Results 2013 - Deutsche Bank · 11 Dear ladies and gentlemen, In 2013, Deutsche Bank Ltd....

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Results 2013Annual Report

Deutsche Bank

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Content

01 Deutsche Bank Ltd.

Members of the Board 5Supervisory Board 6Top Management 7Deutsche Bank New Corporate Values 8Statement of Chief Country Officer,Russia and CIS 10

Chairman of the Board’s Statement 12

02 Activities of the Bank

Strong Commitment to Russia 15

03 Financial statement

Financial Statement under RussianAccounting Standards 27

04 Further details

Details of Deutsche Bank Ltd. 87

Annual Report 2013

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01Deutsche Bank Ltd.

01 Deutsche Bank Ltd. Members of the Board

Members of the Management Board

Joerg Bongartz born 1963, Chairman of the Management Board since 2006

Batubay Ozkan born 1975, Member of the Board since 2009, Head of Global Markets Russia and CIS

Alexander Kirejev born 1971, Member of the Board since 2009, Head of Finance

Yaroslav Lissovolik born 1973, Member of the Board since 2011, Chief Economist, Head of Company Research in Russia

Pavel Kushnir born 1976, Member of the Board since 2012, Head of Oil&Gas Research Central and Eastern Europe

Ekaterina Seredinskaya born 1974, Member of the Board since 2013, Head of Operations Department

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Supervisory Board

Dr. Stephan Leithner Chairman of the Supervisory Board Member of the Management Board Deutsche Bank AG

Marco Bizzozero Head of Wealth Management for Europe, Middle East & Africa, CEO of Deutsche Bank Switzerland

Ahmet Arinc Head of Emerging Markets Debt Trading, Deutsche Bank AG

Stefan Bender Head of Global Transaction Banking Europe, Middle East & Africa

Peter Tils Chief Executive Officer for Central and Eastern Europe, Regional Management, Deutsche Bank AG

Jeremy William Bailey Chairman Global Banking - Europe, Deutsche Bank AG

Murray Daniel Remarque Roos Co-Head of Equity Trading, Deutsche Bank AG

Top management

Pavel Teplukhin Chief Country Officer, Deutsche Bank Group in Russia

Joerg Bongartz Chairman of the Management Board, Deutsche Bank Ltd.

Raj Tanna Managing Director, Chief Operating Officer of Deutsche Bank in Russia

Batubay Ozkan Head of Global Markets of Deutsche Bank for Russia and CIS

Andrew Chulack Co-Head of Investment Banking Coverage & Advisory, Russia and CIS

Daniel Jacobowitz Co-Head of Investment Banking Coverage & Advisory, Russia and CIS

Andre S. Mankowsky Market Head Russia & Eastern Europe, Private Wealth Management

Ekaterina Sannikova Head of Deutsche Bank Russia Technology Center

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Discipline

We protect the firm’s resources by always thinking and acting like owners

We live by the rules and hold ourselves accountable to de liver on our promises – no excuses

We achieve operational excellence by striving to ‘get it right the first time’

Partnership

We build diverse teams to generate better ideas and reach more balanced decisions

We put the common goals of the firm before ‘silo’ loyalty by trusting, respecting and working with each other

We act as responsible partners with all our stakeholders and regulators, and in serving the wider interests of society

Deutsche Bank New Corporate Values

The impact of the economic crisis has made a long-term change of corporate culture in the finan-cial sector absolutely imperative and in addition to cultural change new corporate values are also needed. We understand the message: Responsibility has to be the focus of our actions.

Our values that we defined in July 2013 lie at the core of everything we do. They will guide our behavior with clients, with each other, with our shareholders and with the communities we serve. They define the type of institution Deutsche Bank aspires to be.

Each of the values rests on a clear set of beliefs which set out how we seek to conduct ourselves as we live by our values. Our beliefs reflect our own history, the interests of our stakeholders, and the changing environment in which we operate.

Integrity

We live by the highest standards of integrity in everything we say and do

We will do what is right – not just what is allowed

We communicate openly; we invite, provide and respect challenging views

Sustainable Performance

We drive value for shareholders by putting long-term success over short- term gain

We encourage entrepreneurial spirit which responsibly balances risks and returns

We pursue lasting performance by developing, nurturing and investing in the best talent, and by managing based on merit

Client Centricity

We earn our clients’ trust by placing them at the core of our organization

We deliver true value by understanding and serving our clients’ needs best

We strive to pursue mutually beneficial client relationships in which the value created is shared fairly

Innovation

We foster innovation by valuing intellectual curiosity in our people

We enable our clients’ success by constantly seeking suitable solutions to their problems

We continuously improve our processes and plat forms by embracing new and better ways of doing things

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Dear ladies and gentlemen,

In 2013, Deutsche Bank Ltd. celebrated the fifteenth anniversary of its presence in Russia. Over the years, Deutsche Bank has become one of the most successful and powerful foreign play-ers in the region. All this time we have kept on augmenting our market share in different lines of business, and many of our transactions have won recognition and been repeatedly rewarded by the business community.

From the standpoint of world markets economic stability, this year was not an easy one for Deutsche Bank, as well as the entire financial sector. But we have set the bar pretty high for ourselves, and were successful in clearing it. A satisfying evidence of our success is the series of victories which we won in the past year.

Among these victories is the intensification of cooperation with several outstanding Russian clients from among the corporate giants. In addition, Euromoney named us the best in M&A transactions in Russia, as well as the second best trade finance bank in Russia and the CIS (Trade Finance Forfaiting Review Excellence Award in 2013).

The Bank has proven itself as a truly trustworthy source of professional information. Our research team, commended by the Institutional Investor ratings and National Association of Securities Market Participants, invariably confirms their proficiency and competence, ranking first among foreign brokers in Russia.

The ability of our staff for teamwork, especially in adverse market conditions, inspires confidence in our clients. Our reliability and stability rest on such pillars, as innovative products, a wide cov-erage of the client base, and a highly efficient interaction system, closely knitting all components of the bank’s platform, which ranks among the largest on the Russian market.

In 2013, Investment Banking Coverage & Advisory successfully implemented a number of major projects for its clients which are the largest Russian companies.

Deutsche Bank Russia has rendered consultancy services in the course of numerous big and sticky M&A deals, totaling in tens of billions of U.S. dollars. Among the major mandates of Deutsche Bank was a fairness opinion provided for Russia’s Federal Property Manage-ment Agency (“Rosimushchestvo”) regarding acquisition of BP and AAR’s stake in TNK-BP by Rosneft for combined USD 56 billion and subsequent USD 4.8 billion equity sale in Rosneft by Rosneftegaz; termination of Generali and PPF CEE partnership, which included the acquisition by Generali a 38,5% stake in Ingosstrakh; and the acquisition of MMK -Trans by Globaltrans for 335 million US dollars.

Furthermore, Deutsche Bank acted as the exclusive financial advisor and provider of a fair-ness opinion to TeliaSonera in respect of the USD 10.1 billion worth shareholders’ agreement on the payment of dividends and sale of MegaFon shares, and became the exclusive bookrunner in the Yandex SPO worth 607 million US dollars, as well as a joint bookrunner for the USD 448 million worth Moscow Stock Exchange IPO.

In times of recession, standard approaches traditionally give way to innovative solutions. Real-istic thinking leads us to believe that rough times offer their lucky chances too, one just need to effectively use them.

Statement of Chief Country Officer, Deutsche Russia and CIS

Pavel Teplukhin, Chief Country Officer for Deutsche Bank Group in Russia

The year 2013 saw further development of the principal business partnerships and implementation of Strategy 2015+, a global plan that spells out how the Bank will address the near-term challenges in the changed busi-ness environment and positions it to seize the opportunities presented by longer-term trends.

The impact of economic slump calls urgently for a long-term revision of corporate culture in the financial sec-tor. It has become one of the key areas of our development: in the past year, we laid a dependable foundation for such long-term revision with due accent on our new Values and Beliefs. Our business activities rest on responsibility, that is, we have to achieve more with fewer resources, improve the infrastructure, and set clear priorities, guided by leaders’ success.

Today, we have all we need to secure Deutsche Bank’s position as one of the leading international investment banks on the Russian market: experts, talents, ideas, proficiency, and products.

Deutsche Bank’s frontline position stems from our habit to never rest on oars.

Pavel Teplukhin, Chief Country Officer for Deutsche Bank Group in Russia

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Dear ladies and gentlemen,

The year 2013 saw a slowdown in Russia’s economic growth rate caused by weaker demand resulting from a combination of both external and internal factors.

Russia’s economy staggered in response to various events within the European political and financial sectors, such as the Cyprus bailout, lower oil prices, China’s economic downturn, and low forecasts from the US. In addition, local challenges such as GDP growth rate slow-ing down and corporate governance issues inhibited recovery following external disturbances, therefore resulting in significant market losses.

According to Rosstat, Russia’s GDP was RUR 66.7 trillion in 2013. In physical terms, GDP grew by 1.3% versus 2012. In 2013, the GDP deflator index was 106.5% versus 2012 prices. The positive trade balance of the Russian Federation declined by 7.8% to 177.3 billion USD in 2013. The inflation rate remained essentially the same and stayed at 6.5% at the end of 2013 (2012: 6.6%).

Generally during 2013 the banking sector’s capital inflow structure has seen some decrease in the amount of direct foreign investments, as well as the amount of liabilities in terms of port-folio investments; loans and borrowings, and investments in shares and equities have contracted by about fifty percent (source: Rosstat). The greatest percentage in accumulated foreign capital was on account of miscellaneous repayable investments - 65.7% (at the end of 2012: 60.1%). Total accumulated foreign capital in Russia’s economy was 384.1 bln. USD at the end of 2013, a 6.0% increase year-on-year.

The country’s export of private capital has grown noticeably. The amount of Russia’s outbound investments accumulated abroad was 176.4 bln. USD at the year-end, a 34.5% increase versus 2012.

The exchange rate policy was focused on mitigating the Ruble exchange rate’s fluctuations ver-sus the major global currencies and on compensating persistent demand-supply disbalances on the domestic foreign exchange market. This enabled currency interventions on the domestic foreign exchange market, with their scope taking into account the money market’s demand-sup-ply situation.

Russia’s international reserves were 496.7 bln. USD at the year-end 2013. Last year (2012), its gold and foreign exchange reserves reached their peak as of the reporting date: 537.4 bln. USD. That was the top figure in about 16 months. Thus, the country’s international reserves decreased by approximately 30 bln. USD last year.

Despite the challenging general economic environment in 2013, our Bank has steadily and consistently grown as the leader of Russia’s investment banking services market. We believe that we are playing an important role for Russia’s leading corporate entities and institutions, especially in terms of international relations. In this area, we competed with major domestic players. On the other hand, we collaborated with them as part of relations maintained by Rus-sian companies with other markets. Russia has made good progress towards using its resources to play a part on foreign markets.

The year 2013 was a great success for Global Transaction Banking. We were recognized as the best trade finance bank in Russia and CIS (Trade and Forfaiting Review Excellence Awards) and

Chairman of the Board’s Statement

Joerg Bongartz,Chairman of the Board since 2006

the Best Depositary Receipt House (EMEA Finance magazine) last year. Deutsche Bank has won Best Deposi-tary Receipt Program twice already, but this is the first year it has taken the coveted title of overall best depos-itary receipt house.

We see this as Deutsche Bank’s well-deserved honor reflecting its successful involvement in the most signifi-cant programs deployed in EMEA last year.

According to independent sources, Deutsche Bank ranks among the top M&A advisors, as well as among the top analysts.

As of December 31, 2013, Deutsche Bank Russia’s assets were 145.1 bln. rubles. As of the same date, the Bank’s capital amounted to 14.8 bln. rubles (as per the Russian Accounting Standards). The Bank’s balance sheet profit in 2013 was 1.7 bln. rubles.

This accomplishment was reached through the investments made into our business during 2013, contribution by the Bank’s talented team, and the top-of-the-line products and services we offer to our customers.

I am particularly happy to point out that in 2013 Deutsche Bank Ltd. celebrated its 15th anniversary in Russia. As one of the first ever representative offices of a foreign bank in Russia, Deutsche Bank was granted a license as early as in 1972. However, a full-fledged Russian-based legal entity was registered later.

Starting in 1998, with a fully-owned subsidiary of Deutsche Bank AG established in Russia, the Bank has been providing an extensive range of financial products and services to Russian and international customers in the area of transaction and investment banking.

The entire service record of Deutsche Bank Russia represents progress towards what Deutsche Bank has be-come - a strong and successful foreign player in the region. All those years, the Bank has been working to the benefit of its customers as a role model in highly professional behavior and commitment to business innovation.

Deutsche Bank successfully lived through the financial crises of 1998 and 2008 without reducing the scope of its business operations and personnel in Russia. On the contrary, the Bank continued its progress throughout its major lines of business. We are confident that we will continue to provide top-of-the-line, world-class quality services to our Russian customers for many years to come.

Joerg Bongartz,Chairman of the Board since 2006

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Activitiesof the Bank

02 Activities of the Bank Strong Commitment to Russia

Strong Commitment to Russia

Deutsche Bank Ltd. provides local and international, corporate and private clients with a broad range of financial services, comprising corporate finance and advisory, sales, trading, transaction banking as well as private wealth management and asset management services. The Bank includes the largest Russian and multinational companies among its client base. The Bank focuses its efforts on providing services to the customers capable of making the most efficient use of the Deutsche Bank Group’s experience and potential.

Markets

Deutsche Bank Markets offers a wide range of services and products in trading and sales of equity and debt securities, including securities trading, foreign exchange transactions, derivatives, fixed income debt transactions, credit trading, structured products, providing company research and organising investor conferences and roadshows. Deutsche Bank holds leading positions in foreign exchange, debt and equity markets.

In 2013, Deutsche Bank continued to develop the derivatives market in Russia offering its cor-porate clients an opportunity for efficient hedging of various currency risks. In September 2013, the Risk Magazine named Deutsche Bank The Derivatives House of the Year highlighting the fact that Deutsche Bank kept winning that award for five consecutive years, keeping ahead of others in that key nomination.

Furthermore, in July 2013, Deutsche Bank won 19 awards from the Euromoney magazine, includ-ing two global awards as the Best Global Flow House and the Best Global Commodities House and also 17 other prizes in countries and regions.

Euromoney, the flagship international business and financial magazine, emphasized that Deutsche Bank has been consistently demonstrating most excellent results at a time of huge change in every single part of its business. In the challenging market environment, Deutsche Bank has se-cured its reputation as a reliable and stable partner, preserved and strengthened its leadership.

In early 2013, Deutsche Bank became an official market maker for federal loan bonds futures.

Deutsche Bank Ltd. acts as a partner, a facilitator, and a participant of the Russian market de-velopment. And we welcome its further development — 2013 saw successful start of securities settlement according to T+2 scheme; the OTC derivatives repository for FX swaps and repo trans-actions was launched in the 4th quarter with other OTC products to be added in the 2nd quarter of 2014; in the 1st quarter of 2013, an option to settle federal loan bonds contracts in foreign settlement systems was provided.

In 2013, the Euromoney magazine named Deutsche Bank the Best Bank for Forex Trading for the unprecedented 9th year in a row, further cementing the Bank as the world’s leading FX franchise. In addition to the Euromoney award, in 2013, Deutsche Bank was recognized as the Best Bank for Forex Trading by such reputable media as Greenwich Associates, Risk, Global Finance, and FX Week, which proves consistently high quality of products and services offered by Deutsche Bank to its customers.

