP with a total positive and negative market value of€ 1.1 billion and€ 1.5 billion, respectively.

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Value-at-Risk Analysis
The value-at-risk approach derives a quantitative measure for our trading book market risks under normal market conditions, estimating the potential future loss (in terms of market value) that will not be exceeded in a defined period of time and with a defined confidence level. The value-at-risk measure enables us to apply a constant and uniform measure across all of our trading businesses and products. It also facilitates comparisons of our market risk estimates both over time and against our daily trading results.

We calculate value-at-risk for both internal and regulatory reporting using a 99% confidence level, in accordance with BIS rules. For internal reporting, we use a holding period of one day. For regulatory reporting, the holding period is ten days.

We believe that our value-at-risk model takes into account all material risk factors assuming normal market conditions. Examples of these factors are interest rates, equity prices, foreign exchange rates and commodity prices, as well as their implied volatilities. The model incorporates both linear and, especially for derivatives, nonlinear effects of the risk factors on the portfolio value. The statistical parameters required for the value-at-risk calculation are based on a 261 trading day history (corresponding to at least one calendar year of trading days) with equal weighting being given to each observation. We generally calculate value-at-risk using the Monte Carlo simulation technique and assuming that changes in risk factors follow a normal or logarithmic normal distribution. However, we still utilize a variance-covariance approach to calculate specific interest rate risk for some portfolios, such as in our integrated credit trading and securitization businesses.

To determine our aggregated value-at-risk, we use historically observed correlations between the different general market risk classes. However, when aggregating general and specific market risks, we assume that there is zero correlation between them.

Back-Testing
We use back-testing in our trading units to verify the predictive power of the value-at-risk calculations. In back-testing, we compare actual income as well as hypothetical daily profits and losses under the buy-and-hold assumption (in accordance with German regulatory requirements) with the estimates from our value-at-risk model.

A back-testing committee meets on a quarterly basis to discuss back-testing results of the Group as a whole and of individual businesses. The committee consists of risk managers, risk controllers and business area controllers. They analyze performance fluctuations and assess the predictive power of our value-at-risk model, which in turn allows us to improve the risk estimation process.

Stress Testing and Economic Capital
While value-at-risk, calculated on a daily basis, supplies forecasts for potential large losses under normal market conditions, we also perform stress tests in which we value our trading portfolios under extreme market scenarios not covered by the confidence interval of our value-at-risk model.

The quantification of market risk under extreme stress scenarios forms the basis of our assessment of the economic capital that we estimate is needed to cover the market risk in all of our positions. Underlying risk factors (market parameters) applicable to the different products are stressed, meaning that we assume a sudden change, according to pre-defined scenarios. We derive the stress scenarios from historic worst case scenarios adjusted for structural changes in current markets.

For example, we calculate country-specific event risk scenarios for all Emerging Markets and assess these event risk results daily. A committee reviews the country risk ratings and scenario loss limits bi-weekly.

In addition to the country-specific event risk scenarios for Emerging Markets, we also run regular market stress scenarios on the positions of every major portfolio. This is done weekly for the trading portfolios and monthly for the nontrading portfolios.

Our stress test scenarios include:

– Price and volatility risks for interest rates, equity prices, foreign exchange and commodity prices for industrialized countries. This covers both trading and nontrading securities and investments, as well as trading book derivatives portfolios and includes many basis risks.

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– Emerging Markets’ risks, including equity price declines, strong interest rate movements and currency devaluations.

– Credit spread risks for bonds, credit derivatives and traded loans of both industrialized and Emerging Markets countries.

– Underwriting risks in debt and equity capital markets.

We calculate economic capital by aggregating losses from those stress scenarios using correlations that reflect stressed market conditions (rather than the normal market correlations used in the value-at-risk model).

In 2004, we continued to refine and improve our stress testing processes and their parameterization. Our economic capital usage for market risk arising from the trading units totaled€ 1.6 billion at year-end 2004 (and on average€ 1.5 billion for all of December 2004), compared with€ 1.0 billion at year-end 2003. However, a substantial part of the increase in trading market risk economic capital is related to our refined stress testing parameterization introduced in 2004. Applying the previously implemented parameters to year-end 2004 data on a pro forma basis leads to a year-on-year increase in trading market risk economic capital of€ 0.2 billion instead of€ 0.6 billion.

Limitations of Our Proprietary Risk Models
Although we believe that our proprietary market risk models are of a high standard, we are committed to their ongoing development and allocate substantial resources to reviewing and improving them.

Our stress testing results and economic capital estimations are necessarily limited by the number of stress tests executed and that not all downside scenarios can be predicted and simulated. While the risk managers have used their best judgment to define worst case scenarios based upon the knowledge of past extreme market moves, it is possible for our market risk positions to lose more value than even our economic capital estimates.

Our value-at-risk analyses should also be viewed in the context of the limitations of the methodology we use and are therefore not maximum amounts that we can lose on our market risk positions. The limitations of the value-at-risk methodology include the following:

– The use of historical data as a proxy for estimating future events may not capture all potential events, particularly those that are extreme in nature.

– The assumption that changes in risk factors follow a normal or logarithmic normal distribution. This may not be the case in reality and may lead to an underestimation of the probability of extreme market movements.

– The use of a holding period of one day (or ten days for regulatory value-at-risk calculations) assumes that all positions can be liquidated or hedged in that period of time. This assumption does not fully capture the market risk arising during periods of illiquidity, when liquidation or hedging in that period of time may not be possible. This is particularly the case for the use of a one-day holding period.

– The use of a 99% confidence level does not take account of, nor makes any statement about, any losses that might occur beyond this level of confidence.

– We calculate value-at-risk at the close of business on each trading day. We do not subject intra-day exposures to intra-day value-at-risk calculations.

– Value-at-risk does not capture all of the complex effects of the risk factors on the value of positions and portfolios and could, therefore, underestimate potential losses. For example, the way sensitivities are represented in our value-at-risk model may only be exact for small changes in market parameters.

The aggregate value-at-risk estimates for our trading market risk are conservative risk estimates when measured against our back-testing procedures (as shown by the number of hypothetical buy-and-hold portfolio losses against the predicted value-at-risk). However, we acknowledge the limitations in the value-at-risk methodology by supplementing the value-at-risk limits with other position and sensitivity limit structures, as well as with stress testing, both on individual portfolios and on a consolidated basis.

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Value-at-Risk of the Trading Units of Our Corporate and Investment Bank Group Division
The following table shows the value-at-risk (with a 99% confidence level and a one-day holding period) of the trading units of our Corporate and Investment Bank Group Division. Our trading market risk outside of these units is immaterial. “Diversification effect” reflects the fact that the total value-at-risk on a given day will be lower than the sum of the values-at-risk relating to the individual risk classes. Simply adding the value-at-risk figures of the individual risk classes to arrive at an aggregate value-at-risk would imply the assumption that the losses in all risk categories occur simultaneously.

Value-at-risk of	Total				Diversification						Interest rate				Equity price				Foreign				Commodity
Trading Units					effect						risk				risk				exchange risk				price risk
in€ m.	2004		2003		2004			2003			2004		2003		2004		2003		2004		2003		2004		2003
Average		71.6		48.4		(38.4	)		(33.5	)		61.7		45.9		30.8		21.9		10.6		7.7		7.0		6.4
Maximum		97.9		72.1		(61.5	)		(57.3	)		91.1		64.1		45.1		37.0		25.9		17.5		10.8		16.7
Minimum		54.5		32.3		(28.1	)		(21.9	)		39.7		27.6		19.9		13.0		2.9		3.2		3.8		3.3
Year-end		66.3		60.0		(39.8	)		(33.8	)		41.1		52.6		42.6		27.3		17.2		6.8		5.1		7.1

The following graph shows the daily aggregate value-at-risk of our trading units in 2004, including diversification effects, and actual incomes of the trading units throughout the year.

The higher value-at-risk levels in the middle of the year were mainly the result of increased position taking and smaller diversification benefits. Our value-at-risk levels at the beginning and at the end of 2004 were similar to the level at year-end 2003. In 2003 our value-at-risk increased over the year from an average of€ 37.3 million in the first quarter to an average of€ 62.6 million in the fourth quarter, which is higher than the average for the full year 2003.

Our trading units achieved a positive income for over 93% of the trading days in 2004 (over 96% in 2003). On no trading day in either year did they incur an actual loss that exceeded the value-at-risk estimate for that day.

Also, there was no hypothetical buy-and-hold loss that exceeded our value-at-risk estimate for the trading units as a whole in 2004 and 2003. This is below the expected two to three outliers a year that a 99% confidence level value-at-risk model ought to predict, showing that our risk estimates are conservative.

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The following histogram shows the distribution of actual daily income of our trading units in 2004. The histogram indicates the number of trading days on which we reached each level of trading income shown on the horizontal axis in millions of euro.

In addition to our back-testing, the comparison of the distribution of actual daily income with the average value-at-risk also enables us to ascertain the reasonableness of our value-at-risk estimate. The histogram shows that the distribution of our trading units’ actual daily income produces a 99th percentile of only€ 60.8 million below the average daily income level of€ 35.5 million, which is less than the average value-at-risk estimate of€ 71.6 million.

Market Risk in Our Nontrading Portfolios
The market risk in our nontrading portfolios constitutes the largest portion of the market risk of our consolidated Group.

Assessment of Market Risk in Our Nontrading Portfolios
We assess the market risk in our nontrading portfolios through the use of stress testing procedures that are particular to each risk class and which consider, among other factors, large historically observed market moves as well as the liquidity of each asset class. This assessment forms the basis of our economic capital estimates which enable us to actively monitor and manage the nontrading market risk positions using a methodology which is consistent with that used for the trading market risk positions. As an example, for our industrial holdings we apply individual price shocks between 24% and 37%, which are based on historically observed market moves. In addition, we consider value reductions between 10% and 15% to reflect liquidity constraints. For private equity exposures, all our positions are stressed using our standard credit risk economic capital model as well as market price shocks up to 100%, depending on the individual asset. See also section “Risk Management Tools – Economic Capital” and “Market Risk – Stress Testing and Economic Capital.”

We do not use value-at-risk as the primary metric to assess the market risk in our nontrading portfolios because of the nature of these positions as well as the lack of transparency of some of the pricing.

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Nontrading Market Risk by Risk Class
The biggest market risk in our nontrading portfolios is equity price risk which is further discussed below. The vast majority of the interest rate and foreign exchange risks arising from our nontrading asset and liability positions has been transferred through internal hedges to our Global Finance business line within our Corporate and Investment Bank Group Division and is thus managed on the basis of value-at-risk as reflected in our trading value-at-risk numbers.

Nontrading Market Risk by Group Division
There is nontrading market risk held and managed in each of our Group Divisions. The nontrading market risk in our Corporate Investments Group Division remains by far the biggest in the Group and is mainly incurred through industrial holdings, other corporate investments and private equity investments. Our Private Clients and Asset Management Group Division primarily assumes nontrading market risk through its proprietary investments in real estate, mutual funds and hedge funds, which support the client asset management businesses. In our Corporate and Investment Bank Group Division, which has the smallest amount of nontrading market risk, the most significant part arises from a few strategic investments.

Carrying Value and Economic Capital Usage for Our Nontrading Portfolios
The below table shows the carrying values and economic capital usages separately for our major industrial holdings, other corporate investments (which include EUROHYPO AG and Atradius N.V.) and alternative assets. Our economic capital usage for these nontrading asset portfolios totaled€ 3.9 billion at year-end 2004, which is€ 1.0 billion or 21% below our economic capital usage at year-end 2003. This decrease reflects the continued reduction of our alternative assets portfolios and our industrial holdings, mainly driven by sales of private equity primary funds, venture portfolio assets and real estate investments as well as by the reduction of our capital share in DaimlerChrysler AG. In our total economic capital figures no diversification benefits between the different asset categories (e.g., between industrial holdings, private equity, real estate, etc.) are taken into account.

Nontrading Portfolios	Carrying Value				Economic Capital Usage
in€ bn.	Dec 31, 2004		Dec 31, 2003		Dec 31, 2004		Dec 31, 2003		1
Major Industrial Holdings		5.5		6.4		1.2		1.3
Other Corporate Investments		5.2		5.4		1.8		1.8
Alternative Assets		2.6		4.3		0.9		1.8
Private Equity		1.1		2.0		0.6		1.3
Real Estate		1.3		2.0		0.2		0.4
Hedge Funds		0.2		0.3		0.1		0.1
Total		13.3		16.1		3.9		4.9

¹ To ensure consistency with the 2004 asset categorization,€ 0.2 billion economic capital for certain alternative assets has been reassigned to other corporate investments.

We define alternative assets as direct investments in private equity (including venture capital, mezzanine debt and leveraged buy-out funds), real estate principal investments (including mezzanine debt), and hedge funds. Our alternative assets portfolio continues to be dominated by real estate and private equity investments and is well diversified. Approximately half of our private equity investments were held in funds managed by external managers.

We carry private equity, venture capital and real estate investments on our balance sheet at their costs of acquisition (less write-downs, if applicable) or fair value. In certain circumstances, depending on our ownership percentage or management rights, we apply the equity method of accounting to our investments. In some situations, we consolidate investments made by the private equity business. We account for our investments in leveraged buy-out funds using the equity method and carry hedge fund investments at current market value.

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Management of Our Nontrading Portfolios
To ensure a coordinated investment strategy, a consistent risk management process and appropriate portfolio diversification, our Group Corporate Investments/Alternative Assets Governance Committee supervises all of our nontrading asset portfolios. Our Global Head of Group Market Risk Management is also the Chief Risk Officer for Corporate Investments and alternative assets and is a member of the committee. The committee defines investment strategies, determines risk-adjusted return requirements, sets limits and allocates economic capital among the alternative assets classes. It approves policies, procedures and methodologies for managing alternative assets risk and receives monthly portfolio reports showing performance, estimated market values, economic capital estimates and risk profiles of the portfolios. The committee also oversees the portfolio of industrial holdings and other corporate investments held in our Corporate Investments Group Division.

The following table shows the total shares of capital and market values of our major industrial holdings which were directly and/or indirectly attributable to us at year-end 2004 and 2003. Our Corporate Investments Group Division, which is responsible for administering and restructuring our industrial holdings portfolio, currently plans to continue selling most of its publicly listed holdings over the next few years, subject to the legal environment and market conditions.

Major industrial holdings		Share of capital (in %)				Market value (in€ m.)
Name	Country of domicile	Dec 31, 2004		Dec 31, 2003		Dec 31, 2004		Dec 31,2003
DaimlerChrysler AG	Germany		10.4		11.8		3,706		4,445
Allianz AG	Germany		2.5		2.5		935		965
Linde AG	Germany		10.0		10.0		544		509
Südzucker AG	Germany		4.8		4.8		128		126
Fiat S.p.A.	Italy		1.0		1.0		59		61
DEUTZ AG	Germany		4.5		10.5		12		31
Other	N/M		N/M		N/M		106		242
Total							5,490		6,379

N/M – Not meaningful

Liquidity Risk

Liquidity Risk Management safeguards the ability of the bank to meet all payment obligations when they come due. Our liquidity risk management framework has been instrumental in maintaining adequate liquidity and a healthy funding profile during the year 2004.

Liquidity Risk Management Framework
Group Treasury is responsible for the management of liquidity risk. Our liquidity risk management framework is designed to identify, measure and manage the liquidity risk position. The underlying policies are reviewed on a regular basis by the Group Asset and Liability Committee and finally approved by the Board Member responsible for Group Treasury. The policies define the methodology which is applied to the Group, its branches and its subsidiaries.

Our liquidity risk management approach starts at the intraday level (operational liquidity) managing the daily payment queue, forecasting cash flows and our access to Central Banks. It then covers tactical liquidity risk management dealing with the access to unsecured funding sources and the liquidity characteristics of our asset inventory (Asset Liquidity). Finally, the strategic perspective comprises the maturity profile of all assets and liabilities (Funding Matrix) on our balance sheet and our Issuance Strategy.

We have developed a cash flow based reporting tool (Lima System) which provides daily liquidity risk information to global and regional management.

Our liquidity position is subject to stress testing and scenario analysis to evaluate the impact of sudden stress events. The scenarios are either based on historic events, case studies of liquidity crises or models using hypothetical events.

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Short-term Liquidity
Our reporting tool tracks cash flows on a daily basis over an eighteen months horizon. This scheme allows management to assess our short-term liquidity position in any location, region and globally on a by-currency, by-product, and by-division basis. The system captures all of our cash flows from transactions on our balance sheet, as well as liquidity risks resulting from off-balance sheet transactions. We model products that have no specific contractual maturities using statistical methods to capture the actual behavior of their cash flows. Liquidity outflow limits (MCO Limits), which have been set to limit cumulative global and regional net cash outflows, are monitored on a daily basis and ensure our access to liquidity.

Unsecured Funding
Unsecured funding is a finite resource. Total unsecured funding represents the amount of external liabilities, which we take from the market irrespective of instrument, currency or tenor. Unsecured funding is measured on a regional basis by currency and aggregated to a global utilization report. The Group Asset and Liability Committee has set limits by business divisions to protect our access to unsecured funding at attractive levels.

Asset Liquidity
The Asset Liquidity component tracks the volume and booking location within our consolidated inventory of unencumbered, liquid assets which we can use to raise funds either in the repurchase agreement markets or by selling the assets. Securities inventories include a wide variety of different securities. In a first step, we segregate illiquid and liquid securities in each inventory. Subsequently we assign liquidity values to different classes of liquid securities.

The liquidity of these assets is an important element in protecting us against short-term liquidity squeezes. In addition, we maintained a€ 27.2 billion portfolio of highly liquid securities in major currencies around the world to supply collateral for cash needs associated with clearing activities in euro, U.S. dollar and other major currencies.

Funding Diversification
Diversification of our funding profile in terms of investor types, regions, products and instruments is an important element of our liquidity risk management framework. Our core funding resources, such as retail, small/mid-cap and fiduciary deposits as well as long-term capital markets funding, form the cornerstone of our liability profile. Customer deposits, funds from institutional investors and interbank funding are additional sources of funding. We use interbank deposits primarily to fund liquid assets.

The following chart shows the composition of our external unsecured liabilities as of December 31, 2004 and December 31, 2003 both in euro billion and as a percentage of our total unsecured liabilities.

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Funding Matrix
We have mapped all funding relevant assets and liabilities into time buckets corresponding to their maturities to compile a maturity profile (Funding Matrix). Given that trading assets are typically more liquid than their contractual maturities suggest, we have divided them into liquid assets (assigned to the time bucket one year and under) and illiquid assets (assigned in equal installments to time buckets two to five years). We have taken assets and liabilities from the retail bank that show a behavior of being renewed or prolonged regardless of capital market conditions (mortgage loans and retail deposits) and assigned them to time buckets reflecting the expected prolongation. Wholesale banking products are included with their contractual maturities.

The Funding Matrix identifies the excess or shortfall of assets over liabilities in each time bucket and thus allows us to identify and manage open liquidity exposures. We have also developed a tool, which enables us to predict whether any excess or shortfall will grow or decline over time. The Funding Matrix is a key input parameter for our annual capital market issuance plan, which upon approval of the Group Asset and Liability Committee establishes issuing targets for securities by tenor, volume and instrument.

The Funding Matrix indicates that at year-end 2004 we were structurally long funded.

Stress Testing and Scenario Analysis
We employ stress testing and scenario analysis to evaluate the impact of sudden stress events on our liquidity position. The scenarios are either based on historic events (such as the stock market crash of 1987, the U.S. liquidity crunch of 1990 and the terrorist attacks of September 11, 2001) or modeled using hypothetical events. The latter include internal scenarios such as operational risk events, merger or acquisition, a rating downgrade of the bank by 1 and 3 notches respectively as well as external scenarios such as a market risk event, Emerging Markets crises, systemic shock and prolonged global recession. Under each of these scenarios we assume that all maturing loans to customers will need to be rolled over and require funding whereas rollover of liabilities will be partially impaired resulting in a funding gap. We then model the steps we would take to counterbalance the resulting net shortfall in funding needs. Action steps would include selling assets, switching from unsecured to secured funding and adjusting the price we would pay for liabilities (gap closure).

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This analysis is fully integrated within the existing liquidity risk management framework. We track contractual cash flows per currency and product over an eight-week horizon (the most critical time span in a liquidity crisis) and apply the relevant stress case to each product. Asset Liquidity complements the analysis.

Our stress testing analysis provides guidance as to our ability to generate sufficient liquidity under critical conditions and is a valuable input parameter when defining our target liquidity risk position. The analysis is performed monthly. The following report is illustrative for our stress testing results as of December 31, 2004. For each scenario, the table shows what our maximum funding gap would be over an eight-week horizon after occurrence of the triggering event. We analyze whether the risk to our liquidity would be immediate and whether it would improve or worsen over time. We determine how much liquidity we believe we would have been able to generate at the time to close the gap.

Scenario	Funding gap		1	Liquidity impact	Gap closure		2
	(in€ bn.		)		(in€ bn.		)
Market risk		9.1		Gradually increasing		96.0
Emerging markets		13.5		Gradually increasing		98.8
Prolonged global recession		19.2		Gradually increasing		101.6
Systemic shock		13.8		Immediate, duration 2 weeks		101.5
DB downgrade to A1/P1 (short term) and A1/A+ (long term)		11.2		Gradually increasing		96.0
Operational risk		10.2		Immediate, duration 2 weeks		96.0
Merger & Acquisition		35.8		Gradually increasing, pay-out in week 6		96.0
DB downgrade to A2/P2 (short term) and A3/A- (long term)		52.3		Gradually increasing		103.1

1	Funding gap after assumed partially impaired rollover of liabilities.
2	Maximum liquidity generation based on counterbalancing and asset liquidity opportunities.

With the increasing importance of liquidity management in the financial industry, we consider it important to contribute to financial stability by regularly addressing central banks, supervisors, rating agencies, and market participants on liquidity risk-related topics. We participate in a number of working groups regarding liquidity and participate in efforts to create industry-wide standards that are appropriate to evaluate and manage liquidity risk at financial institutions.

In addition to our internal liquidity management systems, the liquidity exposure of German banks is regulated by the German Banking Act and regulations issued by the BaFin. For a further description of these regulations, see “Item 4: Information on the Company – Regulation and Supervision – Regulation and Supervision in Germany – Principal Laws and Regulators – Liquidity Requirements.” We are in compliance with all applicable liquidity regulations.

Operational Risk

The Basel Committee on Banking Supervision in 2004 published the final version of the new capital adequacy framework which is broadly known as “Basel II” and the EU Commission published the draft of its equivalent Capital Adequacy Directive which is currently going through EU parliamentary procedures. Discussions between the banking industry and the regulators are continuing with regard to specific issues as well as interpretation of both the new accord and directive. On the basis of this regulatory discussion we define operational risk as the potential for incurring losses in relation to employees, project management, contractual specifications and documentation, technology, infrastructure failure and disasters, external influences and customer relationships. This definition includes legal and regulatory risk, but excludes business risk.

Organizational Set-up
Operational Risk Management is an independent risk management function within Deutsche Bank. The Chief Risk Officer for Credit and Operational Risk with Group-wide responsibility reports directly to the Group Chief Risk Officer. The Global Head of Operational Risk Management reports to the Chief Risk Officer for Credit and Operational Risk and both are represented on the Group Risk Committee. The Operational Risk Management Committee is a permanent sub-committee of the Group Risk Committee

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and is composed of the Operational Risk Management team. It is our main decision making committee for all operational risk management matters and approves group standards for identification, assessment, reporting and monitoring of operational risk.

Operational Risk Management is responsible for defining the operational risk framework and related policies while the responsibility for implementing the framework as well as the day-to-day operational risk management lies with our Business Divisions. Based on this business partnership model we ensure a close monitoring and high awareness for operational risk. Operational Risk Management is structured into regional and functional teams: the regional teams ensure consistent implementation of the overall operational risk management framework and pro-active management of operational risks and the functional teams focus on the development and implementation of the operational risk management toolset and reporting, monitoring regulatory requirements, value-added analysis and the setting of loss thresholds.

Managing Our Operational Risk
It is our objective to pro-actively manage operational risks on a Group-wide basis. For this reason we have implemented a Group-wide consistent operational risk framework that enables us to determine our operational risk profile and to define risk mitigating measures and priorities.

In order to efficiently manage the operational risk we have developed and implemented four different infrastructure elements:

– We perform bottom-up operational risk ‘‘self-assessments’’ using the db-SAT tool. This results in a specific operational risk profile for the business lines clearly highlighting the areas with high risk potential.

– We collect losses arising from operational risk events in our db-Incident Reporting System database.

– We capture and monitor qualitative operational risk indicators in our tool db-Score returning early warning signals.

– We capture action points resulting from risk assessments or db-Score in db-Track. Within db-Track we will monitor the progress of the operational risk action points on an ongoing basis.

The calculation of economic capital for operational risk for December 31, 2004 is based on a statistical model using internal and external loss data with certain top-down adjustments. In 2005, we plan to further develop our economic capital calculation for operational risk and implement a process compatible with the advanced measurement approach under “Basel II”.

Based on the organizational set-up, the systems in place to identify and manage the operational risk and the support of control functions responsible for specific operational risk types (e.g. Compliance, Business Continuity Management) we seek to optimize operational risk. Future operational risks – identified through forward looking analysis – are managed via mitigation strategies such as the development of back-up systems and emergency plans. Where appropriate, we purchase insurance against operational risks.

Overall Risk Position

The table below shows the overall risk position of the Group at year-end 2004 and 2003 as measured by the economic capital calculated for credit, market, business and operational risk; it does not include liquidity risk.

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Economic capital usage in€ m.	Dec 31, 2004			Dec 31, 2003
Credit risk		5,971			7,363
Market risk		5,476			5,912
Trading market risk		1,581			972
Nontrading market risk		3,895			4,940
Diversification benefit across credit and market risk		(870	)		(1,152	)
Sub-total credit and market risk		10,577			12,123
Business risk		381			1,117
Operational risk		2,243			2,282
Total economic capital usage		13,201			15,522

To determine our overall (nonregulatory) risk position, we generally add the individual economic capital estimates for the various types of risk. When aggregating credit and market risk, however, we consider the diversification benefit across these risk types, which we estimate as€ 870 million as of December 31, 2004 and€ 1.2 billion as of December 31, 2003. The diversification benefit across all risk types has not yet been calculated.

On December 31, 2004 our economic capital usage totaled€ 13.2 billion, which is€ 2.3 billion or 15% below the€ 15.5 billion economic capital usage as of December 31, 2003.

The reduction in credit risk economic capital primarily reflects the overall reduction in our lending-related credit exposures as well as the improved credit quality of our loan book. The reduction in total market risk economic capital is mainly caused by the decrease in nontrading market risk from alternative assets as well as lower risk from industrial holdings, which was partially offset by the increase in trading market risk economic capital. However, a substantial part of the increase in trading market risk economic capital is related to our refined stress testing parameterization introduced in 2004. Applying the previously implemented parameters to year-end 2004 data on a pro forma basis leads to a year-on-year increase in trading market risk economic capital of€ 0.2 billion compared to the€ 0.6 billion increase shown in the table. The reduction in business risk economic capital reflects an improved market outlook and our increasing ability to adjust costs in a market downturn.

The allocation of economic capital may change from time to time to reflect refinements in our risk measurement methodology.

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Item 12: Description of Securities other than
Equity Securities

Not required because this document is filed as an annual report.

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PART II

Item 13: Defaults, Dividend Arrearages
and Delinquencies

Not applicable.

Item 14: Material Modifications to the Rights of
Security Holders and Use of Proceeds

Not applicable.

Item 15: Controls and Procedures

An evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of December 31, 2004.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As such, disclosure controls and procedures or systems for internal control over financial reporting may not prevent all error and all fraud. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Based upon the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded, subject to the limitations noted above, that the design and operation of our disclosure controls and procedures were effective as of December 31, 2004.

There was no change in our internal control over financial reporting identified in connection with the evaluation referred to above that occurred during the year ended December 31, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16A: Audit Committee Financial Expert

Our Supervisory Board has determined that the following members of its Audit Committee are “audit committee financial experts”, as such term is defined by the regulations of the Securities and Exchange Commission issued pursuant to Section 407 of the Sarbanes-Oxley Act of 2002: Dr. rer.oec. Karl-Hermann Baumann, Dr. Rolf-E. Breuer and Dr. Karl-Gerhard Eick. For a description of the experience

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of such persons, please see “Item 6: Directors, Senior Management and Employees – Supervisory Board.”

Item 16B: Code of Ethics

In response to Section 406 of the Sarbanes-Oxley Act of 2002, we have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of this code of ethics is available on our Internet website at http://www.deutsche-bank.com/corporate-governance. There have been no amendments or waivers to this code of ethics since its adoption. Information regarding any future amendments or waivers will be published on the aforementioned website.

Item 16C: Principal Accountant Fees and Services

In accordance with German law, our principal accountants are appointed by our Annual General Meeting based on a recommendation of our Supervisory Board. The Audit Committee of our Supervisory Board prepares the board’s recommendation on the selection of the principal accountants. Subsequent to the principal accountants’ appointment, the Audit Committee awards the contract and in its sole authority approves the terms and scope of the audit and all audit engagement fees as well as monitors the principal accountants’ independence. At our 2003 and 2004 Annual General Meetings, our shareholders appointed KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, which had been our principal accountants for a number of years, as our principal accountants for the 2003 and 2004 fiscal years, respectively.

The table set forth below contains the aggregate fees billed for each of the last two fiscal years by our principal accountants in each of the following categories: (i) Audit Fees, which are fees for professional services for the audit of our annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years, (ii) Audit-Related Fees, which are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported as Audit Fees, (iii) Tax Fees, which are fees for professional services rendered for tax compliance, tax consulting and tax planning, and (iv) All Other Fees, which are fees for products and services other than Audit Fees, Audit- Related Fees and Tax Fees. These amounts exclude expenses and VAT.

Fee category in€ m.	2004		2003
Audit Fees		40		32
Audit-Related Fees		6		12
Tax Fees		15		8
All Other Fees		–		1
Total Fees		61		53

Our Audit-Related Fees included fees for accounting advisory, due diligence relating to actual or contemplated acquisitions and dispositions, attestation engagements and other agreed-upon procedure engagements. Our Tax Fees included fees for services relating to the preparation and review of tax returns and related compliance assistance and advice, tax consultation and advice relating to Group tax planning strategies and initiatives and assistance with assessing compliance with tax regulations. Our Other Fees were incurred for project-related advisory services.

United States law and regulations in effect since May 6, 2003, and our own policies, generally require all engagements of our principal accountants be pre-approved by our Audit Committee or pursuant to policies and procedures adopted by it. Our Audit Committee has adopted the following policies and procedures for consideration and approval of requests to engage our principal accountants to perform non-audited services. Engagement requests must in the first instance be submitted to our

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Group Finance Committee, whose members consist of our Chief Financial Officer and senior members of our Controlling and Tax departments. If the request relates to services that would impair the independence of our principal accountants, the request must be rejected. Our Audit Committee has given its pre-approval for specified assurance, financial advisory and tax services, provided the expected fees for any such service do not exceed€ 1 million. If the engagement request relates to such specified pre-approved services, it may be approved by the Group Finance Committee, which must thereafter report such approval to the Audit Committee. If the engagement request relates neither to prohibited non-audit services nor to pre-approved non-audit services, it must be forwarded by the Group Finance Committee to the Audit Committee for consideration. In addition, to facilitate the consideration of engagement requests between its meetings, the Audit Committee has delegated approval authority to several of its members who are “independent” as defined by the Securities and Exchange Commission and the New York Stock Exchange. Such members are required to report any approvals made by them to the Audit Committee at its next meeting.

Additionally, United States law and regulations in effect since May 6, 2003 permit the pre-approval requirement to be waived with respect to engagements for non-audit services aggregating no more than five percent of the total amount of revenues we paid to our principal accountants, if such engagements were not recognized by us at the time of engagement and were promptly brought to the attention of our Audit Committee or a designated member thereof and approved prior to the completion of the audit. In each of 2003 and 2004, the percentage of the total amount of revenue we paid to our principal accountants represented by non-audit services in each category that were subject to such a waiver was less than 5%.

Item 16E: Purchases of Equity Securities by the
Issuer and Affiliated Purchasers

In 2004, we repurchased an aggregate of 67,238,436 of our ordinary shares pursuant to two publicly announced share buy-back programs. The first program was announced on September 4, 2003 and was completed by June 28, 2004. Pursuant to this program, a total of 58,185,424 shares were repurchased (17,098,988 in 2003 and 41,086,436 in 2004) at an average price of€ 64.67, for a total aggregate consideration of€ 3.76 billion. Of these shares, 38,000,000 were cancelled in 2004 and the bulk of the remainder was used in connection with our share-based employee compensation plans. The second program, pursuant to which up to 45,513,988 shares may be repurchased through November 30, 2005, was announced on June 30, 2004. As of December 31, 2004, we had purchased a total of 26,152,000 shares pursuant to this program at an average price of€ 59.02, for a total consideration of€ 1.54 billion. This program is still in progress.

In addition to these share buy-back programs, pursuant to shareholder authorizations approved at our 2003 and 2004 Annual General Meetings, we are authorized to buy and sell, for the purpose of securities trading, our ordinary shares through November 30, 2005, provided that the net number of shares we have acquired for this purpose and held at the close of any trading day may not exceed 5% of our share capital on that day. The gross volume of these securities trading transactions is often large, and even the net amount of such repurchases or sales may, in a given month, be large, though over longer periods of time such transactions tend to offset and are in any event constrained by the 5% of share capital limit. These securities trading transactions consist predominantly of transactions on major non-U.S. securities exchanges. We also enter into derivative contracts with respect to our shares. See Notes [18] and [31] of our consolidated financial statements.

The following table sets forth, for each month in 2004 and for the year as a whole, the total gross number of our shares repurchased by us and our affiliated purchasers (pursuant to both the share buy-back programs noted above and the securities trading activities described above), the total gross number of shares sold, the net number of shares purchased or sold, the average price paid per share (based on the gross shares repurchased), the number of shares that were purchased as part of the two publicly announced share buy-back programs mentioned above and the maximum number of shares that at that date remained eligible for purchase under such programs.

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Issuer Purchases of Equity Securities in 2004

	Total number of		Total number of		Net number of			Average price		Number of shares		Maximum number
	shares purchased		shares sold		shares purchased			paid per share		purchased as part		of shares that
					or (sold)			(in€)		of publicly		may yet be
										announced plans		purchased under
Month										or programs		plans or programs
January		18,929,272		16,197,163		2,732,109			64.21		2,792,000		38,294,436
February		55,663,161		69,693,278		(14,030,117	)		66.44		4,840,000		33,454,436
March		40,329,202		36,134,581		4,194,621			70.38		4,349,000		29,105,436
April		45,784,289		35,801,565		9,982,724			70.60		10,202,000		18,903,436
May		73,020,635		62,394,548		10,626,087			66.34		10,032,000		8,871,436
June		90,343,021		120,641,069		(30,298,048	)		65.58		8,871,436		45,513,988
July		51,582,318		53,112,258		(1,529,940	)		61.66		5,082,000		40,431,988
August		64,180,555		49,435,054		14,745,501			55.64		7,314,000		33,117,988
September		22,567,123		19,523,428		3,043,695			58.65		3,691,000		29,426,988
October		21,862,259		17,230,931		4,631,328			59.62		4,226,000		25,200,988
November		25,856,303		22,001,682		3,854,621			63.15		3,768,000		21,432,988
December		26,265,692		24,410,783		1,854,909			64.96		2,071,000		19,361,988
Total 2004		536,383,830		526,576,340		9,807,490			64,27		67,238,436		19,361,988

At December 31, 2003, our issued share capital consisted of 581,854,246 ordinary shares, of which 565,077,163 were outstanding and 16,777,083 were held by us in treasury. At December 31, 2004, our issued share capital consisted of 543,854,246 ordinary shares, of which 517,269,673 were outstanding and 26,584,573 were held by us in treasury. The reduction in our issued shares was the result of the cancellation of 38,000,000 shares, as described above. The reduction in our outstanding shares was the result of such cancellation and net purchases pursuant to our share buy-back programs and securities trading authority of 9,807,490 shares.

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PART III

Item 17: Financial Statements

Not applicable.

Item 18: Financial Statements

See our consolidated financial statements beginning on page F-3, which we incorporate by reference into this document.

Item 19: Exhibits

We have filed the following documents as exhibits to this document.

Exhibit Number	Description of Exhibit
1.1	English translation of the Articles of Association of Deutsche Bank AG, furnished as part of our report on Form 6-K, dated August 10, 2004, which is incorporated by reference herein.
2.1	The total amount of long-term debt securities of us or our subsidiaries authorized under any instrument does not exceed 10 percent of the total assets of our Group on a consolidated basis. We hereby agree to furnish to the Commission, upon its request, a copy of any instrument defining the rights of holders of long-term debt of us or of our subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.
4.1	English Translation of Form of Service Agreement of Members of the Board of Managing Directors of Deutsche Bank AG
4.2	Individual Terms of Service Agreements of Members of the Board of Managing Directors of Deutsche Bank AG
4.3	Global Partnership Plan – Equity Units Plan Rules
4.4	Global Partnership Plan – Performance Options and Partnership Appreciation Rights Plan Rules
8.1	List of Subsidiaries.
12.1	Principal Executive Officer Certifications Required by 17 C.F.R. 240.13a-14(a).
12.2	Principal Financial Officer Certifications Required by 17 C.F.R. 240.13a-14(a).
13.1	Chief Executive Officer Certification Required by 18 U.S.C. Section 1350.
13.2	Chief Financial Officer Certification Required by 18 U.S.C. Section 1350.
14.1	Legal Opinion regarding confidentiality of related party customers
15.1	Consent of KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft.