Extending this run of success is an outstanding result for DB, and has been achieved at a time when competition is as intense as ever. Staying at No.1 for nine years has been about continuous innovation, a culture of excellence, and long-term commitment to our clients.

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According to the Euromoney survey, Deutsche Bank was voted the 2013 year’s clear market leader in E-Trading with a 18% market share.

In 2013, the client base of the Bank kept growing with more clients coming to Deutsche Bank reflecting their preference for a stable and reliable banking partner. Customers were also attract-ed to the broadest product range offered and the high quality of services provided by the Bank.

Within the framework of its corporate strategy, Deutsche Bank seeks not only to retain its lead-ing position in the Russian market, but also to actively penetrate the emerging financial markets in the CIS countries.

Research department

Deutsche Bank’s research team has regularly secured high positions in flagship international rankings for several years.

It has been ranked top team among foreign investment banks in the All-Russia Research, Sales and Trading Survey in 2013 for the fifth straight year and has made the top 3 in the All-Russia Institutional Investor survey.

Deutsche Bank achieved high rankings in ten positions; it was also recognized in the Sales cat-egory and was rated No.3 in the Trading category. Highest appraisal won by Deutsche Bank’s Russian Research, trading, and sales team from independent clients and the business commu-nity for their performance and high quality service cements the Bank’s leading positions in the Russian markets and serves as an incentive for further growth.

DB Research has ranked top spots for CEEMEA research in the international Greenwich survey for the past few years.

The significant input of the Research team in Russia enabled Deutsche Bank to maintain the No.1 position on Institutional Investor 2013 total rating for the European region, All-Europe Re-search, Sales and Trading Team surveys 2013, for the third year in a row. DB’s absolute leader-ship in the EMEA rating for three years and our top position among foreign investment banks in Russia for the fifth year in a row prove our strong positioning in the region, the depth of our market expertise, and business model performance.

Deutsche Bank’s Russian Research team has also been awarded one of the most authoritative rankings in the Russian securities market, NAUFOR’s Elite of the Securities Market for the best research in 2012. That award proved Deutsche Bank’s leadership in the region and recognized extraordinary ability of the Research team who helps and supports the Bank’s clients in making their challenging headway through global markets.

Corporate Finance

Deutsche Bank in Russia is a leading provider of integrated financial solutions for demanding clients. We leverage the full force of our worldwide distribution and extensive product platform and our in-depth local expertise.

Corporate Finance is responsible for M&A as well as ECM and DCM advisory and origination. Regional and industry-focused teams ensure the delivery of the entire range of financial products and services to the bank’s corporate clients.

In Russia Corporate Finance offers the broad spectrum of products and services to large interna-tional and domestic сorporates covering a wide range of industries.

Investment Banking Coverage and Advisory provides strategic advisory services, advisory services on M&A and corporate restructurings, capital investments by foreign companies in Russia, advi-sory and execution of domestic and cross-border M&A, advisory and execution of divestitures and strategic partnerships, preparation of business plans, fairness opinions and feasibility studies. The Deutsche Bank’s Corporate Finance team is an ideal blend of seasoned Russian and international bankers, working equally at home with Russian blue chips and major international corporations.

Equity Capital Markets team deals with raising equity capital for companies, including privatiza-tion, as well as providing financial advisory services related to issuing and placement of equities with listing on both domestic and international stock exchanges, establishing depositary receipts programmes for issuers, structuring and execution of block equity trades, origination, creation of seller/buyer consortia, issuance of convertible securities, investor relations advisory, advisory on tailor-made programs to improve share liquidity.

In the past few years, the Deutsche Bank’s Equity Capital Markets team has led the market in leveraging this dynamic environment through our successful executions of IPOs and secondary placements for Russian companies.

Striving to satisfy the growing demand in the domestic market, Deutsche Bank in Russia provides premier financial advisory services to an expanding number of Russian and international clients. The Deutsche Bank Corporate Finance team is structured on a sector basis with prominent spe-cialists covering Oil & Gas and Energy, Telecommunications, Media and Technology, Consumer, Retail and Pharmaceuticals, Metals and Mining, General industries including Pulp & Paper, Auto-motive, Aerospace, Heavy Machinery and Financial Services.

Deutsche Bank Russia Leveraged Debt Capital Markets team delivers services in provision of ac-quisition financing, leveraged finance, high yield financing, investment grade acquisition finance.

Corporate Finance in Russia and CIS closed a number of significant M&A and equity placements in 2013 to prove Deutsche Bank’s status as one of the market leaders in the region.

Deutsche Bank Russia advised on a range of the largest and most complex mergers and acquisi-tions with total volume of tens of billions US dollars.

Landmark mandates Deutsche Bank worked on include a fairness opinion provided for Russia’s Federal Property Management Agency (“Rosimushchestvo”) regarding acquisition of BP and AAR’s stake in TNK-BP by Rosneft for combined USD 56 billion and subsequent USD 4.8 billion equity sale in Rosneft by Rosneftegaz. This was the third largest Oil & Gas transaction globally.

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Deutsche Bank advised Generali on increase of its stake in GPH from 51% to 100% in 2013 and 2014 and no-cash equity swap with PPF with Generali increasing its stake in Ingosstrakh to 38.46%.

Moreover, Deutsche Bank advised Globaltrans on its USD 335 million acquisition of 100% par-ticipation interest in MMK-Trans.

Furthermore, Deutsche Bank advised TeliaSonera on its USD 1.8 billion acquisition of Scartel and Yota by MegaFon from Garsdale.

In December 2013, Deutsche Bank advised Global Ports Investments in its USD 1.6 billion acqui-sition of 100% in NCC Group.

Deutsche Bank also was the joint bookrunner in a number of landmark ECM deals including USD 607 million of Yandex АBB (accelerated bookbuild) and USD 448 million IPO of Moscow Exchange.

In 2013, the Euromoney magazine marked the undeniable success of Deutsche Bank Corpo-rate Finance by naming Deutsche Bank the Best M&A House in Russia. Euromoney Award for Excellence is one of the most respected awards in the financial services industry, it recognizes institutions that demonstrate leadership, innovation and momentum in global financial markets. The Award recognizes Deutsche Bank Russia strong advisory franchise in the country. With a strong belief in the future of the region, Deutsche Bank has concentrated on consolidating its leading position, retaining its top talent while operating at turbulent global markets conditions.

Deutsche Bank held the second position by market share in the Russian corporate finance from 2011 through 2013 among international banks, including transactions in equity capital markets, M&A and issuance of high-yield bonds/debt (Source: Dealogic BPaD, December 2013).

As for Russian M&A, DB was the first international bank from 2011 to 2013 by the volume of transactions and held the second position overall (Source: Dealogiс, December 2013).

Deutsche Bank led the way among M&A organizers in Russia from 2005 through 2013 by clos-ing 156 transactions with total volume over USD 203 billion and market share of 20.6% (Source: Dealogiс, December 2013).

Deutsche Bank also held the first position among organizers of equity placements in Russia from 2007 through 2013 with a total of 32 deals for USD 30.7 billion and a market share of 12.9% (Source: Dealogiс, December 2013). From 2011 to 2013 DB Equity Capital markets team demon-strated excellent results by successfully organizing 15 share placements for Russian companies without postponing a single transaction.

In 2013, Deutsche Bank continued to strengthen its Russian client relationships in strategically important industries including Oil & Gas, Metals & Mining, Telecommunications, Media, Finan-cial Institutions and Consumer sectors.

With our knowledge of local environment and access to international markets, Corporate Finance was uniquely positioned to help our clients execute transactions both in Russia and abroad.

Excellent reputation, team continuity and high professionalism, deep knowledge of capital mar-kets and the confidence of our clients who recognize Deutsche Bank’s capability as a one-stop solution provider from advisory and deal financing points of view have been key success factors in 2013. Understanding the situation in local and global markets and instant response to changes, ability to execute deals in a challenging market environment are our competitive strengths that

help us build the leading franchise.

Corporate сoverage

Corporate сoverage team plays an important role in profiling Deutsche Bank in the market as a leading provider of the full range of banking products and services. In close cooperation with the product-based divisions of the Bank, relationship managers ensure that our clients have access to a wide selection of financial solutions tailored to their global needs.

Operating on Russian and international platforms, our structure enables us to allocate resources for the specific demands of both Russian corporates and subsidiaries of multinational corpora-tions. Deutsche Bank in Russia provides monitoring, coordination and facilitation of bank-client interaction, short-term financing in all available currencies, asset financing and leasing services, as well as project financing.

In 2013, corporate сoverage team helped its Russian clients to further develop in challenging environment through providing access to long-term financing to support their import and export trades.

Through close cooperation between corporate finance and markets divisions of Deutsche Bank, we assisted our clients in a significant number of projects related to acquisitions and investments by providing short-term and long-term financing and settlement. In addition to Corporate Finance and Global Markets products, Russian clients benefited from Deutsche Bank’s local expertise in Cash Management and Structured Trade & Export Finance. A number of solutions provided have received broad recognition in the Russian market and within the international financial commu-nity.

Global Transaction Banking

Deutsche Bank offers both Russian and international customers a range of standard and innova-tive financial solutions underpinned by the highest level of professional expertise and an unrivalled global network.

Transaction banking services provided by Deutsche Bank Ltd. include client coverage, global cash management, trade finance, structured trade and export finance, as well as domestic custody services.

In 2013, our franchise continued to grow, partly attributable to continued demand from clients for

stable and reliable banking partners.

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Cash Management

Investment in technology, a strong focus on customer service and a number of landmark man-dates consolidated Deutsche Bank as a leader in cash management services for corporates and financial institutions worldwide.

Deutsche Bank delivers pan-European and domestic cash management solutions in accordance with local market requirements.

Deutsche Bank provides a wide range of high quality corporate cash management solutions including: services for current accounts (for corporate clients) in Russian roubles and foreign currency overdraft facilities in RUR and other currencies; payment services, including domestic payments through Central Bank of Russia; passive participation in Sberbank-Clearing; customs card; foreign payments; liquidity management services such as local cash pooling in RUR, cash collection/cash delivery via third party provider; electronic banking services including db-direct internet (also in Russian); supporting around cyrillic characters for domestic payments; and ac-count information for MT940 EoD and intraday MT942; and personalized customer services.

Clients need a secure, robust and reliable banking infrastructure to perform cash management activities. Cash Management’s customer access applications are available worldwide, allowing full access to account information, transaction initiation, and inquiries. In addition, online tools offer clients workflow optimization, integration with existing global and local ERP (Enterprise Resource Planning) systems, and significant cost efficiencies.

Deutsche Bank provides a complete suite of global, regional and domestic bulk and individual payment and collection services. The Bank is also the world’s dominant euro clearer (source: RTGSplus/TARGET and EBA – European clearing system for settlement of payments in Euro), is a top six US dollar clearer (source: CHIPS - major private electronic payment system in the USA). With offices in all major and most secondary financial centers, Deutsche Bank is a leading clear-er of over 50 currencies for corporates and financial institutions.

Deutsche Bank Ltd. offers corporate clients the convenience of Customs Cards to optimize reg-ular settlements with Customs offices; these cards are accepted at over 200 customs terminals across the Russian Federation.

Liquidity Management tools enable customers to maximize interest income, minimize interest charges, gain increased control over cash flows and invest their surplus funds. Clients benefit from consolidated cash positions with multiple set-up options, full automation, and detailed account reporting.

According to the Euromoney Cash Management survey, in 2013 Deutsche Bank was ranked second best among Leading International Cash Management Providers for Corporates.

Deutsche Bank also holds the leading position in cash management for financial institutions being provider #1 for non-cash euro and US dollar payments for Russian banks according to Euromoney Cash Management Survey 2013.

Deutsche Bank is a leader in cash management services

Trade Finance within Deutsche Bank Ltd. provides our customers with a comprehensive range of international commercial products and services supporting their trade activities.

With its global market knowledge, expanding foreign trade operations, and an ability to tap into the resources from its worldwide network, Deutsche Bank Ltd. has established itself as the part-ner of choice for Russian companies with foreign trade operations.

Our clients are Russian corporate majors with significant import and export volumes, as well as international companies that operate in Russia through their subsidiaries.

We support our clients in the challenging Russian environment through custom solutions for lo-cal and cross-border trade operations, such as Letter of Credit payments (both International and Domestic), issuance of bank guarantees, stand-by Letters of Credit, Documentary Collections, Forfaiting, Foreign Exchange, Deposits, Global Trade Management, and Risk Management Ser-vices (advisory).

In our Transaction-based Finance solutions, we provide target financing of trade-related transac-tions providing loans against promissory notes, financing trade payables, purchases, as well as short-term commercial lending.

To enhance its client offering, Deutsche Bank is committed to ongoing innovation. In 2013, Deutsche Bank’s Trade Finance actively supported and successfully implemented a new Trade Fi-nance tool, in the form of the Bank Payment Obligation (BPO). This combines the benefits of open accounts and a documentary Letter of Credit — the seller sends trade transaction documents directly to the buyer but the bank guarantees the payment under that transaction subject to the details of goods dispatched being in accordance with existing trade transaction configurations. Therefore, BPO removes the need for document flow between banks in the settlement process, and the inspection is carried out with the data derived from the documents. Moreover, verifica-tion of the data provided for conformance to the original terms and conditions is performed au-tomatically in the system. Using BPO for trade settlement enables companies to mitigate trade risks related to open account, delivers opportunities to finance such transactions and promotes better management of working capital.

In 2013, Deutsche Bank was recognized with Silver Award as the Best Trade Financing Bank in

Russia and the CIS at the Trade and Forfeiting Review Excellence Awards 2013.

Structured Trade & Export Finance (STEF)

Deutsche Bank is one of the world’s leading arrangers, advisers and coordinators of tied buyer credits. We provide Russian corporates and their business partners around the globe with cus-tomized medium to long-term financing solutions.

Structured Trade & Export Finance (STEF) in Russia provides a broad range of advisory, struc-turing and arranging services, including: medium to long-term ECA-covered tied buyer credits; multi-sourced tied buyer credits; untied and investment loans; down-payment finance; pre-export, prepayment and tolling finance; receivables-backed finance (inter alia with ECA support); and forfaiting and trade-related loans.

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Deutsche Bank offers its customers unique structuring opportunities in deals with Export Credit Agency insurance coverage.

In 2013, Deutsche Bank’s STEF team was involved in structured financial transactions in Russia for over USD 18 billion.

At the same time, Deutsche Bank maintained a leading position in the Russian export finance for corporates and financial institutions.

In May 2013, STEF arranged a USD 600 million transaction for Bashneft related to the pre-export financing of crude oil supplies. Deutsche Bank acted as a Mandated Lead Arranger.

In September 2013, STEF also arranged a USD 1.5 billion deal for Rosneft and Trafigura concern-ing the prepayment financing of crude oil supplies. Deutsche Bank was a lender in that project.

In Russia, Trust & Securities Services are rendered by Investor Services.

Investor Services’ main activities include: the provision of core and value-added custody ser-vices, including: securities safekeeping; securities settlement (both on-exchange and OTC); corporate actions (Income collection, voluntary and mandatory CA, proxy voting); tax services (reclaims and tax relief at source); structuring and administration of large-scale securities trans-actions; ruble cash clearing for foreign financial institutions; and market advocacy.

Investor Services in Russia established custody operations in 1998 to service both local and international clients. Today, Deutsche Bank Ltd.’s Investor Services (IS) is one of the largest local custodians in Russia, offering a comprehensive range of custody services to domestic and cross-border clients. Deutsche Bank is one of the top depositary banks in Russia.

Currently, IS has over EUR 35.6 billion of clients’ assets under custody (as of 2013 year-end).

The consistent growth of the custody business in recent years is indicative of the solid reputation Deutsche Bank Ltd. has established among its domestic custody clients.

We are well represented in a number of domestic market initiatives and play a key role on the committees of various industry groups. IS Russia employees represent Deutsche Bank Ltd. on various market committees and working groups of the Central Securities Depository. These groups focus on the key areas of change and development of the Russian securities market’s settlement and clearing infrastructure as well as corporate governance issues.

Deutsche Bank also holds a leading position as a depositary bank for American Depositary Re-ceipt / Global Depositary Receipt programs for Russian companies. These programs make it easier for overseas investors to purchase Russian equities.

Deutsche Bank Ltd has a wide range of correspondent relations with the leading Russian regis-trars, as well as depositaries and clearing centers in Russia and abroad. This allows us to provide processing, centralized registration and safekeeping of all kinds of securities, including foreign securities.

In Russia, Trust & Securities Services also include Global Equity Services.

Global Equity Services provides the Bank’s customers with services related to depositary receipts, including issuance and cancellation, corporate actions (dividend allocation, proxy voting), general depositary receipts program administration, increasing awareness of the major investment banks of the depositary receipts programs and providing information and market news.

Global Transaction Banking in Russia continues to invest in its business in the form of state-of-the-art technology, its people and quality of service, to ensure it remains among the leading transac-tion services providers in the local market.

25


Deutsche Asset & Wealth Management

Deutsche Asset & Wealth Management with EUR 934 billion of assets under management (31 March 2014) , Deutsche Asset & Wealth Management ranks among the 10 largest bank-owned asset and wealth manager worldwide and is present in around 140 cities in 40 countries. As such, we unite all the asset and wealth management capabilities of Deutsche Bank under one roof.

Deutsche Asset & Wealth Management offers traditional and alternative investments across all major asset classes and provide wealth management and private banking solutions to high-net-worth clients and family offices. We strive to deliver leading investment strategies, a highly efficient investment platform and superior client services to institutional investors, private clients and intermediaries.

In Wealth Management it is our ambition to be the lead, trusted and globally-linked partner for wealthy individuals,

their families, and institutional clients. We dedicate ourselves to effective performance that is characterized by integrity, impartiality and complete confidentiality and will provide benefits by leveraging the far-reaching capabilities and deep expertise of Deutsche Asset & Wealth Manage-ment as well as Deutsche Bank Group.

In Russia, Deutsche Bank’s Private Wealth Management division is present since 2003 and offers its clients direct access to world markets and is able to provide customized and highly sophisticated investment solutions. In 2013 Deutsche Asset & Wealth Management in close co-operation with Corporate Banking & Services of Deutsche Bank in Russia furthered developed its range of world class products and services. It will allow Deutsche Bank to keep its leading position in the Russian private capital market.

Our business is built on a commitment to provide our clients with the highest level of services, trust and integrity. We earn our clients’ trust by placing them at the core of our organisation.

27

03

FinancialStatement

Deutsche Bank Limited Liability CompanyAuditors’ Report on Financial Statements(Annual Report) for 2013

03

To the participant of “Deutsche Bank” Limited Liability Company

We have audited the accompanying annual financial statements of “Deutsche Bank” Limited Liability Company (hereinafter the “Bank”) for the 2013 reporting year.

The accompanying annual financial statements of the Bank, set on 96 pages, comprise:

• the balance sheet (for publication purposes) as at 1 January 2014;

• the income statement (for publication purposes) for 2013;

• apendices to balance sheet and the income statement including:

- the statement on capital adequacy, amounts of provisions on doubtful loans and other assets (for publication purposes) as at 1 January 2014;

- data on mandatory ratios (for publication purposes) as at 1 January 2014;

- the cash flow statement (for publication purposes) for 2013.

• the explanatory notes.

Management’s Responsibility for the Annual financial statements

Management of the Bank is responsible for the preparation and reliability of the annual financial statements in accordance with the requirements of the Russian reporting legislation related to the annual financial statements preparation by credit institutions and for the system of internal control necessary for the preparation of the annual financial statements which are free from material misstatements, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on the annual financial statements in all material respects based on our audit. We conducted our audit in accordance with the Federal Standards on Auditing. These standards require that we comply with relevant ethical requirements and planning and performing the audit in order to obtain sufficient assurance as to whether the annual financial statements are free from material misstatements.

The audit included performing procedures to obtain audit evidence confirming the amounts and disclosures in the annual financial statements. The selection of the procedures is a matter of our judgment, which is based on the assessment of risk of material misstatement, whether due to fraud or error. In the process of risk assessment we considered the system of in-ternal control relevant to the preparation and reliability of the annual financial statements in order to select appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of internal control.

The audit also included an assessment of the appropriateness of the Bank’s accounting policy and the reasonableness of the estimates made by management, as well as the evaluation of the overall presentation of the annual financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the reliability of the annual financial statements.

Opinion

In our opinion, the accompanying annual financial statements present reliably, in all material respects, the financial position of the Bank as at 1 January 2014 and its financial performance and cash flows for the 2014 reporting year in accordance with the requirements of the Russian reporting legislation related to the annual financial statements preparation by credit institutions.

Other matter

Part 3 clause 42 of Federal Law On Banks and Banking Activities № 395-1 of 2 December 1990 requires the audit report to include information on the quality of management and status of internal control framework of the Bank and on the Bank’s compliance with mandatory ratios set by the Central Bank of the Russian Federation. The annual financial statements of the Bank include information on the Bank’s compliance as at 1 January 2014 with mandatory ratios set by the Central Bank of the Russian Federation, on the quality of management and status of internal control framework of the Bank. We have nothing to report on these matters in addition to information disclosed in the annual financial statements.

Director of CJSC KPMG

(power of attorney dated 1 October 2013 No 64/13)

31 March 2014

Lukashova N.V.

Financial Statement Financial statement under Russian Accounting Standards01 Финансовая отчетность Финансовая отчетность в соответствии с правилами ведения бухгалтерского учета ЦБ РФ

39

Аудиторское заключение по бухгалтерской отчетности (годовому отчету) за 2011 годУчастнику «Дойче Банк» Общества с ограниченной ответственностью

Мы провели аудит прилагаемой к настоящему Аудиторскому заключению бухгалтерской отчетности (годового отчета) «Дойче Банк» Общества с ограниченной ответственностью (далее – Банк) за 2011 год.

Бухгалтерская отчетность (годовой отчет) на 41 (сорок одном) листе состоит из: – бухгалтерского баланса (публикуемая форма) по состоянию на 1 января 2012 года; – отчета о прибылях и убытках (публикуемая форма) за 2011 год; – отчета о движении денежных средств (публикуемая форма) за 2011 год; – отчета об уровне достаточности капитала, величине резервов на покрытие сомнительных ссуд и иных активов (публикуемая форма) по состоянию на 1 января 2012 года; – сведений об обязательных нормативах (публикуемая форма) по состоянию на 1 января 2012 года; – пояснительной записки.

Ответственность Банка за бухгалтерскую отчетность (годовой отчет)

Руководство Банка несет ответственность за составление и достоверность данной бухгалтерской отчетности (годового отчета) в соответствии с требованиями законодательства Российской Федерации в части подготов-ки бухгалтерской отчетности (годового отчета) кредитными организациями и за систему внутреннего контроля, необходимую для составления бухгалтерской отчетности (годового отчета), не содержащей существенных иска-жений вследствие недобросовестных действий или ошибок.

Ответственность аудитора

Наша ответственность заключается в выражении мнения о достоверности бухгалтерской отчетности (годово-го отчета) во всех существенных отношениях на основе проведенного нами аудита. Мы проводили аудит в соот-ветствии с Федеральным законом «Об аудиторской деятельности», Федеральным законом «О банках и банков-ской деятельности», федеральными стандартами аудиторской деятельности. Данные стандарты требуют соблю-дения применимых этических норм, а также планирования и проведения аудита таким образом, чтобы получить достаточную уверенность в том, что бухгалтерская отчетность (годовой отчет) не содержит существенных иска-жений.

Аудит включал проведение аудиторских процедур, направленных на получение аудиторских доказательств, подтверждающих числовые показатели в бухгалтерской отчетности (годовом отчете) и раскрытие в ней инфор-мации. Выбор аудиторских процедур является предметом нашего суждения, которое основывается на оценке риска существенных искажений, допущенных вследствие недобросовестных действий или ошибок. В процессе оценки данного риска нами рассмотрена система внутреннего контроля, обеспечивающая составление и досто-верность бухгалтерской отчетности (годового отчета), с целью выбора соответствующих аудиторских процедур, но не с целью выражения мнения об эффективности внутреннего контроля.

Аудит также включал оценку надлежащего характера применяемой учетной политики и обоснованности оце-ночных показателей, полученных руководством Банка, а также оценку представления бухгалтерской отчетно-сти (годового отчета) в целом.

Мы полагаем, что полученные в ходе аудита аудиторские доказательства дают достаточные основания для выражения мнения о достоверности бухгалтерской отчетности (годового отчета).

Мнение

По нашему мнению, прилагаемая к настоящему Аудиторскому заключению бухгалтерская отчетность (годовой отчет) Банка отражает достоверно во всех существенных отношениях его финансовое положение по состоянию на 1 января 2012 года, результаты его финансово-хозяйственной деятельности и движение денежных средств за 2011 год в соответствии с требованиями законодательства Российской Федерации в части подготовки бухгал-терской отчетности (годового отчета) кредитными организациями.

Директор ЗАО «КПМГ» Лукашова Наталья Викторовна

(доверенность от 1 октября 2010 года № 41/10), квалификационный аттестат на право осуществления аудиторской деятельности № 01-000456, без ограничения срока действия

30 марта 2012 года

03 Financial Statement Financial statement under Russian Accounting Standards

29

Balance Sheet(for publication purposes) as at 1 january 2014

№ Name of line item

Amounts as at the reporting

date

Amounts as at the corre-

sponding reporting

date for the prior year

I Assets1 Cash 134 000 63 607

2 Placements of credit institutions with the Central Bank of the Russian Federation 11 455 052 11 043 854

2.1 Mandatory reserves 1 173 620 1 358 449

3 Placements with credit institutions 5 437 225 4 407 218

4 Financial assets at fair value through profit or loss 17 211 835 53 277 097

5 Net loans to customers 107 765 675 100 745 656

6 Net investments in securities and other financial assets available-for-sale 1 524 1 697

6.1 Investments in subsidiaries and affiliated companies - -

7 Net investments in securities held-to-maturity - -

8 Fixed assets, intangible assets and inventories 552 726 808 678

9 Other assets 2 546 249 2 279 269

10 Total assets 145 104 286 172 627 076

II Liabilities 11 Loans, deposits and other funds from the Central Bank of the Russian Federation 6 583 298 37 644 976

12 Amounts due to credit institutions 65 247 881 65 955 529

13 Customer accounts (non-credit institutions) 54 141 355 48 627 900

13.1 Deposits from individuals 2 405 685 2 264 528

14 Financial liabilities at fair value through profit or loss 830 314 168 760

16 Debt securities issued - -

16 Other liabilities 3 073 367 3 782 454

17 Provisions for possible losses on credit related commitments, other possible losses and settlements with offshore zones residents 401 879 252 909

18 Total liabilities 130 278 094 156 432 528

III Equity19 Shareholders (participants) funds 1 237 450 1 237 450

20 Treasury shares (participation interest) - -

21 Share premium - -

22 Reserve fund 145 500 145 500

23 Fair value revaluation of securities available-for-sale (630) (7 363)

24 Revaluation of fixed assets - -

25 Retained earnings (accumulated losses) of prior years 11 752 447 11 752 447

26 Undistributed profit (loss) for the reporting period 1 691 425 3 066 514

27 Total equity 14 826 192 16 194 548

IV Off-balance sheet liabilities28 Irrevocable commitments of credit institution 533 429 426 138 571 250

29 Guarantees issued by the credit institution 22 575 037 19 207 750

30 Non-credit related commitments - -

Chairman of the BoardJ. Bongartz

Chief accountantA. V. Kireev

Statement on financial results(for publication purposes) for 2013

№ Name of line item

Amounts for the

reporting period

Amounts for the cor-responding

period of the prior year*

1 Total interest income, including: 3 229 578 3 845 8361.1 Placements with credit institutions 561 087 705 410

1.2 Loans to customers (non-credit institutions) 411 648 302 408

1.3 Services under finance lease - -

1.4 Investments in securities 2 256 843 2 838 018

2 Total interest expense, including: 4 835 751 3 163 9722.1 Funds borrowed from credit institutions 2 550 573 1 929 928

2.2 Customer accounts (non-credit institutions) 2 285 178 1 234 044

2.3 Debt securities issued - -

3 Net interest income (negative interest margin) (1 606 173) 681 864

4 Movement in the provision for possible losses on loans and loan equivalents, placements on correspondent accounts, and accrued interest income, total including: (69 109) 16 462

4.1 Movements in the provision for possible losses on accrued interest income 50 58

5 Net interest income (negative interest margin) after provision for possible losses (1 675 282) 698 3266 Net gain on financial assets at fair value through profit or loss (547 270) 1 925 8667 Net gain on securities available-for-sale (7 113) (560)

8 Net gain on securities held-to-maturity - -

9 Net gain on operations with foreign currency 541 667 1 966 255

10 Net gain on revaluation of foreign exchange 5 990 186 884 418

11 Gain on participation in other legal entities capital 2 1

12 Fee and commission income 1 610 666 1 341 86913 Fee and commission expense 259 879 152 738

14 Movements in the provision for possible losses on securities available-for-sale 3 795 745

15 Movements in the provision for possible losses on securities held-to-maturity - -

16 Movements in the provision for other losses (111 804) (8 465)

17 Other operating income 4 494 132 4 919 466

18 Net income (loss) 10 039 100 11 575 183

19 Operating expense 7 437 227 7 111 754

20 Profit (loss) before tax 2 601 873 4 463 429

21 Taxes accrued (paid) 910 448 1 396 915

22 Profit (loss) after tax 910 448 3 066 514

23 Total payments out of profit after taxation including: - -

23.1 Distribution between shareholders (participants) in the form of dividends - -

23.1 Allocations to reserve fund - -

24 Undistributed profits (loss) for the reporting period 1 691 425 3 066 514




31

№ Name of indicator

Amounts as at the beginning of the report-

ing period

Increase (+)/decrease (-) for

the reporting period

Amounts as at the date of the reporting

period

1 Total equity (capital), thousand roubles, including: 16 066 095 -1 312 768 14 753 3271.1 Charter capital of the credit institution, including: 1 237 450 - 1 237 4501.1.1 Nominal value of registered ordinary shares (participation interest) 1 237 450 - 1 237 4501.1.2 Nominal value of registered preference shares - - -1.2 Treasury shares (participation interest) - - -1.3 Share premium - - -1.4 Credit institution's reserve fund 145 500 - 145 5001.5 Financial result of activity included in equity (capital): 14 683 164 -1 312 768 13 370 3961.5.1 of prior years 11 752 447 - 11 752 4471.5.2 for the reporting period 2 930 717 -1 312 768 1 617 9491.6 Intangible assets - - -1.7 Subordinated loan (debt, deposit, bond) - - -1.8 Capital sources (part of) formed by investors with inappropriate assets - - -

2 Normative value of capital adequacy ratio (capital), % 10% X 10%

3 Actual value of capital adequacy ratio (capital), % 20,0% X 19,1%

4 Total actual provisions for possible losses, thousand roubles, including: 336 094 176 854 512 9484.1 Loans and loan equivalents 29 287 69 109 98 3964.2 Other assets bearing the risk of possible losses and other losses 53 898 -41 225 12 6734.3 Off-balance sheet credit related commitments and term deals 252 909 148 970 401 8794.4 Settlements with offshore zones residents - - -

Report on capital adequacy, the amount of provision for impairment of doubtful loans and other assets as at 1 january 2014

For information purposes:1. Charge (additional charge) of provision for possible losses on loans and loan equivalents in the reporting period in the amount of RUB 935 017 thousand including those as a result of:

1.2. Change in the loan quality – RUB 275 158 thousand;1.3. Change in the official foreign currency exchange rate to Russian Rouble set by the Central Bank of the Russian Federation – RUB 1 041 thousand;1.4. Other reasons RUB 72 thousand.