146

Signatures

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual report on its behalf.

Date: March 24, 2005

Deutsche Bank Aktiengesellschaft
 

/s/       DR. JOSEF ACKERMANN  

Dr. Josef Ackermann 

Spokesman of the Board of Managing Directors 

/s/       DR. CLEMENS BÖRSIG  

Dr. Clemens Börsig 

Member of the Board of Managing Directors
Chief Financial Officer 

147

Deutsche Bank Aktiengesellschaft

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Financial Statements:
Consolidated Statement of Income for the years ended December 31, 2004, December 31, 2003 and December 31, 2002.		F-3
Consolidated Statement of Comprehensive Income for the years ended December 31, 2004, December 31, 2003 and December 31, 2002.		F-4
Consolidated Balance Sheet at December 31, 2004 and December 31, 2003.		F-5
Consolidated Statement of Changes in Shareholders’ Equity for the years ended December 31, 2004, December 31, 2003 and December 31, 2002.		F-6
Consolidated Statement of Cash Flows for the years ended December 31, 2004, December 31, 2003 and December 31, 2002.		F-7
Notes to the Consolidated Financial Statements.		F-8

F-1

Report of Independent Registered Public Accounting Firm

The Supervisory Board of
Deutsche Bank Aktiengesellschaft

We have audited the accompanying consolidated balance sheets of Deutsche Bank Aktiengesellschaft and subsidiaries (the “Company”) as of December 31, 2004 and 2003, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Deutsche Bank Aktiengesellschaft and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

As discussed in Note [2] to the consolidated financial statements, the Company adopted FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” and Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” during 2003 and Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” effective January 1, 2002.

KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprüfungsgesellschaft

Frankfurt am Main (Germany)
March 16, 2005

F-2

Consolidated Statement of Income

in€ m., except per share data	2004		2003			2002
Net interest revenues:
Interest revenues		28,023		27,583			35,781
Interest expense		22,841		21,736			28,595
Net interest revenues		5,182		5,847			7,186
Provision for loan losses		372		1,113			2,091
Net interest revenues after provision for loan losses		4,810		4,734			5,095
Noninterest revenues:
Commissions and fees from fiduciary activities		3,211		3,273			3,926
Commissions, broker’s fees, markups on securities underwriting and other securities activities		3,711		3,564			4,319
Fees for other customer services		2,584		2,495			2,589
Insurance premiums		123		112			744
Trading revenues, net		6,186		5,611			4,024
Net gains on securities available for sale		235		20			3,523
Net income (loss) from equity method investments		388		(422	)		(887	)
Other revenues		298		768			1,123
Total noninterest revenues		16,736		15,421			19,361
Noninterest expenses:
Compensation and benefits		10,222		10,495			11,358
Net occupancy expense of premises		1,258		1,251			1,291
Furniture and equipment		178		193			230
IT costs		1,726		1,913			2,188
Agency and other professional service fees		824		836			1,001
Communication and data services		599		626			792
Policyholder benefits and claims		260		110			759
Other expenses		2,031		1,890			2,643
Goodwill impairment/impairment of intangibles		19		114			62
Restructuring activities		400		(29	)		583
Total noninterest expenses		17,517		17,399			20,907
Income before income tax expense and cumulative effect of accounting changes		4,029		2,756			3,549
Income tax expense		1,437		1,327			372
Reversal of 1999/2000 credits for tax rate changes		120		215			2,817
Income before cumulative effect of accounting changes, net of tax		2,472		1,214			360
Cumulative effect of accounting changes, net of tax		–		151			37
Net income		2,472		1,365			397
Earnings per common share (in€)
Basic
Income before cumulative effect of accounting changes, net of tax		5.02		2.17			0.58
Cumulative effect of accounting changes, net of tax		–		0.27			0.06
Net income		5.02		2.44			0.64
Diluted
Income before cumulative effect of accounting changes, net of tax		4.53		2.06			0.57
Cumulative effect of accounting changes, net of tax		–		0.25			0.06
Net income		4.53		2.31			0.63
Cash dividends declared per common share		1.50		1.30			1.30

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-3

Consolidated Statement of Comprehensive Income

in€ m.	2004			2003			2002
Net income		2,472			1,365			397
Other comprehensive income (loss):
Reversal of 1999/2000 credits for tax rate changes		120			215			2,817
Unrealized gains (losses) on securities available for sale:
Unrealized net gains (losses) arising during the year, net of tax and other1		12			1,619			(5,596	)
Net reclassification adjustment for realized net (gains) losses, net of applicable tax and other2		(189	)		162			(3,527	)
Unrealized net gains (losses) on derivatives hedging variability of cash flows, net of tax3		40			(4	)		2
Minimum pension liability, net of tax4		(1	)		8			(8	)
Foreign currency translation:
Unrealized net losses arising during the year, net of tax5		(719	)		(936	)		(1,602	)
Net reclassification adjustment for realized net gains, net of tax6		–			(54	)		–
Total other comprehensive income (loss)		(737	)		1,010			(7,914	)
Comprehensive income (loss)		1,735			2,375			(7,517	)

1	Amounts are net of income tax expense (benefit) of€ 131 million,€ 38 million and€ (69) million for the years ended December 31, 2004, 2003 and 2002, respectively, and adjustments to insurance policyholder liabilities and deferred acquisition costs of€ 19 million,€ 4 million and€ (230) million for the years ended December 31, 2004, 2003 and 2002, respectively.
2	Amounts are net of applicable income tax expense of€ 40 million,€ 41 million and€ 15 million for the years ended December 31, 2004, 2003 and 2002, respectively, and adjustments to insurance policyholder liabilities and deferred acquisition costs of€ 6 million,€ (10) million and€ 110 million for the years ended December 31, 2004, 2003 and 2002, respectively.
3	Amount is net of an income tax expense of€ 7 million for the year ended December 31, 2004, an income tax benefit for the year ended December 31, 2003, and an income tax expense for the year ended December 31, 2002.
4	Amount is net of income tax expense (benefit) of€ (1) million,€ 3 million and€ (3) million for the years ended December 31, 2004, 2003 and 2002, respectively.
5	Amounts are net of an income tax expense of€ 53 million,€ 70 million and€ 26 million for the years ended December 31, 2004, 2003 and 2002, respectively.
6	Amount is net of an income tax expense (benefit) of€ 4 million and€ (5) million for the years ended December 31, 2004 and 2003, respectively.

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-4

Consolidated Balance Sheet

in€ m. (except nominal value)	Dec 31, 2004			Dec 31, 2003
Assets
Cash and due from banks		7,579			6,636
Interest-earning deposits with banks		18,089			14,649
Central bank funds sold and securities purchased under resale agreements		123,921			112,419
Securities borrowed		65,630			72,796
Trading assets
of which€ 104 billion and€ 107 billion were pledged to creditors and can be sold or repledged at December 31, 2004 and 2003, respectively		373,147			345,371
Securities available for sale
of which€ 18 million and€ 404 million were pledged to creditors and can be sold or repledged at December 31, 2004 and 2003, respectively		20,335			24,631
Other investments		7,936			8,570
Loans, net		136,344			144,946
Premises and equipment, net		5,225			5,786
Goodwill		6,378			6,735
Other intangible assets, net		1,069			1,122
Other assets related to insurance business		6,733			8,249
Other assets		67,682			51,704
Total assets		840,068			803,614
Liabilities
Deposits		329,469			306,154
Trading liabilities		169,606			153,234
Central bank funds purchased and securities sold under repurchase agreements		105,292			102,433
Securities loaned		12,881			14,817
Other short-term borrowings		20,118			22,290
Insurance policy claims and reserves		7,935			9,071
Other liabilities		58,935			67,623
Long-term debt		106,870			97,480
Obligation to purchase common shares		3,058			2,310
Total liabilities		814,164			775,412
Commitments and contingent liabilities (Notes [11], [31], [35])
Shareholders’ equity
Common shares, no par value, nominal value of€ 2.56
Issued: 2004, 543.9 million shares; 2003, 581.9 million shares		1,392			1,490
Additional paid-in capital		11,147			11,147
Retained earnings		19,814			20,486
Common shares in treasury, at cost:
2004, 26.6 million shares; 2003, 16.8 million shares		(1,573	)		(971	)
Equity classified as obligation to purchase common shares		(3,058	)		(2,310	)
Share awards		1,513			954
Accumulated other comprehensive income (loss)
Deferred tax on unrealized net gains on securities available for sale relating to 1999 and 2000 tax rate changes in Germany		(2,708	)		(2,828	)
Unrealized net gains on securities available for sale, net of applicable tax and other		1,760			1,937
Unrealized net gains (losses) on derivatives hedging variability of cash flows, net of tax		37			(3	)
Minimum pension liability, net of tax		(1	)		–
Foreign currency translation, net of tax		(2,419	)		(1,700	)
Total accumulated other comprehensive loss		(3,331	)		(2,594	)
Total shareholders’ equity		25,904			28,202
Total liabilities and shareholders’ equity		840,068			803,614

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-5

Consolidated Statement of Changes in Shareholders’ Equity

in€ m.	2004			2003			2002
Common shares
Balance, beginning of year		1,490			1,592			1,591
Common shares distributed under employee benefit plans		–			–			1
Retirement of common shares		(98	)		(102	)		–
Balance, end of year		1,392			1,490			1,592
Additional paid-in capital
Balance, beginning of year		11,147			11,199			11,253
Common shares distributed under employee benefit plans		–			–			21
Net losses on treasury shares sold		–			(36	)		(129	)
Other		–			(16	)		54
Balance, end of year		11,147			11,147			11,199
Retained earnings
Balance, beginning of year		20,486			22,087			22,619
Net income		2,472			1,365			397
Cash dividends declared and paid		(828	)		(756	)		(800	)
Dividend related to equity classified as obligation to purchase common shares		96			–			–
Net gains (losses) on treasury shares sold		66			(386	)		–
Retirement of common shares		(2,472	)		(1,801	)		–
Other		(6	)		(23	)		(129	)
Balance, end of year		19,814			20,486			22,087
Common shares in treasury, at cost
Balance, beginning of year		(971	)		(1,960	)		(479	)
Purchases of shares		(34,471	)		(25,464	)		(30,755	)
Sale of shares		30,798			23,903			28,441
Retirement of shares		2,570			1,903			–
Treasury shares distributed under employee benefit plans		501			647			833
Balance, end of year		(1,573	)		(971	)		(1,960	)
Equity classified as obligation to purchase common shares
Balance, beginning of year		(2,310	)		(278	)		–
Additions		(1,241	)		(2,911	)		(330	)
Deductions		493			879			52
Balance, end of year		(3,058	)		(2,310	)		(278	)
Share awards – common shares issuable
Balance, beginning of year		2,196			1,955			1,666
Deferred share awards granted, net		1,270			888			1,098
Deferred shares distributed		(501	)		(647	)		(809	)
Balance, end of year		2,965			2,196			1,955
Share awards – deferred compensation
Balance, beginning of year		(1,242	)		(1,000	)		(767	)
Deferred share awards granted, net		(1,270	)		(888	)		(1,098	)
Amortization of deferred compensation, net		1,060			646			865
Balance, end of year		(1,452	)		(1,242	)		(1,000	)
Accumulated other comprehensive income (loss)
Balance, beginning of year		(2,594	)		(3,604	)		4,310
Reversal of 1999/2000 credits for tax rate changes		120			215			2,817
Change in unrealized net gains on securities available for sale, net of applicable tax and other		(177	)		1,781			(9,123	)
Change in unrealized net gains/losses on derivatives hedging variability of cash flows, net of tax		40			(4	)		2
Change in minimum pension liability, net of tax		(1	)		8			(8	)
Foreign currency translation, net of tax		(719	)		(990	)		(1,602	)
Balance, end of year		(3,331	)		(2,594	)		(3,604	)
Total shareholders’ equity, end of year		25,904			28,202			29,991

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-6

Consolidated Statement of Cash Flows

in€ m.	2004			2003			2002
Cash flows from operating activities:
Net income		2,472			1,365			397
Adjustments to reconcile net income to net cash used in operating activities:
Provision for loan losses		372			1,113			2,091
Restructuring activities		400			(29	)		583
Gain on sale of securities available for sale, other investments, loans and other		(476	)		(201	)		(4,928	)
Deferred income taxes, net		838			269			2,480
Impairment, depreciation and other amortization and accretion		1,776			3,072			2,845
Cumulative effect of accounting changes, net of tax		–			(151	)		(37	)
Share of net loss (income) from equity method investments		(282	)		(42	)		753
Net change in:
Trading assets		(42,461	)		(37,624	)		(4,071	)
Other assets		(15,566	)		(7,452	)		8,627
Trading liabilities		16,380			22,719			11,412
Other liabilities		5,914			8,095			(20,639	)
Other, net		682			47			(296	)
Net cash used in operating activities		(29,951	)		(8,819	)		(783	)
Cash flows from investing activities:
Net change in:
Interest-earning deposits with banks		(4,573	)		11,305			7,800
Central bank funds sold and securities purchased under resale agreements		(11,679	)		5,378			(14,004	)
Securities borrowed		7,166			(35,226	)		2,749
Loans		2,908			22,610			16,395
Proceeds from:
Sale of securities available for sale		21,145			13,620			25,835
Maturities of securities available for sale		3,560			7,511			7,731
Sale of other investments		2,081			2,068			5,089
Sale of loans		10,463			6,882			2,747
Sale of premises and equipment		451			2,628			717
Purchase of:
Securities available for sale		(25,201	)		(19,942	)		(22,464	)
Other investments		(1,200	)		(2,141	)		(4,474	)
Loans		(4,950	)		(9,030	)		(2,364	)
Premises and equipment		(792	)		(991	)		(1,696	)
Net cash received (paid) for business combinations/divestitures		(223	)		2,469			(1,110	)
Other, net		116			327			687
Net cash (used in) provided by investing activities		(728	)		7,468			23,638
Cash flows from financing activities:
Net change in:
Deposits		23,347			(21,423	)		(41,278	)
Securities loaned and central bank funds purchased and securities sold under repurchase agreements		923			17,751			7,603
Other short-term borrowings		3,399			(4,303	)		274
Issuances of long-term debt and trust preferred securities		34,463			43,191			40,245
Repayments and extinguishments of long-term debt and trust preferred securities		(25,773	)		(32,366	)		(27,201	)
Issuances of common shares		–			–			73
Purchases of treasury shares		(34,471	)		(25,464	)		(30,755	)
Sale of treasury shares		30,850			23,389			28,665
Cash dividends paid		(828	)		(756	)		(800	)
Other, net		12			(37	)		(455	)
Net cash provided by (used in) financing activities		31,922			(18	)		(23,629	)
Net effect of exchange rate changes on cash and due from banks		(300	)		(974	)		(635	)
Net increase (decrease) in cash and due from banks		943			(2,343	)		(1,409	)
Cash and due from banks, beginning of the year		6,636			8,979			10,388
Cash and due from banks, end of the year		7,579			6,636			8,979
Interest paid		22,411			22,612			31,349
Income taxes paid, net		199			911			408
Noncash investing activities:
Transfer from available for sale securities to trading assets		–			–			–
Transfer from trading assets to available for sale securities		–			–			–

The accompanying notes are an integral part of the Consolidated Financial Statements.

F-7

Notes to the Consolidated Financial Statements

[1] Significant Accounting Policies

Deutsche Bank Aktiengesellschaft (“Deutsche Bank” or the “Parent”) is a stock corporation organized under the laws of the Federal Republic of Germany. Deutsche Bank together with all entities in which Deutsche Bank has a controlling financial interest (the “Group”) is a global provider of a full range of corporate and investment banking, private clients and asset management products and services. For a discussion of the Group’s business segment information, see Note [28].

The accompanying consolidated financial statements are stated in euros and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions regarding the fair valuation of certain financial assets and liabilities, the allowance for loan losses, the impairment of assets other than loans, the valuation allowance for deferred tax assets, legal, regulatory and tax contingencies, as well as other matters. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from management’s estimates. Certain prior period amounts have been reclassified to conform to the current presentation.

The following is a description of the significant accounting policies of the Group.

Principles of Consolidation

The consolidated financial statements include Deutsche Bank together with all entities in which Deutsche Bank has a controlling financial interest. The Group consolidates entities in which it has a majority voting interest when the entity is controlled through substantive voting equity interests and the equity investors bear the residual economic risks of the entity. The Group consolidates those entities that do not meet these criteria when the Group absorbs a majority of the entity’s expected losses, or if no party absorbs a majority of the expected losses, when the Group receives a majority of the entity’s expected residual returns.

Notwithstanding the above, certain securitization vehicles (commonly known as qualifying special purpose entities) are not consolidated if they are distinct from and not controlled by the entities that transferred the assets into the vehicle, and their activities are legally prescribed, significantly limited from inception, and meet certain restrictions regarding the assets they can hold and the circumstances in which those assets can be sold.

For consolidated guaranteed value mutual funds, in which the Group has only minor equity interests, the obligation to pass the net revenues of these funds to the investors is reported in other liabilities, with a corresponding charge to other revenues.

Prior to January 1, 2003, the Group consolidated all majority-owned subsidiaries as well as special purpose entities that the Group was deemed to control or from which the Group retained the majority of the risks and rewards. Qualifying special purpose entities were not consolidated.

All material intercompany transactions and balances have been eliminated. Issuances of a subsidiary’s stock to third parties are treated as capital transactions.

Revenue Recognition

Revenue is recognized when it is realized or realizable, and earned. This concept is applied to the key revenue generating activities of the Group as follows:

Net interest revenues –Interest from interest-bearing assets and liabilities is recognized on an accrual basis over the life of the asset or liability based on the constant effective yield reflected in the terms of the contract and any related net deferred fees, premiums, discounts or debt issuance costs. See the “Loans” section of this footnote for more specific information regarding interest from loans.

F-8

Valuation of assets and liabilities –Certain assets and liabilities are required to be revalued each period end and the offset to the change in the carrying amount is recognized as revenue. These include assets and liabilities held for trading purposes, certain derivatives held for nontrading purposes, loans held for sale, and investments accounted for under the equity method. In addition, assets are revalued to recognize impairment losses within revenues when certain criteria are met. See the discussions in the “Trading Assets and Liabilities, and Securities Available for Sale”, “Derivatives”, “Other Investments”, “Allowances for Credit Losses”, “Loans Held for Sale”, and “Impairment” sections of this footnote for more detailed explanations of the valuation methods used and the methods for determining impairment losses for the various types of assets involved.

Fees and commissions –Revenue from the various services the Group performs are recognized when the following criteria are met: persuasive evidence of an arrangement exists, the services have been rendered, the fee or commission is fixed or determinable, and collectibility is reasonably assured. Incentive fee revenues from investment advisory services are recognized at the end of the contract period when the incentive contingencies have been resolved.

Sales of assets –Gains and losses from sales of assets result primarily from sales of financial assets in monetary exchanges, which include sales of trading assets, securities available for sale, other investments, and loans. In addition, the Group records revenue from sales of nonfinancial assets such as real estate, subsidiaries and other assets.

To the extent assets are exchanged for beneficial or ownership interests in those same assets, the exchange is not considered a sale and no gain or loss is recorded. Otherwise, gains and losses on exchanges of financial assets that are held at fair value, and gains on financial assets not held at fair value, are recorded when the Group has surrendered control of those financial assets. Gains on exchanges of nonfinancial assets are recorded once the sale has been closed or consummated, except when the Group maintains certain types of continuing involvement with the asset sold, in which case the gains are deferred. Losses from sales of nonfinancial assets and financial assets not held at fair value are recognized once the asset is deemed held for sale.

Gains and losses from monetary exchanges are calculated as the difference between the book value of the assets given up and the fair value of the proceeds received and liabilities incurred. Gains or losses from nonmonetary exchanges are calculated as the difference between the book value of the assets given up and the fair value of the assets given up and liabilities incurred as part of the transaction, except that the fair value of the assets received is used if it is more readily determinable.

Multiple-deliverable arrangements –In circumstances where the Group contracts to provide multiple products, services or rights to a counterparty, an evaluation is made as to whether separate revenue recognition events have occurred. This evaluation considers the stand-alone value of items already delivered, the verifiability of the fair value of items not yet delivered and, if there is a right of return on delivered items, the probability of delivery of remaining undelivered items.

If it is determined that separation is appropriate, the consideration received is allocated based on the relative fair value of each item, unless there is no objective and reliable evidence of the fair value of the delivered item or an individual item is required to be recognized at fair value according to other U.S. GAAP requirements, in which case the residual method is used.

Foreign Currency Translation

Assets and liabilities denominated in currencies other than an entity’s functional currency are translated into its functional currency using the period-end exchange rates, and the resulting transaction gains and losses are reported in trading revenues. Foreign currency revenues, expenses, gains, and losses are recorded at the exchange rate at the dates recognized.

Gains and losses resulting from translating the financial statements of net investments in foreign operations into the reporting currency of the parent entity are reported, net of any hedge and tax effects, in accumulated other comprehensive income within shareholders’ equity. Revenues, expenses, gains and losses are translated at the exchange rates at the dates on which those elements are recognized, either individually or by using an appropriately weighted average exchange rate for the period. Assets and liabilities are translated at the period end rate.

F-9

Reverse Repurchase and Repurchase Agreements

Securities purchased under resale agreements (“reverse repurchase agreements”) and securities sold under agreements to repurchase (“repurchase agreements”) are treated as collateralized financings and are carried at the amount of cash disbursed and received, respectively. The party disbursing the cash takes possession of the securities serving as collateral for the financing. Securities purchased under resale agreements consist primarily of OECD country sovereign bonds or sovereign guaranteed bonds. Securities owned and pledged as collateral under repurchase agreements in which the counterparty has the right by contract or custom to sell or repledge the collateral are disclosed on the Consolidated Balance Sheet.

The Group monitors the fair value of the securities received or delivered. For securities purchased under resale agreements, the Group requests additional securities or the return of a portion of the cash disbursed when appropriate in response to a decline in the market value of the securities received. Similarly, the return of excess securities or additional cash is requested when appropriate in response to an increase in the market value of securities sold under repurchase agreements. The Group offsets reverse repurchase and repurchase agreements with the same counterparty under master netting agreements when they have the same maturity date and meet certain other criteria regarding settlement and transfer mechanisms. Interest earned on reverse repurchase agreements and interest incurred on repurchase agreements are reported as interest revenues and interest expense, respectively.

Securities Borrowed and Securities Loaned

Securities borrowed and securities loaned are recorded at the amount of cash advanced or received. Securities borrowed transactions generally require the Group to deposit cash with the securities lender. In a securities loaned transaction, the Group generally receives either cash collateral, in an amount equal to or in excess of the market value of securities loaned, or securities. If the securities received may be sold or repledged, they are accounted for as trading assets and a corresponding liability to return the security is recorded. The Group monitors the fair value of securities borrowed and securities loaned and additional collateral is obtained, if necessary. Fees received or paid are reported in interest revenues and interest expense, respectively. Securities owned and pledged as collateral under securities lending agreements in which the counterparty has the right by contract or custom to sell or repledge the collateral are disclosed on the Consolidated Balance Sheet.

Trading Assets and Liabilities, and Securities Available for Sale

The Group designates debt and marketable equity securities as either held for trading purposes or available for sale at the date of acquisition.

Trading assets and trading liabilities are carried at their fair values and related realized and unrealized gains and losses are included in trading revenues.

Securities available for sale are carried at fair value with the changes in fair value reported in accumulated other comprehensive income within shareholders’ equity unless the security is subject to a fair value hedge, in which case changes in fair value resulting from the risk being hedged are recorded in other revenues. The amounts reported in other comprehensive income are net of deferred income taxes and adjustments to insurance policyholder liabilities and deferred acquisition costs.

Declines in fair value of securities available for sale below their amortized cost that are deemed to be other than temporary and realized gains and losses are reported in the Consolidated Statement of Income in net gains on securities available for sale. The amortization of premiums and accretion of discounts are recorded in net interest revenues. Generally, the weighted-average cost method is used to determine the cost of securities sold.

Fair value is based on quoted market prices, price quotes from brokers or dealers, or estimates based upon discounted expected cash flows.

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Derivatives

All freestanding contracts that are considered derivatives for accounting purposes are carried at fair value in the balance sheet regardless of whether they are held for trading or nontrading purposes. Derivative features embedded in other contracts that meet certain criteria are also measured at fair value. Fair values for derivatives are based on quoted market prices, discounted cash flow analysis, comparison to similar observable market transactions, or pricing models that take into account current market and contractual prices of the underlying instruments as well as time value and yield curve or volatility factors underlying the positions. Fair values also take into account expected market risks, modeling risks, administrative costs and credit considerations. Derivative assets and liabilities arising from contracts with the same counterparty that are covered by qualifying and legally enforceable master netting agreements are reported on a net basis.

The Group enters into various contracts for trading purposes, including swaps, futures contracts, forward commitments, options and other similar types of contracts and commitments based on interest and foreign exchange rates, equity and commodity prices, and credit risk. The Group also makes commitments to originate mortgage loans that will be held for sale. Such positions are considered derivatives and are carried at their fair values as either trading assets or trading liabilities, and related gains and losses are included in trading revenues. At the inception of a derivative transaction, trading profit is recognized if the fair value of the derivative is obtained from a quoted market price, supported by comparison to observable prices of other current market transactions or supported by other observable data used in the valuation technique. When the fair value of a derivative is not based upon observable market data, the Group defers any trade date profit or loss. This deferral is recognized when the transaction becomes observable, the Group enters into an offsetting transaction that substantially eliminates the derivative’s risk, or using a rational method such as over the life of the transaction.

Derivative features embedded in other nontrading contracts are measured separately at fair value when they are not clearly and closely related to the host contract and meet the definition of a derivative. Unless designated as a hedge, changes in the fair value of such an embedded derivative are reported in trading revenues. The carrying amount is reported on the Consolidated Balance Sheet with the host contract.

Certain derivatives entered into for nontrading purposes, not qualifying for hedge accounting, that are otherwise effective in offsetting the effect of transactions on noninterest revenues and expenses are recorded in other assets or other liabilities with changes in fair value recorded in the same noninterest revenues and expense captions affected by the transaction being offset. The changes in fair value of all other derivatives not qualifying for hedge accounting are recorded in trading revenues.

For accounting purposes there are three possible types of hedges, each of which is accounted for differently: (1) hedges of the changes in fair value of assets, liabilities or firm commitments (fair value hedges), (2) hedges of the variability of future cash flows from forecasted transactions and floating rate assets and liabilities (cash flow hedges), and (3) hedges of the translation adjustments resulting from translating the financial statements of net investments in foreign operations into the reporting currency of the parent. Hedge accounting, as described in the following paragraphs, is applied for each of these types of hedges, if the hedge is properly documented at inception and the hedge is highly effective in offsetting changes in fair value, variability of cash flows, or the translation effects of net investments in foreign operations.

For hedges of changes in fair value, the changes in the fair value of the hedged asset or liability due to the risk being hedged are recognized in earnings along with changes in the entire fair value of the derivative. When hedging interest rate risk, for both the derivative and the hedged item any interest accrued or paid is reported in interest revenue or expense and the unrealized gains and losses from the fair value adjustments are reported in other revenues. When hedging the foreign exchange risk in an available-for-sale security, the fair value adjustments related to the foreign exchange exposures are also recorded in other revenues. Hedge ineffectiveness is reported in other revenues and is measured as the net effect of the fair value adjustments made to the derivative and the hedged item arising from changes in the market rate or price related to the risk being hedged.

If a hedge of changes in fair value is canceled because the derivative is terminated or dedesignated, any remaining interest rate-related fair value adjustment made to the carrying amount of a

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hedged debt instrument is amortized to interest revenue or expense over the remaining life of the hedged item. For other types of fair value adjustments or whenever the hedged asset or liability is sold or terminated, any basis adjustments are included in the calculation of the gain or loss on sale or termination.

For hedges of the variability of cash flows, there is no special accounting for the hedged item and the derivative is carried at fair value with changes in value reported initially in other comprehensive income to the extent the hedge is effective. These amounts initially recorded in other comprehensive income are subsequently reclassified into earnings in the same periods during which the forecasted transaction affects earnings. Thus, for hedges of interest rate risk the amounts are amortized into interest revenues or expense along with the interest accruals on the hedged transaction. When hedging the foreign exchange risk in an available-for-sale security, the amounts resulting from foreign exchange risk are included in the calculation of the gain or loss on sale once the hedged security is sold. Hedge ineffectiveness is recorded in other revenues and is usually measured as the difference between the changes in fair value of the actual hedging derivative and a hypothetically perfect hedge.

When hedges of the variability of cash flows due to interest rate risk are canceled, amounts remaining in accumulated other comprehensive income are amortized to interest revenues or expense over the original life of the hedge. For cancellations of other types of hedges of the variability of cash flows, the related amounts accumulated in other comprehensive income are reclassified into earnings either in the same income statement caption and period as the forecasted transaction, or in other revenues when it is no longer probable that the forecasted transaction will occur.

For hedges of the translation adjustments resulting from translating the financial statements of net investments in foreign operations into the reporting currency of the parent, the portion of the change in fair value of the derivative due to changes in the spot foreign exchange rate is recorded as a foreign currency translation adjustment in other comprehensive income to the extent the hedge is effective; and the remainder is recorded as other revenues.

Hedging derivatives are reported as other assets and other liabilities and any derivative dedesignated as a hedging derivative is transferred to trading assets and liabilities and marked to market with changes in fair value recognized in trading revenues. For any hedging derivative that is terminated, the difference between the derivative’s carrying amount and the cash paid or received is recognized as other revenues.

Other Investments

Other investments include investments accounted for under the equity method, holdings of designated consolidated investment companies, and other nonmarketable equity interests and investments in venture capital companies.

The equity method of accounting is applied to investments when the Group does not have a controlling financial interest, but has the ability to significantly influence operating and financial policies of the investee. Generally, this is when the Group has an investment between 20% and 50% of the voting stock of a corporation or 3% or more of limited partnership interests. Other factors that are considered in determining whether the Group has significant influence include representation on the board of directors (supervisory board in the case of German stock corporations) and material intercompany transactions.

Under equity method accounting, the pro-rata share of the investee’s income or loss, on a U.S. GAAP basis, as well as disposition gains and losses and charges for other-than-temporary impairments, are included in net income from equity method investments. Equity method losses in excess of the Group’s carrying amount of the investment in the enterprise are charged against other assets held by the Group related to the investee. The difference between the Group’s cost and its proportional underlying equity in net assets of the investee at the date of investment (“equity method goodwill”) is subject to impairment reviews in conjunction with the reviews of the overall investment.

Investments held by designated investment companies that are consolidated are included in other investments, as they are primarily nonmarketable equity securities, and are carried at fair value with changes in fair value recorded in other revenues.

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Other nonmarketable equity investments and investments in venture capital companies, in which the Group does not have a controlling financial interest or significant influence, are included in other investments and carried at historical cost, net of declines in fair value below cost that are deemed to be other than temporary. Gains and losses upon sale or impairment are included in other revenues.

Loans

Loans are presented on the balance sheet at their outstanding unpaid principal balances net of charge-offs, unamortized premiums or discounts, deferred fees and costs on originated loans and the allowance for loan losses. Interest revenues are accrued on the unpaid principal balance. Net deferred fees and premiums or discounts are recorded as an adjustment of the yield (interest revenues) over the contractual lives of the related loans. Loan commitment fees related to those commitments that are not accounted for as derivatives are recognized in fees for other customer services over the life of the commitment. Loan commitments that are accounted for as derivatives are carried at fair value.

Loans are placed on nonaccrual status if either the loan has been in default as to payment of principal or interest for 90 days or more and the loan is neither well secured nor in the process of collection; or the loan is not yet 90 days past due, but in the judgment of management the accrual of interest should be ceased before 90 days because it is probable that all contractual payments of interest and principal will not be collected. When a loan is placed on nonaccrual status, any accrued but unpaid interest previously recorded is reversed against current period interest revenues. Cash receipts of interest on nonaccrual loans are recorded as either interest revenues or a reduction of principal according to management’s judgment as to the collectibility of principal. Accrual of interest is resumed only once the loan is current as to all contractual payments due and the loan is not impaired.

Leasing Transactions

Lease financing transactions, which include direct financing and leveraged leases, in which a Group entity is the lessor are classified as loans. Unearned income is amortized to interest revenues over the lease term using the interest method. Capital leases in which a Group entity is the lessee are capitalized as assets and reported in premises and equipment.

Allowances for Credit Losses

The allowances for credit losses represent management’s estimate of probable losses that have occurred in the loan portfolio and other lending-related commitments as of the date of the consolidated financial statements. The allowance for loan losses is reported as a reduction of loans and the allowance for credit losses on lending-related commitments is reported in other liabilities.

To allow management to determine the appropriate level of the allowance for loan losses, all significant counterparty relationships are reviewed periodically, as are loans under special supervision, such as impaired loans. Smaller-balance standardized homogeneous loans are collectively evaluated for impairment. This review encompasses current information and events related to the counterparty, such as past due status and collateral recovery values, as well as industry, geographic, economic, political, and other environmental factors. This process results in an allowance for loan losses which consists of a specific loss component and an inherent loss component.

The specific loss component represents the allowance for impaired loans. Impaired loans represent loans for which, based on current information and events, management believes it is probable that the Group will not be able to collect all principal and interest amounts due in accordance with the contractual terms of the loan agreement. The specific loss component of the allowance is measured by the excess of the recorded investment in the loan, including accrued interest, over either the present value of expected future cash flows, the fair value of the underlying collateral or the market price of the loan. Impaired loans are generally placed on nonaccrual status.

The inherent loss component is principally for all other loans not deemed to be impaired, but that, on a portfolio basis, are believed to have some inherent loss which is probable of having occurred and is reasonably estimable. The inherent loss component consists of a country risk allowance for transfer and currency convertibility risks for loan exposures in countries where there are serious doubts about the ability of counterparties to comply with the repayment terms due to the economic or political situa-

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tion prevailing in the respective country of domicile; a smaller-balance standardized homogeneous loan loss allowance for loans to individuals and small business customers of the private and retail business, and an other inherent loss allowance. The other inherent loss allowance represents an estimate of losses inherent in the portfolio that have not yet been individually identified and reflects the imprecisions and uncertainties in estimating the loan loss allowance. This estimate of inherent losses excludes those exposures that have already been considered when establishing the allowance for smaller-balance standardized homogeneous loans.

Amounts determined to be uncollectible are charged to the allowance. Subsequent recoveries, if any, are credited to the allowance. The provision for loan losses, which is charged to income, is the amount necessary to adjust the allowance to the level determined through the process described above.

The allowance for credit losses on lending-related commitments, which is established through charges to other expenses, is determined using the same measurement techniques as the allowance for loan losses.

Loans Held for Sale

Loans held for sale are accounted for at the lower of cost or market on an individual basis and are reported as other assets. Origination fees and direct costs are deferred until the related loans are sold and are included in the determination of the gains or losses upon sale, which are reported in other revenues. Valuation adjustments related to loans held for sale are reported in other assets and other revenues, and are not included in the allowance for credit losses nor the provision for loan losses.

Asset Securitizations

When the Group transfers financial assets to securitization vehicles, it may retain one or more subordinated tranches, cash reserve accounts, or in some cases, servicing rights or interest-only strips, all of which are retained interests in the securitized assets. The amount of the gain or loss on transfers accounted for as sales depends in part on the previous carrying amounts of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair values at the date of transfer. Retained interests other than servicing rights are classified as trading assets, securities available for sale or other assets depending on the nature of the retained interest and management intent. Servicing rights are classified in intangible assets, carried at the lower of the allocated basis or current fair value and amortized in proportion to and over the period of net servicing revenue.

To obtain fair values, quoted market prices are used if available. However, for securities representing retained interests from securitizations of financial assets, quotes are often not available, so the Group generally estimates fair value based on the present value of future expected cash flows using management’s best estimates of the key assumptions (loan losses, prepayment speeds, forward yield curves, and discount rates) commensurate with the risks involved. Interest revenues on retained interests are recognized using the effective yield method.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation is generally computed using the straight-line method over the estimated useful lives of the assets. The range of estimated useful lives is 25 to 50 years for premises and 3 to 10 years for furniture and equipment. Leasehold improvements are depreciated on a straight-line basis over the shorter of the term of the lease or the estimated useful life of the improvement, which generally ranges from 3 to 15 years. Depreciation of premises is included in net occupancy expense of premises, while depreciation of equipment is included in furniture and equipment expense and IT costs, as applicable. Maintenance and repairs are charged to expense and improvements are capitalized. Gains and losses on dispositions are reflected in other revenues.

Leased properties meeting certain criteria are capitalized as assets in premises and equipment and depreciated over the terms of the leases.

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Eligible costs related to software developed or obtained for internal use are capitalized and depreciated using the straight-line method over a period of 3 to 5 years. Eligible costs include external direct costs for materials and services, as well as payroll and payroll-related costs for employees directly associated with an internal-use software project. Overhead, as well as costs incurred during planning or after the software are ready for use, is expensed as incurred.

Goodwill and Other Intangible Assets

Goodwill, which represents the excess of the cost of an acquired entity over the fair value of net assets acquired at the date of acquisition, is tested for impairment annually, or more frequently if events or changes in circumstances, such as an adverse change in business climate, indicate that the goodwill may be impaired. Mortgage and other loan servicing rights are carried at the lower of cost or current fair value and amortized in proportion to and over the estimated period of net servicing revenue. Other intangible assets that have a finite useful life are amortized over a period of 3 to 15 years; other intangible assets that have an indefinite useful life, primarily investment management agreements related to retail mutual funds, are not amortized. These assets are tested for impairment and their useful lives are reaffirmed at least annually.

Obligation to Purchase Common Shares

Forward purchases of equity shares of a consolidated Group company are reported as obligation to purchase common shares if the number of shares is fixed and physical settlement is required. At inception the obligation is recorded at the fair value of the shares, which is equal to the present value of the settlement amount of the forward. For forward purchases of Deutsche Bank shares, a corresponding charge is made to shareholders’ equity and reported as equity classified as obligation to purchase common shares. For forward purchases of minority interest shares, a corresponding reduction to other liabilities is made.

The liability is accounted for on an accrual basis if the purchase price for the shares is fixed, and interest costs on the liability are reported as interest expense. Deutsche Bank common shares subject to such contracts are not considered to be outstanding for purposes of earnings per share calculations. Upon settlement of such forward purchases the liability is extinguished whereas the charge to equity remains but is reclassified to common shares in treasury.

Prior to July 1, 2003, written put options on equity shares of a consolidated Group company that met certain settlement criteria were also reported as obligation to purchase common shares. Beginning July 1, 2003, such written put options are reported as derivatives.

Impairment

Securities available for sale, equity method and direct investments (including investments in venture capital companies and nonmarketable equity securities), and unguaranteed lease residuals are subject to impairment reviews. An impairment charge is recorded if a decline in fair value below the asset’s amortized cost or carrying value, depending on the nature of the asset, is deemed to be other than temporary.

Other intangible assets with finite useful lives and premises and equipment are also subject to impairment reviews if a change in circumstances indicates that the carrying amount of an asset may not be recoverable. If estimated undiscounted cash flows relating to an asset held and used are less than its carrying amount, an impairment charge is recorded to the extent the fair value of the asset is less than its carrying amount. For an asset to be disposed of by sale, a loss is recorded based on the lower of the asset’s carrying value or fair value less cost to sell. An asset to be disposed of other than by sale is considered held and used and accounted for as such until it is disposed of.

Goodwill and other intangible assets which are not amortized are tested for impairment at least annually and an impairment charge is recorded to the extent the fair market value of the asset is less than its carrying amount.

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Expense Recognition

Direct and incremental costs related to underwriting and advisory services and origination of loans are deferred and recognized together with the related revenue. Loan origination costs are netted against loan origination fees and are amortized to interest revenue over the contractual life of the related loans. Other operating costs, including advertising costs, are recognized as incurred.

Income Taxes

The Group recognizes the current and deferred tax consequences of all transactions that have been recognized in the consolidated financial statements using the provisions of the appropriate jurisdictions’ tax laws. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, net operating loss carry-forwards and tax credits. The amount of deferred tax assets is reduced by a valuation allowance, if necessary, to the amount that, based on available evidence, management believes will more likely than not be realized.

Deferred tax liabilities and assets are adjusted for the effect of changes in tax laws and rates in the period that includes the enactment date.

Share-Based Compensation

Effective as of January 1, 2003, the Group adopted the fair-value-based method prospectively for all employee awards granted, modified or settled after January 1, 2003. Under the fair-value-based method, compensation cost is measured at the grant date based on the fair value of the share-based award. The fair values of stock option awards are estimated using a Black-Scholes option pricing model. For share awards, the fair value is the quoted market price of the share reduced by the present value of the expected dividends that will not be received by the employee and adjusted for the effect, if any, of restrictions beyond the vesting date. Prior to January 1, 2003, the Group accounted for its share awards under the intrinsic-value-based method of accounting. Under this method, compensation expense is the excess, if any, of the quoted market price of the shares at grant date or other measurement date over the amount an employee must pay, if any, to acquire the shares.

The following table illustrates what the effect on net income and earnings per common share would have been if the Group had applied the fair value method to all share-based awards.

in€ m.	Dec 31, 2004			Dec 31, 2003			Dec 31, 2002
Net income, as reported		2,472			1,365			397
Add: Share-based compensation expense included in reported net income, net of related tax effects		696			433			228
Deduct: Share-based compensation expense determined under fair value method for all awards, net of related tax effects		(698	)		(346	)		(478	)
Pro forma net income		2,470			1,452			147
in€
Earnings per share:
Basic – as reported		5.02			2.44			0.64
Basic – pro forma		5.02			2.60			0.24
Diluted – as reported		4.53			2.31			0.63
Diluted – pro forma		4.53			2.46			0.23

The Group records its obligations under outstanding deferred share awards and stock option awards in shareholders’ equity as share awards – common shares issuable. The related deferred compensation is also included in shareholders’ equity. These items are classified in shareholders’ equity based on the Group’s intent to settle these awards with its common shares. Compensation expense is recorded on a straight-line basis over the period in which employees perform services to which the awards relate. Compensation expense is reversed in the period an award is forfeited. Compensation expense for share-based awards payable in cash is remeasured based on the underlying share price changes and the related obligations are included in other liabilities until paid.

See Note [20] for additional information on specific award provisions and the fair values and significant assumptions used to estimate the fair values of options.

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Comprehensive Income

Comprehensive income is defined as the change in equity of an entity excluding transactions with shareholders such as the issuance of common or preferred shares, payment of dividends and purchase of treasury shares. Comprehensive income has two major components: net income, as reported in the Consolidated Statement of Income, and other comprehensive income as reported in the Consolidated Statement of Comprehensive Income. Other comprehensive income includes such items as unrealized gains and losses from translating net investments in foreign operations net of related hedge effects, unrealized gains and losses from changes in fair value of securities available for sale, net of deferred income taxes and the related adjustments to insurance policyholder liabilities and deferred acquisition costs, minimum pension liability, and the effective portions of realized and unrealized gains and losses from derivatives used as cash flow hedges, less amounts reclassified to earnings in combination with the hedged items. Comprehensive income does not include changes in the fair value of nonmarketable equity securities, traditional credit products and other assets generally carried at cost.

Statement of Cash Flows

For purposes of the Consolidated Statement of Cash Flows, the Group’s cash and cash equivalents are cash and due from banks.

Insurance Activities

Insurance Premiums
For the unit-linked business, insurance premiums consist of calculated charges for management services and mortality risk. Insurance premiums from long duration life and participating life insurance contracts are recorded when due from policyholders.

Deferred Acquisition Costs
Acquisition costs that vary with and are primarily related to the acquisition of new and renewed insurance contracts, principally commissions, certain underwriting and agency expenses and the costs of issuing policies, are deferred to the extent that they are recoverable from future earnings. Deferred acquisition costs for nonlife insurance business are amortized over the premium-paying period of the related policies. Deferred acquisition costs for life business are generally amortized over the life of the insurance contract or at a constant rate based upon the present value of estimated gross profits or estimated gross margins expected to be realized. Deferred acquisition costs are reported in other assets related to insurance business.

Unit-Linked Business
Reserves for unit-linked business represent funds for which the investment risk is borne by, and the investment income and investment gains and losses accrue directly to, the contract holders. Reserves for unit-linked business are reported as insurance policy claims and reserves. The assets related to these accounts are legally segregated and are not subject to claims that arise out of any other business of the Group. The separate account assets are carried at fair value as other assets related to insurance business. Deposits received under unit-linked business have been reduced for amounts assessed for management services and risk premiums. Deposits, net investment income, realized and unrealized investment gains and losses for these accounts are excluded from revenues and related liability increases are excluded from expenses.

Other Insurance Policy Claims and Reserves
In addition to the reserve for unit-linked business, the liability for insurance policy claims and reserves includes benefit reserves and other insurance policy provisions and liabilities.

Benefit reserves for life insurance, annuities and health policies are computed based upon mortality, morbidity, persistency and interest rate assumptions applicable to these coverages, including provisions for adverse deviation. These assumptions consider Group experience and industry standards and may be revised if it is determined that future experience will differ substantially from those previously assumed.

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     Reserves for participating life insurance contracts include provisions for terminal dividends. Unrealized holding gains and losses from investments are included in benefit reserves to the extent that the policyholders will participate in such gains and losses once realized on the basis of statutory or contractual regulations. In determining insurance reserves, the Group performs a continuing review of its overall position, its reserving techniques and possible recoveries. Since the reserves are based on estimates, the ultimate liability may be more or less than carried reserves. The effects of changes in such estimated reserves are included in earnings in the period in which the estimates are changed. Other insurance provisions and liabilities primarily represents liabilities for self-insured risks.

[2] Cumulative Effect of Accounting Changes

SFAS 150

Effective July 1, 2003, the Group adopted SFAS No. 150, “Accounting for Certain Instruments with Characteristics of Both Liabilities and Equity” (“SFAS 150”). SFAS 150 requires that an entity classify as liabilities (or assets in some circumstances) certain financial instruments with characteristics of both liabilities and equity. SFAS 150 applies to certain freestanding financial instruments that embody an obligation for the entity and that may require the entity to issue shares, or redeem or repurchase its shares.

SFAS 150 changed the accounting for outstanding forward purchases of approximately 52 million Deutsche Bank common shares with a weighted-average strike price of€ 56.17 which were entered into to satisfy obligations under employee share-based compensation awards. The Group recognized an after-tax gain of€ 11 million, net of€ 5 million tax expense, as a cumulative effect of a change in accounting principle as these contracts were adjusted to fair value upon adoption of SFAS 150. The contracts were then amended effective July 1, 2003, to allow for physical settlement only. This resulted in a charge to shareholders’ equity of€ 2.9 billion and the establishment of a corresponding liability classified as obligation to purchase common shares. Settlements of the forward contracts during 2003 reduced the obligation to purchase common shares to€ 2.3 billion at December 31, 2003. Since July 1, 2003, the costs of these contracts have been recorded as interest expense instead of as a direct reduction of shareholders’ equity.

The accounting for physically settled forward contracts reduces shareholders’ equity, which effectively results in the shares being accounted for as if retired or in treasury even though the shares are still outstanding. As such, SFAS 150 also requires that the number of outstanding shares associated with physically settled forward purchase contracts be removed from the denominator in computing basic and diluted earnings per share (EPS). The number of weighted average shares deemed no longer outstanding for EPS purposes for the year ended December 31, 2003, related to the forward purchase contracts described above was 23 million shares.

FIN 46 and FIN 46(R) (Revised December 2003)

FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”) was issued in January 2003. FIN 46 requires a company to consolidate entities as the primary beneficiary if the equity investment at risk is not sufficient for the entity to finance its activities without additional subordinated financial support from other parties or if the equity investors lack essential characteristics of a controlling financial interest. Securitization vehicles that are qualifying special purpose entities are excluded from the new rule and remain unconsolidated.

The Interpretation was effective immediately for entities established after January 31, 2003, and for interests obtained in variable interest entities after that date. For variable interest entities created before February 1, 2003, FIN 46 was originally effective for the Group on July 1, 2003. In October 2003, the FASB deferred the effective date so that, for the Group, application could be deferred for some or all such variable interest entities until December 31, 2003, pending resolution of various matters and the issuance of clarifying guidance. At July 1, 2003, the Group elected not to apply FIN 46 to a limited number of variable interest entities created before February 1, 2003, which it believed might not require consolidation at December 31, 2003. The Group applied FIN 46 to substantially all other variable inter-

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est entities as of July 1, 2003. Consequently, the Group recorded a€ 140 million gain as a cumulative effect of a change in accounting principle and total assets increased by€ 18 billion. Effective December 31, 2003, the Group fully adopted FIN 46. There was no significant effect from the application of FIN 46 to those variable interest entities for which adoption occurred after July 1, 2003.

The entities consolidated as a result of applying FIN 46 were primarily multi-seller commercial paper conduits that the Group administers in the Corporate and Investment Bank Group Division, and mutual funds offered by the Private Clients and Asset Management Group Division for which the Group guarantees the value of units investors purchase.

Upon adoption at July 1, 2003,€ 12 billion of the increase in total assets was due to the consolidation of the multi-seller commercial paper conduits. In the latter half of 2003, certain of these conduits with total assets of€ 4 billion were restructured and accordingly deconsolidated.

The beneficial interests of the investors in the guaranteed value mutual funds were reported as other liabilities and totaled€ 15 billion at December 31, 2003. The assets of the funds consisted primarily of trading assets in the amount of€ 13 billion at December 31, 2003. The net revenues of these funds due to investors totaled€ 115 million for the six months ended December 31, 2003. These net revenues of the funds consisted of€ 179 million of net interest revenues, negative trading revenues of€ 20 million and€ 44 million of expenses for fund administration. The obligation to pass the net revenues to the investors was recorded as an increase in the beneficial interest obligation in other liabilities and a corresponding charge to other revenues in the amount of€ 115 million for the six months ended December 31, 2003.

Certain entities were deconsolidated as a result of applying FIN 46, primarily investment vehicles and trusts associated with trust preferred securities that the Group sponsors where the investors bear the economic risks. The gain from the application of FIN 46 primarily represents the reversal of the impact on earnings of securities held by the investment vehicles that were deconsolidated.

Effective March 31, 2004, the Group adopted the revised version of FIN 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51” (“FIN 46(R)”). The FASB modified FIN 46 to address certain technical corrections and implementation issues that had arisen. As a result of the adoption, total assets decreased by€ 12.5 billion due to the deconsolidation of certain guaranteed value mutual funds. The adoption did not result in a cumulative effect of a change in accounting principle, however certain offsetting revenues and charges, chiefly trading revenues, net interest revenues and charges against other revenues, are no longer reported in the consolidated statement of income beginning April 1, 2004 due to the deconsolidations.

SFAS 141 and 142

Effective January 1, 2002, the Group adopted SFAS No. 141, “Business Combinations” (“SFAS 141”) and SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). SFAS 141 requires that all business combinations initiated after June 30, 2001 be accounted for by the purchase method and eliminates the use of the pooling-of-interests method. Other provisions of SFAS 141 and SFAS 142 require that, as of January 1, 2002, goodwill no longer be amortized, reclassifications between goodwill and other intangible assets be made based upon certain criteria, and, once allocated to reporting units (the business segment level, or one level below), that tests for impairment of goodwill be performed at least annually. Upon adoption of the requirements of SFAS 142 as of January 1, 2002, the Group discontinued the amortization of goodwill with a net carrying amount of€ 8.7 billion. Upon adoption, the Group recognized a€ 37 million tax-free gain as a cumulative effect of a change in accounting principle from the write-off of negative goodwill and there were no reclassifications between goodwill and other intangible assets.

F-19

[3] Acquisitions and Dispositions

For the years ended December 31, 2004, 2003 and 2002, the Group recorded net gains on dispositions (excluding results from businesses/subsidiaries held for sale) of€ 95 million,€ 513 million and€ 755 million, respectively. The acquisitions and disposals that occurred in 2004 and 2003 had no significant impact on the Group’s total assets.

For a discussion of the Group’s most significant acquisitions and dispositions for the years ended December 31, 2004 and 2003 see Note [28] Business Segments and Related Information.

[4] Trading Assets and Trading Liabilities

The components of these accounts are as follows:

in€ m.	Dec 31, 2004		Dec 31, 2003
Trading assets:
Bonds and other fixed-income securities		224,536		204,324
Equity shares and other variable-yield securities		73,176		66,306
Positive market values from derivative financial instruments1		67,173		65,460
Other trading assets		8,262		9,281
Total trading assets		373,147		345,371
Trading liabilities:
Bonds and other fixed-income securities		77,080		66,685
Equity shares and other variable-yield securities		20,567		25,382
Negative market values from derivative financial instruments1		71,959		61,167
Total trading liabilities		169,606		153,234

¹ Derivatives under master netting agreements are shown net.

[5] Securities Available for Sale

The fair value, amortized cost and gross unrealized holding gains and losses for the Group’s securities available for sale follow:

	Dec 31, 2004
	Fair value		Gross unrealized holding					Amortized cost
in€ m.			gains		losses
Debt securities:
German government		3,128		66		(16	)		3,078
U.S. Treasury and U.S. government agencies		1,460		–		(2	)		1,462
U.S. local (municipal) governments		1		–		–			1
Other foreign governments		3,297		41		(100	)		3,356
Corporates		4,993		176		(9	)		4,826
Other asset-backed securities		6		–		–			6
Mortgage backed securities, including obligations of U.S. federal agencies		41		2		–			39
Other debt securities		770		1		–			769
Total debt securities		13,696		286		(127	)		13,537
Equity securities:
Equity shares		6,010		1,579		(1	)		4,432
Investment certificates and mutual funds		549		23		(6	)		532
Other equity securities		80		29		–			51
Total equity securities		6,639		1,631		(7	)		5,015
Total securities available for sale		20,335		1,917		(134	)		18,552

F-20

	Dec 31, 2003
	Fair value		Gross unrealized holding					Amortized cost
in€ m.			gains		losses
Debt securities:
German government		2,802		52		(23	)		2,773
U.S. Treasury and U.S. government agencies		150		–		(1	)		151
U.S. local (municipal) governments		2		–		–			2
Other foreign governments		3,294		26		(105	)		3,373
Corporates		5,646		173		(45	)		5,518
Other asset-backed securities		1,679		–		–			1,679
Mortgage backed securities, including obligations of U.S. federal agencies		2,708		1		–			2,707
Other debt securities		532		–		–			532
Total debt securities		16,813		252		(174	)		16,735
Equity securities:
Equity shares		6,866		1,868		(8	)		5,006
Investment certificates and mutual funds		951		29		(10	)		932
Other equity securities		1		–		–			1
Total equity securities		7,818		1,897		(18	)		5,939
Total securities available for sale		24,631		2,149		(192	)		22,674

	Dec 31, 2002
	Fair value		Gross unrealized holding					Amortized cost
1n€ m.			gains		losses
Debt securities:
German government		396		20		–			376
U.S. Treasury and U.S. government agencies		168		–		–			168
U.S. local (municipal) governments		2		–		–			2
Other foreign governments		2,893		39		(18	)		2,872
Corporates		6,400		231		(47	)		6,216
Other asset-backed securities		2,977		–		–			2,977
Mortgage backed securities, including obligations of U.S. federal agencies		164		1		–			163
Other debt securities		652		1		(3	)		654
Total debt securities		13,652		292		(68	)		13,428
Equity securities:
Equity shares		6,441		757		(596	)		6,280
Investment certificates and mutual funds		1,499		10		(55	)		1,544
Other equity securities		27		16		–			11
Total equity securities		7,967		783		(651	)		7,835
Total securities available for sale		21,619		1,075		(719	)		21,263

At December 31, 2004, equity shares issued by DaimlerChrysler AG with a fair value of€ 3.7 billion were the only securities of an individual issuer that exceeded 10% of the Group’s total shareholders’ equity.

F-21

The components of net gains on securities available for sale as reported in the Consolidated Statement of Income follow:

in€ m.	2004			2003			2002
Debt securities – gross realized gains		58			106			149
Debt securities – gross realized losses1		(61	)		(35	)		(235	)
Equity securities – gross realized gains		244			488			4,094
Equity securities – gross realized losses2		(6	)		(539	)		(485	)
Total net gains on securities available for sale		235			20			3,523

1	Includes€ 20 million,€ 7 million and€ 156 million of write-downs for other-than-temporary impairment for the years ended December 31, 2004, 2003 and 2002, respectively.
2	Includes€ 2 million,€ 479 million and€ 152 million of write-downs for other-than-temporary impairment for the years ended December 31, 2004, 2003 and 2002, respectively.

The following table shows the fair value, remaining maturities, approximate weighted-average yields (based on amortized cost) and total amortized cost by maturity distribution of the debt security components of the Group’s securities available for sale at December 31, 2004:

	Up to one year					More than one year					More than five years					More than ten years					Total
						and up to five years					and up to ten years
in€ m.	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
German government		22		2.45	%		219		2.77	%		388		3.46	%		2,499		4.17	%		3,128		3.98	%
U.S. Treasury and U.S. government agencies		1,417		1.49	%		23		0.17	%		–		–			20		1.91	%		1,460		1.48	%
U.S. local (municipal) governments		1		1.41	%		–		–			–		–			–		–			1		1.41	%
Other foreign governments		1,206		5.62	%		642		5.12	%		414		3.80	%		1,035		4.25	%		3,297		4.85	%
Corporates		512		2.95	%		1,334		3.66	%		942		3.45	%		2,205		5.46	%		4,993		4.32	%
Other asset-backed securities		–		–			6		5.36	%		–		–			–		–			6		5.36	%
Mortgage-backed securities, principally obligations of U.S. federal agencies		7		1.49	%		–		–			–		–			34		5.21	%		41		4.61	%
Other debt securities		2		3.00	%		752		2.84	%		12		5.37	%		4		3.31	%		770		2.88	%
Total fair value		3,167		3.30	%		2,976		3.67	%		1,756		3.55	%		5,797		4.65	%		13,696		3.99	%
Total amortized cost		3,161					2,933					1,696					5,747					13,537

The following tables show the Group’s gross unrealized losses on securities available for sale and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2004 and 2003, respectively:

December 31, 2004	Less than 12 months					12 months or longer					Total
	Fair value		Unrealized			Fair value		Unrealized			Fair value		Unrealized
in€ m.			losses					losses					losses
Debt securities:
German government		–		–			1,798		(16	)		1,798		(16	)
U.S. Treasury and U.S. government agencies		83		(1	)		–		(1	)		83		(2	)
Other foreign governments		625		(1	)		846		(99	)		1,471		(100	)
Corporates		292		(3	)		32		(6	)		324		(9	)
Total debt securities		1,000		(5	)		2,676		(122	)		3,676		(127	)
Equity securities:
Equity shares		14		(1	)		–		–			14		(1	)
Investment certificates and mutual funds		26		(2	)		45		(4	)		71		(6	)
Total equity securities		40		(3	)		45		(4	)		85		(7	)
Total temporarily impaired securities		1,040		(8	)		2,721		(126	)		3,761		(134	)

F-22

December 31, 2003	Less than 12 months					12 months or longer					Total
	Fair value		Unrealized			Fair value		Unrealized			Fair value		Unrealized
in€ m.			losses					losses					losses
Debt securities:
German government		2,802		(23	)		–		–			2,802		(23	)
U.S. Treasury and U.S. government agencies		18		(1	)		–		–			18		(1	)
Other foreign governments		2,191		(105	)		–		–			2,191		(105	)
Corporates		1,614		(19	)		715		(26	)		2,329		(45	)
Total debt securities		6,625		(148	)		715		(26	)		7,340		(174	)
Equity securities:
Equity shares		9		(4	)		96		(4	)		105		(8	)
Investment certificates and mutual funds		66		(1	)		71		(9	)		137		(10	)
Total equity securities		75		(5	)		167		(13	)		242		(18	)
Total temporarily impaired securities		6,700		(153	)		882		(39	)		7,582		(192	)

The unrealized losses on investments in debt securities were primarily interest rate related. Since the Group has the intent and ability to hold these investments until a market price recovery or maturity, they are not considered other-than-temporarily impaired. The unrealized losses on investments in equity securities are attributable primarily to general market fluctuations rather than to specific adverse conditions. Based on this and our intent and ability to hold the securities until the market price recovers, these investments are not considered other-than-temporarily impaired.

[6] Other Investments

The following table summarizes the composition of other investments:

in€ m.	Dec 31, 2004		Dec 31, 2003
Equity method investments		5,462		6,001
Investments held by designated investment companies		213		181
Other equity interests		2,261		2,388
Total other investments		7,936		8,570

Equity Method Investments

The Group’s pro-rata share of the investees’ income or loss determined on a U.S. GAAP basis were profits of€ 282 million and of€ 42 million for the years ended December 31, 2004 and 2003, respectively and a loss of€ 753 million for the year ended December 31, 2002 . In addition, write-offs for other-than-temporary impairments of€ 16 million,€ 617 million and€ 305 million for the years ended December 31, 2004, 2003 and 2002, respectively, were included in net income (loss) from equity method investments.

Loans to equity method investees, trading assets related to these investees as well as debt securities available for sale issued by these investees amounted to€ 3.7 billion and€ 5.1 billion at December 31, 2004 and 2003, respectively. At December 31, 2004, loans totaling€ 26 million to three equity method investees were on nonaccrual status. At December 31, 2003, loans totaling€ 115 million to three equity method investees were on nonaccrual status. The Group issued a financial guarantee to EUROHYPO AG protecting it against losses on loans contributed by the Group when EUROHYPO AG was created in 2002. The guarantee which had an initial maximum amount of€ 283 million is still in force with an unutilized amount of€ 51 million as of December 31, 2004.

F-23

At December 31, 2004, the following investees were significant, representing 75% of the carrying value of equity method investments:

Significant Equity Method Investments

Investment	Ownership
Arrow Property Investments Limited, London		46.18	%
Atradius N.V., Amsterdam1		33.89	%
Blackrock US Low Duration Bond Fund, Drinagh		22.47	%
Deutsche European Partners IV, London		25.01	%
Deutsche Interhotel Holding GmbH & Co. KG, Berlin		45.51	%
DWS Euro-Bonds (Long)		20.17	%
EUROHYPO AG, Eschborn		37.72	%
Fondo Piramide Globale, Milan		42.33	%
LSV Value Equity Fund, Kansas City		25.01	%
My Travel Group Plc, Manchester		23.00	%
RREEF America REIT III, Inc., Chicago		10.00	%
Santorini Investments Limited Partnership, Edinburgh2		51.00	%
Silver Creek Long/Short Ltd., Georgetown		27.27	%
Silver Creek Low Vol. Strategies Ltd., Georgetown		25.07	%
UFG Ltd., Douglas		40.00	%

1	Formerly, Gerling NCM Credit and Finance AG, Köln.
2	The Group does not have a controlling financial interest in this investee.

The following table provides a summary of the aggregated statement of income (on a U.S. GAAP basis) of the Group’s aforementioned significant investees (excluding EUROHYPO AG, which is considered on an individual basis below), and is not indicative of the Group’s proportionate share of any respective line item.

in€ m.	2004			2003			2002
Interest revenues, and commissions and fees, net		183			51			64
Trading revenues, net		92			360			(548	)
Gross profits on sales and net income from insurance business		910			644			1,015
Income from other investments and gains on securities available for sale, net		52			(96	)		10
Other revenues		83			78			69
Total revenues		1,320			1,037			610
Provision for loan losses		–			–			–
Compensation and benefits		26			27			25
Other expenses		1,444			2,026			1,249
Total expenses		1,470			2,053			1,274
(Loss) before income tax expense and cumulated effects of accounting changes and other		(150	)		(1,016	)		(664	)
Income tax expense		24			17			8
Cumulated effect of accounting changes and other		(1	)		–			–
Net (loss)		(175	)		(1,033	)		(672	)

F-24

The following table provides a summary of the aggregated balance sheet (on a U.S. GAAP basis) of the Group’s aforementioned significant investees (excluding EUROHYPO AG, which is considered on an individual basis below), and is not indicative of the Group’s proportionate share of any respective line item.

in€ m.	Dec 31, 2004			Dec 31, 2003
Assets
Cash, deposits with banks and receivables		3,857			3,241
Trading assets		457			488
Securities available for sale and other investments		2,522			2,459
Loans, net		–			1
Property, plant, equipment and inventories		1,175			1,284
Goodwill and other intangible assets		322			509
Other assets		805			776
Total assets		9,138			8,758
Liabilities and equity
Notes payable to banks		750			850
Deposits received from customers		107			124
Long-term liabilities		2,082			1,742
Other liabilities and provisions		4,236			3,752
Minority interest		5			4
Capital and reserves		2,166			3,280
Accumulated other comprehensive income (loss)		(33	)		39
(Loss) of the reporting period		(175	)		(1,033	)
Total liabilities and equity		9,138			8,758

EUROHYPO AG
The Group’s equity method investment in EUROHYPO AG is considered to be significant on an individual basis.

The following table provides a summary of EUROHYPO AG’s consolidated statement of income according to German GAAP for the years ended December 31, 2003, 2002 and 2001. Financial statements are not yet publicly available for the year ended December 31, 2004.

in€ m.	2003			2002			2001
Net interest, commission and investment income		1,333			1,167			1,166
Other operating income		30			63			210
General administrative expenses		(475	)		(399	)		(419	)
Write-downs, depreciation and value adjustments		(376	)		(152	)		(297	)
Other income/expenses		(411	)		(355	)		(143	)
Net income before tax		101			324			517
Income tax expense		71			30			–
Net income		30			294			517

F-25

The following table provides a summary of EUROHYPO AG’s consolidated balance sheet according to German GAAP:

in€ m.	Dec 31, 2003		Dec 31, 2002
Assets
Claims on banks		22,869		21,812
Claims on customers		164,320		166,899
Bonds and other fixed-income securities		37,608		36,768
Other assets		2,423		2,988
Total assets		227,220		228,467
Liabilities and shareholders’ equity
Liabilities to banks		31,962		30,974
Liabilities to customers		39,800		41,485
Liabilities in certificate form		143,544		145,289
Provisions and other liabilities		6,165		5,953
Capital and reserves		5,749		4,766
Total liabilities and shareholders’ equity		227,220		228,467

Investments Held by Designated Investment Companies

The underlying investment holdings of the Group’s designated investment companies are carried at fair value, and totaled€ 213 million and€ 181 million at December 31, 2004 and 2003, respectively.

Other Equity Interests

Other equity interests totaling€ 2.3 billion and€ 2.4 billion at December 31, 2004 and 2003, respectively, include investments in which the Group does not have significant influence, including certain venture capital companies and nonmarketable equity securities. The write-offs for other-than-temporary impairments of these investments amounted to€ 58 million,€ 214 million and€ 423 million for the years ended December 31, 2004, 2003 and 2002, respectively.

At December 31, 2004, the aggregate carrying amount for all equity securities accounted for under the cost method of accounting was€ 1.5 billion. None of these investments were in an unrealized loss position at December 31, 2004. For equity securities with a carrying amount of€ 1 million the fair value was not estimated according to SFAS 107. No impairment indicators were present for these investments.

F-26

[7] Loans

The following table summarizes the composition of loans:

in€ m.	Dec 31, 2004		Dec 31, 2003
German:
Banks and insurance		2,047		3,861
Manufacturing		7,364		8,668
Households (excluding mortgages)		14,761		14,161
Households – mortgages		26,175		25,445
Public sector		1,474		1,388
Wholesale and retail trade		3,742		5,133
Commercial real estate activities		11,100		11,629
Lease financing		820		855
Other		11,586		12,736
Total German		79,069		83,876
Non-German:
Banks and insurance		5,740		6,660
Manufacturing		5,906		7,487
Households (excluding mortgages)		7,023		6,915
Households – mortgages		9,117		8,416
Public sector		1,804		921
Wholesale and retail trade		6,546		6,691
Commercial real estate activities		3,004		1,977
Lease financing		1,726		3,138
Other		18,830		22,327
Total Non-German		59,696		64,532
Gross loans		138,765		148,408
Less: Unearned income		76		181
Loans less unearned income		138,689		148,227
Less: Allowance for loan losses		2,345		3,281
Total loans, net		136,344		144,946

The “other” category included no single industry group with aggregate borrowings from the Group in excess of 10 percent of the total loan portfolio at December 31, 2004.

Certain related third parties have obtained loans from the Group on various occasions. All such loans have been made in the ordinary course of business and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties. There were€ 2,954 million and€ 3,047 million of loans to related parties (including loans to equity method investees) outstanding at December 31, 2004 and 2003, respectively.

Nonaccrual loans as of December 31, 2004 and 2003 were€ 4.5 billion and€ 6.0 billion, respectively. Loans 90 days or more past due and still accruing interest totaled€ 247 million and€ 380 million as of December 31, 2004 and 2003, respectively.

Additionally, as of December 31, 2004, the Group had€ 83 million of loans held for sale that were non-performing.

F-27

Impaired Loans

This table sets forth information about the Group’s impaired loans:

in€ m.	Dec 31, 2004		Dec 31, 2003		Dec 31, 2002
Total impaired loans1		3,516		5,255		8,922
Allowance for impaired loans under SFAS 1142		1,654		2,471		3,144
Average balance of impaired loans during the year		4,474		6,712		9,710
Interest income recognized on impaired loans during the year		65		70		166

1	Included in these amounts are€ 2.8 billion,€ 4.1 billion and€ 6.0 billion as of December 31, 2004, 2003 and 2002, respectively, that require an allowance. The remaining impaired loans do not require an allowance because the present value of expected future cash flows, the fair value of the underlying collateral or the market price of the loan exceeds the recorded investment in these loans.
2	The allowance for impaired loans under SFAS 114 is included in the Group’s allowance for loan losses.

[8] Allowances for Credit Losses

The allowances for credit losses consist of an allowance for loan losses and an allowance for credit losses on lending-related commitments.

The following table shows the activity in the Group’s allowance for loan losses:

in€ m.	2004			2003			2002
Allowance at beginning of year		3,281			4,317			5,585
Provision for loan losses		372			1,113			2,091
Net charge-offs
Charge-offs		(1,394	)		(1,894	)		(2,728	)
Recoveries		152			167			112
Total net charge-offs		(1,242	)		(1,727	)		(2,616	)
Allowance related to acquisitions/divestitures		3			(105	)		(421	)
Foreign currency translation		(69	)		(317	)		(322	)
Allowance at end of year		2,345			3,281			4,317

The following table shows the activity in the Group’s allowance for credit losses on lending-related commitments:

in€ m.	2004			2003			2002
Allowance at beginning of year		416			485			496
Provision for credit losses		(65	)		(50	)		17
Allowance related to acquisitions/divestitures		–			1			(11	)
Foreign currency translation		(6	)		(20	)		(17	)
Allowance at end of year		345			416			485

[9] Asset Securitizations and Variable Interest Entities

Asset Securitizations

The Group accounts for transfers of financial assets to securitization vehicles as sales when certain criteria are met; otherwise they are accounted for as secured borrowings. Beneficial interests in the securitization vehicles, primarily in the form of debt instruments, are sold to investors and the proceeds are used to pay the Group for the assets transferred. The cash flows collected from the financial assets transferred to the securitization vehicles are then used to repay the beneficial interests. The third party investors and the securitization vehicles generally have no recourse to the Group’s other assets in cases where the issuers of the financial assets fail to perform under the original terms of those assets. The Group may retain interests in the assets created in the securitization vehicles.

F-28

For the years ended December 31, 2004, 2003 and 2002, the Group recognized€ 219 million,€ 146 million and€ 91 million, respectively, of gains on securitizations primarily related to residential and commercial mortgage loans.

The following table summarizes certain cash flows received from and paid to securitization vehicles during 2004, 2003 and 2002:

	Residential and commercial						Commercial loans,
	mortgage loans						excluding mortgages
in€ m.	2004		2003		2002		2004		2003		2002
Proceeds from new securitizations		15,822		5,414		5,843		–		–		918
Proceeds from collections reinvested in new securitization receivables		–		–		–		439		1,157		12,177
Servicing fees received		4		5		14		–		1		44
Cash flows received on retained interests		72		82		28		6		13		101
Other cash flows received from (paid to) securitization vehicles		–		–		–		–		–		(42	)

Prior to the year ended December 31, 2003, the Group had securitization activities related to marine and recreational vehicle loans. During 2002 and 2003, these commercial and consumer finance businesses were sold.

At December 31, 2004, the weighted-average key assumptions used in determining the fair value of retained interests, including servicing rights, and the impact of adverse changes in those assumptions on carrying amount/fair value are as follows:

	Residential and			Commercial loans,
	commercial mortgage			excluding mortgages
in€ m. (except percentages)	loans
Carrying amount/fair value of retained interests		570			100
Prepayment speed (current assumed)		10.81	%		1.37	%
Impact on fair value of 10% adverse change		(14	)		–
Impact on fair value of 20% adverse change		(26	)		–
Default rate (current assumed)		2.91	%		0.26	%
Impact on fair value of 10% adverse change		(10	)		–
Impact on fair value of 20% adverse change		(21	)		–
Discount factor (current assumed)		8.37	%		7.51	%
Impact on fair value of 10% adverse change		(14	)		(2	)
Impact on fair value of 20% adverse change		(29	)		(3	)

These sensitivities are hypothetical and should be viewed with caution. As the figures indicate, changes in fair value based on a 10 percent variation in assumptions generally should not be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumptions; in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments and increased credit losses), which might affect the sensitivities. The key assumptions used in measuring the initial retained interests resulting from securitizations completed in 2004 were not significantly different from the current assumptions in the above table.

F-29

The key assumptions used in measuring the initial retained interests resulting from securitizations completed in 2003 and 2002 were not significantly different from the key assumptions used in determining the fair value of retained interests, including servicing rights, at December 31, 2003 and 2002, respectively. The weighted-average assumptions used at December 31, 2003 and 2002 were as follows:

	Residential and commercial				Commercial loans, excluding
	mortgage loans1				mortgages
in %	2003		2002		2003		2002
Prepayment speed		33.48		19.20		1.81		1.66
Default rate		3.43		1.02		0.30		0.19
Discount factor		5.89		11.25		8.35		8.19

¹ Excluded from the weighted-average assumptions are retained interests for commercial mortgage interest-only bonds in the amount of€ 67 million at December 31, 2002. These are short-duration assets valued using conservative prepayment speeds by assuming all underlying loans within the securitized pool are paid off at the earliest possible point in time after the expiration of contractual limitations.

The following table presents information about securitized loans, including delinquencies (loans which are 90 days or more past due) and credit losses, net of recoveries, for the years ended December 31, 2004 and 2003:

	Residential and commercial				Commercial loans, excluding
	mortgage loans				mortgages
in€ m.	2004		2003		2004		2003
Total principal amount of loans		7,606		14,127		750		1,346
Principal amount of loans 90 days or more past due		128		228		15		33
Net credit losses		20		2		1		3

The table excludes securitized loans that the Group continues to service but otherwise has no continuing involvement.