2. Total recovery of provision (decrease in the provision) for possible losses on loans and loan equivalents in the reporting period in the amount of RUB 865 908, including those as a result of:

2.1. Bad loans disposal - RUB 0 thousand;2.2. Repayment of loans - RUB 772 729 thousand;2.3 Change in the loan quality - RUB 92 978 thousand;2.4. Change in the official foreign currency exchange rate to Russian Rouble set by the Central Bank of the Russian Federation – RUB 181 thousand;2.5. Other reasons - 20.



№ Name of indicator Regulatory

value

Actual value

as at the reporting dateas at the past

reporting date

1 Capital adequacy ratio (N1) min 10,0% 19,1% 20,0%

2 Instant liquidity ratio (N2) min 15,0% 163,6% 188,2%3 Current liquidity ratio (N3) min 50,0% 175,9% 155,8%4 Long-term liquidity ratio (N4) max 120,0% 7,3% 6,7%5 Maximum risk per borrower or per group of related

borrowers (N6) max 25,0%Maximum 20,8% Maximum 16,3%Minimum 1,8% Minimum 1,5%

6 Maximum exposure to large credit risks (N7) max 800,0% 169,0%7 Maximum loans, bank guaranties and sureties isseud by

the bank to its participants (shareholders) (N9.1) max 50,0% 0,0% 0,0%8 Aggregate amount of exposure to the bank’s insiders

(N10.1) max 3,0% 0,0% 0,0%9 Ratio for the use of the bank’s capital to acquire shares

(participation interest) in other legal entities (N12) max 25,0% 0,0% 0,0%10 Amount of liquid assets with execution period within

the next 30 calendar days to the amount of liabilities of NSCA (N15) X X X

11

Capital adequacy ratio of a non-banking credit institution entitled to transfer cash without opening bank accounts and related banking transactions (N15.1) X X X

12 Maximum aggregate amount of loans to settlements participants for completion of settlements (N16) X X X

13 Issuance of loans to borrowers on the NSCA behalf and for its own account, excluding settlements participants (N16.1) X X X

14 Minimum amount of loans issued to equity ratio (N17) X X X15 Minimum amount of mortgage collateral to issuance of

bonds with mortgage collateral (N18) X X X16 Maximum aggregate amount of liabilities of the issuer

credit institution to its creditors which have statutory priority of claim to the holders of bonds with mortgage collateral to equity (capital) (N19) X X X

Statutory requirements(for publication purposes) as at 1 January 2014




33

Cash flow statement(for publication purposes) for 2013


Cash flows for the

reporting period

Cash flows for the prior

reporting period

1 Net cash flows from (used in) operating activities1.1 Total cash flows from (used in) operating activities before changes in operating assets and liabilities

including: (4 054 554) 3 023 6371.1.1 Interest receipts 3 662 820 3 846 3991.1.2 Interest payments (4 880 305) (3 118 975)1.1.3 Fee and commission receipts 1 610 666 1 341 8691.1.4 Fee and commission payments (259 879) (152 738)1.1.5 Gains less losses on operations with financial assets at fair value through profit or loss and availa-

ble-for-sale 8 297 1 458 4431.1.6 Gain less losses on securities held-to-maturity - -

1.1.7 Gain less losses on foreign exchange 541 667 1 966 2551.1.8 Other operating income 4 105 604 5 388 4531.1.9 Operating expenses (7 334 306) (6 807 752)1.1.10 Tax expense (benefit) (1 509 118) (898 317)1.2 Total increase (decrease) in net cash flows from operating assets and liabilities including: 8 531 089 (4 011 566 )1.2.1 Net increase (decrease) in mandatory reserves with the Central Bank of the Russian Federation 184 829 427 2621.2.2 Net increase (decrease) in investments in securities at fair value through profit or loss 35 796 302 (32 763 023)1.2.3 Net increase (decrease) in loans (362 995) (40 255 819)1.2.4 Net increase (decrease) in other assets 310 903 191 3671.2.5 Net increase (decrease) in loans deposits and other funds of the Central Bank

of the Russian Federation (31 061 678) 37 644 9761.2.6 Net increase (decrease) in amounts due to other credit institutions (1 072 082) 24 097 0121.2.7 Net increase (decrease) in customer accounts (non-credit institutions 4 870 199 6 567 3091.2.8 Net increase (decrease) in financial liabilities at fair value through profit or loss - -1.2.9 Net increase (decrease) in debt liabilities issued - -1.2.10 Net increase (decrease) in other liabilities (134 389) 79 350

Total for section 1 (lines 1.1 and 1.2) 4 476 535 (987 929)


Cash flows for the

reporting period

Cash flows for the prior

reporting period

2 Net cash flows from (used in) investing activities2.1 Purchase of securities and other financial assets available-for-sale

- (1 463 757)2.2 Gain from disposal and redemption of securities and other financial assets available-for-sale

2 675 1 869 4822.3 Purchase of securities held-to-maturity - -2.4 Gain from redemption of securities held-to-maturity - -2.5 Purchase of fixed assets intangible assets and materials (50 790) (224 675)2.6 Gain from disposal of fixed assets intangible assets and materials 6 144 3 6232.7 Dividends received - -

Total for section 2 (lines from 2.1 to 2.7) (41 971)

3 Net cash flows from (used in) financing activities 184 6733.1 Shareholders’ (participants’) contributions to the charter capital - -3.2 Purchase of treasury shares (participation interest) - -3.3 Disposal of treasury shares (participation interest) - -3.4 Dividends paid (3 066 514) (212 135)

Total for section 3 (lines from 3.1 to 3.4) (3 066 514) (212 135)

4Effect of changes in exchange rates set by the Central Bank of the Russian Federation on cash and cash equivalents 328 377 912 191

5 Increase (decrease) in cash and cash equivalents 1 696 427 (103 200)5.1 Cash and cash equivalents as at the beginning of the reporting period 14 156 230 14 259 4305.2 Cash and cash equivalents as at the end of the reporting period 15 852 657 14 156 230




35

Explanatory note to the annualreport for the year 2013of LLC “Deutsche Bank”1. General information on the credit institution

Information on the state registration, separate and internal devisions and rating of the credit institution

Full official name of the credit institution: “Deutsche Bank” Limited Liability Company.

Short name of the credit institution: LLC “Deutsche Bank”.

Address of LLC “Deutsche Bank”:

– legal: 82 Sadovnicheskaya str., bldg. 2, Moscow 115035;

– postal: 82 Sadovnicheskaya str., bldg. 2, Moscow 115035.

Bank Identification Code (BIC): 044525101.

Taxpayer identification number (TIN): 7702216772.

Phone number (fax, telex): (495) 797-50-00 (tel.),

(495)797-50-17 (fax).

Email: [email protected].

Internet: www.deutsche-bank.ru.

State registration number: 1027739369041.

Registration number of the credit institution issued by the CBR: 3328. Date of inclusion into the Unified State Register of Legal Entities: 10/14/2002. Limited liability company “Deutsche Bank” (hereinafter the Bank) was established in accordance with the decision of the sole participant, Deutsche Bank AG (Deutsche Bank Aktiengesellschaft), a joint stock company under the legislation of the Federal Republic of Germany (Aktiengesellschaft), of 10/1/1997. The Bank was registered in the State Registration Chamber on 5/5/1998 (Certificate No. 10428.17) and in the Moscow Registration Chamber on 6/2/1998, Certificate No. 072.863. On 4/17/1998 the Bank received the Certificate of the state registration of the credit institution No. 3328 issued by the CBR.

In accordance with the Federal law No. 129-FZ the Bank was included in the Unified State Register of Legal Entities on 10/14/2002 by Moscow Interregional Tax Inspection No. 39 of the Ministry for Taxes and Duties of the Russian Federation, Registration No.1027739369041.

The Bank has 1 operating cash desk and 1 operating office, the Bank has no branches. As at 1/1/2012 the Bank has a representative office in St. Petersburg. The Bank is owned by Deutsche Bank Group, which operates in the global banking market. A significant part of the Bank’s funding is from, and credit exposures are to the Deutsche Bank Group. The activities of the Bank are closely linked with the requirements of the Deutsche Bank Group and the policies of the Deutsche Bank Group are determined for all Deutsche Bank Group members.

Licenses of the credit institution

The Bank provides brokerage, investment and advisory, depository and other services.

The Bank conducts its activity under the general banking license No. 3328 issued by theBank of Russia on 10/9/2003 for banking transactions in Russian roubles and foreigncurrency for legal entities and individuals.

The Bank was included was included in the register of the deposit insurance system members under No. 444 by the State Corporation “Agency for Deposits Insurance”.

The following licenses were issued by the Federal Service for Financial Markets:

–– Professional Securities Market Depositary Activities License No. 177-05616-000100 of 9/4/2001 valid for an indefinite period;

–– Professional Securities Market Brokerage Activities License No. 177-05600-100000 of 9/4/2001 valid for an indefinite period;

–– Professional Securities Market Dealer Activities License No. 177-05608-010000 of 9/4/2001 valid for an indefinite period;

–– License of a Professional Securities Market Participant performing specialized depositary activities for investment funds, mutual investment funds and non-state pension funds No. 22-000-1-00091 of 1/26/2010 valid for an indefinite period;

–– Professional Securities Market Security Management Activities License No. 177-09679-001000 of 11/14/2006 valid for an indefinite period;

–– License of a Professional Securities Market Participant performing broker activities, performing trade future and option transactions in exchange trade No. 1279 of 11/27/2008 valid for an indefinite period.

The Bank holds a license for maintenance of encryption facilities LS No. 0009519 Reg. 5360X of 4/7/2008 issued by FSS RF Center for Licensing, Certification and Protection of State Secrets, valid till 1/25/2013.


37

2. Basis of preparation

Statement of compliance

The accompanying financial statements are prepared in accordance with International Financial Reporting Standards (IFRS).

Basis of measurement

The financial statements are prepared on the historical cost basis except that financial instruments held for trading and available-for-sale financial assets are stated at fair value.

Functional and presentation currency

The functional currency of the Bank is the Russian Rouble (RUB) as, being the national currency of the Russian Federation, it reflects the economic substance of the majority of underlying events and circumstances relevant to them.

RUB is also the presentation currency for the purposes of these financial statements.

Financial information presented in RUB is rounded to the nearest thousand.

Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to make judgments, es-timates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results could differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about significant areas of uncertainty and critical judgments in applying accounting policies is described in the following notes:

• loan impairement estimates – note 8

• estimates of fair value of financial instruments – note 26.

Changes in accounting policies

The Bank has adopted the following new standards and amendments to standards, including any consequen-tial amendments to other standards, with a date of initial application of 1 January 2013:

• IFRS 13 Fair Value Measurements (see (i))

• Presentation of Items of Other Comprehensive Income (Amendments to IAS 1 Presentation of Financial Statements) (see (ii))

• Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) (see (iii)).

Fair value measurement

IFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other IFRS requirements. In particular,

it unifies the definition of fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also replaces and expands the disclosure requirements about fair value measurements in other IFRS requirements, including IFRS 7 Financial Instruments: Disclosures (see note 26).

As a result, the Bank adopted a new definition of fair value, as set out in note 3(c)(v). The change had no sig-nificant impact on the measurements of assets and liabilities. However, the Bank included new disclosures in the financial statements that are required under IFRS 13. Comparatives not restated.

Presentation of items of other comprehensive income

As a result of the amendments to IAS 1, the Bank modified the presentation of items of other comprehensive income in its statement of profit or loss and other comprehensive income, to present separately items that would be reclassified to profit or loss in the future from those that would never be. Comparative information is also re-presented accordingly.

The adoption of the amendment to IAS 1 has no impact on the recognized assets, liabilities or comprehensive income.

Financial instruments: Disclosures – Offsetting financial assets and financial liabilities

Amendments to IFRS 7 Financial Instruments: Disclosures - Offsetting Financial Assets and Financial Liabili-ties introduced new disclosure requirements for financial assets and liabilities that are offset in the statement of financial position or subject to master netting arrangements or similar agreements.

The Bank included new disclosures in the financial statements that are required under amendments to IFRS 7 and provided comparative information for new disclosures.

3. Significant accounting policies

The accounting policies set out below are applied consistently to all periods presented in these financial state-ments, unless otherwise stated.

Foreign currency

Transactions in foreign currencies are translated to the respective functional currency of the Bank at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign curren-cy gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the reporting period. Foreign currency differ-ences arising on retranslation are recognized in profit or loss, except for differences arising on the retransla-tion of available-for-sale equity instruments which are recognized in other comprehensive income unless the difference is due to impairment in which case foreign currency differences that have been recognized in other comprehensive income are reclassified to profit or loss. As at 31 December 2013, the exchange rates used for translation of balances in foreign currencies are 32.7292 USD/RUB and 44.9699 EUR/RUB (31 December 2012: 30.3727 USD/RUB and 40.2286 EUR/RUB).

Cash and cash equivalents

Cash and cash equivalents include notes and coins on hand, unrestricted balances (nostro accounts) held with the CBR and other banks.

The mandatory reserve deposit with the CBR is not considered to be a cash equivalent due to restrictions on its


39

withdrawability. Cash and cash equivalents are carried at amortised cost in the statement of financial position.

Financial instruments

Classification

Financial instruments at fair value through profit or loss are financial assets or liabilities that are:

- acquired or incurred principally for the purpose of selling or repurchasing in the near term

- part of a portfolio of identified financial instruments that are managed together and for which there is evi-dence of a recent actual pattern of short-term profit-taking

- derivative financial instruments (except for derivative that is a financial guarantee contract or a designated and effective hedging instruments) or,

- upon initial recognition, designated as at fair value through profit or loss.

The Bank may designate financial assets and liabilities at fair value through profit or loss where either:

- the assets or liabilities are managed, evaluated and reported internally on a fair value basis

- the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise or,

- the asset or liability contains an embedded derivative that significantly modifies the cash flows that would otherwise be required under the contract.