In July 2003, the Group sold U.S.- and European-domiciled private equity investments with a carrying value of€ 361 million as well as€ 80 million in liquid investments to a securitization vehicle that was a qualifying special purpose entity. The securitization vehicle issued€ 174 million of debt to unaffiliated third parties and the Group received cash proceeds of€ 102 million and retained debt and equity interests initially valued at€ 306 million. The Group recognized a€ 7 million loss on the sale of assets to the securitization vehicle. During 2004 and 2003, respectively, the Group received€ 1 million and€ 2 million of cash flows from retained interests.

The valuation of the Group’s retained interests at December 31, 2004 and December 31, 2003 were based on the fair values of the underlying investments in the securitization vehicle. These fair values were determined by the servicer of the securitization vehicle. The servicer is a Group-related entity. In determining fair value, the servicer utilizes the valuations of the underlying investments as provided by the general partners of those respective investments. The value of securities and other financial instruments are provided by these general partners on a fair value basis of accounting. The servicer may rely upon any valuations provided to it by the general partners of the investments, but is not bound by such valuations. At December 31, 2004 and 2003, respectively, the Group’s retained interests were valued at€ 302 million and€ 303 million.

The private equity investments held by the securitization vehicles are subject to€ 49 million funding commitments under their limited partnership agreements. These commitments are automatically funded by the securitization vehicle via the liquid investments.

To hedge its interest rate and currency risk, the securitization vehicle entered into a total rate of return swap with the Group. The Group also provided a liquidity facility to meet€ 168 million of servicing, administration, and interest expenses and€ 8 million to meet any funding commitments.

F-30

Variable Interest Entities

In the normal course of business, the Group becomes involved with variable interest entities primarily through the following types of transactions: asset securitizations, structured finance, commercial paper programs, mutual funds, and commercial real estate leasing and closed-end funds. The Group’s involvement includes transferring assets to the entities, entering into derivative contracts with them, providing credit enhancement and liquidity facilities, providing investment management and administrative services, and holding ownership or other investment interests in the entities.

The table below shows the aggregated assets (before consolidating eliminations) of variable interest entities consolidated by type of asset and entity as of December 31, 2004 and December 31, 2003:

	Commercial paper programs				Guaranteed value mutual				Asset securitization
					funds
in€ m.	2004		2003		2004		2003		2004		2003
Assets
Interest-earning deposits with banks		238		189		96		1,176		404		404
Trading assets		–		1,739		491		13,988		9,424		7,279
Securities		–		4,298		–		–		–		360
Loans, net		1,060		4,409		–		–		–		4
Other		–		30		35		230		3		4
Total		1,298		10,665		622		15,394		9,831		8,051
	Structured finance and other				Commercial real estate leasing
					vehicles and closed-end funds
in€ m.	2004		2003		2004		2003
Assets
Interest-earning deposits with banks		546		110		57		46
Trading assets		1,476		1,096		–		–
Securities		39		–		–		–
Loans, net		6,689		380		255		310
Other		5,495		215		736		552
Total		14,245		1,801		1,048		908

Substantially all of the consolidated assets of the variable interest entities act as collateral for related consolidated liabilities. The holders of these liabilities have no recourse to the Group, except to the extent the Group guarantees the value of the mutual fund units that investors purchase. The Group’s liabilities to pay under these guarantees were not significant as of December 31, 2004 and 2003. The mutual funds that the Group manages are investment vehicles that were established to provide returns to investors in the vehicles.

The commercial paper programs give clients access to liquidity in the commercial paper market. As an administrative agent for the commercial paper programs, the Group facilitates the sale of loans, other receivables, or securities from various third parties to a commercial paper entity, which then issues collateralized commercial paper to the market. The Group provides liquidity facilities to the commercial paper vehicles, but these facilities create only limited credit exposure since the Group is not required to provide funding if the assets of the vehicle are in default. In 2004, conduits with total assets of€ 5.8 billion were restructured and accordingly deconsolidated.

For asset securitization, the Group may retain a subordinated interest in the assets the Group securitizes or may purchase interest in the assets securitized by independent third parties. For structured finance and other products, the Group structures VIEs to meet various needs of our clients. For the commercial real estate leasing vehicles and closed-end funds, third party investors essentially provide financing for the purchase of commercial real estate or other assets which are leased to other third parties.

F-31

As of December 31, 2004 and December 31, 2003 the total assets and the Group’s maximum exposure to loss as a result of its involvement with variable interest entities where the Group holds a significant variable interest, but does not consolidate, are as follows:

	Aggregated total assets				Maximum exposure to loss
in€ m.	2004		2003		2004		2003
Commercial paper programs		17,296		15,008		20,305		16,170
Commercial real estate leasing vehicles and closed-end funds		1,599		1,622		95		336
Structured finance and other		3,212		1,248		579		116
Guaranteed value mutual funds		5,856		–		5,856		–

The Group provides liquidity facilities and, to a lesser extent, guarantees to the commercial paper programs that it has a significant interest in. The Group’s maximum exposure to loss from these programs is equivalent to the contract amount of its liquidity facilities since the Group cannot be obligated to fund the liquidity facilities and guarantees at the same time. The liquidity facilities create only limited credit exposure since the Group is not required to provide funding if the assets of the vehicle are in default.

For the commercial real estate leasing vehicles and closed-end funds, the Group’s maximum exposure to loss results primarily from investments held in these vehicles. For structured finance and other vehicles, the Group’s maximum exposure to loss results primarily from the risk associated with the Group’s purchased and retained interests in the vehicles. The maximum exposure to loss related to the significant non-consolidated guaranteed value mutual funds results from the above mentioned guarantees.

[10] Assets Pledged and Received as Collateral

The carrying value of the Group’s assets pledged (primarily for borrowings, deposits, and securities loaned) as collateral where the secured party does not have the right by contract or custom to sell or repledge the Group’s assets are as follows:

in€ m.	Dec 31, 2004		Dec 31, 2003
Trading assets		25,568		16,830
Securities available for sale		8		742
Loans		10,433		11,086
Premises and equipment		636		625
Total		36,645		29,283

At December 31, 2004 and 2003, the Group has received collateral with a fair value of€ 298 billion and€ 223 billion, respectively, arising from securities purchased under reverse repurchase agreements, securities borrowed, derivatives transactions, customer margin loans and other transactions, which the Group as the secured party has the right to sell or repledge. At December 31, 2004 and 2003,€ 124 billion and€ 115 billion, respectively, related to collateral that the Group has received and sold or repledged primarily to cover short sales, securities loaned and securities sold under repurchase agreements. These amounts exclude the impact of netting.

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[11] Premises and Equipment, Net

An analysis of premises and equipment, including assets under capital leases, follows:

in€ m.	Dec 31, 2004		Dec 31, 2003
Land		1,036		1,014
Buildings		3,576		4,058
Leasehold improvements		1,211		1,214
Furniture and equipment		2,344		2,495
Purchased software		347		440
Self-developed software		331		322
Construction-in-progress		144		151
Total		8,989		9,694
Less: Accumulated depreciation		3,764		3,908
Premises and equipment, net1		5,225		5,786

¹ Amounts at December 31, 2004 and 2003 included€ 1.8 billion and€ 1.9 billion, respectively, of net book value of premises and equipment held for investment purposes.

The Group is lessee under lease agreements covering real property and equipment. The future minimum lease payments, excluding executory costs, required under the Group’s capital leases at December 31, 2004, were as follows:

in€ m.
2005	73
2006	109
2007	257
2008	45
2009	47
2010 and later	506
Total future minimum lease payments	1,037
Less: Amount representing interest	658
Present value of minimum lease payments	379

At December 31, 2004, the total minimum sublease rentals to be received in the future under subleases are€ 484 million. Contingent rental income incurred during the year ended December 31, 2004, was€ 2 million.

The future minimum lease payments, excluding executory costs, required under the Group’s operating leases at December 31, 2004, were as follows:

in€ m.
2005	533
2006	451
2007	365
2008	307
2009	262
2010 and later	1,110
Total future minimum lease payments	3,028
Less: Minimum sublease rentals	682
Net minimum lease payments	2,346

F-33

The following shows the net rental expense for all operating leases:

in€ m.	2004		2003		2002
Gross rental expense		857		760		869
Less: Sublease rental income		116		61		97
Net rental expense		741		699		772

[12] Goodwill and Other Intangible Assets, Net

Goodwill impairment exists if the net book value of a reporting unit exceeds its estimated fair value. The Group’s reporting units are generally consistent with the Group’s business segment level, or one level below. The Group performs its annual impairment review during the fourth quarter of each year, beginning in the fourth quarter of 2002. There was no goodwill impairment in 2004, 2003 and 2002 resulting from the annual impairment review.

In 2004, an impairment loss of€ 19 million relating to investment management agreements was recorded in the Asset and Wealth Management Corporate Division following the termination of such agreements. The impairment loss was determined based on a discounted cash flow model and is included in the line item Goodwill impairment/impairment of intangibles on the Consolidated Statement of Income.

In 2003, a goodwill impairment loss of€ 114 million related to the Private Equity reporting unit was recorded following decisions relating to the private equity fee-based business including the transfer of certain businesses to the Group’s Asset and Wealth Management Corporate Division. The fair value of the business remaining in the Private Equity reporting unit was calculated using the discounted cash flow model.

A goodwill impairment loss of€ 62 million was recognized in the Private Equity reporting unit during 2002. A significant portion of the reporting unit was classified as held for sale during the fourth quarter of 2002 resulting in an impairment loss of the goodwill related to the remaining reporting unit.

Other Intangible Assets

An analysis of acquired other intangible assets follows:

	Dec 31, 2004						Dec 31, 2003
	Gross		Accumulated		Net		Gross		Accumulated			Net
	carrying		amortization		carrying		carrying		amortization			carrying
in€ m.	amount				amount		amount					amount
Amortized intangible assets:
Customer contracts		59		11		48		75		19			56
Investment management agreements		41		19		22		62		14			48
Mortgage servicing rights		68		3		65		–		–	��		–
Other customer-related		79		21		58		48		15			33
Other		17		9		8		29		9			20
Total amortized intangible assets		264		63		201		214		57			157
Unamortized intangible assets:
Retail investment management agreements and other						848							925
Loan servicing rights						20							40
Total other intangible assets						1,069							1,122

F-34

For the years ended December 31, 2004 and 2003, the aggregate amortization expense for other intangible assets was€ 24 million and€ 22 million, respectively. The estimated aggregate amortization expense for each of the succeeding five fiscal years is as follows:

in€ m.
2005	26
2006	20
2007	19
2008	18
2009	16

For the year ended December 31, 2004, the Group acquired the following other intangible assets:

			Weighted-average
in€ m.	Additions in current year		amortization period
Amortized intangible assets:
Mortgage servicing rights		68	10 years
Other customer-related		19	10 years
Other		11	5 years
Total other intangible assets		98	9 years

These additions are mainly due to the acquisitions of Berkshire Mortgage Finance L.P.’s origination and servicing business as well as Dresdner Bank’s German domestic custody business, which contributed€ 68 million and€ 19 million respectively.

Goodwill

All goodwill has been allocated to reporting units. The changes in the carrying amount of goodwill for the years ended December 31, 2004 and 2003 are as follows:

	Corporate			Global			Asset and			Private &			Corporate			Total
	Banking &			Transaction			Wealth			Business			Investments
in€ m.	Securities			Banking			Management			Clients
Balance as of January 1, 2003		3,731			635			3,165			246			595			8,372
Purchase accounting adjustments		–			–			14			–			–			14
Goodwill acquired during the year		2			1			112			4			–			119
Impairment losses		–			–			–			–			(114	)		(114	)
Goodwill related to dispositions		–			(133	)		(51	)		–			(382	)		(566	)
Effects from exchange rate fluctuations		(572	)		(75	)		(417	)		(16	)		(10	)		(1,090	)
Balance as of December 31, 2003		3,161			428			2,823			234			89			6,735
Purchase accounting adjustments		–			–			(20	)		–			–			(20	)
Transfers		6			–			(6	)		–			–			–
Goodwill acquired during the year		27			36			60			4			–			127
Impairment losses		–			–			–			–			–			–
Goodwill related to dispositions		–			–			(11	)		–			–			(11	)
Effects from exchange rate fluctuations		(243	)		(28	)		(178	)		(4	)		–			(453	)
Balance as of December 31, 2004		2,951			436			2,668			234			89			6,378

The additions to goodwill of€ 127 million for the year ended December 31, 2004 are mainly due to the acquisitions of the remaining 1.5% third party holding in DWS Holding & Service GmbH, Dresdner Bank’s German domestic custody business and Berkshire Mortgage Finance L.P.’s origination and servicing business, which contributed€ 57 million,€ 36 million and€ 26 million, respectively.

The additions to goodwill of€ 119 million for the year ended December 31, 2003 are mainly due to the acquisition of Rued, Blass & Cie AG Bankgeschaeft, which contributed€ 59 million.

F-35

[13] Assets Held for Sale

In 2004, the Group signed several contracts to sell real estate in the Asset and Wealth Management and the Corporate Investments segments. The net assets were written down to the lower of their carrying value or fair value less cost to sell resulting in a loss of€ 29 million.

During 2003, the Group decided to sell subsidiaries and investments in the Corporate Investments, Global Transaction Banking, Private & Business Clients and Asset and Wealth Management segments. The net assets for these subsidiaries and investments were written down to the lower of their carrying value or fair value less cost to sell resulting in a loss of€ 32 million.

During 2002, the Group decided to sell certain businesses in the Global Transaction Banking, Asset and Wealth Management and Corporate Investment segments. The net assets for these businesses, most of which are reported as other investments, were written down to the lower of their carrying value or fair value less cost to sell resulting in a loss of€ 217 million for the year ended December 31, 2002.

[14] Other Assets and Other Liabilities

The largest individual component of other assets at December 31, 2004 and December 31, 2003 was pending securities transactions past settlement date of€ 8,984 million and€ 11,082 million, respectively. Other assets also included loans held for sale, which were€ 8,194 million and€ 7,110 million at December 31, 2004 and December 31, 2003, respectively. These loans held for sale were acquired in the course of our securitization activities or originated in our loan business. Among other items included in other assets were accrued interest receivable of€ 3,854 million and€ 3,612 million at December 31, 2004 and December 31, 2003, respectively, and due from customers on acceptances of€ 74 million and€ 60 million at December 31, 2004 and December 31, 2003, respectively.

Pending securities transactions past settlement date of€ 9,562 million and€ 10,390 million at December 31, 2004 and December 31, 2003, respectively, were also the largest individual component of other liabilities. Among other items also included in other liabilities were accrued interest payable of€ 4,223 million and€ 3,793 million at December 31, 2004 and December 31, 2003, respectively, and acceptances outstanding of€ 74 million and€ 60 million at December 31, 2004 and December 31, 2003, respectively.

F-36

[15] Deposits

The components of deposits are as follows:

in€ m.	Dec 31, 2004		Dec 31, 2003
German offices:
Noninterest-bearing demand deposits		20,851		22,371
Interest-bearing deposits Demand deposits		31,252		24,787
Certificates of deposit		247		665
Savings deposits		22,572		24,147
Other time deposits		34,505		33,194
Total interest-bearing deposits		88,576		82,793
Total deposits in German offices		109,427		105,164
Non-German offices:
Noninterest-bearing demand deposits		6,423		5,797
Interest-bearing deposits Demand deposits		73,630		57,463
Certificates of deposit		19,056		20,696
Savings deposits		6,314		6,419
Other time deposits		114,619		110,615
Total interest-bearing deposits		213,619		195,193
Total deposits in non-German offices		220,042		200,990
Total deposits		329,469		306,154

Related party deposits amounted to€ 1,937 million and€ 1,050 million at December 31, 2004 and 2003, respectively.

[16] Other Short-term Borrowings

Short-term borrowings are borrowed funds generally with an original maturity of one year or less. Components of other short-term borrowings include:

in€ m.	Dec 31, 2004		Dec 31, 2003
Commercial paper		9,980		13,150
Other		10,138		9,140
Total		20,118		22,290

F-37

[17] Long-term Debt

The Group issues fixed and floating rate long-term debt denominated in various currencies, approximately half of which is denominated in euros.

The following table is a summary of the Group’s long-term debt:

By remaining maturities	Due in		Due in		Due in		Due in		Due in		Due after		Dec 31,		Dec 31,
	2005		2006		2007		2008		2009		2009		2004		2003
in€ m.													total		total
Senior debt:
Bonds and notes:
Fixed rate		8,012		5,345		7,038		3,827		9,072		20,540		53,834		47,364
Floating rate		6,764		4,168		6,343		6,514		4,367		11,307		39,463		37,217
Subordinated debt:
Bonds and notes:
Fixed rate		152		928		611		288		1,457		6,069		9,505		10,379
Floating rate		104		–		348		94		183		3,339		4,068		2,520
Total		15,032		10,441		14,340		10,723		15,079		41,255		106,870		97,480

Based solely on the contractual terms of the debt issues, the following table represents the range of interest rates payable on this debt for the periods specified:

	Dec 31, 2004			Dec 31, 2003
Senior debt:
Bonds and notes:
Fixed rate1		0.00% – 50.00	%		0.00% – 31.63	%
Floating rate1		0.00% – 18.83	%		0.00% – 21.11	%
Subordinated debt:
Bonds and notes:
Fixed rate		0.81% – 10.50	%		0.81% – 10.50	%
Floating rate		0.74% – 8.00	%		0.74% – 8.00	%

¹ The lower and higher end of the range of interest rates relate to some transactions where the contractual rates are shown excluding the effect of embedded derivatives.

Fixed rate debt outstanding at December 31, 2004 matures at various dates through 2044. The weighted-average interest rates on fixed rate debt at December 31, 2004 and 2003 were 5.57% and 5.23%, respectively. Floating rate debt outstanding at December 31, 2004 matures at various dates through 2050 excluding€ 4.6 billion with undefined maturities. The weighted-average interest rates on floating rate debt at December 31, 2004 and 2003 were 2.84% and 2.58%, respectively. The weighted-average interest rates for total long-term debt were 4.36% and 3.97% at December 31, 2004 and 2003, respectively.

The interest rates for the floating rate debt issues are generally based on EURIBOR, although in certain instances they are subject to minimum interest rates as specified in the agreements governing the respective issues.

The Group enters into various transactions related to the debt it issues. This debt may be traded for market-making purposes or held for a period of time. Purchases of the debt are accounted for as extinguishments; however, the resulting net gains (losses) during 2004 and 2003 were insignificant.

F-38

[18] Obligation to Purchase Common Shares

As of December 31, 2004 and 2003, the obligation to purchase common shares amounted to€ 3,058 million and€ 2,310 million, respectively. The obligation represented forward purchase contracts covering approximately 56.1 million (2003: 44.3 million) Deutsche Bank common shares with a weighted-average strike price of€ 54.52 (2003:€ 52.18) entered into to satisfy obligations under employee share-based compensation awards. Contracts covering 0.4 million shares (2003: 3.1 million) mature in less than one year. The remaining contracts covering 55.7 million shares (2003: 41.2 million) have maturities between one and five years.

[19] Mandatorily Redeemable Shares and Minority Interests in Limited Life Entities

Other liabilities included€ 93 million and€ 62 million, representing the settlement amount as of December 31, 2004 and 2003, respectively, for minority interests in limited life subsidiaries and mutual funds. These entities have termination dates between 2007 and 2103.

Included in long-term debt and short-term borrowings were€ 3,545 million and€ 4,164 million related to mandatorily redeemable shares at December 31, 2004 and 2003, respectively. The amount to be paid if settlement was at December 31, 2004 and 2003 was€ 3,548 million and€ 4,167 million, respectively. These mandatorily redeemable shares are primarily due between 2005 and 2033. The majority of interest paid on the redeemable shares is at fixed rates between 0.00% – 4.70% with the remainder paid at variable rates, which are based on LIBOR or the tax-adjusted U.S. dollar swap rate.

[20] Common Shares and Share-Based Compensation Plans

Deutsche Bank’s share capital consists of common shares issued in registered form without par value. Under German law, no par value shares are deemed to have a “nominal” value equal to the total amount of share capital divided by the number of shares. Therefore, the Group’s shares have a nominal value of€ 2.56.

Common share activity was as follows:

Number of shares	2004			2003			2002
Common shares outstanding, beginning of year		565,077,163			585,446,954			614,475,625
Shares issued under employee benefit plans		–			–			285,800
Shares retired		(38,000,000	)		(40,000,000	)		–
Shares purchased for treasury		(536,383,830	)		(464,939,509	)		(474,184,113	)
Shares sold or distributed from treasury		526,576,340			484,569,718			444,869,642
Common shares outstanding, end of year		517,269,673			565,077,163			585,446,954

Shares purchased for treasury consist of shares held for a period of time by the Group as well as any shares purchased with the intention of being resold in the short term. In addition, beginning in 2002, the Group launched share buy-back programs. Shares acquired under these programs are deemed to be retired or used for share-based compensation. The 2002 program was completed in April 2003 resulting in the retirement of 40 million shares. The second program was completed in June 2004 and resulted in the retirement of 38 million shares. The third buy-back program started in July 2004. All such transactions were recorded in shareholders’ equity and no revenues and expenses were recorded in connection with these activities.

F-39

Authorized and Conditional Capital

Deutsche Bank’s share capital may be increased by issuing new shares for cash and in some circumstances for non-cash consideration. At December 31, 2004, Deutsche Bank had authorized but unissued capital of€ 584,000,000 which may be issued at various dates through April 30, 2009 as follows:

	Authorized capital
	excluding shareholders’
Authorized capital	pre-emptive rights	Expiration date
–	€ 30,000,000	May 31, 2005
€ 128,000,0001	–	April 30, 2006
€ 100,000,000	–	April 30, 2007
€ 128,000,0001	–	April 30, 2008
€ 198,000,000	–	April 30, 2009

¹ Capital increase may be effected for noncash contributions with the intent of acquiring a company or holdings in companies.

Deutsche Bank also had conditional capital of€ 275,200,000. Conditional capital includes various instruments that may potentially be converted into common shares.

The Annual General Meeting on June 2, 2004 authorized the Board of Managing Directors to issue once or more than once, bearer or registered participatory notes with bearer warrants and/or convertible participatory notes, bonds with warrants, and/or convertible bonds on or before April 30, 2009. For this purpose share capital was increased conditionally by up to€ 150,000,000.

At December 31, 2004,€ 51,200,000 of conditional capital was available for option rights available for grant until May 10, 2003 and€ 64,000,000 for option rights available for grant until May 20, 2005 under the DB Global Partnership Plan. Also, the Board of Managing Directors was authorized at the Annual General Meeting on May 17, 2001 to issue, with the consent of the Supervisory Board, up to 12,000,000 option rights on Deutsche Bank shares on or before December 31, 2003 of which 3,585,476 option rights were granted and not exercised at December 31, 2004. For this purpose there was a conditional capital of€ 10,000,000 of which€ 9,178,819 was used under the DB Global Share Plan. These plans are described below.

Share-Based Compensation

Effective January 1, 2003, the Group adopted the fair-value-based method under SFAS 123 prospectively for all employee awards granted, modified or settled after January 1, 2003, excluding those related to the 2002 performance year. Prior to this the Group applied the intrinsic-value-based provisions of APB 25. Compensation expense for share-based awards is included in compensation and benefits on the Consolidated Statement of Income. See Note [1] for a discussion on the Group’s accounting for share-based compensation.

In accordance with the requirements of SFAS 123, the pro forma disclosures relating to net income and earnings per common share as if the Group had always applied the fair-value-based method are provided in Note [1].

The Group’s share-based compensation plans currently used for granting new awards are summarized in the table below. These plans, and those plans no longer used for granting new awards, are described in more detail in the text that follows.

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Plan name	Eligibility	Vesting period*	Expense	Equity or	Performance
			treatment	Equity Units	Options/
					Partnership
					Appreciation
					Rights
Share-based compensation plans
Restricted Equity Units Plan	Select executives	4.5 years	3	X
DB Global Partnership Plan
DB Equity Units
as bonus grants	Select executives	2 years	2	X
as retention grants	Select executives	3.5 years	3	X
Performance Options	Select executives1	4 years	2		X
Partnership Appreciation Rights	Select executives1	4 years	2		X
DB Share Scheme
as bonus grants	Select employees	3 years	2	X
as retention grants	Select employees	3 years	3	X
DB Key Employee Equity Plan
(DB KEEP)	Select executives	5 years	3	X
DB Global Share Plan 2004	All employees4	1 year	3	X

*	Approximate period after which all portions of the award are no longer subject to the plan specific forfeiture provisions.
1	Performance options and partnership appreciation rights are granted as a unit.
2	The value is recognized during the applicable performance year as part of compensation expense.
3	The value is recognized on a straight-line basis over the vesting period as part of compensation expense.
4	A participant must have been working for the Group for at least one year and have had an active employment contract in order to participate.

Share-Based Compensation Plans Currently Used for Granting New Awards

Restricted Equity Units Plan
Under the Restricted Equity Units Plan, the Group grants various employees deferred share awards as retention incentive which provide the right to receive common shares of the Group at specified future dates. The expense related to Restricted Equity Units awarded is recognized on a straight-line basis over the vesting period, which is generally four to five years.

The Group also grants to the same group of employees exceptional awards as a component of the Restricted Equity Units as an additional retention incentive that is forfeited if the participant terminates employment prior to the end of the vesting period. Compensation expense for these awards is recognized on a straight-line basis over the vesting period.

DB Global Partnership Plan
DB Equity Units. DB Equity Units are deferred share awards, each of which entitles the holder to one of the Group’s common shares approximately three and a half years from the date of the grant. DB Equity Units granted in relation to annual bonuses are forfeited if a participant terminates employment under certain circumstances within the first two years following the grant. Compensation expense for these awards is recognized in the applicable performance year as part of compensation earned for that year.

The Group also grants exceptional awards of DB Equity Units to a selected group of employees as retention incentive that is forfeited if the participant terminates employment prior to the end of the vesting period. Compensation expense for these awards is recognized on a straight-line basis over the vesting period which is approximately three and a half years.

Performance Options.Performance options are rights to purchase the Group’s common shares. Performance Options were granted with an exercise price equal to 120% of the reference price. The reference price is set at the higher of the fair market value of the Group’s common shares on the date of grant or an average of the fair market value of the Group’s common shares for the ten trading days on the Frankfurt Stock Exchange up to and including the date of the grant.

Performance Options are subject to a minimum vesting period of two years. In general, one-third of the options become exercisable at each of the second, third and fourth anniversaries of the grant date. However, if the Group’s common shares trade at more than 130% of the reference price for 35 consecutive trading days, the Performance Options become exercisable on the later of the end of the 35-day trading period or the second anniversary of the award date. This condition was fulfilled for the

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Performance Options granted in February 2003 and therefore, all these options became exercisable in February 2005 rather than in three equal tranches.

Under certain circumstances, if a participant terminates employment prior to the vesting date, Performance Option awards will be forfeited. All options not previously exercised or forfeited expire on the sixth anniversary of the grant date.

There were no options awarded for the 2004 performance year. Compensation expense for options awarded for the 2003 performance year was recognized in 2003 in accordance with the fair-value-based method. No compensation expense for options awarded for the 2002 performance year was recognized in 2002, as the market price of the shares on the date of grant did not exceed the exercise price.

Partnership Appreciation Rights.Partnership Appreciation Rights (“PARs”) are rights to receive a cash award in an amount equal to 20% of the reference price for Performance Options described above. The vesting of PARs will occur at the same time and to the same extent as the vesting of Performance Options. PARs are automatically exercised at the same time and in the same proportion as the exercise of the Performance Options.

There were no PARs awarded for the 2004 performance year. No compensation expense was recognized for the years ended December 31, 2003 and 2002 as the PARs represent a right to a cash award only with the exercise of Performance Options. This effectively reduces the exercise price of any Performance Option exercised to the reference price described above and is factored into the calculation of the fair value of the option.

DB Share Scheme
Under the DB Share Scheme, the Group grants various employees deferred share awards which provide the right to receive common shares of the Group at a specified future date. Compensation expense for awards granted in relation to annual bonuses is recognized in the applicable performance year as part of compensation earned for that year. Awards granted as retention incentive are expensed on a straight-line basis over the vesting period, which is generally three years.

DB Key Employee Equity Plan
Under the DB Key Employee Equity Plan (“DB KEEP”), the Group grants selected executives deferred share awards which provide the right to receive common shares of the Group at a specified future date. The awards are granted as retention incentive to various employees and are expensed on a straight-line basis over the vesting period as compensation expense. The vesting period is generally five years.

DB Global Share Plan 2004
The DB Global Share Plan 2004 awarded in 2004 is an all employee program which awards eligible employees ten shares of the Group’s common shares as part of their annual compensation. A participant must have been working for the Group for at least one year and have had an active employment contract in order to participate. The number of shares granted to part-time employees and those in various categories of extended leave was on a pro rata basis. Awards will ordinarily be forfeited if the participant terminates employment prior to the vesting date which is November 1, 2005.

The expense related to the DB Global Share Plan 2004 is recognized on a straight line basis over the vesting period which is one year from the date of grant.

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Share-Based Compensation Plans No Longer Used for Granting New Awards

DB Global Share Plan
Share Purchases.In 2003 and 2002, eligible employees could purchase up to 20 shares and eligible retirees could purchase up to 10 shares of the Group’s common shares. German employees and retirees were eligible to purchase these shares at discount. The discount was linked to the Group’s prior year’s earnings. The participant was fully vested and received all dividend rights for the shares purchased. At the date of purchase, the Group recognized as compensation expense the difference between the quoted market price of a common share at that date and the price paid by the participant.

Performance Options.In 2003 and 2002, employee participants received for each common share purchased five options. Each option entitled the participant to purchase one of the Group’s common shares. Options vest approximately two years after the date of grant and expire after six years. Options may be exercised at a strike price equal to 120% of the reference price. The reference price was set at the higher of the fair market value of the Group’s common shares on the date of grant or an average of the fair market value of the Group’s common shares for the ten trading days on the Frankfurt Stock Exchange up to and including the date of grant.

Generally, a participant must have been working for the Group for at least one year and have had an active employment contract in order to participate. Options are forfeited upon termination of employment. Participants who retire or become permanently disabled prior to vesting may still exercise their rights during the exercise period.

Compensation expense for options awarded for the 2003 performance year is recognized over the vesting period in accordance with the fair-value-based method. No compensation expense was recognized for options awarded for the 2002 performance year as the market price of the shares on the date of grant did not exceed the exercise price.

Global Equity Plan
During 1998, 1999 and 2000, certain key employees of the Group participated in the Global Equity Plan (“GEP”) and were eligible to purchase convertible bonds in 1,000 DM denominations at par. On October 16, 2001, the Board of Managing Directors gave approval to buy out the outstanding awards at a fixed price.

As of December 31, 2001, participants holding DM 55,429,000 (€ 28,340,398) bonds convertible into 11,085,800 shares accepted the offer and received cash payments totaling€ 490,347,106. Compensation expense relating to participants who accepted the buy-out offer was fully accrued in 2001.

Compensation expense was recorded using variable plan accounting over the vesting period for awards to participants who did not accept the buy-out offer in 2001. In June 2003, the remaining bonds were redeemed at their nominal value since specific performance criteria for conversion were not met. The Group released€ 3 million to earnings related to amounts previously accrued for the GEP Plan.

In addition, in connection with the buy-out offer in 2001, the Board authorized a special payment to 93 participants in 2003. These participants could not take part in the buy-out offer due to the conditions of the authorization in 2001. The cash payments, which totaled€ 9 million in connection with these bonds, were not included in share-based compensation expense.

Stock Appreciation Rights Plans
The Group has granted stock appreciation rights plans (“SARs”) which provide eligible employees of the Group the right to receive cash equal to the appreciation of the Group’s common shares over an established strike price. The stock appreciation rights granted can be exercised approximately three years from the date of grant. Stock appreciation rights expire approximately six years from the date of grant.

Compensation expense on SARs, calculated as the excess of the current market price of the Group’s common shares over the strike price, is recorded using variable plan accounting. The expense related to a portion of the awards is recognized in the performance year if it relates to annual bonuses earned as part of compensation, while remaining awards are expensed over the vesting periods.

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db Share Plan
Prior to the adoption of the DB Global Share Plan, certain employees were eligible to purchase up to 60 shares of the Group’s common shares at a discount under the db Share Plan. In addition, for each share purchased, employee participants received one option which entitled them to purchase one share. Options vested over a period of approximately three years beginning on the date of grant. Following the vesting period, options could be exercised if specific performance criteria were met. The exercise price was determined by applying a performance dependent discount to the average quoted price of a common share on the Frankfurt Stock Exchange on the five trading days before the exercise period started.

At the date of purchase of the common shares, the Group recognized as compensation expense the difference between the quoted market price of a common share at that date and the price paid by the participant. Compensation expense for the options was recognized using variable plan accounting over the vesting period, and based upon an estimated exercise price for the applicable three-year period and the current market price of the Group’s common shares.

All remaining db Share Plan options expired unexercised in 2003 because the specific performance criteria were not met. In 2003, the Group released€ 20 million to earnings related to amounts previously accrued for the options.

Other Plans
The Group has other local share-based compensation plans, none of which, individually or in the aggregate are material to the consolidated financial statements.

Compensation Expense
The Group recognized compensation expense related to its significant share-based compensation plans, described above, as follows:

in€ m.	2004		2003			2002
DB Global Partnership Plan1		11		8			4
DB Global Share Plan2		15		3			3
DB Share Scheme/Restricted Equity Units Plan/DB KEEP		997		773			469
Global Equity Plan		–		(3	)		(6	)
Stock Appreciation Rights Plans3		81		(13	)		35
db Share Plan		–		(20	)		(45	)
Total		1,104		748			460

1	Compensation expense for the years ended December 31, 2004, 2003 and 2002 included€ 6.6 million,€ 5.9 million and€ 3.9 million, respectively, related to DB Equity Units granted in February 2005, February 2004 and February 2003, respectively.
2	Compensation expense for the year ended December 31, 2004 included€ 6.6 million in relation to the DB Global Share Plan 2004.
3	For the years ended December 31, 2004, 2003 and 2002, net (gains) losses of€ 81 million,€ (13) million and€ 226 million, respectively, from non-trading equity derivatives, used to offset fluctuations in employee share-based compensation expense, were included.

F-44

The following is a summary of the activity in the Group’s current compensation plans involving share and option awards for the years ended December 31, 2004, 2003 and 2002 (amounts in thousands of shares, except exercise prices).

	DB Global Partnership Plan
	DB Equity Units1			Performance Options2			Weighted-average
							exercise price
Balance at December 31, 2001		–			–			–
Granted		451			12,156			€ 89.96
Issued		–			–			–
Forfeited		(43	)		(392	)		€ 89.96
Balance at December 31, 2002		408			11,764			€ 89.96
Granted		122			14,615			€ 47.53
Issued		–			–			–
Forfeited		(3	)		(490	)		€ 58.58
Balance at December 31, 2003		527			25,889			€ 66.60
Granted		127			115			€ 76.61
Issued		(324	)		–			–
Forfeited		–			(152	)		€ 89.96
Balance at December 31, 2004		330			25,852			€ 66.51
Weighted-average remaining contractual life at:
December 31, 2004				3 years 7 months
December 31, 2003				4 years 8 months

1	The weighted-average grant-date fair value per share of deferred share awards granted in 2004, 2003 and 2002 was€ 58.11,€ 38.62, and€ 74.96 respectively.
2	The weighted-average grant-date fair value per option, including the PAR, granted during 2004, 2003 and 2002 was€ 13.02,€ 11.97 and€ 21.24 respectively. Performance Options and PARs granted in 2004, 2003 and 2002 related to the 2003, 2002 and 2001 performance year, respectively.

There were no options exercisable under the DB Global Partnership Plan at December 31, 2004. Approximately 14.1 million options under the DB Global Partnership Plan, which have an exercise price of€ 47.53 per share, became exercisable in early 2005. Each Global Partnership Plan option was accompanied by a Partnership Appreciation Right entitling the holder to 20% of the reference price upon exercise of the related option. As of February 28, 2005, approximately 2.9 million of these Global Partnership Plan options and PARs had been exercised.

In addition, approximately 111,000 DB Equity Units were granted in February 2005 related to the 2004 performance year and included in compensation expense for the year ended December 31, 2004. Approximately 28,000 DB Equity Units were granted as a retention incentive in February 2005 and not included in compensation expense for the year ended December 31, 2004. The weighted-average grant date fair value per DB Equity Unit was€ 59.68.

There were no Performance Options or PARs awarded in relation to the 2004 performance year.

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The following table details the distribution of options outstanding for the DB Global Partnership Plan and for the DB Global Share Plan (reported under plans no longer used for granting new awards) as of year ended 2004:

Range of	Options outstanding						Options exercisable
exercise prices
	Options		Weighted-		Weighted-		Options		Weighted-
	outstanding		average		average		exercisable		average
			exercise price1		remaining				exercise price
					contractual life
					(in years)
€ 40.00 – 59.99		16,087		€ 55.33		4.1		–		N/A
€ 60.00 – 79.99		1,699		€ 75.24		5.1		–		N/A
€ 80.00 – 99.99		11,652		€ 87.81		3.1		–		N/A

N/A – Not applicable
1	The weighted-average exercise price does not include the effect of the PARs for the DB Global Partnership Plan.

The following is a summary of the activity in the Group’s compensation plans involving share awards (DB Share Scheme, DB Key Employee Equity Plan, Restricted Equity Units Plan and DB Global Share Plan 2004) for the years ended December 31, 2004, 2003 and 2002 (amounts in thousands of shares) broken into three categories. Expense for bonus awards is recognized in the applicable performance year. Expense for retention awards and DB Global Share Plan 2004 is recognized over the vesting period.

	Bonus			Retention			Global Share
in thousands of shares	awards1			awards2			Plan 20043		Total
Balance at December 31, 2001		5,723			13,304			–		19,027
Granted		6,386			12,148			–		18,534
Issued		(5,603	)		(4,243	)		–		(9,846	)
Forfeited		(417	)		(1,610	)		–		(2,027	)
Balance at December 31, 2002		6,089			19,599			–		25,688
Granted		1,036			26,823			–		27,859
Issued		(4,439	)		(3,210	)		–		(7,649	)
Forfeited		(228	)		(1,749	)		–		(1,977	)
Balance at December 31, 2003		2,458			41,463			–		43,921
Granted		2,169			21,848			594		24,611
Issued		(2,832	)		(4,938	)		–		(7,770	)
Forfeited		(231	)		(3,091	)		–		(3,322	)
Balance at December 31, 2004		1,564			55,282			594		57,440

1	The weighted-average grant-date fair values per share of deferred share awards granted during 2004, 2003 and 2002 were€ 61.11,€ 39.61 and€ 74.96, respectively.
2	The weighted-average grant-date fair values per share of deferred share awards granted during 2004, 2003 and 2002 were€ 57.71,€ 34.62 and€ 72.56, respectively. For the outstanding balance at year-end 2004, the weighted-average grant-date fair value per share was€ 50.24 and approximately€ 1.36 billion were expensed by year-end 2004.
3	The weighted-average grant-date fair values per share of deferred share awards granted during 2004 was€ 58.65. For the outstanding balance at year-end 2004, the weighted-average grant-date fair value per share was€ 58.65 and approximately€ 6.6 million were expensed by year-end 2004.

In addition to the amounts shown in the table above, the Group granted the following equity awards in February 2005:

(a) Approximately 1.5 million shares under the DB Share Scheme with a fair value of€ 61.99 per share were awarded as a bonus for the 2004 performance year and included in compensation expense for the year ended December 31, 2004.

(b) Approximately 13.3 million shares under the Restricted Equity Units Plan with an average fair value of€ 57.14 were awarded as retention awards.

F-46

The following is a summary of the Group’s share-based compensation plans (for which there will be no future awards) for the years ended December 31, 2004, 2003 and 2002:

Global

Stock

db Share Plan

DB Global Share Plan

Equity Plan

Appreciation

Rights Plans

Convertible

SARs2

Shares

Options

Shares

Performance

Weighted-

bonds1

Options3

average

exercise

in thousands of equivalent shares

price

Balance at December 31, 2001

607

16,928

N/A

3,476

N/A

175

€ 87.66

Granted

–

3

–

–

–

2,082

€ 55.39

Issued

–

(30

)

–

(1,453

)

471

–

–

Convertible bonds converted

(286

)

–

–

–

–

–

–

Forfeited

(49

)

(555

)

–

(170

)

–

(22

)

€ 57.99

Balance at December 31, 2002

272

16,346

N/A

1,853

N/A

2,235

€ 57.90

Granted

–

–

–

–

–

1,691

��

€ 75.24

Issued

–

–

–

–

396

–

–

Convertible bonds redeemed

(269

)

–

–

–

–

–

–

Forfeited

(3

)

(175

)

–

(14

)

–

(81

)

€ 57.00

Expired

–

–

–

(1,839

)

–

–

–

Balance at December 31, 2003

–

16,171

N/A

–

N/A

3,845

€ 65.54

Granted

–

–

–

–

–

–

–

Issued

–

–

–

–

–

–

–

Exercised

–

(387

)

–

–

–

–

–

Forfeited

–

–

–

–

–

(260

)

€ 64.02

Expired

–

(451

)

–

–

–

–

–

Balance at December 31, 2004

–

15,333

N/A

–

N/A

3,585

€65.64

Weighted-average remaining contractual life at:

December 31, 2004

4 years

4 months

December 31, 2003

5 years

4 months

N/A – Not applicable. Participant was fully vested for shares purchased under the db Share Plan.
1	Convertible bonds were included in long-term debt on the Consolidated Balance Sheet.
2	SARs were granted at various strike prices. In October 2001, 16,223,276 SARs with a strike price of€ 98 vesting in 2004 and expiring in 2007 were replaced by 10,328,417 rights at a strike price of€ 67. The weighted-average strike price of the outstanding SARs at December 31, 2004 is€ 69.39 with an average remaining life of two years.
3	The weighted/average grant-date fair value per option granted during 2003 and 2002 was€ 9.71 and€ 12.35, respectively.

There were no options exercisable under the DB Global Share Plan at December 31, 2004. Approximately 1.8 million options granted under the DB Global Share Plan in 2002, which have an exercise price of€ 55.39, became exercisable in early 2005. As of February 28, 2005, approximately 0.2 million of these options had been exercised.

Fair Value of Share Options Assumptions

No options were granted in 2004.

The fair value of share options granted in 2003 and 2002 was estimated at the grant date using a Black-Scholes option pricing model. The information for 2003 is used in accounting for share options under the fair-value-based method which the Group adopted prospectively effective January 1, 2003. The information for 2002 is used to calculate what the effect on net income and earnings per common share would have been if the Group had applied the fair value method as shown in Note [1].

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The weighted-average fair value per option and the significant assumptions used to estimate the fair values of options were:

	Dec 31, 20041		Dec 31, 2003			Dec 31, 2002
Weighted-average fair value per option		N/A		€ 9.92			€ 12.03
Risk free interest rate		N/A		3.52	%		3.45	%
Expected lives (in years)		N/A		4.0			4.4
Dividend yield		N/A		1.97	%		3.22	%
Volatility		N/A		26.65	%		43.2	%

N/A – Not applicable
1	No options were granted in 2004.

[21] Asset Restrictions and Dividends

Since January 1, 1999, when stage three of the European Economic and Monetary Union was implemented, the European Central Bank has had responsibility for monetary policy and control in all the member countries of the European Monetary Union, including Germany.

The European Central Bank sets minimum reserve requirements for institutions that engage in the customer deposit and lending business. These minimum reserves must equal a certain percentage of the institutions’ liabilities resulting from certain deposits, and the issuance of bonds. Liabilities to European Monetary Union national central banks and to other European Monetary Union banking institutions that are themselves subject to the minimum reserve requirements are not included in this calculation. Since January 1, 1999, the European Central Bank has set the minimum reserve rate at 2%. For deposits with a term to maturity or a notice period of more than two years, bonds with a term to maturity of more than two years and repurchase transactions, the minimum reserve rate has been set at 0%. Each institution is required to deposit its minimum reserve with the national central bank of its home country.

Cash and due from banks includes reserve balances that the Group is required to maintain with certain central banks. These required reserves were€ 424 million and€ 451 million at December 31, 2004 and 2003, respectively.

Under Deutsche Bank’s Articles of Association and German law, dividends are based on the results of Deutsche Bank AG as prepared in accordance with German accounting rules. The Board of Managing Directors, which prepares the annual financial statements of Deutsche Bank AG on an unconsolidated basis, and the Supervisory Board, which reviews them, first allocate part of Deutsche Bank’s annual surplus (if any) to the statutory reserves and to any losses carried forward, as it is legally required to do. Then they allocate the remainder between profit reserves (or retained earnings) and balance sheet profit (or distributable profit). They may allocate up to one-half of this remainder to profit reserves, and must allocate at least one-half to balance sheet profit. The Group then distributes the amount of the balance sheet profit of Deutsche Bank AG if the Annual General Meeting resolves so.

Certain other subsidiaries are subject to various regulatory and other restrictions that may limit cash dividends and certain advances to Deutsche Bank.

[22] Regulatory Capital

The regulatory capital adequacy guidelines applicable to the Group are set forth by the Basel Committee on Banking Supervision, the secretariat of which is provided by the Bank for International Settlements (“BIS”) and by European Council directives, as implemented into German law. The German Federal Financial Supervisory Authority(Bundesanstalt für Finanzdienstleistungsaufsicht, referred to as BaFin)in cooperation with the Deutsche Bundesbank supervises our compliance with such guidelines. Effective December 31, 2001 the BaFin permitted the Group to calculate its BIS capital adequacy ratios on the basis of the consolidated financial statements prepared in accordance with U.S. GAAP.

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The BIS capital ratio is the principal measure of capital adequacy for international banks. This ratio compares a bank’s regulatory capital with its counterparty risks and market price risks (which the Group refers to collectively as the “risk position”). Counterparty risk is measured for asset and off-balance sheet exposures according to broad categories of relative credit risk. The Group’s market risk component is a multiple of its value-at-risk figure, which is calculated for regulatory purposes based on the Group’s internal models. These models were approved by the BaFin for use in determining the Group’s market risk equivalent component of its risk position. A bank’s regulatory capital is divided into three tiers (core or Tier I capital, supplementary or Tier II capital, and Tier III capital). Core or Tier I capital consists primarily of share capital, additional paid-in capital, retained earnings and hybrid capital components, such as noncumulative trust preferred securities and equity contributed on silent partnership interests(stille Beteiligungen), less intangible assets (principally goodwill) and the impact from the tax law changes (as described below). Supplementary or Tier II capital consists primarily of profit participation rights(Genussrechte), cumulative trust preferred securities, long-term subordinated debt, unrealized gains on listed securities and other inherent loss allowance. Tier III capital consists mainly of certain short-term subordinated liabilities and it may only cover market price risk. Banks may also use Tier I and Tier II capital that is in excess of the minimum required to cover counterparty risk (excess Tier I and Tier II capital) in order to cover market price risk. The minimum BIS total capital ratio (Tier I + Tier II + Tier III) is 8% of the risk position. The minimum BIS core capital ratio (Tier I) is 4% of the risk-weighted positions and 2.29% of the market risk equivalent. The minimum core capital ratio for the total risk position therefore depends on the weighted-average of risk-weighted positions and market risk equivalent. Under BIS guidelines, the amount of subordinated debt that may be included as Tier II capital is limited to 50% of Tier I capital. Total Tier II capital is limited to 100% of Tier I capital. Tier III capital is limited to 250% of the Tier I capital not required to cover counterparty risk.

The effect of the 1999/ 2000 German Tax Reform Legislation on securities available for sale is treated differently for the regulatory capital calculation and financial accounting. For financial accounting purposes, deferred tax provisions for unrealized gains on securities available for sale are recorded directly to other comprehensive income whereas the adjustment to the related deferred tax liabilities for a change in expected effective income tax rates is recorded as an adjustment of income tax expense in current period earnings. The positive impact from the above on retained earnings of the Group from the two important German tax law changes in 1999 and 2000 amounts to approximately€ 2.7 billion and€ 2.8 billion as of December 31, 2004 and 2003, respectively. For the purpose of calculating the regulatory capital, gross unrealized gains on securities available for sale are excluded from Tier I capital. The adjustment relates to accumulated other comprehensive income (€ (0.9) billion in 2004 and€ (0.9) billion in 2003 and the release of deferred tax provisions (€ 2.7 billion in 2004 and€ 2.8 billion in 2003) included in retained earnings.

in€ m. (except percentages)	Dec 31, 2004			Dec 31, 2003
Risk-weighted positions		206,718			206,142
Market risk equivalent1		10,069			9,530
Risk position		216,787			215,672
Core capital (Tier I)		18,727			21,618
Supplementary capital (Tier II)		9,885			8,253
Available Tier III capital		–			–
Total regulatory capital		28,612			29,871
Core capital ratio (Tier I)		8.6	%		10.0	%
Capital ratio (Tier I + II + III)		13.2	%		13.9	%

¹ A multiple of the Group’s value-at-risk, calculated with a probability level of 99% and a ten-day holding period.

In 2004, the Group’s risk position increased by€ 1.1 billion to€ 216.8 billion on December 31, 2004.

BIS rules and the German Banking Act require the Group to cover its market price risk as of December 31, 2004, with slightly over€ 805 million of regulatory capital (Tier I + II + III). The Group met this requirement entirely with Tier I and Tier II capital.

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The Group’s U.S. GAAP-based total regulatory capital was€ 28.6 billion on December 31, 2004, and core capital (Tier I) was€ 18.7 billion, compared to€ 29.9 billion and€ 21.6 billion on December 31, 2003. The Group’s supplementary capital (Tier II) of€ 9.9 billion on December 31, 2004, amounted to 53% of core capital.

The Group’s capital ratio was 13.2% on December 31, 2004, significantly higher than the 8% minimum required by the BIS guidelines. The core capital ratio was 8.6% in relation to the total risk position (including market risk equivalent).

Failure to meet minimum capital requirements can initiate certain mandates, and possibly additional discretionary actions by the BaFin and other regulators that, if undertaken, could have a direct material effect on the consolidated financial statements of the Group.

The components of core and supplementary capital for the Group of companies consolidated for regulatory purposes are as follows at December 31, 2004, according to BIS:

Core capital(in€ m.)	Dec 31, 2004
Common shares		1,392
Additional paid-in capital		11,147
Retained earnings, common shares in treasury, equity classified as obligation to purchase common shares, share awards, foreign currency translation		14,277
Minority interests		548
Noncumulative trust preferred securities		2,520
Other (equity contributed on silent partnership interests)		525
Items deducted (principally goodwill and tax effect of available for sale securities)		(11,682	)
Total core capital		18,727

Supplementary capital(in€ m.)	Dec 31, 2004
Unrealized gains on listed securities (45% eligible)		788
Other inherent loss allowance		453
Cumulative preferred securities		762
Subordinated liabilities, if eligible according to BIS		7,882
Total supplementary capital		9,885

The group of companies consolidated for regulatory purposes includes all subsidiaries in the meaning of the German Banking Act that are classified as credit institutions, financial services institutions and financial enterprises or bank services enterprises. It does not include insurance companies, fund management companies or companies outside the finance sector.

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[23] Interest Revenues and Interest Expense

The following are the components of interest revenues and interest expense:

in€ m.	2004		2003		2002
Interest revenues
Interest-earning deposits with banks		797		902		1,469
Central bank funds sold and securities purchased under resale agreements		4,647		4,857		6,579
Securities borrowed		1,668		1,429		2,809
Interest income on securities available for sale and other investments		509		588		1,257
Dividend income on securities available for sale and other investments		300		386		385
Loans		6,896		7,649		11,741
Trading assets		12,596		11,286		11,248
Other		610		486		293
Total interest revenues		28,023		27,583		35,781
Interest expense
Interest-bearing deposits
Domestic		1,953		1,918		2,662
Foreign		5,174		4,662		6,657
Trading liabilities		6,866		5,667		4,410
Central bank funds purchased and securities sold under repurchase agreements		4,627		4,595		7,049
Securities loaned		556		430		580
Other short-term borrowings		467		598		705
Long-term debt		3,198		3,766		6,362
Trust preferred securities		–		100		170
Total interest expense		22,841		21,736		28,595
Net interest revenues		5,182		5,847		7,186

[24] Insurance Business

The following are the components of other assets related to insurance business:

in€ m.	Dec 31, 2004		Dec 31, 2003
Investment under unit-linked business		6,367		7,967
Deferred acquisition costs		20		21
Other		346		261
Total other assets related to insurance business		6,733		8,249

All other assets of the Group’s insurance business, primarily securities available for sale, are included in the respective line item on the Consolidated Balance Sheet.

The following are the components of insurance policy claims and reserves:

in€ m.	Dec 31, 2004		Dec 31, 2003
Benefit reserves		561		437
Reserve for unit-linked business		6,367		7,967
Other insurance provisions and liabilities		1,007		667
Total insurance policy claims and reserves		7,935		9,071

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[25] Pension and Other Employee Benefit Plans

The Group provides retirement arrangements covering the majority of its subsidiaries and employees working in Germany, the United Kingdom, the United States and other European and Asian countries. The majority of beneficiaries of the retirement arrangements are principally located in Germany. The value of a participant’s accrued pension benefit is based primarily on each employee’s remuneration and length of service.

Our plans are generally funded.

During 2004, the Group contributed€ 71 million to its qualified German pension plan (thereof€ 4 million initial funding and€ 67 million discretionary funding),€ 8 million to its qualified U.K. pension plans and€ 40 million to different qualified European pension plans (thereof€ 17 million initial funding and€ 23 million discretionary funding).

During 2003, the Group contributed€ 170 million to its qualified U.K. pension plans and€ 196 million to its qualified German pension schemes,€ 136 million and€ 76 million of which were discretionary contributions, respectively.

In December 2002, the Group began to fund the majority of its pension plans in Germany and contributed€ 3.9 billion to a segregated pension trust relating to an accumulated benefit obligation totaling€ 3.5 billion. In addition during 2002, the Group contributed to its qualified U.S. and U.K. pension plans approximately€ 115 million and€ 300 million, respectively.

The Group also sponsors a number of defined contribution plans covering employees of certain subsidiaries. The assets of all the Group’s defined contribution plans are held in independently administered funds. Contributions are generally determined as a percentage of salary.

In addition, the Group’s affiliates offer unfunded contributory defined benefit postretirement health care plans to a number of retired employees who are located in the United States and the United Kingdom. These plans pay stated percentages of eligible medical and dental expenses of retirees after a stated deductible has been met. The Group funds these plans on a cash basis as benefits are due.

The Group uses a measurement date of September 30 for plans in the United Kingdom and the United States. All other plans have a December 31 measurement date.

All plans are valued using the projected unit credit method. The recognition of actuarial gains and losses is applied by using the 10% “corridor” approach.

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The following table provides a reconciliation of the changes in the Group’s plans’ benefit obligation and fair value of assets over the two-year period ended December 31, 2004 and a statement of the funded status as of December 31 for each year:

	Pension benefits						Postretirement benefits
in€ m.	2004			2003			2004			2003
Change in benefit obligation
Benefit obligation at beginning of year		6,920			6,653			148			160
Service cost		244			279			7			8
Interest cost		384			375			9			9
Plan amendments		–			4			–			3
Acquisitions/divestitures		(103	)		(2	)		–			–
Actuarial loss (gain)		499			247			(1	)		11
Benefits paid		(320	)		(319	)		(12	)		(12	)
Curtailment/settlement/other1		50			(46	)		–			(2	)
Foreign currency exchange rate changes		(82	)		(271	)		(13	)		(29	)
Benefit obligation at end of year		7,592			6,920			138			148
Change in plan assets
Fair value of plan assets at beginning of year		6,801			6,296			–			–
Actual return on plan assets		768			546			–			–
Employer contributions2		310			560			12			11
Benefits paid		(119	)		(295	)		(12	)		(11	)
Curtailment/settlement/other1		(35	)		(30	)		–			–
Foreign currency exchange rate changes		(82	)		(276	)		–			–
Fair value of plan assets at end of year		7,643			6,801			–			-
Funded status		51			(119	)		(138	)		(148	)
Unrecognized net actuarial loss (gain)		870			838			10			14
Unrecognized prior service cost (benefit)		(8	)		9			7			10
Unrecognized transition obligation (assets)		–			14			–			–
Net amount recognized at end of year		913			742			(121	)		(124	)

1	Includes beginning balance of first time application of smaller schemes.
2	Amount for 2004 includes€ 71 million,€ 8 million and€ 40 million contributed to the Group’s German, U.K. and other European pension plans, respectively. Amount for 2003 includes€ 170 million and€ 196 million contributed to the Group’s U.K. and German pension plans, respectively.

The following amounts were recognized in the Consolidated Balance Sheet:

	Pension benefits						Postretirement benefits
in€ m.	2004			2003			2004			2003
Prepaid pension costs		1,094			1,001			–			–
Accrued benefit costs		(180	)		(259	)		(121	)		(124	)
Accumulated other comprehensive income		(1	)		–			–			–
Net amount recognized		913			742			(121	)		(124	)

The accumulated benefit obligation for all defined benefit pension plans was€ 7.1 billion and€ 6.4 billion at December 31, 2004 and 2003, respectively.

F-53

The following table shows the information for defined benefit pension plans with an accumulated benefit obligation in excess of the fair value of plan assets:

in€ m.	Dec 31, 2004		Dec 31, 2003
Projected benefit obligation		70		374
Accumulated benefit obligation		57		329
Fair value of plan assets		30		103

The information for defined benefit pension plans with a projected benefit obligation in excess of the fair value of plan assets is shown in the following table.

in€ m.	Dec 31, 2004		Dec 31, 2003
Projected benefit obligation		239		1,873
Accumulated benefit obligation		203		1,658
Fair value of plan assets		185		1,667

The accumulated postretirement benefit obligation exceeds plan assets for all of the company’s other postretirement benefit plans as they are unfunded.

The Group’s pension plan weighted-average asset allocations at December 31, 2004 and 2003, by asset category are as follows:

	Target allocation			Percentage of plan assets
	Dec 31, 2005			Dec 31, 2004			Dec 31, 2003
Asset category
Equity securities		16	%		17	%		27	%
Debt securities		82	%		73	%		65	%
Real Estate and other		2	%		10	%		8	%
Total		100	%		100	%		100	%

The Group’s pension plan investment strategy is to match the maturity profiles of the assets and liabilities in order to reduce the future volatility of pension expense and funding status of the plans. This involves the rebalancing of the investment portfolios to reduce the exposure to equity securities as well as increase the amount and duration of the fixed income portfolio. During 2004, a reduction of the average equity share of the portfolios to 17% was achieved. In the last quarter of 2003, the average equity share of the portfolios had been reduced from 35% to below 30% at year end 2003.

An extension of the average duration of the fixed income portfolio has also occurred during 2004 so that it more closely matches the duration of the liabilities. Implementation of the investment strategy has occurred for the German, United States and United Kingdom plans and will be extended in 2005 to other locations subject to the constraints of the regulatory and legal framework applicable to the particular pension plans. The asset allocation of each of the Group’s pension plans is reviewed regularly.

Plan Assets include derivative transactions with the Group for its qualified German and Luxembourg scheme totaling to€ 250 million. In addition there are€ 2 million of debt securities issued by the Group included in the plan assets.

The Group expects to contribute approximately€ 250 million to its pension plans in 2005, representing expected service costs in 2005.

The table below reflects the total benefits expected to be paid from both the plan assets and from the Company’s assets, including both the Company’s share of the benefit cost and the participants’ share of the cost, which is funded by participant contributions to the plan.

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Expected benefits to be paid from the plan assets and direct payments from the company to participants’ total:

in€ m.	Pension Benefits		Postretirement Benefits
2005		290		9
2006		306		9
2007		328		9
2008		342		10
2009		359		10
2010 – 2014		2,144		50

Benefits expense for the years ended December 31, 2004, 2003 and 2002, included the following components:

	Pension benefits									Postretirement benefits
in€ m.	2004			2003			2002			2004		2003		2002
Service cost		244			279			323			7		8		4
Interest cost		384			375			384			9		9		8
Expected return on plan assets		(388	)		(409	)		(175	)		–		–		–
Actuarial loss (gain) recognized		61			66			39			–		–		–
Settlement/curtailment		5			(7	)		4			–		–		–
Amortization of unrecognized transition obligation (asset)		17			(9	)		(10	)		–		–		–
Total defined benefit plans		323			295			565			16		17		12
Defined contribution plans		151			167			228			–		–		–
Net periodic benefit expense		474			462			793			16		17		12

The following actuarial assumptions were calculated on a weighted-average basis and reflect the local economic conditions for each country’s respective defined benefit and postretirement benefit plans:

	Pension benefits									Postretirement benefits
	2004			2003			2002			2004			2003			2002
Discount rate in determining expense		5.5	%		5.4	%		5.7	%		5.9	%		6.0	%		6.7	%
Discount rate in determining benefit obligations at year-end		5.0	%		5.5	%		5.8	%		5.7	%		5.9	%		6.7	%
Rate of increase in future compensation levels for determining expense		3.3	%		3.5	%		3.0	%		N/A			N/A			N/A
Rate of increase in future compensation levels for determining benefit obligations at year-end		3.3	%		3.3	%		2.0	%		N/A			N/A			N/A
Expected long-term rate of return on assets		5.6	%		5.6	%		6.7	%		N/A			N/A			N/A

N/A – Not applicable

The expected return on the Group’s defined benefit pension plans’ assets is calculated by applying a risk premium which reflects the inherent risks associated with each relevant asset category over a risk-free return. This percentage is applied against the target assets in each category to arrive at an expected total return. Using this so-called “building block” approach globally ensures that the Group has a consistent framework in place. In addition, it allows sufficient flexibility to allow for changes that need to be built in to reflect local specific conditions. The determination of the expected return on plan assets for 2005 was based on the actual asset allocation as of the measurement date. The ten-year government fixed interest bond yield for the country in which each plan is located was used as the basis for the risk-free return. An additional risk premium was then added to the risk-free return for equities and real estate, respectively. The additional return for debt securities was calculated by reference to the mix of debt securities in each plan with the return representing an appropriate return for each category

F-55

of debt security. For cash, the Group estimated the expected return to be equivalent to the yield of a short-term (two to three years) bond for the applicable country.

In determining postretirement benefits expense, an annual weighted-average rate of increase of 10.7% in the per capita cost of covered health care benefits was assumed for 2005. The rate is assumed to decrease gradually to 5.0% by 2010 and remain at that level thereafter.

Assumed health care cost trend rates have an effect on the amounts reported for the retiree health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects on the Group’s retiree health care plans:

	One-percentage point increase				One-percentage point decrease
in€ m.	2004		2003		2004			2003
Effect on total of service and interest cost components		2		3		(2	)		(2	)
Effect on accumulated postretirement benefit obligation		22		18		(19	)		(16	)

In May 2004, the FASB issued Staff Position 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP 106-2”), which superseded FSP 106-1 issued in January 2004. The Act, signed into law in the U.S. on December 8, 2003, introduces a prescription drug benefit as well as a subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to benefits provided under the Act. FSP 106-2, which is effective for the reporting period beginning after June 15^th, 2004, provides authoritative guidance on the accounting for the effects of the Act and disclosure guidance related to the federal subsidy provided by the Act. The Group determined that the effects of the Act were not a significant event requiring an interim remeasurement under SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions.” Consequently, as permitted by FSP 106-2, net periodic postretirement benefit cost for 2004 does not reflect the effects of the Act. The accumulated postretirement benefit obligation (“APBO”) for the postretirement benefit plan was remeasured at September 30, 2004 to reflect the effects of the Act, which resulted in a reduction of the APBO of approximately€ 36 million.

[26] Income Taxes

The components of income taxes (benefits) follow:

in€ m.	2004			2003		2002
Domestic		(201	)		305		215
Foreign		920			968		494
Current taxes		719			1,273		709
Domestic		572			37		2,992
Foreign		266			232		(512	)
Deferred taxes		838			269		2,480
Total		1,557			1,542		3,189

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The following is an analysis of the difference between the amount that would result from applying the German statutory income tax rate to income before tax and the Group’s actual income tax expense:

in€ m.	2004			2003			2002
Expected tax expense at German statutory income tax rate of 39.2% (40.5% for 2003 and 39.2% for 2002)		1,579			1,116			1,391
Reversal of 1999/2000 credits for tax rate changes		120			215			2,817
Effect of changes of German tax law		–			154			–
Domestic tax rate differential on dividend distribution		14			1			(65	)
Tax-exempt gains on securities and other income		(330	)		(637	)		(1,824	)
Foreign tax-rate differential		(126	)		(298	)		87
Change in valuation allowance		(7	)		99			254
Nondeductible expenses		312			647			223
Goodwill impairment		–			46			24
Tax credit related to domestic dividend received		–			(1	)		(7	)
Tax rate differential on (income) loss on equity method investments		(80	)		171			348
Other		75			29			(59	)
Actual income tax expense		1,557			1,542			3,189

The domestic tax rate including corporate tax, solidarity surcharge, and trade tax used for calculating deferred tax assets and liabilities as of December 31, 2004, 2003 and 2002 was 39.2%. For the year 2003 only, the corporate income tax rate was temporarily increased by 1.5% to 26.5% which increased the statutory income tax rate to 40.5%. The applicable statutory income tax rate for temporary differences that reversed after 2003 reverted to 39.2%.

For the years ended December 31, 2004, 2003 and 2002, due to actual sales of equity securities on which there was accumulated deferred tax provision in other comprehensive income, it was necessary to reverse those provisions as income tax expense. This treatment led to income tax expense of€ 120 million,€ 215 million and€ 2,817 million, respectively. This adjustment does not result in actual tax payments and has no net effect on shareholders’ equity.

The remaining accumulated deferred tax amounts recorded within other comprehensive income will be reversed as income tax expense in the periods that the related securities are sold. At December 31, 2004 and 2003, the amount of these deferred taxes accumulated within other comprehensive income that will reverse in a future period as tax expense when the securities are sold is approximately€ 2.7 billion and€ 2.8 billion, respectively.

The enactment of the German Act for the reduction of Tax Allowances and Exemptions (StVergAbG) in May 2003 provided a minimum taxation for trade tax purposes which resulted in a catch-up tax expense of€ 107 million. In December 2003, the German Federal Government modified the taxation of capital gains and dividends with the 2004 Tax Reform Act by treating 5% of any tax-exempt dividend and tax-exempt capital gains as non-tax deductible for corporation tax purposes. The new rules applicable from 2004 resulted in an additional deferred tax expense of€ 47 million in 2003.

F-57

The tax effects of each type of temporary difference and carry-forward that give rise to significant portions of deferred income tax assets and liabilities are the following:

in€ m.	Dec 31, 2004			Dec 31, 2003*
Deferred income tax assets:
Trading activities		20,279			10,589
Net operating loss carry-forwards and tax credits		1,940			2,513
Property and equipment, net		402			521
Other assets		13			1,106
Allowance for loan losses		106			265
Other provisions		1,944			590
Total deferred income tax assets		24,684			15,584
Valuation allowance		(888	)		(964	)
Deferred tax assets after valuation allowance		23,796			14,620
Deferred income tax liabilities:
Trading activities		21,232			11,550
Property and equipment, net		412			546
Securities valuation		140			82
Other liabilities		544			74
Total deferred income tax liabilities		22,328			12,252
Net deferred income tax assets		1,468			2,368

* Prior year amounts have been restated to conform to current year presentation.

Included in other assets and other liabilities at December 31, 2004 and 2003 are deferred tax assets of€ 3.7 billion and€ 3.6 billion and deferred tax liabilities of€ 2.2 billion and€ 1.3 billion, respectively.

Certain foreign branches and companies in the Group have deferred tax assets related to net operating loss carry-forwards and tax credits available to reduce future tax expense. The net operating loss carry-forwards at December 31, 2004 were€ 5.2 billion of which€ 3.4 billion have no expiration date and€ 1.8 billion expire at various dates extending to 2024. Tax credits were€ 158 million of which€ 0.8 million will expire in 2005 and€ 0.4 million will expire in 2006 and€ 157 million have other expiration dates. The Group has established a valuation allowance where it is more likely than not that the deferred tax assets relating to these losses and credits will not be realized.

The Group is under continuous examinations by the tax authorities in various countries. In 2004 a tax audit in the U.S. covering fiscal years until 2000 was settled without material impact on income taxes. Tax reserves have been established, which we believe to be adequate in relation to the potential for additional assessments.

The Group did not provide income taxes or foreign withholding taxes on€ 6.8 billion of cumulative earnings of foreign subsidiaries as of December 31, 2004 because these earnings are intended to be indefinitely reinvested in those operations. It is not practicable to estimate the amount of unrecognized deferred tax liabilities for these undistributed earnings. The American Jobs Creation Act of 2004 was signed into law by the President of the United States on October 22, 2004 and provides, in part a reduced rate of U.S. tax on certain dividends received from foreign subsidiaries of U.S. taxpayers. The Group estimates that approximately€ 370 million may be eligible for repatriation under this provision. The Group is still evaluating the effect of such a repatriation, and is not yet able to reasonably estimate the income tax effect thereof, but it is not anticipated that such repatriation would have a material impact on the consolidated financial statements.

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[27] Earnings Per Common Share

Basic earnings per common share amounts are computed by dividing net income by the average number of common shares outstanding during the year. The average number of common shares outstanding is defined as the average number of common shares issued, reduced by the average number of shares in treasury and by the average number of shares that will be acquired under physically settled forward purchase contracts and increased by undistributed vested shares awarded under deferred share plans.

Diluted earnings per share assumes the conversion into common shares of outstanding securities or other contracts to issue common stock, such as share options, convertible debt, unvested deferred share awards and certain forward contracts.

The following table sets forth the computation of basic and diluted earnings per share:

in€ m.	2004			2003		2002
Income before cumulative effect of accounting changes, net of tax		2,472			1,214		360
Cumulative effect of accounting changes, net of tax		–			151		37
Numerator for basic earnings per share – net income		2,472			1,365		397
Effect of dilutive securities
Forwards		(65	)		–		–
Convertible debt		4			–		–
Numerator for diluted earnings per share – net income applicable to common shareholders after assumed conversions		2,411			1,365		397
Number of shares in m.
Denominator for basic earnings per share – weighted-average shares outstanding		492.6			559.3		615.9
Effect of dilutive securities
Forwards		9.3			10.4		3.8
Employee stock compensation options		4.9			0.7		0.4
Convertible debt		1.9			–		0.1
Deferred shares		23.0			19.1		6.1
Other (including trading options)		–			0.2		0.2
Dilutive potential common shares		39.1			30.4		10.6
Denominator for diluted earnings per share – adjusted weighted-average shares after assumed conversions		531.7			589.7		626.5

The diluted EPS computations do not include the anti-dilutive effect of the following potential common shares:

Number of shares in m.	2004		2003		2002
Forward purchase contracts		10.0		–		–
Forward sale contracts		–		3.1		26.0
Put options sold		1.5		–		0.4
Call options sold		–		1.3		0.3
Stock compensation awards		13.6		15.5		0.2
Convertible Debt		0.2		–		–

F-59

in€	2004		2003		2002
Basic earnings per share
Income before cumulative effect of accounting changes, net of tax		5.02		2.17		0.58
Cumulative effect of accounting changes, net of tax		–		0.27		0.06
Net income		5.02		2.44		0.64
Diluted earnings per share
Income before cumulative effect of accounting changes, net of tax		4.53		2.06		0.57
Cumulative effect of accounting changes, net of tax		–		0.25		0.06
Net income		4.53		2.31		0.63

[28] Business Segments and Related Information

The Group’s segment reporting follows the organizational structure as reflected in its internal management reporting systems, which are the basis for assessing the financial performance of the business segments and for allocating resources to the business segments.

Organizational Structure

In order to best serve the Group’s clients and manage its investments, Deutsche Bank is organized into three Group Divisions, which are further sub-divided into corporate divisions. As of December 31, 2004, the Group Divisions were:

The Corporate and Investment Bank (CIB)combines the Group’s corporate banking and securities activities (including sales and trading, corporate finance, global banking and loan exposure management activities), with the Group’s transaction banking activities. CIB serves corporate and institutional clients, ranging from medium-sized enterprises to multinational corporations, banks and sovereign organizations.

Private Clients and Asset Management (PCAM)combines the Group’s asset management, private wealth management and private and business client activities. Within PCAM, we manage these activities in two global corporate divisions: Asset and Wealth Management (AWM) and Private & Business Clients (PBC)

– AWM comprises two business divisions. Asset Management Business Division (AM), which focuses on managing assets on behalf of institutional clients, including pension funds, and providing mutual funds and other investment vehicles for private individuals, and Private Wealth Management (PWM), which focuses, globally, on the specific needs of demanding high net worth clients, their families and selected institutions.

– PBC serves retail and affluent clients as well as small corporate customers. PBC focuses on three core European markets: Germany, Italy and Spain.

Corporate Investments (CI)combines the management of the Group’s industrial holdings, private equity investments, and other corporate principal investment activities.

In addition to these three group divisions, Deutsche Bank’s organization includes a Corporate Center, which supports cross-divisional management and leadership.

Significant Changes in Management Responsibility

Management responsibility has changed for a deposit product activity, which was previously reported within the Corporate Banking & Securities Corporate Division and has been transferred to the Global Transaction Banking Corporate Division. In addition, the London based PCS business unit was transferred from the Asset and Wealth Management Corporate Division to the Corporate Banking & Securities Corporate Division.

Prior periods have been restated to conform to the current year’s presentation.

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Impact of Acquisitions and Divestitures During 2004 and 2003

The effects of significant acquisitions and divestitures on segmental results are described below:

– In December 2004, the Group completed the integration of Dresdner Bank’s former institutional custody business in Germany. This business was included in the corporate division Global Transaction Banking.

– In November 2004, the Group signed an agreement with Legg Mason for the sale of a selected portion of the private client unit of Scudder, Scudder Private Investment Counsel (PIC). Under this agreement, Legg Mason will assume all investment advisory agreements and retain the staff from New York, Philadelphia, Chicago and Cincinnati Scudder PIC offices. This transaction closed December 31, 2004.

– In November 2004, the Group completed the acquisition of the remaining minority interests in DWS Holding & Service GmbH.

– In October 2004, the Group completed the acquisition of substantially all of the origination and servicing assets of Berkshire Mortgage Finance L.P., a U.S. commercial mortgage bank specializing in financing for multifamily properties. This business was included in the corporate division Corporate Banking & Securities.