All trading derivatives in a net receivable position (positive fair value), as well as options purchased, are report-ed as assets. All trading derivatives in a net payable position (negative fair value), as well as options written, are reported as liabilities.

Management determines the appropriate classification of financial instruments in this category at the time of the initial recognition. Derivative financial instruments and financial instruments designated as at fair value through profit or loss upon initial recognition are not reclassified out of at fair value through profit or loss cate-gory. Financial assets that would have met the definition of loan and receivables may be reclassified out of the fair value through profit or loss or available-for-sale category if the Bank has an intention and ability to hold it for the foreseeable future or until maturity. Other financial instruments may be reclassified out of at fair value through profit or loss category only in rare circumstances. Rare circumstances arise from a single event that is unusual and highly unlikely to recur in the near term.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than those that the Bank:

- intends to sell immediately or in the near term

- upon initial recognition designates as at fair value through profit or loss

- upon initial recognition designates as available-for-sale or,

- may not recover substantially all of its initial investment, other than because of credit deterioration.

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that the Bank has the positive intention and ability to hold to maturity, other than those that:

- the Bank upon initial recognition designates as at fair value through profit or loss

- the Bank designates as available-for-sale or,

- meet the definition of loans and receivables.

Available-for-sale financial assets are those non-derivative financial assets that are designated as availa-ble-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial instruments at fair value through profit or loss.

Recognition

Financial assets and liabilities are recognized in the statement of financial position when the Bank becomes a party to the contractual provisions of the instrument. All regular way purchases of financial assets are ac-counted for at the settlement date.

Measurement

A financial asset or liability is initially measured at its fair value plus, in the case of a financial asset or liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or liability.

Subsequent to initial recognition, financial assets, including derivatives that are assets, are measured at their fair values, without any deduction for transaction costs that may be incurred on sale or other disposal, except for:

- loans and receivables which are measured at amortised cost using the effective interest method

- held to maturity investments that are measured at amortised cost using the effective interest method

- investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, which are measured at cost.

All financial liabilities, other than those designated at fair value through profit or loss and financial liabilities that arise when a transfer of a financial asset carried at fair value does not qualify for derecognition, are meas-ured at amortised cost.

Amortized cost

The amortized cost of a financial asset or liability is the amount at which the financial asset or liability is meas-ured at initial recognition, minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount recognized and the maturity amount, minus any reduction for impairment. Premiums and discounts, including initial transaction costs, are includ-ed in the carrying amount of the related instrument and amortised based on the effective interest rate of the instrument.

Fair value measurement principles

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly trans-action between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Bank has access at that date. The fair value of a liability reflects its non-per-formance risk.

When available, the Bank measures the fair value of an instrument using quoted prices in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

When there is no quoted price in an active market, the Bank uses valuation techniques that maximise the use


41

of relevant observable inputs and minimise the use of unobservable inputs. The chosen valuation technique incorporates all the factors that market participants would take into account in these circumstances.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price, i.e., the fair value of the consideration given or received. If the Bank determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, the financial instrument is initially measured at fair value, adjusted to defer the dif-ference between the fair value at initial recognition and the transaction price. Subsequently, that difference is recognized in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is supported wholly by observable market data or the transaction is closed out.

If an asset or a liability measured at fair value has a bid price and an ask price, the Bank measures assets and long positions at the bid price and liabilities and short positions at the ask price.

The Bank recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

Gains and losses on subsequent measurement

A gain or loss arising from a change in the fair value of a financial asset or liability is recognized as follows:

- a gain or loss on a financial instrument classified as at fair value through profit or loss is recognized in profit or loss

- a gain or loss on an available-for-sale financial asset is recognized as other comprehensive income in equity (except for impairment losses and foreign exchange gains and losses on debt financial instruments available-for-sale) until the asset is derecognized, at which time the cumulative gain or loss previously rec-ognized in equity is recognized in profit or loss. Interest in relation to an available-for-sale financial asset is recognized in profit or loss using the effective interest method.

For financial assets and liabilities carried at amortised cost, a gain or loss is recognized in profit or loss when the financial asset or liability is derecognized or impaired, and through the amortization process.

Derecognition

The Bank derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Bank neither transfers nor retains substan-tially all the risks and rewards of ownership and it does not retain control of the financial asset. Any interest in transferred financial assets that qualify for derecognition that is created or retained by the Bank is recognized as a separate asset or liability in the statement of financial position. The Bank derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.

The Bank enters into transactions whereby it transfers assets recognized on its statement of financial position, but retains either all risks and rewards of the transferred assets or a portion of them. If all or substantially all risks and rewards are retained, then the transferred assets are not derecognized.

In transactions where the Bank neither retains nor transfers substantially all the risks and rewards of owner-ship of a financial asset, it derecognizes the asset if control over the asset is lost.

In transfers where control over the asset is retained, the Bank continues to recognize the asset to the extent of its continuing involvement, determined by the extent to which it is exposed to changes in the value of the transferred assets.

If the Bank purchases its own debt, it is removed from the statement of financial position and the difference between the carrying amount of the liability and the consideration paid is included in gains or losses arising from early retirement of debt.

The Bank writes off assets deemed to be uncollectible.

Repurchase and reverse repurchase agreements

Securities sold under sale and repurchase agreements are accounted for as secured financing transactions, with the securities retained in the statement of financial position and the counterparty liability included in amounts payable under repurchase agreements with the Central Bank of the Russian Federation. The differ-ence between the sale and repurchase prices represents interest expense and is recognized in profit or loss over the term of the repurchase agreement using the effective interest method.

Securities purchased under agreements to resell are recorded as amounts receivable under reverse repurchase transactions within placements with banks or loans to customers, as appropriate. The difference between the purchase and resale prices represents interest income and is recognized in profit or loss over the term of the reverse repurchase agreement using the effective interest method.

If assets purchased under an agreement to resell are sold to third parties, the obligation to return securities is recorded as a trading liability and measured at fair value.

Derivative financial instruments

Derivative financial instruments include swaps, forwards, futures, spot transactions and options in interest rates, foreign exchanges, and stock markets, and any combinations of these instruments.

Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. All derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative.

Changes in the fair value of derivatives are recognized immediately in profit or loss.

Derivatives may be embedded in another contractual arrangement (a host contract). An embedded derivative is separated from the host contract and is accounted for as a derivative if, and only if the economic charac-teristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative; and the combined instrument is not measured at fair value with changes in fair value recognized in profit or loss. Derivatives embedded in financial assets or financial liabilities at fair value through profit or loss are not separated.

Although the Bank trades in derivative instruments for risk hedging purposes, these instruments do not qualify for hedge accounting.

Offsetting

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

Property, equipment and intangible assets

Owned assets and intangible assets

Items of property and equipment are stated at cost less accumulated depreciation and impairment losses.


43

Where an item of property and equipment comprises major components having different useful lives, they are accounted for as separate items of property and equipment.

Acquired intangible assets are stated at cost less accumulated amortization and impairment losses.

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software.

Leased assets

Operating leases, the terms of which the Bank does not assume substantially all the risks and rewards of own-ership, are expensed over the term of the lease.

Depreciation and amortization

Depreciation and amortization is charged to profit or loss on a straight-line basis over the estimated useful lives of the individual assets. Depreciation and amortization commences on the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed and ready for use. The estimated useful lives are as follows:

- leasehold improvements 3 - 15 years

- equipment 3 - 7 years

- computer software 1 - 3 years

Impairment

The Bank assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. If any such evidence exists, the Bank determines the amount of any impairment loss.

A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recog-nition of the financial asset (a loss event) and that event (or events) has had an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Objective evidence that financial assets are impaired can include default or delinquency by a borrower, breach of loan covenants or conditions, restructuring of financial asset or group of financial assets that the Bank would not otherwise consider, indications that a borrower or issuer will enter bankruptcy, the disappearance of an active market for a security, deterioration in the value of collateral, or other observable data relating to a group of assets such as adverse changes in the payment status of borrowers in the group, or economic con-ditions that correlate with defaults in the group.

In addition, for an investment in an equity security available-for-sale a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.

Financial assets carried at amortized cost

Financial assets carried at amortized cost consist principally of loans and other receivables (loans and receiv-ables). The Bank reviews its loans and receivables to assess impairment on a regular basis.

The Bank first assesses whether objective evidence of impairment exists individually for loans and receivables that are individually significant, and individually or collectively for loans and receivables that are not individ-ually significant. If the Bank determines that no objective evidence of impairment exists for an individually assessed loan or receivable, whether significant or not, it includes the loan in a group of loans and receivables

with similar credit risk characteristics and collectively assesses them for impairment. Loans and receivables that are individually assessed for impairment and for which an impairment loss is or continues to be recog-nized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on a loan or receivable has been incurred, the amount of the loss is measured as the difference between the carrying amount of the loan or receivable and the present value of estimated future cash flows including amounts recoverable from guarantees and collateral discounted at the loan or receivable’s original effective interest rate. Contractual cash flows and historical loss experience adjusted on the basis of relevant observable data that reflect current economic conditions provide the basis for estimating expected cash flows.

In some cases the observable data required to estimate the amount of an impairment loss on a loan or receiva-ble may be limited or no longer fully relevant to current circumstances. This may be the case when a borrower is in financial difficulties and there is little available historical data relating to similar borrowers. In such cases, the Bank uses its experience and judgment to estimate the amount of any impairment loss.

All impairment losses in respect of loans and receivables are recognized in profit or loss and are only reversed if a subsequent increase in recoverable amount can be related objectively to an event occurring after the im-pairment loss was recognized.

When a loan is uncollectable, it is written off against the related allowance for loan impairment. The Bank writes off a loan balance (and any related allowances for loan losses) when management determines that the loans are uncollectible and when all necessary steps to collect the loan are completed.

Financial assets carried at cost

Financial assets carried at cost include unquoted equity instruments included in available-for-sale financial as-sets that are not carried at fair value because their fair value cannot be reliably measured. If there is objective evidence that such investments are impaired, the impairment loss is calculated as the difference between the carrying amount of the investment and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset.

All impairment losses in respect of these investments are recognized in profit or loss and cannot be reversed.

Available-for-sale financial assets

Impairment losses on available-for-sale financial assets are recognized by transferring the cumulative loss that is recognized in other comprehensive income to profit or loss as a reclassification adjustment. The cumulative loss that is reclassified from other comprehensive income to profit or loss is the difference between the acqui-sition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss previously recognized in profit or loss. Changes in impairment allowance attributable to time value are reflected as a component of interest income.

If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the in-crease can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed, with the amount of the reversal recognized in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income.

Non financial assets

Other non financial assets, other than deferred taxes, are assessed at each reporting date for any indications of impairment. The recoverable amount of non financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present val-ue using a pre-tax discount rate that reflects current market assessments of the time value of money and the


45

risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is recognized when the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

All impairment losses in respect of non financial assets are recognized in profit or loss and reversed only if there has been a change in the estimates used to determine the recoverable amount. Any impairment loss reversed is only reversed to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recog-nized.

Provisions

A provision is recognized in the statement of financial position when the Bank has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Credit related commitments

In the normal course of business, the Bank enters into credit related commitments, comprising undrawn loan commitments, letters of credit and guarantees, and provides other forms of credit insurance.

Financial guarantees are contracts that require the Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.

A financial guarantee liability is recognized initially at fair value net of associated transaction costs, and is measured subsequently at the higher of the amount initially recognized less cumulative amortization or the amount of provision for losses under the guarantee. Provisions for losses under financial guarantees and other credit related commitments are recognized when losses are considered probable and can be measured reliably.

Financial guarantee liabilities and provisions for other credit related commitments are included in other liabil-ities.

Loan commitments are not recognized.

Distributions to the participant

Distributions to the participant are recorded in the period in which they are declared. Distributions to the par-ticipant declared after the reporting date are disclosed as a subsequent event. The Bank distributes profits on the basis of financial statements prepared in accordance with Russian Accounting Rules.

Taxation

Income tax comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items of other comprehensive income or transactions with the participant recognized directly in equity, in which case it is recognized within other comprehensive income or directly within equity.

Current tax expense is the expected tax payable on the taxable profit for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are not recognized for the temporary differences arisen from the initial rec-ognition of assets or liabilities that affect neither accounting nor taxable profit.

The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow the manner in which the Bank expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to the tempo-rary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be availa-ble against which the temporary differences, unused tax losses and credits can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Income and expense recognition

Interest income and expense are recognized in profit or loss using the effective interest method.

Loan organization fees, loan servicing fees and other fees that are considered to be integral to the overall profitability of a loan, and together with the related transaction costs, are deferred and amortized to interest income over the estimated life of the financial instrument using the effective interest method.

Other fees, commissions and other income and expense items are recognized in profit or loss when the cor-responding service is provided.

Dividend income is recognized in profit or loss on the date that the dividend is declared.

Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the term of the lease.

Comparative information

Certain comparative amounts in the statement of financial position have been reclassified to conform with the current year’s presentation, which was changed for better disclose the nature of the assets. The effects of these reclassifications on amounts presented in the statement of financial position as at 31 December 2012 were as follows:

RUB’000As originally

presented Reclassification

As reclassified

for 2012

Cash 63,607 (63,607) -Cash and cash equivalents - 14,156,230 14,156,230 Mandatory reserve deposit with the Central Bank of the Russian Federation - 1,358,449 1,358,449 Placements with banks 89,354,950 1,345,311 90,700,261 Due from the Central Bank of the Russian Federation 11,043,854 (11,043,854) - Other assets 7,895,950 (5,752,529) 2,143,421


47

The effects of these reclassifications on amounts presented in the statement of financial position as at 31 December 2011 were as follows:

The respective reclassifications have been made in the statement of cash flows as at 31 December 2012:

The respective amounts in the notes to these financial statements were modified accordingly.

Certain comparative amounts in the statement of profit or loss and other comprehensive income have been reclassified to conform with the current year’s presentation, which was changed to better reflect the underly-ing activity. The effects of these reclassifications on amounts presented in the statement of profit or loss and other comprehensive income as at 31 December 2012 were as follows:



As reclassified

for 2011

Cash 196,970 (196,970) -Cash and cash equivalents - 17,661,060 17,661,060Mandatory reserve deposit with the Central Bank of the Russian Federation - 1,785,712 1,785,712Placements with banks 54,289,788 (3,357,669) 50,932,119Due from the Central Bank of the Russian Federation 10,635,333 (10,635,333) -Other assets 8,707,621 (5,256,800) 3,450,821



As reclassified

for 2012

Unrealized gain on financial instruments held for trading (593,587) (331,666) (925,253)Change in accruals in other income - 549,535 549,535 Change in accruals in general administrative expenses - (399,975) (399,975)Financial instruments held for trading (33,670,378) 331,666 (33,338,712)Placements with banks (34,388,618) (4,588,309) (38,976,927)Other assets 876,593 (62,016) 814,577 Other liabilities 299,233 399,975 699,208 Net cash provided from (used in) operating activities 767,509 (4,100,790) (3,333,281)Effect of changes in exchange rates on cash and cash equivalents (3,391) (106,461) (109,852)Cash and cash equivalents at the beginning of the year 9,046,591 8,614,469 17,661,060

Cash and cash equivalents at the end of the year 9,749,012 4,407,218 14,156,230



As reclassified

for 2012

Net gain on financial instruments held for trading 2,177,467 2,177,628 4,355,095 Net foreign exchange income 3,062,046 (2,177,628) 884,418

No cash and cash equivalents are past due or impaired.

New standards and interpretations not yet adopted

The following new standards, amendments to standards and interpretations are not yet effective as at 31 December 2013, and are not applied in preparing these financial statements. The Bank plans to adopt these pronouncements when they become effective.

• IFRS 9 Financial Instruments is to be issued in phases and is intended ultimately to replace IAS 39 Financial Instruments: Recognition and Measurement. The first phase of IFRS 9 was issued in November 2009 and relates to the classification and measurement of financial assets. The second phase regarding classification and measurement of financial liabilities was published in October 2010. The third phase of IFRS 9 was issued in November 2013 and relates to general hedge accounting. The final standard is expected to be issued in 2014 and will be effective for annual periods beginning on or after 1 January 2018. The Bank recognizes that the new standard introduces many changes to the accounting for financial instruments and is likely to have a significant impact on the financial statements. The impact of these changes will be analyzed during the course of the project as further phases of the standard are issued. The Bank does not intend to adopt this standard early.

• Amendments to IAS 32 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Lia-bilities do not introduce new rules for offsetting financial assets and liabilities; rather they clarify the offset-ting criteria to address inconsistencies in their application. The amendments specify that an entity currently has a legally enforceable right to set-off if that right is not contingent on a future event; and enforceable both in the normal course of business and in the event of default, insolvency or bankruptcy of the entity and all counterparties. The amendments are effective for annual periods beginning on or after 1 January 2014, and are to be applied retrospectively. The Bank has not yet analyzed the likely impact of the amendments on its financial position or performance.

• Various Improvements to IFRS are dealt with on a standard-by-standard basis. All amendments, which result in accounting changes for presentation, recognition or measurement purposes, will come into effect not earlier than 1 January 2014. The Bank has not yet analyzed the likely impact of the improvements on its financial position or performance.

4. Cash and cash equivalents

2013RUB’000.

2012RUB’000

Cash on hand 134,000 63,607

Nostro accounts with the CBR 10,281,432 9,685,405

Nostro accounts at Moscow Exchange 2,737,921 1,740,889

Nostro accounts with other banks 2,699,304 2,666,329

- Rated from iAA- to iAA+ 287,205 298,223

- Rated from iA to iA+ 2,399,458 2,161,414

- Rated iBB+ - 206,287

- Not rated 12,641 405

Total cash and cash equivalents 15,852,657 14,156,230


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Concentration of cash and cash equivalents

As at 31 December, cash equivalents that individually comprised more than 10% of cash and cash equivalents are as follows:

2013 2012

BalanceRUB’000

Percentage%.

BalanceRUB’000

Percentage%

The Central Bank of the Russian Federation 10,281,432 65% 9,685,405 68%

Moscow Exchange 2,737,921 17% 1,740,889 12%

Deutsche Bank Group 2,397,683 15% 2,366,151 17%

Total 15,417,036 97% 13,792,445 97%

5. Financial instruments held for trading

2013RUB’000

2012RUB’000

ASSETSHeld by the Bank

Debt and other fixed-income instruments

Russian Government OFZ bonds 4,797,745 7,795,773

Russian municipal and regional authorities bonds 702,926 -

Corporate bonds 3,315,665 6,333,015

- Rated from iBBB- to iBBB+ 2,115,308 5,865,566

- Rated from iBB- to iBB+ 1,200,357 117,612

- Not rated - 349,837

Promissory notes 1,565,900 2,380,262

- Rated iBBB+ - 2,380,262

- Rated iBB- 1,565,900 -

Derivative financial instruments

Foreign currency contracts 758,714 367,010

- Rated from iA+ to iA- 84,053 68,094

- Rated from iBBB+ to iBB- 674,661 288,356

- Rated from iB+ to iB- - 3,922

- Not rated - 6,638

Structured derivatives contracts 814,305 -

- Rated from iA+ to iA- 492,620 -

- Rated from iBBB+ to iBB- 321,685 -

Total financial instruments held by the Bank 11,955,255 16,876,060

Pledged under sale and repurchase agreements

Debt and other fixed-income instruments

Russian Government OFZ bonds 4,339,353 32,254,808

Russian municipal and regional authorities bonds 200,836 -

Corporate bonds 3,017,300 6,849,409

- Rated from iBBB- to iBBB+ 3,017,300 6,643,665

- Rated from iBB- to iBB+ - 205,744

Total financial instruments pledged under sale and repurchase agreements 7,557,489 39,104,217

2013RUB’000

2012RUB’000

LIABILITYDerivative financial instruments

Foreign currency contracts 424,232 246,734

Structured derivative contracts 811,478 -

1,235,710 246,734

No financial instruments held for trading are past due or impaired.

Structured derivative contracts represent target profit forwards, cross currency interest rate swap with cap, cross currency swap with knock-out and binary options.

The Bank uses the Deutsche Bank Group’s internal credit ratings system to rate the credit quality of financial instruments. A detailed description of the internal credit ratings system is presented in note 22 “Risk manage-ment, corporate governance and internal control”.

6. Transfers of financial assets

Transferred financial assets that are not derecognized in their entirety

Securities

The Bank has transactions to sell securities under agreements to repurchase. Sale and repurchase agreements are transactions in which the Bank sells a security and simultaneously agrees to repurchase it (or an asset that is sub-stantially the same) at a fixed price on a future date.

The securities sold under agreements to repurchase are transferred to a third party and the Bank receives cash in exchange. These financial assets may be repledged or resold by counterparties in the absence of default by the Bank, but the counterparty has an obligation to return the securities at the maturity of the contract. The Bank has deter-mined that it retains substantially all the risks and rewards of these securities and therefore has not derecognized them. These securities are presented as “pledged under sale and repurchase agreements” in note 5. The cash re-ceived is recognized as a financial asset and a financial liability is recognized for the obligation to repay the purchase price for this collateral, and is included in amounts payable under repurchase agreements with the Central Bank of the Russian Federation. Because the Bank sells the contractual rights to the cash flows of the securities it does not have the ability to use the transferred assets during the term of the agreement.

These transactions are conducted under terms that are usual and customary to standard lending activities, as well as requirements determined by exchanges where the Bank acts as intermediary.

2013RUB’000

Financial intruments held for trading

Carrying amount of assets 7,557,489

Carrying amount of associated liabilities (6,588,588)

2012RUB’000

Financial intruments held for trading

Carrying amount of assets 39,104,217

Carrying amount of associated liabilities (37,673,369)


51

2013RUB’000

2012RUB’000

Placements with Moscow Exchange 6,173,380 4,011,740

Loans and deposits 91,388,020 86,688,521

- Rated from iAA- to iAA+ 89,956,875 82,960,321

- Rated iBBB+ 1,428,229 3,728,200

- Not rated 2,916 -

Total placements with banks 97,561,400 90,700,261

2013RUB’000

2012RUB’000

Loans to legal entities 7,166,041 8,860,624

Impairment allowance (4,812) (11,214)

7,161,229 8,849,410

2013RUB’000

2012RUB’000

Balance as at the beginning of the year (11,214) (10,793)

Net reversal (charge) 6,402 (421)

Balance as at the end of the year (4,812) (11,214)

7. Placements with banks

8. Loans to customers

No placements with banks are past due or impaired.

Placements with Moscow Exchange represent guarantee deposits and unsettled transacations at CJSC ACB National Clearing Centre which are subject to certain restrictions on withdrawability.

Concentration of placements with banks

As at 31 December, placements with banks that individually comprised more than 10% of placements with banks, are as follows:

Movements in the loan impairment allowance for the years ended 31 December 2013 and 2012 are as follows:

2013 2012

BalanceRUB’000

Percentage%.

BalanceRUB’000

Percentage%


The following table provides information on the credit quality of the loans to legal entities as at 31 December 2012:

Management has not identified any specific loans that display indicators of impairment. There are no loans that are past due or that have been restructured. In addition, the Bank historically has not incurred impairment losses on loans and has received guarantees from Deutsche Bank AG and other Deutsche Bank Group companies that, as at 31 December 2013, cover 23% (31 December 2012: 12%) of loans to customers. The Bank created a 0.07% collective impairment allowance on loans to customers, based on historical experience and its assessment of the risks in the loan portfolio as at 31 December 2013 (31 December 2012: 0.13%).

Analysis of collateral

The following table provides the analysis of loans to customers, net of impairment, by types of collateral as at 31 December 2013 and 31 December 2012:

Credit quality of loans to customers

The following table provides information on the credit quality of the loans to legal entities as at 31 December 2013:

Gross loansRUB’000

Impairment allowanceRUB’000

Net loansRUB’000

Impairment to gross loans

%

Loans to legal entities

Rated from iAAA- to iAA- 198,998 (29) 198,969 0.01%

Rated from iA+ to iA- 1,088,518 (438) 1,088,080 0.04%

Rated from iBBB+ to iBB- 5,836,413 (4,239) 5,832,174 0.07%

Not rated 42,112 (106) 42,006 0.25%

Total loans to legal entities 7,166,041 (4,812) 7,161,229 0.07%

Gross loansRUB’000

Impairment allowanceRUB’000

Net loansRUB’000

Impairment to gross loans

%


Rated from iAAA- to iAA- 160,072 (52) 160,020 0.03%

Rated from iA+ to iA- 580,170 (77) 580,093 0.01%

Rated from iBBB+ to iBB- 5,977,420 (7,365) 5,970,055 0.12%

Rated from iB+ to iB- 1,105,571 (37) 1,105,534 0.00%

Not rated 1,037,391 (3,683) 1,033,708 0.36%

Total loans to legal entities 8,860,624 (11,214) 8,849,410 0.13%

31 December 2013RUB’000


Guarantees of Deutsсhe Bank Group companies 1,660,642

Corporate guarantees 4,205,466

No collateral or fair value not assessed 1,295,121

Total loans to legal entities 7,161,229


53

31 December 2012RUB’000


Guarantees of Deutsсhe Bank Group companies 1,088,087

Corporate guarantees 6,623,580

No collateral or fair value not assessed 1,137,743

Total loans to legal entities 8,849,410

The amounts shown in the table above represent the carrying value of the loans and do not necessarily represent the fair value of the collateral.

Management estimates that the impairment allowance on loans to legal entities secured by guarantees would not change without the respective guarantees as at 31 December 2013 and 31 December 2012.

During the year ended 31 December 2013 the Bank did not obtain any assets by repossessing of collateral securing loans to customers (31 December 2012: nil).

Industry analysis of the loan portfolio

Loans were issued primarily to customers located within the Russian Federation who operate in the following economic sectors:

Significant credit exposures

As at 31 December 2013 and 2012, loans to customers, which individually comprised more than 10% of gross loans to customers, are as follows:

2013RUB’000

2012RUB’000

Manufacturing 4,817,134 2,816,707

Real estate 1,082,718 1,082,710

Trade 812,165 4,667,815

Transport and logistics 190,998 160,072

Other 263,026 133,320


7,161,229 8,849,410

2013 2012

BalanceRUB’000

% of loan portfolio

%Balance

RUB’000

% of loan portfolio

%

OJSC “Rudnik imeni Matrosova” 3,700,618 51.7% 1,071,619 12.1%

LLC “Ikea Mos” 1,081,962 15.1% 1,082,710 12.2%

OJSC “TENEX” - - 3,212,775 36.3%

OJSC “Volzhskiy Orgsintes” - - 918,892 10.4%

Total gross value 4,782,580 66.8% 6,285,996 71.0%

Loan maturities

The maturity of the loan portfolio is presented in note 22 “Risk management, corporate governance and internal control”, which shows the remaining period from the reporting date to the contractual maturity date. It is likely that many of the loans to customers will be prolonged on maturity. Accordingly, the effective maturity of the loan portfolio may be significantly longer than the classification indicated based on contractual terms.

9. Other assets

Settlements on conversion deals represent receivables of currency from a counterparty on a spot transaction with a valuation date on 27 December 2013. The cash was received on 9 January 2014.

Movements in the other assets impairment allowance for the years ended 31 December 2013 and 2012 are as follows:

2013RUB’000

2012RUB’000

Settlements on conversion deals 1,636,400 -

Receivables for commissions, corporate finance and underwriting services 40,981 90,705


Total other financial assets 1,664,769 40,664

Receivable for services rendered to Deutsche Bank Group companies 1,953,136 1,495,798

Income tax prepayment 311,586 382,795

Guarantee deposits for rented objects 84,726 82,025

Prepayments 44,392 101,287

Other tax prepayments 31,567 34,633

Other 7,745 6,219

Total other non-financial assets 2,433,152 2,102,757

Total other assets 4,097,921 2,143,421

2013RUB’000

2012RUB’000

Balance at the beginning of the year (50,041) (53,648)

Write-offs 264 -

Net reversal 37,165 3,607

Balance at the end of the year (12,612) (50,041)


55

10. Property, equipment and intangible assets

The roll-forward of property, equipment and intangible assets from 1 January 2013 to 31 December 2013 is as follows:

The roll-forward of property, equipment and intangible assets from 1 January 2012 to 31 December 2012 is as follows:

RUB’000Leasehold im-

provements EquipmentComputer software Total

Cost

Balance at 1 January 2013 1,034,260 711,289 124,172 1,869,721

Additions 4,682 54,407 12,785 71,874

Disposals (13,129) (145,842) (47,637) (206,608)

Balance at 31 December 2013 1,025,813 619,854 89,320 1,734,987

Depreciation

Balance at 1 January 2012 630,190 335,890 78,730 1,044,810

Depreciation and amortization 169,241 123,269 27,507 320,017

Disposals (7,066) (133,105) (47,637) (187,808)

Balance at 31 December 2013 792,365 326,054 58,600 1,177,019

Carrying valueBalance at 31 December 2013 233,448 293,800 30,720 557,968

RUB’000Leasehold im-

provements EquipmentComputer software Total

Cost

Balance at 1 January 2012 1,010,143 562,343 98,123 1,670,609

Additions 24,482 196,481 26,049 247,012

Disposals (365) (47,535) - (47,900)

Balance at 31 December 2012 1,034,260 711,289 124,172 1,869,721

Depreciation

Balance at 1 January 2012 459,666 254,208 51,460 765,334

Depreciation and amortization 170,889 126,321 27,270 324,480

Disposals (365) (44,639) - (45,004)

Balance at 31 December 2012 630,190 335,890 78,730 1,044,810

Carrying valueBalance at 31 December 2012 404,070 375,399 45,442 824,911

12. Current accounts and deposits from customers

11. Deposits and balances from banks

2013RUB’000

2012RUB’000

Loans and deposits from banks 22,202,133 38,558,091

Vostro accounts 43,055,949 28,494,490

65,258,082 67,052,581

Concentration of deposits and balances from banks

As at 31 December, deposits and balances from banks, which individually comprised more than 10% of deposits and balances from banks, are as follows:

As at 31 December 2013, the Bank has no customers whose balances individually comprised more than 10% of total current accounts and deposits from customers (31 December 2012: no customers).