– In September 2004, the Group merged three Australian trusts — Deutsche Diversified Trust, Deutsche Office Trust and Deutsche Industrial Trust — into a new trust, DB RREEF Trust. The merger created Australia’s fourth largest listed property trust. In connection with this transaction the Group transferred its Australian fiduciary real estate trust management and property management business into a subsidiary, renamed DB RREEF Holdings. The Group subsequently sold a 50% interest in DB RREEF Holdings and recognized a net gain of€ 18 million within the Group’s Asset and Wealth Management Corporate Division.

– Effective July 2004, the Group sold its wholly-owned subsidiary DB Payment Projektgesellschaft to the Betriebscenter fuer Banken Deutschland GmbH & Co KG (BCB), a 100% subsidiary of Deutsche Postbank AG. Since then BCB provides payment transaction services to the Group for its German domestic and parts of its foreign payment transactions. Prior to the sale, DB Payment Projektgesellschaft had been managed within the infrastructure groups of the Private Client and Asset Management Group Division. The loss on sale was partly recognized within the Private & Business Clients Division and partly within Global Transaction Banking.

– In June 2004, the Group’s wholly-owned subsidiary european transaction bank ag (etb), which had been managed under the Private Clients and Asset Management Group Division, was deconsolidated in the course of entering into a securities processing partnership with Xchanging Holdings, which assumes operational management of securities, funds and derivatives processing. The etb was transferred to Xchanging etb GmbH (formerly Zweite Xchanging GmbH), an equity method investment under the Corporate and Investment Bank Group Division.

– In the first quarter of 2004, the Group completed the sale of its interest in the operations of maxblue Americas, which had been included in Corporate Investments, to Banco do Brazil.

– In January, 2004 the Group completed the purchase of a 40% stake in United Financial Group (UFG). Deutsche Bank and Moscow-based UFG cooperate on research, sales and trading of Russian equities and Russian corporate finance business. This business was included in the corporate division Corporate Banking & Securities.

– In July 2003, the Group sold its investments in Tele Columbus GmbH and in Tele Columbus Ost GmbH (formally SMATcom GmbH), which were included in the Corporate Investments Group Division.

– In March 2003, the Group completed the acquisition of Rued, Blass & Cie AG Bankgeschaeft, a Swiss private bank. The majority of the business was included in the corporate division Asset and Wealth Management.

– In February 2003, the Group completed the sale of 80% of its late-stage private equity portfolio, which had been managed under the Corporate Investments Group Division.

– In January 2003, the Group completed the sale of most of its Passive Asset Management business to Northern Trust Corporation.

F-61

– In January 2003, the Group sold substantial parts of its Global Securities Services business to State Street Corporation. The completion of the sale of the Italian and Austrian parts of the business occurred in the third quarter of 2003 in a separate but related transaction. The business units included in the sale were Global Custody, Global Funds Services (including Depotbank services) and Agency Securities Lending, which were previously included in the Global Transaction Banking Corporate Division. In addition, the sale included Domestic Custody and Securities Clearing in the U.S. and the United Kingdom.

– In January 2003, the German commercial real estate financing activities were transferred to EUROHYPO AG. This increased the Group’s share of EUROHYPO AG to 37.7%. EUROHYPO AG resulted from the merger in 2002 of the Group’s former mortgage banking subsidiary “EUROHYPO AG Europäische Hypothekenbank der Deutschen Bank” with the mortgage banking subsidiaries of Dresdner Bank AG and Commerzbank AG. Since the merger, EUROHYPO AG has been included in the Corporate Investments Group Division. The Group has accounted for this investment under the equity method.

Changes in the Format of Segment Disclosure

The revenue breakdown by product for the Corporate and Investment Bank Group Division has been modified to reflect current industry practice. Loan syndication revenues, formerly reported as loan products, have now been included within origination (debt).

Prior periods have been restated to conform to the current year’s presentation.

Definitions of Financial Measures Used in the Format of Segment Disclosure

In the segmental results of operations, the following terms with the following meanings are used with respect to each segment:

– Operating cost base:Noninterest expenses less provision for off-balance sheet positions (reclassified to provision for credit losses), policyholder benefits and claims, minority interest, restructuring activities and goodwill/intangible impairment.

– Underlying pre-tax profit:Income before income taxes less restructuring activities, goodwill/intangible impairment and specific revenue items as referred to in the table for such segment.

– Underlying cost/income ratio in %:Operating cost base as a percentage of total net revenues excluding the revenue items excluded from the corresponding underlying pre-tax profit figure, net of policyholder benefits and claims.Cost/income ratio in %, which is defined as total noninterest expenses less provision for off-balance sheet positions, as a percentage of total net revenues, is also provided.

– Average active equity:The portion of adjusted average total shareholders’ equity that has been allocated to a segment pursuant to the capital allocation framework. The overriding objective of this framework is to allocate adjusted average total shareholders’ equity based on the respective goodwill and other intangible assets with indefinite lifetimes as well as the economic risk position of each segment. In determining the total amount of average active equity to be allocated, average total shareholders’ equity is adjusted to exclude average unrealized net gains on securities available for sale, net of applicable tax effects, and average dividends.

– Underlying return on average active equity in %:Underlying pre-tax profit as a percentage of average active equity.Return on average active equity in %,which is defined as income before income taxes as a percentage of average active equity, is also provided. These returns, which are based on average active equity, should not be compared to those of other companies without considering the differences in the calculation of such ratios.

Management uses these measures as part of its internal reporting system because it believes that such measures provide it with a more useful indication of the financial performance of the business segments. The Group discloses such measures to provide investors and analysts with further insight into how management operates the Group’s businesses and to enable them to better understand the Group’s results. The Group has excluded the following items in deriving the above measures for the following reasons.

F-62

– Net gains (losses) from businesses sold/held for sale:Gains or losses are excluded from the calculations of underlying results because they do not represent results of the Group’s continuing businesses.

– Net gains (losses) from securities available for sale/industrial holdings (including hedging):Net gains or losses related to several financial holdings investments and to the Group’s portfolio of shareholdings in publicly-listed industrial companies, most of which the Group has held for over 20 years and which the Group is reducing over time. Because these investments do not relate to the Group’s customer-driven businesses, the Group excludes all revenues (positive and negative) related to these investments from its underlying results, except for dividend income from the investments, which the Group does not exclude as funding costs associated with the investments are also not excluded.

– Significant equity pick-ups/net gains and losses from investments:This item includes significant net gains/ losses from equity method investments and other significant investments. They are excluded in the calculation of underlying results since they reflect results that are not related to the Group’s customer-driven businesses.

– Net gains (losses) on the sale of premises:This item includes net gains or losses on the sale of premises used for banking purposes. Net losses in 2003 related to the divestiture of non-core activities pursuant to the Group’s transformation strategy.

– Policyholder benefits and claims:For internal steering purposes, policyholder benefits and claims are reclassified from noninterest expenses to noninterest revenues so as to consider them together with insurance revenues, to which they are related. The reclassification does not affect the calculation of underlying pre-tax profits. Following the disposition of most of the Group’s insurance operations in early 2002, the size of this item has decreased significantly.

– Provision for off-balance sheet positions:Provision for off-balance sheet positions is reclassified from noninterest expenses to provision for credit losses because provision for off-balance sheet positions and provision for loan losses are managed together. This reclassification does not affect the calculation of underlying pre-tax profit.

– Change in measurement of other inherent loan loss allowance:In the third quarter of 2002, the Group took a charge of€ 200 million to reflect a refinement in the measurement of the other inherent loss allowance. This change was made in order to make the provision more sensitive to the prevailing credit environment and less based on historical experience. This effect does not affect the calculation of underlying pre-tax profit.

– Restructuring activities and Goodwill/intangible impairmentare excluded from the calculation of operating cost base and thus underlying pre-tax profit because these items are not considered part of the day-to-day business operations and therefore not indicative of trends.

– Minority interest:Minority interest represents the net share of minority shareholders in revenues, provision for loan losses, noninterest expenses and income tax expenses. This net component is reported as a noninterest expense item. This item is not considered to be an operating expense, but as a minority shareholder’s portion of net income. Accordingly, such item is excluded in the determination of the operating cost base. Minority interest is reflected in the calculation of underlying pre-tax profit as a separate item.

– Adjustments to calculate average active equity:The items excluded from average total shareholders’ equity to calculate average active equity result primarily from the portfolio of shareholdings in publicly-listed industrial companies. The Group has held most of its larger participations for over 20 years, and is reducing these holdings over time. Gains and losses on these securities are realized only when the Group sells them. Accordingly, the adjustments the Group makes to average total shareholders’ equity to derive the average active equity are to exclude unrealized net gains or losses on securities available for sale, net of applicable tax effects. In addition, the Group adjusts its average total shareholders’ equity for the effect of paying a dividend once a year following approval at the Annual General Meeting.

F-63

Framework of the Group’s Management Reporting Systems

Business segment results are determined based on the Group’s internal management reporting process, which reflects the way management views its businesses, and are not necessarily prepared in accordance with the Group’s U.S. GAAP consolidated financial statements. This internal management reporting process may be different than the processes used by other financial institutions and therefore should be considered in making any comparisons with those institutions. Since the Group’s business activities are diverse in nature and its operations are integrated, certain estimates and judgments have been made to apportion revenue and expense items among the business segments.

The management reporting systems follow the “matched transfer pricing concept” in which the Group’s external net interest revenues are allocated to the business segments based on the assumption that all positions are funded or invested via the money and capital markets. Therefore, to create comparability with competitors who have legally independent units with their own equity funding, the Group allocates among the business segments the notional interest credit on its consolidated capital resulting from a method for allocating funding costs. This credit is allocated in proportion to each business segment’s allocated average active equity, and is included in the segment’s net interest revenues.

In 2004, the Group further refined its economic capital framework. The allocation of the Group’s average active equity to the segments, which is driven by their economic capital as well as goodwill and other unamortized intangible assets attributable to them, now also reflects the diversification benefits across credit and market risk categories. As a result, the economic capital and the allocated average active equity of the segments decreased, with a corresponding increase in the average active equity of “Consolidation & Adjustments”. For the restated full-year 2003 this meant that€ 1.1 billion of average active equity is now recorded in “Consolidation & Adjustments”.

Revenues from transactions between the business segments are allocated on a mutually agreed basis. Internal service providers (including the Corporate Center), which operate on a nonprofit basis, allocate their noninterest expenses to the recipient of the service. The allocation criteria are generally contractually agreed and are either determined based upon “price per unit” (for areas with countable services) or “fixed price” or “agreed percentages” (for all areas without countable services).

F-64

Segmental Results of Operations

The following tables present the results of the business segments for the years ended December 31, 2004, 2003 and 2002.

2004	Corporate and Investment Bank									Private Clients and Asset Management									Corporate			Total
	Corporate			Global			Total			Asset and			Private &			Total			Invest-			Manage-
	Banking &			Trans-						Wealth			Business						ments			ment
	Securities			action						Manage-			Clients									Reporting
in€ m. (except percentages)				Banking						ment
Net revenues1		11,437			1,893			13,331			3,491			4,539			8,030			621			21,981
Provision for loan losses		80			9			89			(6	)		270			264			19			372
Provision for off-balance sheet positions		(66	)		1			(65	)		–			(1	)		(1	)		–			(65	)
Total provision for credit losses		14			11			24			(6	)		269			263			19			307
Operating cost base2		8,670			1,574			10,245			2,925			3,287			6,212			414			16,871
Policyholder benefits and claims		–			–			–			50			–			50			–			50
Minority interest		5			–			5			1			–			1			(1	)		4
Restructuring activities		272			28			299			88			10			98			3			400
Goodwill impairment/impairment of intangibles		–			–			–			19			–			19			–			19
Total noninterest expenses4		8,947			1,602			10,549			3,083			3,297			6,380			416			17,344
Income (loss) before income taxes5		2,477			280			2,757			415			973			1,387			185			4,330
Add (deduct):
Net (gains) losses from business sold/held for sale		–			(31	)		(31	)		(32	)		24			(8	)		(38	)		(76	)
Significant equity pick-ups/net (gains) from investments		–			–			–			–			–			–			(148	)		(148	)
Net (gains) on securities available for sale/industrial holdings including hedging		–			–			–			–			–			–			(176	)		(176	)
Net (gains) on the sale of premises		–			–			–			–			–			–			(20	)		(20	)
Restructuring activities		272			28			299			88			10			98			3			400
Goodwill impairment/impairment of intangibles		–			–			–			19			–			19			–			19
Underlying pre-tax profit (loss)		2,749			277			3,026			490			1,007			1,497			(194	)		4,328
Cost/income ratio in %		78			85			79			88			73			79			67			79
Underlying cost/income ratio in %		76			85			77			86			72			78			174			78
Assets3, 6		720,546			16,639			729,872			34,945			78,930			113,818			16,442			832,933
Expenditures for additions to long-lived assets		316			129			445			19			78			97			2			544
Risk-weighted positions (BIS risk positions)		128,027			11,097			139,124			11,424			54,253			65,677			10,242			215,044
Average active equity7		11,481			1,386			12,867			5,038			1,681			6,718			3,933			23,519
Return on average active equity in %		22			20			21			8			58			21			5			18
Underlying return on average active equity in %		24			20			24			10			60			22			(5	)		18
1  Includes:
Net interest revenues		1,790			628			2,417			214			2,414			2,629			105			5,151
Net revenues from external customers		11,433			1,980			13,414			3,736			4,205			7,941			527			21,881
Net intersegment revenues		4			(87	)		(83	)		(245	)		334			89			94			100
Net income (loss) from equity method investments		156			1			157			65			3			68			160			386
2  Includes:
Depreciation, depletion and amortization		289			76			365			92			154			246			30			640
Severance payments		154			16			170			51			50			101			1			272
3  Includes:
Equity method investments		1,546			38			1,584			434			33			466			3,298			5,348

4	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
5	Before cumulative effect of accounting changes.
6	The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on group division level. The same approach holds true for the sum of group divisions compared to Total Management Reporting.
7	For management reporting purposes goodwill and other intangible assets with indefinite lives are explicitly assigned to the respective divisions. Average active equity is first allocated to divisions according to goodwill and intangible assets, remaining average active equity is allocated to the divisions in proportion to the economic capital calculated for them.

F-65

2003	Corporate and Investment Bank									Private Clients and Asset Management									Corporate			Total
	Corporate			Global			Total			Asset and			Private &			Total			Invest-			Manage-
	Banking &			Trans-						Wealth			Business						ments			ment
	Securities			action						Manage-			Clients									Reporting
in€ m. (except percentages)				Banking						ment
Net revenues1		11,697			2,497			14,193			3,830			4,388			8,217			(921	)		21,490
Provision for loan losses		750			2			752			2			322			325			36			1,113
Provision for off-balance sheet positions		8			(53	)		(45	)		(3	)		(1	)		(3	)		(2	)		(50	)
Total provision for credit losses		759			(51	)		707			(1	)		322			321			35			1,063
Operating cost base2		8,220			1,743			9,963			3,094			3,605			6,699			681			17,343
Policyholder benefits and claims		–			–			–			21			–			21			–			21
Minority interest		13			–			13			13			2			15			(31	)		(3	)
Restructuring activities		(23	)		(6	)		(29	)		–			(1	)		(1	)		–			(29	)
Goodwill impairment		–			–			–			–			–			–			114			114
Total noninterest expenses4		8,211			1,737			9,947			3,128			3,607			6,735			763			17,445
Income (loss) before income taxes5		2,727			811			3,539			702			459			1,162			(1,719	)		2,982
Add (deduct):
Net (gains) losses from business sold/held for sale		–			(583	)		(583	)		(55	)		4			(51	)		141			(494	)
Significant equity pick-ups/net losses from investments		–			–			–			–			–			–			938			938
Net losses on securities available for sale/industrial holdings including hedging		–			–			–			–			–			–			184			184
Net losses on the sale of premises		–			–			–			–			–			–			107			107
Restructuring activities		(23	)		(6	)		(29	)		–			(1	)		(1	)		–			(29	)
Goodwill impairment		–			–			–			–			–			–			114			114
Underlying pre-tax profit (loss)		2,704			222			2,926			647			462			1,109			(236	)		3,800
Cost/income ratio in %		70			70			70			82			82			82			N/M			81
Underlying cost/income ratio in %		70			91			73			82			82			82			152			78
Assets3, 6		693,414			16,709			681,722			48,138			78,477			124,606			18,987			795,818
Expenditures for additions to long-lived assets		391			99			490			38			42			80			141			711
Risk-weighted positions (BIS risk positions)		127,449			10,166			137,615			12,170			51,244			63,414			13,019			214,048
Average active equity7		12,776			1,416			14,192			5,694			1,531			7,225			4,900			26,317
Return on average active equity in %		21			57			25			12			30			16			(35	)		11
Underlying return on average active equity in %		21			16			21			11			30			15			(5	)		14
N/M – Not meaningful
1  Includes:
Net interest revenues		2,495			663			3,158			278			2,379			2,656			138			5,952
Net revenues from external customers		11,587			2,629			14,216			4,041			4,094			8,135			(967	)		21,384
Net intersegment revenues		110			(133	)		(23	)		(212	)		294			82			47			106
Net income (loss) from equity method investments		163			(1	)		163			166			–			166			(757	)		(428	)
2  Includes:
Depreciation, depletion and amortization		344			90			434			99			171			270			65			769
Severance payments		194			66			260			78			317			395			20			675
3  Includes:
Equity method investments		1,889			37			1,927			380			30			410			3,511			5,848

4	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
5	Before cumulative effect of accounting changes.
6	The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on group division level. The same approach holds true for the sum of group divisions compared to Total Management Reporting.
7	For management reporting purposes goodwill and other intangible assets with indefinite lives are explicitly assigned to the respective divisions. Average active equity is first allocated to divisions according to goodwill and intangible assets, remaining average active equity is allocated to the divisions in proportion to the economic capital calculated for them.

F-66

2002	Corporate and Investment Bank									Private Clients and Asset Management									Corporate			Total
	Corporate			Global			Total			Asset and			Private &			Total			Invest-			Manage-
	Banking &			Trans-						Wealth			Business						ments			ment
	Securities			action						Manage-			Clients									Reporting
in€ m. (except percentages)				Banking						ment
Net revenues1		11,154			2,643			13,797			3,724			5,775			9,499			2,998			26,295
Provision for loan losses		1,706			6			1,712			23			201			224			155			2,091
Provision for off-balance sheet positions		83			(52	)		31			–			(1	)		(1	)		(11	)		18
Total provision for credit losses		1,788			(46	)		1,742			23			200			223			144			2,110
Operating cost base2		8,701			2,207			10,908			3,245			3,880			7,125			1,228			19,261
Policyholder benefits and claims		–			–			–			35			650			685			–			685
Minority interest		8			–			8			25			7			32			3			43
Restructuring activities		316			26			341			–			240			240			1			583
Goodwill impairment		–			–			–			–			–			–			62			62
Total noninterest expenses4		9,025			2,233			11,258			3,304			4,778			8,082			1,293			20,633
Income (loss) before income taxes5		341			456			797			397			797			1,195			1,561			3,552
Add (deduct):
Net (gains) from business sold/held for sale		–			–			–			(8	)		(503	)		(511	)		(18	)		(529	)
Significant equity pick-ups/net losses from investments		–			–			–			–			–			–			1,197			1,197
Net (gains) on securities available for sale/industrial holdings including hedging		–			–			–			–			–			–			(3,659	)		(3,659	)
Change in measurement of other inherent loss allowance		200			–			200			–			–			–			–			200
Restructuring activities		316			26			341			–			240			240			1			583
Goodwill impairment		–			–			–			–			–			–			62			62
Underlying pre-tax profit (loss)		856			482			1,338			389			535			924			(857	)		1,405
Cost/income ratio in %		81			84			82			89			83			85			43			78
Underlying cost/income ratio in %		78			84			79			88			84			86			N/M			85
Assets3, 6		629,975			25,098			642,127			37,642			74,039			109,394			26,536			750,238
Expenditures for additions to long-lived assets		339			103			442			258			27			285			332			1,059
Risk-weighted positions (BIS risk positions)		142,211			12,949			155,160			11,803			47,690			59,493			19,219			233,872
Average active equity7		15,342			2,169			17,511			5,667			1,599			7,266			6,466			31,243
Return on average active equity in %		2			21			5			7			50			16			24			11
Underlying return on average active equity in %		6			22			8			7			33			13			(13	)		4
N/M – Not meaningful
1  Includes:
Net interest revenues		3,513			900			4,413			70			2,656			2,726			42			7,181
Net revenues from external customers		11,110			2,767			13,877			3,857			5,540			9,397			2,907			26,181
Net intersegment revenues		43			(124	)		(80	)		(133	)		236			103			91			114
Net income (loss) from equity method investments		(32	)		1			(31	)		141			20			162			(1,034	)		(903	)
2  Includes:
Depreciation, depletion and amortization		431			128			559			101			283			385			132			1,076
Severance payments		243			18			261			86			50			136			19			416
3  Includes:
Equity method investments		571			38			609			1,154			19			1,173			3,944			5,725

4	Excludes provision for off-balance sheet positions (reclassified to provision for credit losses).
5	Before cumulative effect of accounting changes.
6	The sum of corporate divisions does not necessarily equal the total of the corresponding group division because of consolidation items between corporate divisions, which are to be eliminated on group division level. The same approach holds true for the sum of group divisions compared to Total Management Reporting.
7	For management reporting purposes goodwill and other intangible assets with indefinite lives are explicitly assigned to the respective divisions. Average active equity is first allocated to divisions according to goodwill and intangible assets, remaining average active equity is allocated to the divisions in proportion to the economic capital calculated for them.

F-67

The following tables present the revenue components of the Corporate and Investment Bank Group Division and the Private Clients and Asset Management Group Division for the years ended December 31, 2004, 2003 and 2002, respectively:

	Corporate and Investment Bank
in€ m.	2004			2003		2002
Sales & Trading (equity)		2,486			3,118		2,506
Sales & Trading (debt and other products)		6,299			6,077		5,582
Total Sales & Trading		8,785			9,194		8,088
Origination (equity)		499			485		354
Origination (debt)		916			806		683
Total Origination		1,414			1,291		1,037
Advisory		488			465		546
Loan products		1,142			1,193		1,804
Transaction services		1,862			1,914		2,643
Other		(361	)		136		(322	)
Total		13,331			14,193		13,797

	Private Clients and Asset Management
in€ m.	2004		2003		2002
Portfolio/fund management		2,526		2,615		2,733
Brokerage		1,659		1,591		1,512
Loan/deposit products		2,358		2,330		2,425
Payments, account & remaining financial services		915		823		843
Other		571		858		1,986
Total		8,030		8,217		9,499

Reconciliation of Segmental Results of Operations to Consolidated Results of Operations
According to U.S. GAAP

The following table provides a reconciliation of the total results of operations and total assets of the Group’s business segments under management reporting systems to the consolidated financial statements prepared in accordance with U.S. GAAP for the years ended December 31, 2004, 2003 and 2002.

	2004									2003									2002
	Total			Consoli-			Total			Total			Consoli-			Total			Total		Consoli-			Total
	Manage-			dation &			Consoli-			Manage-			dation &			Consoli-			Manage-		dation &			Consoli-
	ment			Adjust-			dated			ment			Adjust-			dated			ment		Adjust-			dated
in€ m.	Reporting			ments						Reporting			ments						Reporting		ments
Net revenues1		21,981			(63	)		21,918			21,490			(223	)		21,268			26,295		253			26,547
Provision for loan losses		372			–			372			1,113			–			1,113			2,091		(1	)		2,091
Provision for off- balance sheet positions		(65	)		–			(65	)		(50	)		–			(50	)		18		(1	)		17
Total provision for credit losses		307									1,063									2,110
Noninterest expenses2		17,344			238			17,582			17,445			3			17,449			20,633		257			20,890
Income (loss) before income taxes3		4,330			(301	)		4,029			2,982			(225	)		2,756			3,552		(3	)		3,549
Assets		832,933			7,135			840,068			795,818			7,796			803,614			750,238		8,117			758,355
Risk-weighted positions (BIS risk positions)		215,044			1,743			216,787			214,048			1,625			215,672			233,872		3,606			237,479
Average active equity		23,519			1,259			24,778			26,317			1,057			27,374			31,243		2			31,246

1	Net interest revenues and noninterest revenues.
2	Excludes provision for off-balance sheet positions.
3	Before cumulative effect of accounting changes.

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The two primary components recorded in Consolidation & Adjustments are differences in accounting methods used for management reporting versus U.S. GAAP as well as results and balances from activities outside the management responsibility of the business segments.

	Loss before income taxeswas€ 301 million in 2004,€ 225 million in 2003 and€ 3 million in 2002.Net revenuesincluded the following items:
–	Adjustments related to positions which are marked to market for management reporting purposes and accounted for on an accrual basis under U.S. GAAP were approximately€ (150) million in 2004,€ (200) million in 2003 and€ 100 million in 2002.
–	Trading results from the Group’s own shares are reflected in the Corporate Banking & Securities Corporate Division. The elimination of such results under U.S. GAAP resulted in credits of approximately€ 45 million in 2004 and€ 200 million in each of the years 2003 and 2002 within Consolidation & Adjustments.
–	Debits related to the elimination of Group-internal rental income were€ (101) million in 2004,€ (106) million in 2003 and€ (115) million in 2002.
–	Insurance premiums of€ 91 million in 2004 and€ 79 million in each of the years 2003 and 2002 were primarily related to the Group’s reinsurance subsidiary which is not managed by an individual business segment.
–	Interest income on tax refunds from ongoing audits of prior period tax returns was€ 131 million in 2004.
–	Mark-to-market losses for hedges related to share-based compensation plans were approximately€ (100) million in 2002.
–	The remainder of net revenues in each year was due to other corporate items outside the management responsibility of the business segments, such as net funding expenses for non-divisionalized assets/liabilities and results from hedging capital of certain foreign subsidiaries.

Provisions for loan losses and provision for off-balance sheet positionsincluded no material items in each of the reported years.

	Noninterest expensesreflected the following items:
–	Credits related to the elimination of Group-internal rental expenses were€ 101 million in 2004,€ 106 million in 2003 and€ 115 million in 2002.
–	Policyholder benefits and claims of€ 210 million in 2004,€ 89 million in 2003, and€ 75 million in 2002 were primarily related to the Group’s re-insurance subsidiary which is not managed by an individual business segment. The increase in 2004 was due to newly established provisions, including charges associated with the settlement agreement of the WorldCom litigation, partly offset by releases for certain other self-insured risks.
–	Credits related to certain share-based compensation plans of approximately€ 100 million in 2002 were not allocated to the business segments.
–	The remainder of noninterest expenses in each year was attributable to other corporate items outside the management responsibility of the business segments. 2002 included charges for certain legal-related provisions of approximately€ 170 million.

Assets and risk-weighted positionsreflect corporate assets outside of the management responsibility of the business segments such as deferred tax assets and central clearing accounts.

Average active equityassigned to Consolidation and Adjustments reflects the refinement of the Group’s economic capital framework as described under “Framework of the Group’s Management’s Reporting Systems” within this Footnote.

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Total Net Revenues (before Provision for Loan Losses) by Geographical Location

The following table presents total net revenues (before provision for loan losses) by geographical location:

in€ m.	2004			20031			20021
Germany
CIB		2,319			2,539			2,770
PCAM		4,393			4,318			5,451
Total Germany		6,712			6,857			8,221
Rest of Europe
CIB		4,522			5,032			4,066
PCAM		2,173			2,176			2,295
Total Rest of Europe2		6,695			7,209			6,361
North America (primarily U.S.)
CIB		4,390			4,603			4,899
PCAM		1,201			1,473			1,460
Total North America		5,591			6,076			6,359
South America
CIB		72			128			146
PCAM		–			1			16
Total South America		73			130			162
Asia-Pacific
CIB		2,027			1,891			1,916
PCAM		262			248			277
Total Asia-Pacific		2,289			2,140			2,194
Corporate Investments		621			(921	)		2,998
Consolidation & Adjustments		(63	)		(223	)		253
Consolidated net revenues3		21,918			21,268			26,547

1	Reclassified to conform to the 2004 presentation.
2	The United Kingdom accounted for over one-half of these revenues in 2004, 2003 and 2002. Rest of Europe also includes the Group’s African operations.
3	Consolidated total net revenues comprise interest revenues, interest expenses and total noninterest revenues (including net commission and fee revenues). Revenues are attributed to countries based on the location in which the Group’s booking office is located. The location of a transaction on our books is sometimes different from the location of the headquarters or other offices of a customer and different from the location of our personnel who entered into or facilitated the transaction. Where we record a transaction involving our staff and customers and other third parties in different locations frequently depends on other considerations, such as the nature of the transaction, regulatory considerations and transaction processing considerations.

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[29] Restructuring Activities

Restructuring plans are recorded in conjunction with acquisitions as well as business realignments. Severance includes employee termination benefits related to the involuntary termination of employees. Such costs include obligations resulting from severance agreements, termination of employment contracts and early-retirement agreements. Other costs primarily include amounts for lease terminations and related costs.

The following table presents the activity in the Group’s restructuring programs for the years ended December 31, 2004, 2003, and 2002:

2004 plan

2002 plans

Total

Business Realignment

Group restructuring

Scudder restructuring

CIB restructuring

Program

in€ m.

Severance

Other

Severance

Other

Severance

Other

Severance

Other

Balance at Dec 31, 2001

–

–

–

–

–

–

–

–

272

1

Additions

–

–

235

105

83

3

215

50

691

2

Utilization

–

–

203

92

57

–

77

27

683

1

Releases

–

–

–

–

–

–

–

–

22

1

Effects from exchange rate fluctuations

–

–

(2

)

(1

)

(12

)

–

(10

)

(4

)

(52

)1

Balance at Dec 31, 2002

–

–

30

12

14

3

128

19

206

Utilization

–

–

30

11

9

3

99

9

161

Releases

–

–

–

–

4

–

21

8

33

3

Effects from exchange rate fluctuations

–

–

–

(1

)

(1

)

–

(8

)

(2

)

(12

)

Balance at Dec 31, 2003

–

–

–

–

–

–

–

–

–

Additions

400

–

–

–

–

–

–

–

400

Utilization

170

–

–

–

–

–

–

–

170

Effects from exchange rate fluctuations

–

–

–

–

–

–

–

–

–

Balance at Dec 31, 2004

230

–

–

–

–

–

–

–

230

1	Totals include activity for the 2001 Group Restructuring Plan which was completed in 2002. Balance at December 31, 2001, utilization, releases and effects from exchange rate fluctuations were€ 272 million,€ 227 million,€ 22 million and€ (23) million, respectively.
2	Scudder restructuring of€ 86 million was recorded as goodwill; net expense, after releases, was€ 583 million.
3	Scudder restructuring reserve releases of€ 4 million were recorded against goodwill.€ 29 million related to the CIB restructuring was released against net income.

2004 Plan

Business Realignment Program (“BRP”)

The BRP covers a series of initiatives aimed at revenue growth and cost efficiency. The program, together with additional measures in the fourth quarter 2004, is expected to result in a reduction of approximately 6,400 full-time equivalent headcount. We anticipate that a significant portion of this reduction will arise in the CIB and PCAM Group Divisions as we integrate coverage and product units. The majority of the reduction will arise in infrastructure units. The transfer of jobs to more cost-effective locations will result in additional headcount of approximately 1,200. This gives a net reduction in our headcount of approximately 5,200.

In the fourth quarter, the Group recorded a pre-tax restructuring charge of€ 400 million in connection with the BRP of which€ 288 million related to severance payments and€ 112 million related to stock compensation awards. The charge was attributable to CIB (€ 299 million), PCAM (€ 98 million) and CI (€ 3 million). The underlying restructuring measures affected approximately 1,200 staff. Of the€ 400 million restructuring liability,€ 170 million was utilized as of December 31, 2004. All actions contemplated in the portion of the plan recorded in 2004 are expected to be completed by the end of the

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first quarter of 2005. It is expected that additional expenses of approximately€ 750 million will be recorded in 2005 as further actions are taken related to the BRP.

2002 Plans

Group Restructuring

The Group recorded a pre-tax charge of€ 340 million in the first quarter of 2002 related to restructuring activities affecting PCAM (€ 246 million), CIB (€ 93 million) and CI (€ 1 million). These restructuring plans affected approximately 2,100 staff and included a broad range of measures primarily to streamline the Group’s branch network in Germany, as well as its infrastructure. The plan was completed during the year ended December 31, 2003.

Scudder Restructuring

During 2002, the Group recorded a restructuring liability of€ 86 million related to restructuring activities in connection with the acquisition of Zurich Scudder Investments, Inc. Of this amount, approximately€ 83 million of severance and other termination-related costs and€ 3 million for other costs, primarily related to lease terminations, were recognized as a liability assumed as of the acquisition date and charged directly to goodwill. This restructuring plan affected approximately 1,000 Scudder staff. Reserves of€ 4 million were released against goodwill in 2003. The plan was completed during the year ended December 31, 2003.

CIB Restructuring

In the second quarter of 2002, the Group recorded a restructuring liability of€ 265 million related to the CIB Group Division. The plan affected approximately 2,000 staff, across all levels of the Group. The restructuring resulted from detailed business reviews and reflected the Group’s outlook for the markets in which it operates. It related to banking coverage, execution and relationship management processes; custody; trade finance and other transaction banking activities; and the related technology, settlement, real estate and other support functions. Due primarily to lower headcount, the restructuring program was completed at lower than anticipated costs. Therefore,€ 21 million of staff-related reserves and€ 8 million of infrastructure-related reserves were released during 2003. The plan was completed during the year ended December 31, 2003.

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[30] International Operations

The following table presents asset and income statement information by major geographic area. The information presented has been classified based primarily on the location of the Group’s office in which the assets and transactions are recorded. However, due to the highly integrated nature of the Group’s operations, estimates and assumptions have been made to allocate items, especially consolidation items, between regions.

2004	Total assets			Total gross			Total gross			Income (loss)			Net income
in€ m.				revenues1			expenses1			before taxes			(loss)
International operations:
Europe (excluding Germany)2		346,273			16,430			15,424			1,006			511
North America (primarily U.S.)		212,945			12,547			11,570			977			627
South America		2,867			532			440			92			87
Asia-Pacific		71,928			4,016			3,418			598			262
Total international		634,013			33,525			30,852			2,673			1,487
Domestic operations (Germany)		206,055			11,234			9,878			1,356			985
Total		840,068			44,759			40,730			4,029			2,472
International as a percentage of total above		75	%		75	%		76	%		66	%		60	%

1	Total gross revenues comprise interest revenues and total noninterest revenues (including net commissions and fee revenues). Total gross expenses comprise interest expense, provision for loan losses and total noninterest expenses.
2	Includes balance sheet and income statement data from Africa, which were not material in 2004.

2003	Total assets			Total gross			Total gross			Income (loss)			Net income
in€ m.				revenues1			expenses1			before taxes2			(loss)
International operations:
Europe (excluding Germany)3		327,835			17,674			15,954			1,720			837
North America (primarily U.S.)		221,048			10,156			9,853			303			233
South America		1,277			575			575			–			–
Asia-Pacific		60,101			3,389			2,877			512			357
Total international		610,261			31,794			29,259			2,535			1,427
Domestic operations (Germany)		193,353			11,210			10,989			221			(62	)
Total		803,614			43,004			40,248			2,756			1,365
International as a percentage of total above		76	%		74	%		73	%		92	%		105	%

1	Total gross revenues comprise interest revenues and total noninterest revenues (including net commissions and fee revenues). Total gross expenses comprise interest expense, provision for loan losses and total noninterest expenses.
2	Before cumulative effect of accounting changes.
3	Includes balance sheet and income statement data from Africa, which were not material in 2003.

2002	Total assets			Total gross			Total gross			Income (loss)			Net income
in€ m.				revenues1			expenses1			before taxes2			(loss)
International operations:
Europe (excluding Germany)3		286,545			18,938			18,618			320			309
North America (primarily U.S.)		205,375			13,352			14,129			(777	)		(488	)
South America		1,051			963			877			86			52
Asia-Pacific		48,612			3,863			3,271			592			397
Total international		541,583			37,116			36,895			221			270
Domestic operations (Germany)		216,772			18,026			14,698			3,328			127
Total		758,355			55,142			51,593			3,549			397
International as a percentage of total above		71	%		67	%		72	%		6	%		68	%

1	Total gross revenues comprise interest revenues and total noninterest revenues (including net commissions and fee revenues). Total gross expenses comprise interest expense, provision for loan losses and total noninterest expenses.
2	Before cumulative effect of accounting changes.
3	Includes balance sheet and income statement data from Africa, which were not material in 2002.

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[31] Derivative Financial Instruments and Financial Instruments with Off-Balance Sheet Risk

In the normal course of business, the Group enters into a variety of derivative transactions for both trading and nontrading purposes. The Group’s objectives in using derivative instruments are to meet customers’ needs, to manage the Group’s exposure to risks and to generate revenues through trading activities. Derivative contracts used by the Group in both trading and nontrading activities include swaps, futures, forwards, options and other similar types of contracts based on interest rates, foreign exchange rates, credit risk and the prices of equities and commodities (or related indices).

Derivatives Held or Issued for Trading Purposes

The Group trades derivative instruments on behalf of customers and for its own positions. The Group transacts derivative contracts to address customer demands both as a market maker in the wholesale markets and in structuring tailored derivatives for customers. The Group also takes proprietary positions for its own accounts. Trading derivative products include swaps, options, forwards and futures and a variety of structured derivatives which are based on interest rates, equities, credit, foreign exchange and commodities.