2013 2012

BalanceRUB’000

% of portfolio

BalanceRUB’000

% of portfolio


2013RUB’000

2012RUB’000

Current accounts and demand deposits 24,535,662 20,780,407

Corporate customers 22,325,854 18,535,166

Individuals 2,209,808 2,245,241

Term deposits 29,634,587 27,932,818

Corporate customers 29,430,001 27,659,757

Individuals 204,586 273,061

54,170,249 48,713,225


57

13. Other liabilities

2013RUB’000

2012RUB’000

Settlements payable 68,693 39,140

Total other financial liabilities 68,693 39,140

Employee compensation payable 1,680,032 1,798,096

Payables for services rendered by Deutsche Bank Group companies 1,194,517 1,251,650

Taxes other than on income payable 214,799 245,684

Income tax payable 80,631 586,493

Provision for guarantees and letters of credit issued 4,938 3,163

Other liabilities 6,950 4,963

Total other non-financial liabilities 3,181,867 3,890,049

Total other liabilities 3,250,560 3,929,189

2013RUB’000

2012RUB’000

Interest income

Financial instruments held for trading 2,364,443 3,025,642

Placements with banks 451,981 571,049

Loans to customers 411,637 299,306

Total interest income 3,228,061 3,895,997

Interest expense

Deposits and balances from banks (2,546,979) (1,929,928)

Term deposits from legal entities (2,285,004) (1,229,992)

Total interest expense (4,831,983) (3,159,920)

Net interest (expense) income (1,603,922) 736,077

14. Equity

Charter capital represents contributions made by the sole participant of the Bank. Under Russian legislation the sole participant in a Russian limited liability company does not have the unilateral right to withdraw his capital from the company. Accordingly charter capital is classified as equity.

As at 31 December 2013, the charter capital consists of the registered unit with a par value of RUB 1,237,450 thousand (31 December 2012: RUB 1,237,450 thousand).

Distributions to participants are restricted to the maximum retained earnings of the Bank, which are determined according to legislation of the Russian Federation. In accordance with the requirements of the legislation of the Russian Federation as of the reporting date the amount available for distribution to the participant constitutes RUB 13,443,872 thousand (31 December 2012: RUB 14,818,961 thousand).

During 2013 a distribution of RUB 3,066,514 thousand (2012: RUB 212,135 thousand) was declared and paid to the participant.

15. Net interest (expense) income

16. Net fee and commission income

17. Net gain on financial instruments held for trading

2013RUB’000

2012RUB’000

Fee and commission income

Brokerage fees 844,682 635,274

Custodian and trust management fees 233,245 230,757

Settlement fees 192,756 176,018

Foreign exchange fees 147,127 148,908

Commissions on guarantees issued 94,875 85,073

Commissions on letters of credit 94,599 65,844

Consultancy fees 3,398 4,864

Total fee and commission income 1,610,682 1,346,738

Fee and commission expense

Custodian fees (81,893) (80,343)

Foreign exchange fees (73,508) (48,336)

Brokerage fees (39,777) (32,123)

Settlement fees (27,701) (25,588)

Commissions on guarantees received (24,464) (1,893)

Other (12,535) (16,952)

Total fee and commission expense (259,878) (205,235)

Net fee and commission income 1,350,804 1,141,503

18. Other income

Other income represents mainly income from consultancy and information technology services rendered to Deutsche Bank Group companies.

2013RUB’000

2012RUB’000

Net realized gain on financial instruments held for trading 558,145 3,429,842

Net unrealized (loss) gain on financial instruments held for trading (479,076) 925,253

Net gain on financial instruments held for trading 79,069 4,355,095


59

19. General administrative expenses

20. Provision for impairment other than on loans

21. Income tax expense

2013RUB’000

2012RUB’000

Employee compensation 4,702,238 4,625,807

Communications and information services 439,039 570,756

Allocation of overhead expenses of Deutsche Bank Group companies 690,279 535,053

Occupancy 398,769 335,579

Depreciation and amortization 320,017 324,480

Professional services 274,605 295,541

Taxes other than on income 236,756 293,706

Office maintenance costs 196,660 145,536

Travel 107,759 110,864

Advertising and marketing 63,245 74,365

Other 172,320 177,302

Total general administrative expenses 7,601,687 7,488,989

2013RUB’000

2012RUB’000

Available-for-sale securities 3,795 512

Other assets 37,165 3,607

Guarantees and letters of credit (1,775) 17,621

Total reversal of provision for impairment other than on loans 39,185 21,740

2013RUB’000

2012RUB’000

Current year tax expense 669,416 1,103,209

Current tax underprovided in prior years 5,965 -

Deferred taxation (39,114) (208,498)

Total income tax expense 636,267 894,711

In 2013 the applicable tax rate for current and deferred tax is 20% (2012: 20%)

A reconciliation of effective tax rate for the year ended 31 December is as follows:

RUB’0002013

%. RUB’000 2012

%

Profit before tax 2,751,476 4,547,077

Income tax expense at 20% 550,295 20.0% 909,415 20.0%

Non-deductible costs 140,803 5.1% 132,783 2.9%

Income taxed at lower tax rates (60,796) (2.2%) (140,453) (3.1%)

Current tax underprovided in prior years 5,965 0.2% - -

Non-taxable income - - (7,034) (0.2%)

Total income tax expense 636,267 23.1% 894,711 19.%

RUB’000Balance

1 January 2013

Recognized in profit or loss

Recognized in other

comprehensive income

Balance 31 December

2013

Financial instruments held for trading (assets) (196,731) (135,714) - (332,445)

Loans to customers 2,243 (1,293) - 950

Available-for-sale financial assets 1,470 - (1,346) 124

Property and equipment 90,717 27,079 - 117,796

Financial instruments held for trading (liabilities) 41,350 205,794 - 247,144

Other assets 8,670 (8,370) - 300

Other liabilities 399,692 (48,382) - 351,310

347,411 39,114 (1,346) 385,179

RUB’000Balance

1 January 2012

Recognized in profit or loss

Recognized in other

comprehensive income

Balance 31 December

2012

Financial instruments held for trading (assets) (86,819) (109,912) - (196,731)

Loans to customers 2,158 85 - 2,243

Available-for-sale financial assets (80,258) 81,595 133 1,470

Property and equipment 33,494 57,223 - 90,717

Financial instruments held for trading (liabilities) 122,933 (81,583) - 41,350

Other assets (21,430) 30,100 - 8,670

Other liabilities 168,702 230,990 - 399,692

138,780 208,498 133 347,411

Deferred tax asset

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes give rise to net deferred tax assets as at 31 December 2013 and 2012.

Movements in temporary differences during the years ended 31 December 2013 and 2012 are presented as follows.


61

Income tax recognized in other comprehensive income

The tax effects relating to components of other comprehensive income for the years ended 31 December 2013 and 2012 comprise the following:

2013 2012

RUB’000Amount

before taxTax

expenseAmount

net-of-taxAmount

before taxTax

expenseAmount

net-of-tax

Net change in fair value of financial assets available-for-sale - - - (663) 133 (530)

Net change in fair value of financial assets availa-ble-for-sale transferred to profit or loss 6,734 (1,346) 5,388 - - -

Other comprehensive income (loss) for the year 6,734 (1,346) 5,388 (663) 133 (530)

22. Risk management, corporate governance and internal control

Corporate governance framework

The Bank is established as a limited liability company in accordance with Russian legislation. The Bank is governed by the Sole participant. The Sole participant makes strategic decisions on the Bank’s operations.

The Sole participant elects the Supervisory Board. The Supervisory Board is responsible for overall governance of the Bank’s activities.

Russian legislation and the charter of the Bank define certain decisions that are exclusively approved by the Sole participant and that are approved by the Supervisory Board.

As at 31 December 2013, the Supervisory Board includes:

Stephan Leithner – Chairman of the Supervisory Board

Marco Francesco Bizzozero, Ahmet Arinc, Stefan Gernot Bender, Peter Johannes Maria Tils, Jeremy William Bailey, Murray Roos – members of the Supervisory Board.

During the year ended 31 December 2013, the following changes occurred in composition of the Supervisory Board:

– 3 June 2013: Peter Johannes Maria Tils, Jeremy William Bailey and Murray Roos were elected as members of the Supervisory Board;

– 30 July 2013: Philip Richard Girzevald resigned.

General activities of the Bank are managed by the sole executive body of the Bank (Chairman of the Management Board) and collective executive body of the Management Board. The Supervisory Board meeting elects the Chairman of the Management Board and the Management Board. The executive bodies of the Bank are responsible for implementation of decisions of the Sole participant and the Supervisory Board. Executive bodies report to the Supervisory Board and to the Sole participant.

As at 31 December 2013, the Management Board includes:

Joerg Bongartz – Chairman of the Management Board

Batubay Ozkan, Alexander Kirejev, Yaroslav Lisovolik, Pavel Kushnir, Ekaterina Seredinskaya – members of the Management Board.

During the year ended 31 December 2013, the following changes occurred in composition of the Management Board:

– 17 October 2013: Ekaterina Seredinskaya was elected as a member of Management Board.

Internal control policies and procedures

The Supervisory Board and the Management Board have responsibility for the development, implementation and maintaining of internal controls in the Bank that are commensurate with the scale and nature of operations.

The purpose of internal controls is to ensure:

• proper and comprehensive risk assessment and management

• proper business and accounting and financial reporting functions, including proper authorization, processing and recording of transactions

• completeness, accuracy and timeliness of accounting records, managerial information, regulatory reports, etc.

• reliability of IT-systems, data and systems integrity and protection

• prevention of fraudulent or illegal activities, including misappropriation of assets

• compliance with laws and regulations.

Management is responsible for identifying and assessing risks, designing controls and monitoring their effectiveness. Management monitors the effectiveness of the Bank’s internal controls and periodically implements additional controls or modifies existing controls as considered necessary.

The Bank developed a system of standards, policies and procedures to ensure effective operations and compliance with relevant legal and regulatory requirements, including the following areas:

• requirements for appropriate segregation of duties, including the independent authorization of transactions

• requirements for the recording, reconciliation and monitoring of transactions

• compliance with regulatory and other legal requirements

• documentation of controls and procedures

• requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified

• requirements for the reporting of operational losses and proposed remedial action

• development of contingency plans

• training and professional development

• ethical and business standards and

• risk mitigation, including insurance where this is effective.


63

There is a hierarchy of requirements for authorization of transactions depending on their size and complexity. A significant portion of operations are automated and the Bank put in place a system of automated controls.

Compliance with the Bank’s standards is supported by a program of periodic reviews undertaken by the Internal Audit function. The Internal Audit function is independent from management and reports directly to the Supervisory Board. The results of the Internal Audit reviews are discussed with relevant business process managers, with summaries submitted to the Supervisory Board and senior management of the Bank.

The internal control system in the Bank comprises:

• the Supervisory Board

• the Chairman of the Management Board and the Management Board

• the Chief Accountant

• the risk management function

• the security function, including IT-security

• the human resource function

• the Internal Audit function

• other employees, division and functions that are responsible for compliance with the established standards, policies and procedures, including:

– heads of business-units

– business processes managers

– the compliance officer and the compliance function, including the division responsible for compliance with anti-money laundering and anti-corruption requirements

– professional securities market participant controller – an executive office responsible for compliance with the requirements for securities market participants

– the legal officer – an employee and a division responsible for compliance with the legal and regulatory requirements

– other employees/divisions with control responsibilities.

Russian legislation, including Federal Law dated 2 December 1990 No. 395-1 On Banks and Banking Activity, establishes the professional qualifications, business reputation and other requirements for members of the Supervisory Board, the Management Board, the Head of the Internal Audit function and other key management personnel. All members of the Bank’s governing and management bodies meet with these requirements.

Management believes that the Bank complies with the CBR requirements related to risk management and internal control systems, including requirements related to the Internal Audit function, and that risk management and internal control systems are appropriate for the scale, nature and complexity of operations.

Risk management policies and procedures

Risk and capital are managed through a framework of principles, organizational structures as well as measurement and monitoring processes that are closely aligned with the activities of the Bank’s divisions.

The importance of a strong focus on risk management and the continuous need to refine risk management practice have become particularly evident during the financial market crisis.

The organizational risk management and functions, tasks and authorities of the employees, committees and departments involved in the management of risk are clearly and unambiguously defined. All principles and guidelines are reviewed regularly and adapted and enhanced in line with internal and external developments.

The Supervisory Board appoints, supervises and advises the Management Board and is directly involved in decisions of fundamental importance to the Bank. The Management Board regularly informs the Supervisory Board of the intended business policies and other fundamental matters relating to assets, liabilities, financial and profit situation as well as its risk situation, risk management and risk controlling.

The Bank has a dedicated risk management function on a global level to ensure that oversight and monitoring of risk is achieved in a robust manner. This function is performed by the Risk Division under the lead of the Chief Risk Officer, who is a member of the Management Board, and is responsible for the identification, assessment, management and reporting of risks arising within operations across all businesses and risk types.

Credit, market, liquidity, operational, business, legal and reputational risks as well as capital are managed in a coordinated manner at all relevant levels within the Bank.

Risk management and risk monitoring are an established part of all organizational processes. The aim of risk management policies and procedures is to ensure that all risks assumed in the context of the Bank are recognized at an early stage, and that they are specifically managed in line with the Bank’s risk appetite.

Risk management and in particular the risk limitation processes are closely linked to Bank-wide management processes such as strategic planning, annual earnings, cost and risk budgeting, and performance measurement within the Bank.

The Management Board provides overall risk and capital management supervision for the Bank.

Treasury is responsible for identification, measurement, monitoring and management of the Bank’s liquidity risk profile. It implements Deutsche Bank Group policies and has the authority to issue local policies and executes measures required to keep the Bank’s liquidity risk profile within the risk tolerance defined by the Management Board.

Under the stewardship of Treasury, the Asset and Liability Committee (the ALCO) provides the forum for managing capital, funding and liquidity risk of the Bank.

The main objectives of the ALCO are:

• review the usage of capital liquidity and funding to ensure it is employed in the most efficient way

• ensure compliance with Deutsche Bank Group policies and procedures as well as external rules and regulations

• establish a link between the local, regional and Deutsche Bank Group perspective on capital, liquidity and funding.

The Operating Committee (the OpCo) is the main decision and policy making body on all operational issues. The purpose of the OpCo is to organize efficient support for all businesses and reliable control environment.The OpCo approves relevant policies and procedures, decides on infrastructure projects, budgets and cost containment issues and staffing issues, ensures that the implementation of the global strategies of Business Divisions and Infrastructure/Control Functions is consistent with local requirements.


65

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises currency risk, interest rate risk and other price risks. Market risk arises from open positions in interest rate and equity financial instruments, which are exposed to general and specific market movements and changes in the level of volatility of market prices and foreign currency rates.

The objective of market risk management is to manage and control market risk exposures within acceptable parameters, whilst optimizing the return on risk. The Global Market Risk Limits Policy describes the requirements for the Bank in the setting, monitoring, management and reporting of market risk limits.

The Bank manages its market risk by setting managing open position limits in relation to financial instrument, interest rate maturity and currency positions. Currency positions are subject to the CBR regulations.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Bank is exposed to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest margins may increase as a result of such changes but may also reduce or create losses in the event that unexpected movements occur.

The Bank’s interest rate policy is reviewed and approved by the Management Board.