Derivatives Held or Issued for Nontrading Purposes

Derivatives held or issued for nontrading purposes primarily consist of interest rate swaps used to manage interest rate risk. Through the use of these derivatives, the Group is able to modify the volatility and interest rate characteristics of its nontrading interest-earning assets and interest-bearing liabilities. The Group is subject to risk from interest rate fluctuations to the extent that there is a gap between the amount of interest-earning assets and the amount of interest-bearing liabilities that mature or reprice in specified periods. The Group actively manages this interest rate risk through, among other things, the use of derivative contracts. Utilization of derivative financial instruments is modified from time to time within prescribed limits in response to changing market conditions, as well as changes in the characteristics and mix of the related assets and liabilities.

The Group also uses cross-currency interest rate swaps to hedge both foreign currency and interest rate risks from securities available for sale.

For these hedges, the Group applies either fair value or cash flow hedge accounting when cost beneficial. When hedging only interest rate risk, fair value hedge accounting is applied for hedges of assets or liabilities with fixed interest rates, and cash flow hedge accounting is applied for hedges of floating interest rates. When hedging both foreign currency and interest rate risks, cash flow hedge accounting is applied when all functional-currency-equivalent cash flows have been fixed; otherwise fair value hedge accounting is applied.

For the years ended December 31, 2004, 2003 and 2002, net hedge ineffectiveness from fair value hedges, which is based on changes in fair value resulting from changes in the market price or rate related to the risk being hedged, and amounts excluded from the assessment of hedge effectiveness resulted in a loss of€ 100 million, a loss of€ 82 million and a loss of€ 81 million, respectively. As of December 31, 2004, the longest term cash flow hedge outstanding, excluding hedges of existing variable rate instruments, matures in 2039.

Derivatives entered into for nontrading purposes that do not qualify for hedge accounting are also classified as trading assets and liabilities. These include interest rate swaps, credit derivatives, foreign exchange forwards and cross currency interest rate swaps used to economically hedge interest, credit and foreign exchange risk, but for which it is not cost beneficial to apply hedge accounting.

Net (gains) losses of€ 81 million,€ (13) million and€ 226 million from nontrading equity derivatives used to offset fluctuations in employee share-based compensation expense were included in compensation and benefits for the years ended December 31, 2004, 2003 and 2002, respectively.

Derivative Financial Instruments Indexed to Our Own Shares

The Group enters into contracts indexed to Deutsche Bank common shares to acquire shares to satisfy employee share-based compensation awards, and for trading purposes.

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At December 31, 2004, the Group had outstanding call options to purchase approximately 3.5 million shares at a weighted-average strike price of€ 68.29 per share related to employee share-based compensation awards. The options must be net-cash settled and they mature in less than five years. The fair value of these options amounted to€ 20.9 million at December 31, 2004. A€ 1 decrease in the price of Deutsche Bank common shares would have reduced the fair value of these options by€ 1.7 million.

Related to trading activities, the following derivative contracts that are indexed to Deutsche Bank’s own shares are outstanding at December 31, 2004.

Type of contract	Settlement	Maturity	Number of		Weighted-		Effect of			Fair value of
	alternative		issuer’s shares		average strike		decrease			contract
			to which		price (in€)		of share price			asset
			contracts are				by€ 1			(liability)
			indexed				(€ in thousands)			(€ in thousands)
Purchased options	Net-cash	Up to 3 months		12,539,217		69.27		(39	)		2,754
		> 3 months – 1 year		7,119,315		67.15		(177	)		40,705
		> 1 year – 5 years		6,462,566		63.91		(613	)		36,906
Sold options	Net-cash	Up to 3 months		1,515,426		62.27		46			(5,148	)
		> 3 months – 1 year		24,193,469		65.34		1,536			(51,366	)
		> 1 year – 5 years		5,947,696		65.65		857			(52,549	)
Forward purchases	Net-cash	Up to 3 months		7,027		64.30		(7	)		8
		> 3 months – 1 year		1,489,928		63.30		(1,490	)		(206	)
	Deutsche Bank choice Net-cash/ physical1	Up to 3 months		16,000,000		58.00		(16,000	)		(655	)
		> 3 months – 1 year		28,720,220		60.90		(28,720	)		111,727
		>1 year – 5 years		10,000,000		65.00		(10,000	)		(4,303	)
Forward sales	Net-cash	Up to 3 months		163,894		65.32		164			(22	)
		> 3 months – 1 year		1,312,062		65.32		1,312			(63	)
	Counterparty choice Net-cash/ physical1	> 3 months – 1 year		386,748		54.39		387			(3,636	)
		> 1 year – 5 years		55,708,795		54.52		55,709			(383,946	)

¹ Fair values do not differ significantly relating to settlement alternatives.

The above contracts related to trading activities are accounted for as trading assets and liabilities and are thus carried at fair value with changes in fair value recorded in earnings.

Financial Instruments with Off-Balance Sheet Risk

The Group utilizes various lending-related commitments in order to meet the financing needs of its customers. The contractual amount of these commitments is the maximum amount at risk for the Group if the customer fails to meet its obligations. Off-balance sheet credit risk amounts are determined without consideration of the value of any related collateral and reflect the total potential loss on undrawn commitments. The table below summarizes the Group’s lending-related commitments:

in€ m.	Dec 31, 2004		Dec 31, 2003
Commitments to extend credit:
Fixed rates1		27,897		22,318
Variable rates2		77,268		66,566

1	Includes commitments to extend commercial letters of credit and guarantees of€ 2.4 billion and€ 2.3 billion at December 31, 2004 and 2003, respectively.
2	Includes commitments to extend commercial letters of credit and guarantees of€ 902 million and€ 833 million at December 31, 2004 and 2003, respectively.

In addition, as of December 31, 2004 the Group had loan commitments of€ 19.2 billion that were revocable at any time. Commitments to enter into reverse repurchase and repurchase agreements amounted to€ 58.6 billion and€ 41.1 billion, respectively, as of December 31, 2004. As of December 31, 2003, commitments to enter into reverse repurchase and repurchase agreements totaled€ 39.3 billion and€ 23.5 billion, respectively.

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As of December 31, 2004 and 2003, the Group had commitments to contribute capital to equity method and other investments totaling€ 324 million and€ 399 million, respectively.

The Group also enters regularly into various guarantee and indemnification agreements in the normal course of business. Probable losses under these agreements are provided for as part of other liabilities. The principal guarantees and indemnifications that the Group enters into are the following:

Financial guarantees, standby letters of credit and performance guarantees, including indemnification for the effect of income taxes that may have to be paid by counterparties on certain transactions entered into with the Group, with a carrying amount of€ 592 million and€ 666 million and with maximum potential payments of€ 26.9 billion and€ 24.0 billion as of December 31, 2004 and 2003, respectively, generally require the Group to make payments to the guaranteed party based on another’s failure to meet its obligations or to perform under an obligating agreement. Most of these guarantees (€ 17.0 billion) mature within five years, for€ 3.5 billion the duration is more than five years and€ 6.4 billion have revolving terms. These guarantees are collateralized with cash, securities and other collateral of€ 11.8 billion and€ 5.5 billion as of December 31, 2004 and 2003, respectively.

Upon exercise, written put options effectively require the Group to pay for a decline in market value related to the counterparty’s underlying asset or liability. The carrying amount and maximum potential payments of written puts as of December 31, 2004 was€ 4.1 billion and€ 61.4 billion, respectively. The carrying amount and maximum potential payments of written puts as of December 31, 2003 was€ 4.9 billion and€ 66.2 billion, respectively. More than half of the puts (€ 36.0 billion) mature within one year,€ 22.4 billion have remaining exercise periods of more than one up to five years and€ 3.0 billion have remaining terms of more than five years. Additionally, credit derivatives requiring payment by the Group in the event of default of debt obligations have a carrying and maximum potential payment amount of€ 473 million and€ 4.0 billion, respectively, for those credit derivatives with negative market values and€ 486 million and€ 2.7 billion, respectively, related to those with positive market values. More than half of the credit derivatives with negative market values (€ 3.4 billion) mature within one year.€ 494 million have remaining exercise periods of more than one and up to five years and€ 50 million have remaining terms of more than five years. Instruments with positive market values of€ 271 million mature within one year,€ 2.2 billion have remaining exercise periods of more than one and up to five years and€ 249 million have remaining terms of more than five years. These contracts are typically uncollateralized. As of December 31, 2003 the carrying amount and maximum potential payments of credit derivatives related to negative market values was€ 1 million and€ 53 million, respectively. The credit derivatives related positive market values with a carrying amount and maximum potential payments were€ 588 million and€ 2.3 billion, respectively.

Securities lending indemnifications require the Group to pay for the replacement costs or market value of securities loaned to third parties in the event the third parties fail to return the securities. The Group had no securities lending indemnifications as of December 31, 2004 as this business was sold to State Street Bank. At December 31, 2003 the Group had maximum potential indemnification payments totaling€ 45.3 billion with contract terms up to six months for which it had received collateral, primarily cash, totaling€ 45.9 billion. These indemnifications related to clients whose business had not yet been novated and migrated to State Street Bank and/or who had terminated their relationship.

[32] Concentrations of Credit Risk

The Group defines credit exposure as all transactions where losses might occur due to the fact that counterparties may not fulfill their contractual payment obligations. The Group calculates the gross amount of the exposure without taking into account any collateral, other credit enhancement or credit risk mitigating transactions. The tables below show details about the Group’s main credit exposures categories, namely, loans, contingent liabilities, over-the-counter (“OTC”) derivatives and tradable assets.

– “Loans” are net loans as reported on the balance sheet but before deduction of the allowance for loan losses.

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– “Contingent Liabilities” consist of financial and performance guarantees, standby letters of credit and indemnity agreements.

– “OTC Derivatives” are credit exposures from over-the-counter derivative transactions that the Group has entered into. On the Group’s balance sheet, these are included in trading assets and, for derivatives entered into for nontrading purposes, in other assets.

– “Tradable Assets” include bonds, loans and other fixed-income products that are in trading assets as well as in securities available for sale.

Although the Group considers them in monitoring credit exposures, the following are not included in the tables below: cash and due from banks, interest-earning deposits with banks, and accrued interest receivables amounting to€ 29.5 billion at December 31, 2004 and€ 29.4 billion at December 31, 2003; forward committed repurchase and reverse repurchase agreements of€ 99.7 billion at December 31, 2004 and€ 62.8 billion at December 31, 2003; and lending-related commitments of€ 105.2 billion at December 31, 2004 and€ 88.9 billion at December 31, 2003. At December 31, 2004, 86% of our lending-related commitments were extended to counterparties rated at the equivalent of investment-grade debt ratings from the major international rating agencies.

The following table breaks down the Group’s main credit exposure categories according to the industry sector of the Group’s counterparties.

Credit risk profile by	Loans						Contingent liabilities				OTC derivatives				Tradable assets				Total
industry sector
	Dec. 31,			Dec. 31,			Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
in€ m.	2004			2003			2004		2003		2004		2003		2004		2003		2004		2003
Banks and insurance		7,787			10,521			4,921		4,990		44,450		46,597		51,406		62,480		108,564		124,588
Manufacturing		13,270			16,155			8,028		7,834		1,837		1,997		15,919		18,241		39,054		44,227
Households		57,076			54,937			1,372		862		285		357		–		–		58,733		56,156
Public sector		3,278			2,309			1,630		377		5,838		3,984		140,614		104,648		151,360		111,318
Wholesale and retail trade		10,288			11,824			2,274		2,454		684		691		3,062		3,589		16,308		18,558
Commercial real estate activities		14,102			13,606			313		722		763		300		1,755		1,447		16,933		16,075
Other		32,888	1		38,875	1		11,357		9,298		7,810		6,545		32,270		38,064		84,325		92,782
Total		138,689			148,227			29,895		26,537		61,667		60,471		245,026		228,469		475,277		463,704

¹ Includes lease financing.

In the following table, exposures have been allocated to regions based on the country of domicile of the Group’s counterparties, irrespective of any affiliations the counterparties may have with corporate groups domiciled elsewhere.

Credit risk profile by	Loans				Contingent liabilities				OTC derivatives				Tradable assets				Total
region
	Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
in€ m.	2004		2003		2004		2003		2004		2003		2004		2003		2004		2003
Eastern Europe		1,568		1,372		418		491		607		588		3,282		2,840		5,875		5,291
Western Europe		112,139		120,136		18,840		16,283		36,486		35,428		88,450		87,969		255,915		259,816
Africa		288		395		168		192		300		224		1,000		1,086		1,756		1,897
Asia-Pacific		8,258		7,176		2,656		2,624		6,892		7,072		57,680		36,019		75,486		52,891
North America		14,911		17,038		7,469		6,752		15,820		15,495		87,749		94,632		125,949		133,917
Central and South America		1,522		2,075		326		195		688		571		4,607		3,850		7,143		6,691
Other1		3		35		18		–		874		1,093		2,258		2,073		3,153		3,201
Total		138,689		148,227		29,895		26,537		61,667		60,471		245,026		228,469		475,277		463,704

¹ Includes supranational organizations and other exposures that have not been allocated to a single region.

F-77

[33] Fair Value of Financial Instruments

SFAS No. 107, “Disclosures about Fair Value of Financial Instruments” (“SFAS 107”) requires the disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Quoted market prices, when available, are used as the measure of fair value. In cases where quoted market prices are not available, fair values are based on present value estimates or other valuation techniques. These derived fair values are significantly affected by assumptions used, principally the timing of future cash flows and the discount rate. Because assumptions are inherently subjective in nature, the estimated fair values cannot be substantiated by comparison to independent market quotes and, in many cases, the estimated fair values would not necessarily be realized in an immediate sale or settlement of the instrument. The disclosure requirements of SFAS 107 exclude certain financial instruments and all nonfinancial instruments (e.g., franchise value of businesses). Accordingly, the aggregate fair value amounts presented do not represent management’s estimation of the underlying value of the Group.

The following are the estimated fair values of the Group’s financial instruments recognized on the Consolidated Balance Sheet, followed by a general description of the methods and assumptions used to estimate such fair values.

	Carrying amount				Fair value
in€ m.	Dec 31, 2004		Dec 31, 2003		Dec 31, 2004		Dec 31, 2003
Financial assets:
Cash and due from banks		7,579		6,636		7,579		6,636
Interest-earning deposits with banks		18,089		14,649		18,100		14,660
Central bank funds sold and securities purchased under resale agreements and securities borrowed		189,551		185,215		189,610		185,351
Trading assets		373,147		345,371		373,147		345,371
Securities available for sale		20,335		24,631		20,335		24,631
Other investments		2,358		2,398		2,364		2,398
Loans (excluding leases), net		133,801		140,963		136,311		143,014
Other financial assets		67,830		53,812		67,992		53,812
Financial liabilities:
Noninterest-bearing deposits		27,274		28,168		27,274		28,168
Interest-bearing deposits		302,195		277,986		302,040		278,262
Trading liabilities		169,606		153,234		169,606		153,234
Central bank funds purchased and securities sold under repurchase agreements and securities loaned		118,173		117,250		118,178		117,348
Other short-term borrowings		20,118		22,290		20,115		22,315
Other financial liabilities		60,598		72,132		60,550		72,126
Long-term debt		106,870		97,480		106,602		97,848

Methods and Assumptions

For short-term financial instruments, defined as those with remaining maturities of 90 days or less, the carrying amounts were considered to be a reasonable estimate of fair value. The following instruments were predominantly short-term:

Assets	Liabilities
Cash and due from banks	Interest-bearing deposits
Central bank funds sold and securities purchased under resale agreements and securities borrowed	Central bank funds purchased and securities sold under repurchase agreements and securities loaned
Interest-earning deposits with banks	Other short-term borrowings
Other financial assets	Other financial liabilities

For those components of the above-listed financial instruments with remaining maturities greater than 90 days, fair value was determined by discounting contractual cash flows using rates which could be

F-78

earned for assets with similar remaining maturities and, in the case of liabilities, rates at which the liabilities with similar remaining maturities could be issued as of the balance sheet date.

Trading assets (including derivatives), trading liabilities and securities available for sale are carried at their fair values.

For short-term loans and variable rate loans which reprice within 90 days, the carrying value was considered to be a reasonable estimate of fair value. For those loans for which quoted market prices were available, fair value was based on such prices. For other types of loans, fair value was estimated by discounting future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. In addition, the specific loss component of the allowance for loan losses, including recoverable amounts of collateral, was considered in the fair value determination of loans. Other investments consist primarily of investments in equity instruments (excluding, in accordance with SFAS 107, investments accounted for under the equity method).

Other financial assets consisted primarily of accounts receivable, accrued interest receivable, cash and cash margins with brokers and due from customers on acceptances.

Noninterest-bearing deposits do not have defined maturities. Fair value represents the amount payable on demand as of the balance sheet date.

Other financial liabilities consisted primarily of accounts payable, accrued interest payable, accrued expenses and acceptances outstanding.

The fair value of long-term debt was estimated by using market quotes, as well as discounting the remaining contractual cash flows using a rate at which the Group could issue debt with a similar remaining maturity as of the balance sheet date.

The fair value of commitments to extend credit was estimated by using market quotes. On this basis, at December 31, 2004, the fair value of commitments to extend credit approximated the allowance for these commitments of€ 107 million.

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[34] Condensed Deutsche Bank AG (Parent Company Only) Financial Statements

Condensed Statement of Income

in€ m.	2004			2003			2002
Interest revenues, excluding dividends from subsidiaries		17,921			18,080			21,948
Dividends received from subsidiaries:
Banks		1,172			898			1,670
Nonbanks		1,211			1,930			3,934
Interest expense		18,639			17,732			20,761
Net interest and dividend revenues		1,665			3,176			6,791
Provision for loan losses		92			525			1,310
Net interest and dividend revenues after provision for loan losses		1,573			2,651			5,481
Noninterest revenues:
Commissions and fees		2,901			2,864			2,830
Trading revenues, net		6,803			4,940			5,275
Other revenues		153			(35	)		763
Total noninterest revenues		9,857			7,769			8,868
Noninterest expenses:
Compensation and benefits		5,074			5,414			4,857
Other expenses		3,533			3,513			3,887
Services provided to affiliates, net		(234	)		(29	)		(560	)
Total noninterest expenses		8,373			8,898			8,184
Income before income taxes and equity in undistributed income of subsidiaries and affiliates		3,057			1,522			6,165
Income tax expense (benefit)		721			(333	)		978
Income before cumulative effect of accounting changes		2,336			1,855			5,187
Cumulative effect of accounting changes, net of tax		–			140			–
Income before equity in undistributed income (loss) of subsidiaries and affiliates		2,336			1,995			5,187
Equity in undistributed income (loss) of subsidiaries and affiliates		136			(630	)		(4,790	)
Net income		2,472			1,365			397

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Condensed Balance Sheet

in€ m.	Dec 31, 2004		Dec 31, 2003
Assets
Cash and due from banks:
Bank subsidiaries		203		645
Other		3,586		2,532
Interest-earning deposits with banks:
Bank subsidiaries		37,803		39,470
Other		12,070		12,600
Securities borrowed and central bank funds sold and securities purchased under resale agreements:
Bank subsidiaries		3,043		4,288
Nonbank subsidiaries		65,530		49,728
Other		81,746		84,122
Trading assets:
Bank subsidiaries		4,601		6,238
Nonbank subsidiaries		5,673		6,789
Other		278,802		233,592
Securities available for sale		4,720		4,133
Other investments		3,551		3,045
Investment in subsidiaries:
Bank subsidiaries		7,749		7,688
Nonbank subsidiaries		32,624		34,114
Loans, net:
Bank subsidiaries		3,993		3,474
Nonbank subsidiaries		91,746		90,958
Other		46,673		54,123
Other assets:
Bank subsidiaries		3,085		1,968
Nonbank subsidiaries		7,552		7,923
Other		47,244		32,221
Total assets		741,994		679,651
Liabilities and shareholders’ equity
Deposits:
Bank subsidiaries		61,357		61,064
Nonbank subsidiaries		61,888		57,634
Other		231,910		211,986
Trading liabilities:
Bank subsidiaries		2,554		4,587
Nonbank subsidiaries		4,970		4,554
Other		118,172		105,778
Securities loaned and central bank funds purchased and securities sold under repurchase agreements:
Bank subsidiaries		11,044		12,225
Nonbank subsidiaries		19,607		19,338
Other		55,472		53,639
Other short-term borrowings:
Bank subsidiaries		1,453		155
Nonbank subsidiaries		1,085		690
Other		7,101		5,275
Other liabilities:
Bank subsidiaries		952		870
Nonbank subsidiaries		15,114		8,675
Other		27,888		22,661
Long-term debt		95,523		82,318
Total liabilities		716,090		651,449
Total shareholders’ equity		25,904		28,202
Total liabilities and shareholders’ equity		741,994		679,651

F - 81

Condensed Statement of Cash Flows

in€ m.	2004			2003			2002
Cash flows from operating activities:
Net income		2,472			1,365			397
Adjustments to reconcile net income to net cash used in operating activities:
Provision for loan losses		92			(2,226	)		1,310
Equity in undistributed income of subsidiaries		(136	)		490			4,790
Deferred income taxes, net		735			94			(903	)
Impairment, depreciation and other amortization and accretion		283			1,473			3,919
Share of net loss (income) from equity method investments		(79	)		15			856
(Gains) losses on securities available for sale, other investments, loans and other		(204	)		(157	)		(1,424	)
Cumulative effect of accounting changes, net of tax		–			(139	)		–
Other, net		–			7			(1	)
Net change in:
Trading assets		(42,457	)		(10,378	)		(22,671	)
Other assets		(12,515	)		(7,105	)		(1,544	)
Trading liabilities		10,777			9,249			5,576
Other liabilities		11,307			10,180			(5,030	)
Other, net		(306	)		(648	)		1,405
Net cash (used in) provided by operating activities		(30,031	)		2,220			(13,320	)
Cash flows from investing activities:
Net change in:
Interest-earning deposits with banks		2,198			8,125			11,511
Securities borrowed and central bank funds sold and securities purchased under resale agreements		(12,181	)		(22,506	)		9,128
Loans		4,092			(1,585	)		29,662
Investment in subsidiaries		1,565			(2,326	)		3,847
Proceeds from:
Sale of securities available for sale		987			1,738			4,011
Maturities of securities available for sale		2,967			3,622			6,436
Sale of other investments, loans and other		3,057			4,235			8,495
Purchase of:
Securities available for sale		(2,874	)		(5,902	)		(6,480	)
Other investments		(2,032	)		(1,249	)		(3,358	)
Premises and equipment		(209	)		(284	)		(402	)
Other, net		56			84			376
Net cash (used in) provided by investing activities		(2,374	)		(16,048	)		63,226
Cash flows from financing activities:
Net change in:
Deposits		24,476			(729	)		(48,949	)
Securities loaned and central bank funds purchased and securities sold under repurchase agreements		922			13,591			(12,158	)
Other short-term borrowings		3,519			2,946			480
Issuances of long-term debt		30,385			22,701			34,603
Repayments and extinguishment of long-term debt		(21,781	)		(23,742	)		(19,656	)
Issuances of common shares		–			–			73
Purchases of treasury shares		(34,471	)		(25,464	)		(30,755	)
Sale of treasury shares		30,850			23,389			28,665
Cash dividends paid		(828	)		(756	)		(800	)
Other, net		12			(30	)		(807	)
Net cash (used in) provided by financing activities		33,084			11,906			(49,304	)
Net effect of exchange rate changes on cash and due from banks		(67	)		(288	)		(314	)
Net increase (decrease) in cash and due from banks		612			(2,210	)		288
Cash and due from banks, beginning of the year		3,177			5,387			5,099
Cash and due from banks, end of the year		3,789			3,177			5,387
Interest paid		18,156			18,057			21,111
Income taxes paid, net		(35	)		(18	)		(521	)
Noncash investing activities:
Transfer from available for sale securities to trading assets		–			–			–
Transfer from trading assets to available for sale securities		–			–			–

F - 82

The following table is a summary of the Parent Company’s long-term debt:

By remaining maturities	Due in		Due in		Due in		Due in		Due in		Due after		Dec 31, 2004		Dec 31, 2003
in€ m.	2005		2006		2007		2008		2009		2009		total		total
Senior debt:
Bonds and notes:
Fixed rate		6,170		5,239		8,442		3,652		9,220		18,407		51,130		42,552
Floating rate		6,400		3,112		5,126		5,620		4,164		9,244		33,666		30,019
Subordinated debt:
Bonds and notes:
Fixed rate		152		1,172		990		–		1,264		4,254		7,832		8,505
Floating rate		–		–		73		–		184		2,638		2,895		1,242
Total		12,722		9,523		14,631		9,272		14,832		34,543		95,523		82,318

[35] Litigation

WorldCom Litigation. Deutsche Bank AG and Deutsche Bank Securities Inc., the Group’s U.S. broker-dealer subsidiary (“DBSI”), are defendants in more than 40 actions filed in federal and state courts arising out of alleged material misstatements and omissions in the financial statements of WorldCom Inc. DBSI was a member of the syndicate that underwrote WorldCom’s May 2000 and May 2001 bond offerings, which are among the bond offerings at issue in the actions. Deutsche Bank AG, London branch was a member of the syndicate that underwrote the sterling and Euro tranches of the May 2001 bond offering. Plaintiffs are alleged purchasers of these and other WorldCom debt securities. The defendants in the various actions include certain WorldCom directors and officers, WorldCom’s auditor and members of the underwriting syndicates for the debt offerings. Plaintiffs allege that the offering documents contained material misstatements and/or omissions regarding WorldCom’s financial condition. The claims against DBSI and Deutsche Bank AG are made under federal and state statutes (including securities laws), and under various common law doctrines. The largest of the actions against Deutsche Bank AG and DBSI is a class action litigation in the U.S. District Court in the Southern District of New York, in which the class plaintiffs are the holders of a significant majority of the bonds at issue. On March 10, 2005, Deutsche Bank AG and DBSI reached a settlement agreement, subject to court approval, resolving the class action claims asserted against them, for a payment of approximately U.S.$ 325 million. The settlement of the class action claims does not resolve the individual actions brought by investors who chose to opt out of the federal class action. The financial effects of the class action settlement are reflected in our 2004 consolidated financial statements.

Philipp Holzmann AG.Philipp Holzmann AG (“Holzmann”) is a major German construction firm which filed for insolvency in March 2002. The Group had been a major creditor bank and holder of an equity interest of Holzmann for many decades, and, from April 1997 until April 2000, a former member of Deutsche Bank AG’s Board of Managing Directors was the Chairman of its Supervisory Board. When Holzmann had become insolvent at the end of 1999, a consortium of banks led by Deutsche Bank participated in late 1999 and early 2000 in a restructuring of Holzmann that included the banks’ extension of a credit facility, participation in a capital increase and exchange of debt into convertible bonds. In March 2002, Holzmann and several of its subsidiaries, including in particular imbau Industrielles Bauen GmbH (“imbau”), filed for insolvency. As a result of this insolvency, the administrators for Holzmann and for imbau and a group of bondholders have informed the Group they may assert claims against the Group because of its role as lender to the Holzmann group prior to and after the restructuring and as leader of the consortium of banks which supported the restructuring. The purported claims include claims that amounts repaid to the banks constituted voidable preferences that should be returned to the insolvent entities and claims of lender liability resulting from the banks’ support for an allegedly infeasible restructuring. Although the Group is in ongoing discussions, the Group cannot exclude that some of the parties may file lawsuits against it. To date, the administrator for imbau filed a lawsuit against the Group in August 2004 alleging that payments received by the Group in respect of a

F - 83

loan made to imbau in 1997 and 1998 and in connection with a real estate transaction that was part of the restructuring constituted voidable preferences that should be returned to the insolvent entity. Additionally, Gebema N.V. filed a lawsuit in 2000 seeking damages against the Group alleging deficiencies in the offering documents based on which Gebema N.V. had invested in equity and convertible bonds of Holzmann in 1998.

Due to the nature of its business, the Group is involved in litigation, arbitration and regulatory proceedings in Germany and in a number of jurisdictions outside Germany, including the United States, arising in the ordinary course of business. Such matters are subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. Although the final resolution of any such matters could have a material effect on the Group’s consolidated operating results for a particular reporting period, the Group believes that it should not materially affect its consolidated financial position.

[36] Terrorist Attacks in the United States

As a result of the terrorist attacks in the United States on September 11, 2001, several of the Group’s office buildings as well as a leased property were severely damaged or destroyed. Costs incurred by the Group as a result of the terrorist attacks include, but are not limited to, write-offs of fixed assets, expenses incurred to replace fixed assets that were damaged, relocation expenses, and expenses incurred to secure and maintain the damaged properties. The Group has and continues to make claims for these costs through its insurance policies.

During 2003, the Group reached a settlement with two of its four insurers. As of December 31, 2004, the Group has partially settled with the other two insurers, including a tri-party agreement in which the Lower Manhattan Development Corporation (LMDC) purchased the land at 130 Liberty Street for U.S.$ 90 million and will pay for the demolition of the building on the property, subject to a demolition cap agreement that establishes an amount above which costs will be borne by the two insurers. The remaining claim with these two insurers has been directed to a binding arbitration process for resolution.

As of December 31, 2004, the Group received payments from the four insurers totaling U.S.$ 747 million. These proceeds for the settled portions of its claims exceeded the total amount of the net receivable on the balance sheet for asset write-offs, environmental, consulting, and other costs. As a result, the Group recorded a benefit of€ 51 million arising from the net insurance reimbursements and sale of the property at 130 Liberty Street. For the years ended December 31, 2003 and 2002, no losses were recorded by the Group.

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[37] Condensed Consolidating Financial Information

On June 4, 1999, Deutsche Bank, acting through a subsidiary, acquired all outstanding shares of Deutsche Bank Trust Corporation (formerly Bankers Trust Corporation), a bank holding company headquartered in New York. Deutsche Bank conducts some of its activities in the United States through Deutsche Bank Trust Corporation and its subsidiaries (“DBTC”).

On July 10, 2002, Deutsche Bank issued full and unconditional guarantees of DBTC’s outstanding SEC-registered obligations. DBTC is a wholly-owned subsidiary of Deutsche Bank. Set forth below is condensed consolidating financial information regarding the Parent, DBTC and other subsidiaries of Deutsche Bank on a combined basis.

Condensed Consolidating Statement of Income

2004	Parent			DBTC			Other			Consolidating			Deutsche
							subsidiaries			entries			Bank AG
in€ m.													consolidated
Net interest revenues:
Interest revenues, including dividends from subsidiaries		20,304			990			20,602			(13,873	)		28,023
Interest expense		18,639			528			13,775			(10,101	)		22,841
Net interest and dividend revenues		1,665			462			6,827			(3,772	)		5,182
Provision for loan losses		92			10			276			(6	)		372
Net interest and dividend revenues after provision for loan losses		1,573			452			6,551			(3,766	)		4,810
Noninterest revenues:
Commissions and fees, including insurance premiums		2,901			545			6,183			–			9,629
Trading revenues, net		6,803			(105	)		(503	)		(9	)		6,186
Net gains (losses) on securities available for sale		(20	)		1			250			4			235
Other revenues		309			802			(361	)		(64	)		686
Total noninterest revenues		9,993			1,243			5,569			(69	)		16,736
Noninterest expenses:
Compensation and benefits		5,074			426			4,783			(61	)		10,222
Other expenses		3,299			830			3,387			(221	)		7,295
Total noninterest expenses		8,373			1,256			8,170			(282	)		17,517
Income before income tax expense and cumulative effect of accounting changes		3,193			439			3,950			(3,553	)		4,029
Income tax expense		721			157			428			251			1,557
Income before cumulative effect of accounting changes, net of tax		2,472			282			3,522			(3,804	)		2,472
Cumulative effect of accounting changes, net of tax		–			–			–			–			–
Net income (loss)		2,472			282			3,522			(3,804	)		2,472

F - 85

2003	Parent			DBTC			Other		Consolidating			Deutsche
							subsidiaries		entries			Bank AG
in€ m.												consolidated
Net interest revenues:
Interest revenues, including dividends from subsidiaries		20,908			807			18,184		(12,316	)		27,583
Interest expense		17,732			508			11,800		(8,304	)		21,736
Net interest and dividend revenues		3,176			299			6,384		(4,012	)		5,847
Provision for loan losses		525			232			371		(15	)		1,113
Net interest and dividend revenues after provision for loan losses		2,651			67			6,013		(3,997	)		4,734
Noninterest revenues:
Commissions and fees, including insurance premiums		2,864			663			5,917		–			9,444
Trading revenues, net		4,940			67			497		107			5,611
Net gains (losses) on securities available for sale		(67	)		(3	)		105		(15	)		20
Other revenues		(598	)		747			992		(795	)		346
Total noninterest revenues		7,139			1,474			7,511		(703	)		15,421
Noninterest expenses:
Compensation and benefits		5,414			461			4,598		22			10,495
Other expenses		3,484			745			2,975		(300	)		6,904
Total noninterest expenses		8,898			1,206			7,573		(278	)		17,399
Income before income tax expense (benefit) and cumulative effect of accounting changes		892			335			5,951		(4,422	)		2,756
Income tax expense (benefit)		(333	)		121			1,013		741			1,542
Income before cumulative effect of accounting changes, net of tax		1,225			214			4,938		(5,163	)		1,214
Cumulative effect of accounting changes, net of tax		140			–			11		–			151
Net income (loss)		1,365			214			4,949		(5,163	)		1,365

F - 86

2002	Parent			DBTC			Other			Consolidating			Deutsche
							subsidiaries			entries			Bank AG
in€ m.													consolidated
Net interest revenues:
Interest revenues, including dividends from subsidiaries		27,552			1,199			24,644			(17,614	)		35,781
Interest expense		20,761			791			18,189			(11,146	)		28,595
Net interest and dividend revenues		6,791			408			6,455			(6,468	)		7,186
Provision for loan losses		1,310			268			487			26			2,091
Net interest and dividend revenues after provision for loan losses		5,481			140			5,968			(6,494	)		5,095
Noninterest revenues:
Commissions and fees, including insurance premiums		2,830			908			7,840			–			11,578
Trading revenues, net		5,275			23			(1,017	)		(257	)		4,024
Net gains on securities available for sale		371			5			2,989			158			3,523
Other revenues		(4,398	)		520			2,638			1,476			236
Total noninterest revenues		4,078			1,456			12,450			1,377			19,361
Noninterest expenses:
Compensation and benefits		4,857			797			5,874			(170	)		11,358
Other expenses		3,327			871			5,527			(176	)		9,549
Total noninterest expenses		8,184			1,668			11,401			(346	)		20,907
Income (loss) before income tax expense (benefit) and cumulative effect of accounting changes		1,375			(72	)		7,017			(4,771	)		3,549
Income tax expense (benefit)		978			(1	)		600			1,612			3,189
Income (loss) before cumulative effect of accounting changes, net of tax		397			(71	)		6,417			(6,383	)		360
Cumulative effect of accounting changes, net of tax		–			(60	)		37			60			37
Net income (loss)		397			(131	)		6,454			(6,323	)		397

F - 87

Condensed Consolidating Balance Sheet

Dec 31, 2004	Parent		DBTC		Other		Consolidating			Deutsche
					subsidiaries		entries			Bank AG
in€ m.										consolidated
Assets
Cash and due from banks		3,789		2,031		3,498		(1,739	)		7,579
Interest-earning deposits with banks		49,873		3,526		133,505		(168,815	)		18,089
Securities borrowed and central bank funds sold and securities purchased under resale agreements		150,319		7,872		146,336		(114,976	)		189,551
Trading assets		289,076		3,156		101,330		(20,415	)		373,147
Securities available for sale		4,720		1,279		20,021		(5,685	)		20,335
Other investments		43,924		2,553		25,356		(63,897	)		7,936
Loans, net		142,412		17,225		146,066		(169,359	)		136,344
Other assets		57,881		2,618		62,285		(35,697	)		87,087
Total assets		741,994		40,260		638,397		(580,583	)		840,068
Liabilities
Deposits		355,155		10,175		135,372		(171,233	)		329,469
Trading liabilities		125,696		1,055		61,777		(18,922	)		169,606
Securities loaned and central bank funds purchased and securities sold under repurchase agreements		86,123		4,712		142,643		(115,305	)		118,173
Other short-term borrowings		9,639		10,264		94,171		(93,956	)		20,118
Other liabilities		43,954		3,362		59,618		(37,006	)		69,928
Long-term debt		95,523		7,589		85,424		(81,666	)		106,870
Total liabilities		716,090		37,157		579,005		(518,088	)		814,164
Total shareholders’ equity		25,904		3,103		59,392		(62,495	)		25,904
Total liabilities and shareholders’ equity		741,994		40,260		638,397		(580,583	)		840,068

F - 88

Dec 31, 2003	Parent		DBTC		Other		Consolidating			Deutsche
					subsidiaries		entries			Bank AG
in€ m.										consolidated
Assets
Cash and due from banks		3,177		1,616		3,759		(1,916	)		6,636
Interest-earning deposits with banks		52,070		3,959		123,548		(164,928	)		14,649
Securities borrowed and central bank funds sold and securities purchased under resale agreements		138,138		5,743		140,977		(99,643	)		185,215
Trading assets		246,619		10,110		105,728		(17,086	)		345,371
Securities available for sale		4,133		154		21,051		(707	)		24,631
Other investments		44,847		3,441		16,385		(56,103	)		8,570
Loans, net		148,555		16,499		127,932		(148,040	)		144,946
Other assets		42,112		3,285		60,247		(32,048	)		73,596
Total assets		679,651		44,807		599,627		(520,471	)		803,614
Liabilities
Deposits		330,684		10,935		133,078		(168,543	)		306,154
Trading liabilities		114,919		1,635		53,310		(16,630	)		153,234
Securities loaned and central bank funds purchased and securities sold under repurchase agreements		85,202		5,462		94,220		(67,634	)		117,250
Other short-term borrowings		6,120		10,916		90,388		(85,134	)		22,290
Other liabilities		32,206		3,733		103,459		(60,394	)		79,004
Long-term debt		82,318		8,242		73,666		(66,746	)		97,480
Total liabilities		651,449		40,923		548,121		(465,081	)		775,412
Total shareholders’ equity		28,202		3,884		51,506		(55,390	)		28,202
Total liabilities and shareholders’ equity		679,651		44,807		599,627		(520,471	)		803,614

F - 89

Condensed Consolidating Statement of Cash Flows

2004	Parent			DBTC			Other1			Deutsche
							subsidiaries			Bank AG
in€ m.										consolidated
Net cash (used in) provided by operating activities		(30,031	)		6,263			(6,183	)		(29,951	)
Cash flows from investing activities:
Net change in:
Interest-earning deposits with banks		2,198			158			(6,929	)		(4,573	)
Securities borrowed and central bank funds sold and securities purchased under resale agreements		(12,181	)		(2,528	)		10,196			(4,513	)
Loans		4,092			(1,882	)		698			2,908
Investment in subsidiaries		1,565			–			(1,565	)		–
Proceeds from:
Sale of securities available for sale		987			4			20,154			21,145
Maturities of securities available for sale		2,967			302			291			3,560
Sale of other investments, loans and other		3,057			–			9,938			12,995
Purchase of:
Securities available for sale		(2,874	)		(1,408	)		(20,919	)		(25,201	)
Other investments		(2,032	)		–			832			(1,200	)
Loans		–			–			(4,950	)		(4,950	)
Premises and equipment		(209	)		(54	)		(529	)		(792	)
Net cash paid for business combinations/divestitures		–			–			(223	)		(223	)
Other, net		56			844			(784	)		116
Net cash (used in) provided by investing activities		(2,374	)		(4,564	)		6,210			(728	)
Cash flows from financing activities:
Net change in:
Deposits		24,476			–			(1,129	)		23,347
Securities loaned and central bank funds purchased and securities sold under repurchase agreements		922			(370	)		371			923
Other short-term borrowings		3,519			107			(227	)		3,399
Issuances of long-term debt		30,385			–			4,078			34,463
Repayments and extinguishments of long-term debt		(21,781	)		(72	)		(3,920	)		(25,773	)
Issuances of common shares		–			–			–			–
Purchases of treasury shares		(34,471	)		–			–			(34,471	)
Sale of treasury shares		30,850			–			–			30,850
Cash dividends paid		(828	)		(830	)		830			(828	)
Other, net		12			(7	)		7			12
Net cash provided by (used in) financing activities		33,084			(1,172	)		10			31,922
Net effect of exchange rate changes on cash and due from banks		(67	)		–			(233	)		(300	)
Net increase (decrease) in cash and due from banks		612			527			(196	)		943
Cash and due from banks, beginning of year		3,177			1,504			1,955			6,636
Cash and due from banks, end of year		3,789			2,031			1,759			7,579
Interest paid		18,156			516			3,739			22,411
Income taxes paid, net		(35	)		1			233			199

¹ This column includes amounts for other subsidiaries and intercompany cash flows.

F - 90

2003	Parent			DBTC			Other1			Deutsche
							subsidiaries			Bank AG
in€ m.										consolidated
Net cash provided by (used in) operating activities		2,220			(2,997	)		(8,042	)		(8,819	)
Cash flows from investing activities:
Net change in:
Interest-earning deposits with banks		8,125			(156	)		3,336			11,305
Securities borrowed and central bank funds sold and securities purchased under resale agreements		(22,506	)		4,301			(11,643	)		(29,848	)
Loans		(1,585	)		(985	)		25,180			22,610
Investment in subsidiaries		(2,326	)		–			2,326			–
Proceeds from:
Sale of securities available for sale		1,738			2			11,880			13,620
Maturities of securities available for sale		3,622			13			3,876			7,511
Sale of other investments, loans and other		4,235			–			7,343			11,578
Purchase of:
Securities available for sale		(5,902	)		(10	)		(14,030	)		(19,942	)
Other investments		(1,249	)		–			(892	)		(2,141	)
Loans		–			–			(9,030	)		(9,030	)
Premises and equipment		(284	)		(37	)		(670	)		(991	)
Net cash received for business combinations/divestitures		–			–			2,469			2,469
Other, net		84			(237	)		480			327
Net cash provided by (used in) investing activities		(16,048	)		2,891			20,625			7,468
Cash flows from financing activities:
Net change in:
Deposits		(729	)		(3,312	)		(17,382	)		(21,423	)
Securities loaned and central bank funds purchased and securities sold under repurchase agreements		13,591			1,247			2,913			17,751
Other short-term borrowings		2,946			(67	)		(7,182	)		(4,303	)
Issuances of long-term debt		22,701			3,141			17,349			43,191
Repayments and extinguishments of long-term debt		(23,742	)		(927	)		(7,697	)		(32,366	)
Purchases of treasury shares		(25,464	)		–			–			(25,464	)
Sale of treasury shares		23,389			–			–			23,389
Cash dividends paid		(756	)		–			–			(756	)
Other, net		(30	)		(46	)		39			(37	)
Net cash provided by (used in) financing activities		11,906			36			(11,960	)		(18	)
Net effect of exchange rate changes on cash and due from banks		(288	)		–			(686	)		(974	)
Net (decrease) in cash and due from banks		(2,210	)		(70	)		(63	)		(2,343	)
Cash and due from banks, beginning of year		5,387			1,686			1,906			8,979
Cash and due from banks, end of year		3,177			1,616			1,843			6,636
Interest paid		18,057			707			3,848			22,612
Income taxes paid, net		(18	)		6			923			911

¹ This column includes amounts for other subsidiaries and intercompany cash flows.

F - 91

2002	Parent			DBTC			Other1			Deutsche
							subsidiaries			Bank AG
in€ m.										consolidated
Net cash provided by (used in) operating activities		(13,320	)		6,547			5,990			(783	)
Cash flows from investing activities:
Net change in:
Interest-earning deposits with banks		11,511			(120	)		(3,591	)		7,800
Securities borrowed and central bank funds sold and securities purchased under resale agreements		9,128			(3,744	)		(16,639	)		(11,255	)
Loans		29,662			506			(13,773	)		16,395
Investment in subsidiaries		3,847			–			(3,847	)		–
Proceeds from:
Sale of securities available for sale		4,011			5			21,819			25,835
Maturities of securities available for sale		6,436			11			1,284			7,731
Sale of other investments, loans and other		8,495			–			58			8,553
Purchase of:
Securities available for sale		(6,480	)		(1	)		(15,983	)		(22,464	)
Other investments		(3,358	)		–			(1,116	)		(4,474	)
Loans		–			–			(2,364	)		(2,364	)
Premises and equipment		(402	)		(90	)		(1,204	)		(1,696	)
Net cash paid for business combinations/divestitures		–			–			(1,110	)		(1,110	)
Other, net		376			5			306			687
Net cash provided by (used in) investing activities		63,226			(3,428	)		(36,160	)		23,638
Cash flows from financing activities:
Net change in:
Deposits		(48,949	)		704			6,967			(41,278	)
Securities loaned and central bank funds purchased and securities sold under repurchase agreements		(12,158	)		4			19,757			7,603
Other short-term borrowings		480			67			(273	)		274
Issuances of long-term debt		34,603			–			5,642			40,245
Repayments and extinguishments of long-term debt		(19,656	)		(2,783	)		(4,762	)		(27,201	)
Issuances of common share		73			–			–			73
Purchases of treasury shares		(30,755	)		–			–			(30,755	)
Sale of treasury shares		28,665			–			–			28,665
Cash dividends paid		(800	)		–			–			(800	)
Other, net		(807	)		(118	)		470			(455	)
Net cash provided by (used in) financing activities		(49,304	)		(2,126	)		27,801			(23,629	)
Net effect of exchange rate changes on cash and due from banks		(314	)		(20	)		(301	)		(635	)
Net increase (decrease) in cash and due from banks		288			973			(2,670	)		(1,409	)
Cash and due from banks, beginning of year		5,099			1,066			4,223			10,388
Cash and due from banks, end of year		5,387			2,039			1,553			8,979
Interest paid		21,111			999			9,239			31,349
Income taxes paid, net		(521	)		22			927			408

¹ This column includes amounts for other subsidiaries and intercompany cash flows.

F - 92

Supplemental Financial Information

(Unaudited)

Financial Condition

The following table presents the Group’s average balance sheet and net interest revenues for the periods specified. The average balances for each year are calculated based upon month-end balances for December of the preceding year and for each month of the year except January. The allocations of the assets and liabilities between German and non-German offices are based on the location of the Group’s entity on the books of which it carries the asset or liability. Categories of loans include nonaccrual loans.

Average balance sheet and	2004								2003								2002
net interest revenues	Average			Interest		Average			Average			Interest		Average			Average			Interest		Average
in€ m.	balance					yield/			balance					yield/			balance					yield/
(except percentages)						rate								rate								rate
Assets
Interest-earning deposits with banks:
In German offices		3,402			89		2.62	%		6,606			164		2.48	%		10,173			335		3.29	%
In non-German offices		18,538			708		3.82	%		14,044			738		5.26	%		19,775			1,134		5.74	%
Total interest-earning deposits with banks		21,940			797		3.63	%		20,650			902		4.37	%		29,948			1,469		4.91	%
Central bank funds sold and securities purchased under resale agreements:
In German offices		17,620			372		2.11	%		18,185			456		2.51	%		15,743			587		3.73	%
In non-German offices		121,215			4,275		3.53	%		130,185			4,401		3.38	%		126,335			5,992		4.74	%
Total central bank funds sold and securities purchased under resale agreements		138,835			4,647		3.35	%		148,370			4,857		3.27	%		142,078			6,579		4.63	%
Securities borrowed:
In German offices		64			2		2.94	%		160			3		1.89	%		412			5		1.23	%
In non-German offices		91,388			1,666		1.82	%		78,112			1,426		1.83	%		61,391			2,804		4.57	%
Total securities borrowed		91,452			1,668		1.82	%		78,272			1,429		1.83	%		61,803			2,809		4.55	%
Trading assets:
In German offices		49,044			1,900		3.87	%		30,346			1,408		4.64	%		34,068			1,744		5.12	%
In non-German offices		248,091			10,696		4.31	%		237,981			9,878		4.15	%		217,348			9,504		4.37	%
Total trading assets		297,135			12,596		4.24	%		268,327			11,286		4.21	%		251,416			11,248		4.47	%
Securities available for sale and other investments:
In German offices		14,887			385		2.59	%		16,706			547		3.27	%		36,057			1,066		2.96	%
In non-German offices		16,633			424		2.55	%		16,494			427		2.59	%		18,975			576		3.03	%
Total securities available for sale and other investments		31,520			809		2.57	%		33,200			974		2.93	%		55,032			1,642		2.98	%
Loans:
In German offices		83,390			3,958		4.75	%		90,540			4,338		4.79	%		131,336			7,152		5.45	%
In non-German offices		61,091			2,938		4.81	%		75,168			3,311		4.41	%		97,120			4,589		4.72	%
Total loans		144,481			6,896		4.77	%		165,708			7,649		4.62	%		228,456			11,741		5.14	%
Total other interest-earning assets		26,194			610		2.33	%		21,519			486		2.26	%		12,401			293		2.36	%
Total interest-earning assets		751,557			28,023		3.73	%		736,046			27,583		3.75	%		781,134			35,781		4.58	%
Cash and due from banks		9,013								8,853								10,338
Noninterest-earning trading assets:
In German offices		26,709								25,779								18,479
In non-German offices		38,847								43,685								40,694
All other assets		60,557								64,562								80,487
Allowance for loan losses		(2,830	)							(3,742	)							(4,919	)
Total assets		883,853								875,183								926,213
% of assets attributable to non-German offices		76	%							77	%							72	%

S-1

Average balance sheet and	2004								2003								2002
net interest revenues	Average			Interest		Average			Average			Interest		Average			Average			Interest		Average
in€ m. (except percentages)	balance					yield/			balance					yield/			balance					yield/
						rate								rate								rate
Liabilities and shareholders’ equity
Interest-bearing deposits:
In German offices:
Time deposits		33,621			1,058		3.14	%		36,177			912		2.52	%		41,881			1,380		3.29	%
Savings deposits		22,773			436		1.92	%		24,203			528		2.18	%		24,428			678		2.77	%
Demand deposits		29,062			459		1.58	%		29,393			478		1.63	%		29,679			604		2.04	%
Total in German offices		85,456			1,953		2.29	%		89,773			1,918		2.14	%		95,988			2,662		2.77	%
In non-German offices:
Time deposits		152,052			3,423		2.25	%		135,071			2,806		2.08	%		148,571			4,219		2.84	%
Savings deposits		6,571			104		1.59	%		6,632			77		1.16	%		8,120			146		1.80	%
Demand deposits		74,104			1,647		2.22	%		72,011			1,779		2.47	%		77,362			2,292		2.96	%
Total in non-German offices		232,727			5,174		2.22	%		213,714			4,662		2.18	%		234,053			6,657		2.84	%
Total interest-bearing deposits		318,183			7,127		2.24	%		303,487			6,580		2.17	%		330,041			9,319		2.82	%
Trading liabilities:
In German offices		22,011			1,099		4.99	%		18,593			772		4.15	%		16,397			663		4.04	%
In non-German offices		82,497			5,767		6.99	%		69,468			4,895		7.05	%		63,352			3,747		5.91	%
Total trading liabilities		104,508			6,866		6.57	%		88,061			5,667		6.44	%		79,749			4,410		5.53	%
Central bank funds purchased and securities sold under repurchase agreements:
In German offices		12,639			288		2.28	%		14,835			331		2.23	%		8,619			291		3.37	%
In non-German offices		122,077			4,339		3.55	%		135,791			4,264		3.14	%		135,408			6,758		4.99	%
Total central bank funds purchased and securities sold under repurchase agreements		134,716			4,627		3.43	%		150,626			4,595		3.05	%		144,027			7,049		4.89	%
Securities loaned:
In German offices		1,028			8		0.77	%		1,354			1		0.07	%		662			17		2.56	%
In non-German offices		16,624			548		3.29	%		14,837			429		2.89	%		10,744			563		5.24	%
Total securities loaned		17,652			556		3.15	%		16,191			430		2.65	%		11,406			580		5.09	%
Other short-term borrowings:
In German offices		958			24		2.45	%		957			16		1.62	%		603			20		3.41	%
In non-German offices		20,184			443		2.20	%		20,252			582		2.87	%		19,994			685		3.42	%
Total other short-term borrowings		21,142			467		2.21	%		21,209			598		2.82	%		20,597			705		3.42	%
Long-term debt:1
In German offices		36,002			1,146		3.18	%		31,736			1,338		4.21	%		58,117			2,587		4.45	%
In non-German offices		62,891			2,052		3.26	%		71,817			2,528		3.52	%		85,706			3,945		4.60	%
Total long-term debt		98,893			3,198		3.23	%		103,553			3,866		3.73	%		143,823			6,532		4.54	%
Total interest-bearing liabilities		695,094			22,841		3.29	%		683,127			21,736		3.18	%		729,643			28,595		3.92	%
Noninterest-bearing deposits:
In German offices		21,382								20,953								18,909
In non-German offices		10,937								6,958								8,373
Noninterest-bearing trading liabilities:
In German offices		24,139								25,072								17,556
In non-German offices		40,613								38,928								37,165
All other noninterest-bearing liabilities		64,494								71,205								77,778
Shareholders’ equity		27,194								28,940								36,789
Total liabilities and shareholders’ equity		883,853								875,183								926,213
% of liabilities attributable to non-German offices		75	%							75	%							73	%
Rate spread		0.44	%							0.57	%							0.66	%
Net interest margin (net interest revenues to total interest-earning assets):
In German offices		1.43	%							1.59	%							2.04	%
In non-German offices		0.48	%							0.57	%							0.46	%
Total		0.69	%							0.79	%							0.92	%

¹ Includes trust preferred securities.

S-2

The following table sets forth changes in net interest revenues on assets and liabilities between the periods specified. It also indicates, for each category of assets and liabilities, how much of the change in net interest revenues arose from changes in the volume of the category of assets or liabilities and how much arose from changes in the interest rate applicable to the category. Changes due to a combination of volume and rate are allocated proportionally.

	2004 over 2003 due to changes in:									2003 over 2002 due to changes in:
	Net			Volume			Rate			Net			Volume			Rate
in€ m.	change									change
Interest revenues:
Interest-earning deposits with banks:
German offices		(75	)		(84	)		9			(171	)		(100	)		(71	)
Non-German offices		(30	)		202			(232	)		(396	)		(307	)		(89	)
Total interest-earning deposits with banks		(105	)		118			(223	)		(567	)		(407	)		(160	)
Central bank funds sold and securities purchased under resale agreements:
German offices		(84	)		(14	)		(70	)		(131	)		81			(212	)
Non-German offices		(126	)		(311	)		185			(1,591	)		177			(1,768	)
Total central bank funds sold and securities purchased under resale agreements		(210	)		(325	)		115			(1,722	)		258			(1,980	)
Securities borrowed:
German offices		(1	)		(2	)		1			(2	)		(4	)		2
Non-German offices		240			242			(2	)		(1,378	)		621			(1,999	)
Total securities borrowed		239			240			(1	)		(1,380	)		617			(1,997	)
Trading assets:
German offices		492			755			(263	)		(336	)		(181	)		(155	)
Non-German offices		818			428			390			374			872			(498	)
Total trading assets		1,310			1,183			127			38			691			(653	)
Securities available for sale and other investments:
German offices		(162	)		(56	)		(106	)		(519	)		(623	)		104
Non-German offices		(3	)		4			(7	)		(149	)		(70	)		(79	)
Total securities available for sale and other investments		(165	)		(52	)		(113	)		(668	)		(693	)		25
Loans:
German offices		(380	)		(340	)		(40	)		(2,814	)		(2,029	)		(785	)
Non-German offices		(373	)		(658	)		285			(1,278	)		(984	)		(294	)
Total loans		(753	)		(998	)		245			(4,092	)		(3,013	)		(1,079	)
Other		124			303			(179	)		193			206			(13	)
Total interest revenues		440			469			(29	)		(8,198	)		(2,341	)		(5,857	)
Interest expense:
Interest-bearing deposits:
German offices		35			(95	)		130			(744	)		(164	)		(580	)
Non-German offices		512			421			91			(1,995	)		(542	)		(1,453	)
Total interest-bearing deposits		547			326			221			(2,739	)		(706	)		(2,033	)
Trading liabilities:
German offices		327			156			171			109			91			18
Non-German offices		872			911			(39	)		1,148			385			763
Total trading liabilities		1,199			1,067			132			1,257			476			781
Central bank funds purchased and securities sold under repurchase agreements:
German offices		(43	)		(50	)		7			40			161			(121	)
Non-German offices		75			(455	)		530			(2,494	)		19			(2,513	)
Total central bank funds purchased and securities sold under repurchase agreements		32			(505	)		537			(2,454	)		180			(2,634	)
Securities loaned:
German offices		7			–			7			(16	)		9			(25	)
Non-German offices		119			55			64			(134	)		170			(304	)
Total securities loaned		126			55			71			(150	)		179			(329	)
Other short-term borrowings:
German offices		8			–			8			(4	)		9			(13	)
Non-German offices		(139	)		10			(149	)		(103	)		8			(111	)
Total other short-term borrowings		(131	)		10			(141	)		(107	)		17			(124	)
Long-term debt1:
German offices		(192	)		164			(356	)		(1,249	)		(1,118	)		(131	)
Non-German offices		(476	)		(300	)		(176	)		(1,417	)		(578	)		(839	)
Total long-term debt		(668	)		(136	)		(532	)		(2,666	)		(1,696	)		(970	)
Total interest expense		1,105			817			288			(6,859	)		(1,550	)		(5,309	)
Net change in net interest revenues		(665	)		(348	)		(317	)		(1,339	)		(791	)		(548	)

¹ Includes trust preferred securities.

S-3

Loans Outstanding

The following three tables provide more detailed information on the loan portion of the Group’s credit exposures. The following table shows the Group’s loan portfolio according to the industry sector and location (within or outside Germany) of the borrower.

	Dec 31,		Dec 31,		Dec 31,		Dec 31,		Dec 31,
in€ m.	2004		2003		2002		2001		2000
German:
Banks and insurance		2,047		3,861		1,600		7,444		11,068
Manufacturing		7,364		8,668		9,388		12,612		13,507
Households (excluding mortgages)		14,761		14,161		13,768		13,509		13,920
Households – mortgages		26,175		25,445		25,226		35,283		34,593
Public sector		1,474		1,388		1,750		20,752		22,531
Wholesale and retail trade		3,742		5,133		4,549		6,559		8,865
Commercial real estate activities		11,100		11,629		15,841		28,311		24,695
Lease financing		820		855		416		436		3,107
Other		11,586		12,736		15,898		22,878		27,907
Total German		79,069		83,876		88,436		147,784		160,193
Non-German1:
Banks and insurance		5,740		6,660		9,120		12,465		25,919
Manufacturing		5,906		7,487		13,157		19,490		21,253
Households (excluding mortgages)		7,023		6,915		6,937		7,873		8,832
Households – mortgages		9,117		8,416		7,276		6,503		1,112
Public sector		1,804		921		2,834		2,906		3,144
Wholesale and retail trade		6,546		6,691		9,918		9,200		12,680
Commercial real estate activities		3,004		1,977		2,519		7,306		7,864
Lease financing		1,726		3,138		3,905		3,263		4,500
Other		18,830		22,327		27,768		49,297		37,133
Total non-German		59,696		64,532		83,434		118,303		122,437
Gross loans		138,765		148,408		171,870		266,087		282,630
Less: unearned income		76		181		250		664		1,225
Total		138,689		148,227		171,620		265,423		281,405

¹ For 2001 certain exposures were reclassified from banks and insurance to other (€ 6.5 billion) and from commercial real estate activities to households (€ 2.8 billion).

S-4

Loan Maturities and Sensitivity to Changes in Interest Rates

The following table provides an analysis of the maturities of the loans in the Group’s loan portfolio (excluding lease financings) as of December 31, 2004.

Dec 31, 2004	Within one year			After one but		After five years		Total
in€ m.				within five years
German:
Banks and insurance		409			341		1,297		2,047
Manufacturing		4,909			1,829		626		7,364
Households (excluding mortgages)		3,506			4,269		6,986		14,761
Households – mortgages		1,898			5,152		19,125		26,175
Public sector		972			128		374		1,474
Wholesale and retail trade		2,863			527		352		3,742
Commercial real estate activities		2,864			2,784		5,452		11,100
Other		5,921			2,963		2,702		11,586
Total German		23,342			17,993		36,914		78,249
Non-German:
Banks and insurance		3,585			1,029		1,126		5,740
Manufacturing		3,406			2,239		261		5,906
Households (excluding mortgages)		3,771			2,899		353		7,023
Households – mortgages		1,307			526		7,284		9,117
Public sector		1,661			88		55		1,804
Wholesale and retail trade		3,812			2,192		542		6,546
Commercial real estate activities		1,015			1,407		582		3,004
Other		9,644			6,285		2,901		18,830
Total non-German		28,201			16,665		13,104		57,970
Gross loans		51,543			34,658		50,018		136,219
Less: unearned income		(50	)		100		23		73
Total		51,593			34,558		49,995		136,146

The following table shows a breakdown of the volumes of the loans in the Group’s loan portfolio (excluding lease financings) on December 31, 2004 that had residual maturities of more than one year from that date that had fixed interest rates and that had floating or adjustable interest rates.

Dec 31, 2004	After one but		After five years		Total
in€ m.	within five years
Fixed rate loans		26,091		38,264		64,355
Floating or adjustable rate loans		8,467		11,731		20,198
Total		34,558		49,995		84,553

S-5

Problem Loans

The following table illustrates total problem loans based on the domicile of the Group’s counterparty (within or outside Germany) for the last five years.

	Dec 31,		Dec 31,		Dec 31,		Dec 31,			Dec 31,
in€ m.	2004		2003		2002		2001			2000
Nonaccrual loans:
German		3,146		3,448		4,587		6,538			3,730
Non-German		1,353		2,594		5,511		4,990			2,824
Total nonaccrual loans		4,499		6,042		10,098		11,528	1		6,554
Loans 90 days or more past due and still accruing:
German		236		335		439		658			1,028
Non-German		11		45		70		189			470
Total loans 90 days or more past due and still accruing		247		380		509		847			1,498
Troubled debt restructurings:
German		71		20		38		57			14
Non-German		18		181		154		222			141
Total troubled debt restructurings		89		201		192		279			155

¹ Total nonaccrual loans for 2001 includes approximately€ 3.4 billion of impaired loans that were classified as potential problem loans in 2000.

The following table shows the approximate effect on interest revenue of nonaccrual loans and troubled debt restructurings. It shows the gross interest income that would have been recorded in 2004 if those loans had been current in accordance with their original terms and had been outstanding throughout 2004 or since their origination, if we only held them for part of 2004. It also shows the amount of interest income on those loans that was included in net income for 2004. The reduction of interest revenue we experienced from the nonperforming other interest bearing assets was immaterial to the Group.

in€ m.	2004
German loans:
Gross amount of interest that would have been recorded at original rate		138
Less interest, net of reversals, recognized in interest revenue		53
Reduction of interest revenue		85
Non-German loans:
Gross amount of interest that would have been recorded at original rate		90
Less interest, net of reversals, recognized in interest revenue		34
Reduction of interest revenue		56
Total reduction of interest revenue		141

S-6

Allowance for Loan Losses

The following table sets forth a breakdown of the movements in the Group’s allowance for loan losses for the periods specified.

in€ m. (except percentages)	2004			2003			2002			2001			2000
Allowance at beginning of year		3,281			4,317			5,585			6,745			7,281
Charge-offs
German:
Banks and insurance		3			3			8			7			13
Manufacturing		80			57			196			280			123
Households (excluding mortgages)		185			169			400			214			37
Households – mortgages		39			30			45			27			39
Public sector		–			–			–			–			–
Wholesale and retail trade		78			41			140			192			60
Commercial real estate activities		106			59			127			209			148
Lease financing		–			–			–			1			3
Other		231			217			567			426			220
German total		722			576			1,483			1,356			643
Non-German:
Excluding lease financing		672			1,318			1,244			697			652
Lease financing only		–			–			1			2			1
Non-German total		672			1,318			1,245			699			653
Total charge-offs		1,394			1,894			2,728			2,055			1,296
Recoveries
German:
Banks and insurance		1			–			–			–			–
Manufacturing		12			7			4			4			10
Households (excluding mortgages)		37			48			24			15			3
Households – mortgages		–			–			2			2			–
Public sector		–			–			–			–			–
Wholesale and retail trade		12			6			3			1			–
Commercial real estate activities		3			2			3			–			3
Lease financing		–			–			–			–			–
Other		37			36			42			11			35
German total		102			99			78			33			51
Non-German:
Excluding lease financing		50			67			34			34			24
Lease financing only		–			1			–			–			–
Non-German total		50			68			34			34			24
Total recoveries		152			167			112			67			75
Net charge-offs		1,242			1,727			2,616			1,988			1,221
Provision for loan losses		372			1,113			2,091			1,024			478
Other changes (currency translation and allowance related to acquisitions/divestitures)		(66	)		(422	)		(743	)		(196	)		207
Allowance at end of year		2,345			3,281			4,317			5,585			6,745
Percentage of total net charge-offs to average loans for the year		0.86	%		1.04	%		1.15	%		0.71	%		0.39	%

S-7

Our provision for loan losses in 2002 was€ 2.1 billion, an increase of 104% from the prior year. This amount is composed of both net new specific and inherent loan loss provisions. The provision for the year was primarily due to provisions raised to address the downturn in the telecommunication industry and specific loan loss provisions reflecting the deterioration in various industry sectors represented within our German portfolio and the Americas.

Our total provision for loan losses in 2001 was€ 1.0 billion, an increase of 114% from the prior year. This amount was comprised to both new specific and inherent loan loss provisions, reflecting the downturn in the global economy.

Our total provision for loan losses in 2000 was€ 478 million, a decline of 34% from the prior year. This balance was composed of net new specific loan loss provisions and a release of our inherent loss provision. Our total net new specific loan loss provision amounted to€ 805 million, which was almost equally split between German and non-German clients. Our specific loan loss provisions declined between 1999 and 2000, reflecting the improvement of the quality of our loan portfolio. Specific provisions were approximately 13% less in 2000 than the prior year due to in large part to provisions we took in 1999 with respect to significant exposure to a single German borrower in the real estate industry.

For a discussion of the provision for loan losses for the years 2004 and 2003, see “Item 11: Quantitative and Qualitative Disclosures about Credit, Market and Other Risk – Credit Loss Exposure and Allowance for Loan Losses”.

The following table sets forth the components of our allowance for loan losses by industry of the borrower, and the percentage of our total loan portfolio accounted for by those industry classifications, on the dates specified. The breakdown between German and non-German borrowers is based on the location of the borrowers.

in€ m. (except percentages)	Dec 31, 2004				Dec 31, 2003				Dec 31, 2002				Dec 31, 2001				Dec 31, 2000
German:
Specific loan loss allowance:
Banks and insurance		–	1	%		38	3	%		37	1	%		7	3	%		67	4	%
Manufacturing		271	5	%		338	6	%		317	5	%		427	5	%		668	5	%
Households (excluding mortgages)		55	11	%		68	10	%		121	8	%		102	5	%		110	5	%
Households – mortgages		17	19	%		17	17	%		5	15	%		73	13	%		58	12	%
Public sector		–	1	%		–	1	%		–	1	%		–	8	%		–	8	%
Wholesale and retail trade		161	3	%		154	3	%		130	3	%		187	2	%		359	3	%
Commercial real estate activities		345	8	%		350	8	%		287	9	%		643	11	%		773	9	%
Other		278	9	%		378	9	%		479	9	%		606	9	%		840	11	%
Specific German total		1,127				1,343				1,376				2,045				2,875
Inherent loss allowance		417				472				495				1,098				1,395
German total		1,544	57	%		1,815	57	%		1,871	51	%		3,143	56	%		4,270	57	%
Non-German:
Specific loan loss allowance		527				1,128				1,768				1,675				1,702
Inherent loss allowance		273				338				678				767				773
Non-German total		800	43	%		1,466	43	%		2,446	49	%		2,442	44	%		2,475	43	%
Total allowance for loan losses		2,345	100	%		3,281	100	%		4,317	100	%		5,585	100	%		6,745	100	%
Total specific allowance		1,654				2,471				3,144				3,720				4,577
Total inherent loss allowance		691				810				1,173				1,865				2,168
Total allowance for loan losses		2,345				3,281				4,317				5,585				6,745

S-8

The following table presents an analysis of the changes in the international component of the allowance for loan losses. As of December 31, 2004, 34% of the Group’s total allowance was attributable to international clients.

in€ m.	2004			2003			2002			2001			2000
Allowance at beginning of year		1,466			2,446			2,441			2,475			2,812
Charge-offs		672			1,318			1,245			699			653
Recoveries		50			68			34			34			24
Net charge-offs		622			1,250			1,211			665			629
Provision for loan losses		25			590			1,500			710			219
Other changes (currency translation and allowance related to acquisitions/divestitures)		(69	)		(320	)		(284	)		(79	)		73
Allowance at end of year		800			1,466			2,446			2,441			2,475

S-9

Foreign Outstandings

The following tables list only those countries for which the cross-border outstandings exceeded 0.75% of the Group’s total assets at December 31, 2004, 2003, and 2002. At December 31, 2004, there were no outstandings that exceeded 0.75% of total assets in any country currently facing debt restructurings or liquidity problems that the Group expects would materially impact the country’s ability to service its obligations.

Dec 31, 2004	Banks and		Governments		Other1		Commit-		Net local		Total		Percent
	other		and official				ments		country
	financial		institutions						claim
in€ m.	institutions
United States		7,445		6,697		122,679		8,052		59,213		204,086		24.30	%
France		2,195		8,249		19,779		3,701		42		33,966		4.04	%
Italy		4,103		11,780		12,989		688		1,324		30,884		3.68	%
Japan		1,452		7,673		8,034		126		12,486		29,771		3.54	%
Netherlands		3,067		2,833		8,836		4,228		–		18,964		2.26	%
Great Britain		2,148		2,313		6,100		1,277		–		11,838		1.41	%
Spain		3,168		3,341		4,806		257		–		11,572		1.38	%
Cayman Islands		339		70		10,269		354		–		11,032		1.31	%
Luxembourg		3,336		326		4,783		782		–		9,227		1.10	%
Switzerland		1,453		279		4,223		1,212		–		7,167		0.85	%

¹ Other includes commercial and industrial, insurance and other loans.

Dec 31, 2003	Banks and		Governments		Other1		Commit-		Net local		Total		Percent
	other		and official				ments		country
	financial		institutions						claim
in€ m.	institutions
United States		9,467		5,532		92,654		3,117		13,140		123,910		15.42	%
Japan		1,374		11,928		28,401		186		21,176		63,065		7.85	%
Italy		2,835		9,369		13,171		1,351		–		26,726		3.33	%
Netherlands		2,620		4,136		10,454		5,688		1		22,899		2.85	%
France		2,521		4,557		13,197		1,875		90		22,240		2.77	%
Great Britain		3,508		2,195		5,480		6,329		874		18,386		2.29	%
Spain		1,823		2,059		7,124		151		3,099		14,256		1.77	%
Switzerland		958		1,247		5,323		2,749		–		10,277		1.28	%
Cayman Islands		197		70		8,126		783		–		9,176		1.14	%
Canada		466		1,052		4,490		736		65		6,809		0.85	%
Luxembourg		1,004		133		5,226		199		–		6,562		0.82	%

¹ Other includes commercial and industrial, insurance and other loans.

Dec 31, 2002	Banks and		Governments		Other1		Commit-		Net local		Total		Percent
	other		and official				ments		country
	financial		institutions						claim
in€ m.	institutions
United States		23,176		3,560		69,126		2,067		23,702		121,631		16.04	%
Japan		2,027		11,659		15,353		122		16,296		45,457		5.99	%
Italy		2,630		6,335		14,544		1,116		–		24,625		3.25	%
Great Britain		6,286		777		3,735		3,192		6,905		20,895		2.76	%
France		4,605		3,969		9,961		1,260		145		19,940		2.63	%
Netherlands		5,125		1,911		5,719		2,788		–		15,543		2.05	%
Spain		1,281		2,152		5,039		623		3,965		13,060		1.72	%
Cayman Islands		5,926		282		3,828		454		–		10,490		1.38	%
Switzerland		1,160		683		5,660		2,022		138		9,663		1.27	%
Belgium		1,899		658		3,707		549		–		6,813		0.90	%
Luxembourg		4,155		45		689		1,387		–		6,276		0.83	%

¹ Other includes commercial and industrial, insurance and other loans.

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Deposits

The following table provides an analysis of the maturities of deposits in the amount of U.S.$ 100,000 or more in domestic offices as of December 31, 2004.

2004	Within three		After three		After six months		After one year		Total
	months		months but		but within
in€ m.			within six months		one year
Offices in Germany
Certificates of deposits		–		–		107		140		247
Other time deposits		22,810		909		463		5,485		29,667
Total		22,810		909		570		5,625		29,914

The amount of time certificates of deposits and other time deposits in the amount of U.S.$ 100,000 or more issued by foreign offices was€ 129.8 billion at December 31, 2004.

Total deposits by foreign depositors in German offices amounted to€ 21.8 billion,€ 17.5 billion and€ 20.6 billion at December 31, 2004, 2003 and 2002, respectively.

Short-term Borrowings

Short-term borrowings are borrowings with an original maturity of one year or less. The following table sets forth certain information relating to the categories of the Group’s short-term borrowings. The Group calculated the average balances for each period based upon month-end balances for December of the preceding year and for each month of the year except January. The allocation of assets and liabilities between German and non-German offices is based on the location of the entity on the books of which the Group carries the asset or liability.

in€ m. (except percentages)	Dec 31, 2004			Dec 31, 2003			Dec 31, 2002
Central bank funds purchased and securities sold under repurchase agreements:
Year-end balance		105,292			102,433			90,709
Average balance		134,716			150,626			144,027
Maximum balance at any month-end		165,305			191,744			189,446
Weighted-average interest rate during the year		3.43	%		3.05	%		4.89	%
Weighted-average interest rate on year-end balance		2.86	%		2.37	%		2.05	%
Securities loaned:
Year-end balance		12,881			14,817			8,790
Average balance		17,652			16,191			11,406
Maximum balance at any month-end		23,131			31,347			17,166
Weighted-average interest rate during the year		3.15	%		2.65	%		5.09	%
Weighted-average interest rate on year-end balance		3.17	%		1.28	%		2.73	%
Commercial Paper:
Year-end balance		9,980			13,150			4,320
Average balance		9,503			10,901			9,306
Maximum balance at any month-end		16,838			18,207			15,187
Weighted-average interest rate during the year		2.09	%		2.35	%		2.80	%
Weighted-average interest rate on year-end balance		1.92	%		2.80	%		1.12	%
Other:
Year-end balance		10,138			9,140			7,253
Average balance		11,639			10,308			11,291
Maximum balance at any month-end		18,606			13,752			19,011
Weighted-average interest rate during the year		2.31	%		3.31	%		3.93	%
Weighted-average interest rate on year-end balance		3.06	%		1.58	%		2.86	%

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