Interest rate gap analysis

Interest rate risk is managed principally through monitoring interest rate gaps. A summary of the interest gap position as at 31 December for major financial instruments is as follows:

RUB ’00031 December 2013

Demand and less than 1

monthFrom 1 to 6

monthsFrom 6 to 12

months 1-5 yearsMore than 5

yearsNon-interest

bearingCarrying amount

ASSETSFinancial instruments held for trading 896,879 3,894,000 626,934 6,589,303 5,932,609 1,573,019 19,512,744

Placements with banks 89,940,535 1,444,570 - - - 6,176,295 97,561,400

Loans to customers 103,150 2,159,419 1,901,780 2,996,880 - - 7,161,229

Total assets 90,940,564 7,497,989 2,528,714 9,586,183 5,932,609 7,749,314 124,235,373

LIABILITIESDeposits and balances from banks 22,202,133 - - - - 43,055,949 65,258,082

Amounts payable under repurchase agreements with the CBR 6,588,588 - - - - - 6,588,588

Current accounts and deposits from customers 27,869,743 1,726,153 25,022 - - 24,549,331 54,170,249

Total liabilities 56,660,464 1,726,153 25,022 - - 67,605,280 126,016,919

Net position 34,280,100 5,771,836 2,503,692 9,586,183 5,932,609 (59,855,966) (1,781,546)

RUB ’00031 December 2012

Demand and less than 1

monthFrom 1 to 6

monthsFrom 6 to 12

months 1-5 yearsMore than 5

yearsNon-interest

bearingCarrying amount

ASSETSFinancial instruments held for trading - 1,255,530 1,478,182 25,777,519 27,102,036 367,010 55,980,277

Placements with banks 85,101,474 1,587,047 - - - 4,011,740 90,700,261

Loans to customers 96,555 1,512,022 6,158,123 1,082,710 - 8,849,410

Total assets 85,198,029 4,354,599 7,636,305 26,860,229 27,102,036 4,378,750 155,529,948

LIABILITIESDeposits and balances from banks 35,335,645 598,696 3,681,607 - - 27,436,633 67,052,581

Amounts payable under repurchase agreements with the CBR 37,673,369 - - - - - 37,673,369

Current accounts and deposits from customers 26,568,106 1,342,786 17,976 3,949 - 20,780,408 48,713,225

Total liabilities 99,577,120 1,941,482 3,699,583 3,949 - 48,217,041 153,439,175

Net position (14,379,091) 2,413,117 3,936,722 26,856,280 27,102,036 (43,838,291) 2,090,773

Interest rate sensitivity analysis

An analysis of sensitivity of profit or loss and equity (net of taxes) to changes in interest rates (repricing risk) based on a simplified scenario of a 100 basis point (bp) symmetrical fall or rise in all yield curves and positions of interest-bearing assets and liabilities existing as at 31 December 2013 and 2012 is as follows:

Average interest rates

The table below displays average effective interest rates for interest bearing assets and liabilities as at 31 December 2013 and 2012. These interest rates are an approximation of the yields to maturity of these assets and liabilities, except for overdrafts included in loans to customers, which are variable rate contracts.

2013RUB’000

2012RUB’000

100 bp parallel rise (434,284) (1,029,548)

100 bp parallel fall 471,020 1,030,577

2013RUB’000

2012RUB’000

100 bp parallel rise 321,450 (70,240)

100 bp parallel fall (321,450) 70,240


67

2013Average effective interest rate, %

2012Average effective interest rate, %

RUB EUR USD RUB EUR USD

Interest bearing assets

Financial instruments held for trading 7.45% 3.46% - 7.41% - 3.91%

Placements with banks 6.60% - 0.30% 5.84% 0.50% 0.37%

Loans to customers 8.12% 1.93% 1.90% 8.11% 2.56% 2.33%

Interest bearing liabilities

Deposits and balances from banks 6.04% - 0.82% 6.15% 0.74% 1.79%

Amounts payable under repurchase agree-ments with the CBR 5.51% - - 5.51% - -

Current accounts and deposits from customers 5.80% 0.01% 0.01% 5.61% 0.01% 0.12%

Currency risk

The Bank has assets and liabilities denominated in several foreign currencies.

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign currency exchange rates. Although the Bank hedges its exposure to currency risk, such activities do not qualify as hedging relationships in accordance with IFRS.

The following table shows the foreign currency exposure structure of assets and liabilities as at 31 December 2013:

RUB’000 RUB EUR USD Other Total

ASSETSCash and cash equivalents 11,653,885 2,172,710 1,970,338 55,724 15,852,657

Mandatory reserve deposit with the CBR 1,173,620 - - - 1,173,620

Financial instruments held for trading net of currency derivatives 16,373,825 1,565,900 - - 17,939,725

Placements with banks 1,447,486 5,846,087 90,267,827 - 97,561,400

Loans to customers 2,525,039 3,959,481 676,709 - 7,161,229

Financial assets available-for-sale 1,524 - - - 1,524

Deferred tax asset 385,179 - - - 385,179

Other assets 479,879 1,965,031 1,653,011 - 4,097,921

Property, equipment and intangible assets 557,968 - - - 557,968

Total assets 34,598,405 15,509,209 94,567,885 55,724 144,731,223

LIABILITIESDeposits and balances from banks 58,003,868 3,229,521 4,020,368 4,325 65,258,082

Amounts payable under repurchase agreements with the CBR 6,588,588 - - - 6,588,588

Current accounts and deposits from customers 42,738,681 7,451,935 3,920,230 59,403 54,170,249

Other liabilities 2,045,045 1,204,362 399 754 3,250,560

Total liabilities 109,376,182 11,885,818 7,940,997 64,482 129,267,479

Net recognized position (74,777,777) 3,623,391 86,626,888 (8,758) 15,463,744

Unrecognized position 89,098,347 (2,400,206) (86,802,033) 103,892 -

Net position 14,320,570 1,223,185 (175,145) 95,134 15,463,744

A strengthening of RUB, as indicated below, against the following currencies at 31 December 2013 and 2012 would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is on net of tax basis and is based on foreign currency exchange rate variances that the Bank considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.

A weakening of RUB against the above currencies at 31 December 2013 and 2012 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

The following table shows the foreign currency exposure structure of financial assets and liabilities as at 31 December 2012:

RUB’000 RUB EUR USD Other Total

ASSETSCash and cash equivalents 11,560,172 1,843,662 561,559 190,837 14,156,230

Mandatory reserve deposit with the CBR 1,358,449 - - - 1,358,449

Financial instruments held for trading net of currency derivatives 52,307,764 - 3,305,503 - 55,613,267

Placements with banks 3,826,742 6,838,996 80,034,523 - 90,700,261

Loans to customers 2,711,023 4,182,064 1,956,323 - 8,849,410

Financial assets available-for-sale 1,698 - - - 1,698

Deferred tax asset 347,411 - - - 347,411

Other assets 474,035 1,447,999 221,387 - 2,143,421

Property, equipment and intangible assets 824,911 - - - 824,911

Total assets 73,412,205 14,312,721 86,079,295 190,837 173,995,058

LIABILITIESDeposits and balances from banks 62,266,063 2,354,838 2,431,680 - 67,052,581

Amounts payable under repurchase agreements with the CBR 37,673,369 - - - 37,673,369

Current accounts and deposits from customers 40,793,638 5,029,910 2,839,099 50,578 48,713,225

Other liabilities 2,586,175 1,262,099 58,820 22,095 3,929,189

Total liabilities 143,319,245 8,646,847 5,329,599 72,673 157,368,364

Net recognized position (69,907,040) 5,665,874 80,749,696 118,164 16,626,694

Unrecognized position 86,432,441 (5,505,702) (80,682,787) (243,952) -

Net position 16,256,401 160,172 66,909 125,788 16,626,694

2013RUB’000

2012RUB’000

10% appreciation of RUB against EUR (97,855) (12,814)

10% appreciation of RUB against USD 14,012 (5,353)


69

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. Other price risk arises when the Bank takes a long or short position in a financial instrument.

An analysis of sensitivity of profit or loss and equity to changes in securities prices based on positions existing as at 31 December 2013 and 2012 and a simplified scenario of a 10% change in all securities prices is as follows:

Credit risk

Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a financial instrument fails to meet its contractual obligations.

Credit risk arises from all transactions that give rise to actual, contingent or potential claims against any counterparty, borrower or obligor (which are collectively referred to as counterparties). Three kinds of credit risk are monitored: default risk, country risk and settlement risk. The Bank has policies and procedures for the management of credit exposures (both for recognized and unrecognized exposures), including guidelines to limit portfolio concentration and the establishment of a Credit and Policy Committee, which actively monitors credit risk of the Bank. The key credit risk related policies are reviewed and approved by the Management Board’s Risk Executive Committee.

Monitoring tasks are primarily performed by the Divisional Risk Units in close cooperation with Portfolio Management. Both also interact with other portfolio functions such as Loan Exposure Management Group (LEMG), Credit Portfolio Management, Traded Credit Products as well as Market Risk Management to ensure a complete and efficient monitoring and risk management.

To ensure a complete and comprehensive overview of the Bank’s credit portfolio, Credit Risk Management operates a fully integrated Risk Management platform incorporating information from various front and back office systems.

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.

The Bank continuously monitors the performance of individual credit exposures and regularly reassesses the creditworthiness of its customers. The review is based on the customer’s most recent financial statements and other information submitted by the borrower, or otherwise obtained by the Bank.

The Bank uses the internal credit ratings system to rate the credit quality of financial instruments. A broad range of methodologies for the assessment of the credit risk is applied, such as expert opinions, expert systems, score cards and econometric approaches.

2013 2012

Profitor loss

RUB’000Equity

RUB’000

Profitor loss

RUB’000Equity

RUB’000

10% increase in securities prices 1,435,178 1,435,178 4,449,061 4,449,061

10% decrease in securities prices (1,435,178) (1,435,178) (4,449,061) (4,449,061)

The Bank’s internal rating system uses a granular, transparent 26-grade rating scale, which is similar to S&P’s rating scale. The Credit Rating Policy describes the principals for credit ratings.

The maximum exposure to credit risk is generally reflected in the carrying amounts of financial assets on the statement of financial position. The impact of possible netting of assets and liabilities to reduce potential credit exposure is not significant.

Collateral generally is not held against claims under derivative financial instruments, investments in securities, and loans and advances to banks, except when securities are held as part of reverse repurchase and securities borrowing activities.

For the analysis of collateral held against loans to customers and concentration of credit risk in respect of loans to customers refer to note 8.

The maximum exposure to unrecognized credit risk is presented in note 24.

Deutsche Bank’s rating Assigned probability of default S&P’s rating

iAAA 0.01% AAA

iAA+ 0.02% AA+

iAA 0.03% AA

iAA- 0.04% AA-

iA+ 0.05% A+

iA 0.07% A

iA- 0.09% A-

iBBB+ 0.14% BBB+

iBBB 0.23% BBB

iBBB- 0.39% BBB-

iBB+ 0.64% BB+

iBB 1.07% BB

iBB- 1.76% BB-

iB+ 2.92% B+

iB 4.82% B

iB- 7.95% B-

iCCC+ 13.00% CCC+

iCCC 22.00% CCC

iCCC- 31.00% CCC-, CC, C

iCC+ 100.00%

iCC 100.00%

iCC- 100.00%

iC+ 100.00%

iC 100.00%

iC- 100.00%

iD 100.00% D


71

Offsetting financial assets and financial liabilities

The Bank has no financial assets and financial liabilities that are offset in the statement of financial position.

The disclosures set out in the tables below include financial assets and financial liabilities that are subject to an enforceable master netting arrangement or similar agreement that covers similar financial instruments, irrespective of whether they are offset in the statement of financial position.

The similar agreements include derivative clearing agreements, global master repurchase agreements. Similar financial instruments include derivatives, sales and repurchase agreements. Financial instruments such as loans and deposits are not disclosed in the table below unless they are offset in the statement of financial position.

The Bank’s derivative transactions that are not transacted on the exchange are entered into under International Derivative Swaps and Dealers Association (ISDA) Master Netting Agreements. In general, under such agreements the amounts owed by each counterparty that are due on a single day in respect of transactions outstanding in the same currency under the agreement are aggregated into a single net amount being payable by one party to the other. In certain circumstances, for example when a credit event such as a default occurs, all outstanding transactions under the agreement are terminated, the termination value is assessed and only a single net amount is due or payable in settlement transactions.

The Bank’s sale and repurchase transactions are covered by master agreements with netting terms similar to those of ISDA Master Netting Agreements.

The above ISDA and similar master netting arrangements do not meet the criteria for offsetting in the statement of financial position. This is because they create a right of set-off of recognized amounts that is enforceable only following an event of default, insolvency or bankruptcy of the Bank or the counterparties. In addition the Bank and its counterparties do not intend to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

The table below shows financial assets and financial liabilities subject to enforceable master netting arrangements and similar arrangements as at 31 December 2013:

RUB’000

Gross amounts of recognized

financial asset/liability

Gross amount of recognized

financial liability/asset offset in the

statement of financial position

Net amount of financial

assets/liabilities presented in the


Related amounts subject to offset under specific conditions

Net amountFinancial

instruments

Impact of Master Netting

AgreementTypes of financial assets/liabilities

Derivatives trading assets 990,634 - 990,634 - (74,873) 915,761

Total financial assets 990,634 - 990,634 - (74,873) 915,761

Derivatives trading liabilities (560,758) - (560,758) - 74,873 (485,885)

Sale and repurchase agreements (6,588,588) - (6,588,588) 6,588,588 - -

Total financial liabilities (7,149,346) - (7,149,346) 6,588,588 74,873 (485,885)

The table below shows financial assets and financial liabilities subject enforceable master netting arrangements and similar arrangements as at 31 December 2012:

The amounts of financial assets and financial liabilities that are disclosed in the above tables are measured in the statement of financial position on the following basis:

• derivative assets and liabilities – fair value

• assets and liabilities resulting from sale and repurchase agreements – amortized cost.

The table below reconciles the “Net amounts of financial assets and financial liabilities presented in the statement of financial position”, as set out above, to the line items presented in the statement of financial position as at 31 December 2013.

RUB’000

Gross amounts of recognized

financial asset/liability

Gross amount of recognized

financial liability/asset offset in the


Net amount of financial

assets/liabilities presented in the


Related amounts subject to offset under specific conditions

Net amountFinancial

instruments

Impact of Master Netting

AgreementTypes of financial assets/liabilities

Derivatives trading assets 78,274 - 78,274 - (7,071) 71,203

Total financial assets 78,274 - 78,274 - (7,071) 71,203

Derivatives trading liabilities (78,969) - (78,969) - 7,071 (71,898)

Sale and repurchase agreements (37,673,369) - (37,673,369) 37,673,369 - -

Total financial liabilities (37,752,338) - (37,752,338) 37,673,369 7,071 (71,898)

RUB’000

Net amountsy

Line item in the statement

of financial position

Carrying amount in the

statement of financial

position

Financial asset/liability

not in the scope of offsetting

disclosure NoteTypes of financial assets/liabilities

Derivatives trading assets 990,634

Financial instru-ments held for

trading (assets) 19,512,744 18,522,110 5

Derivatives trading liabilities (560,758)


trading (liabilities) (1,235,710) (749,825) 5

Sale and repurchase agreements (6,588,588)

Amounts payable under repurchase agreements with

the CBR (6,588,588) - 6


73

The table below reconciles the “Net amounts of financial assets and financial liabilities presented in the statement of financial position”, as set out above, to the line items presented in the statement of financial position as at 31 December 2012.

RUB’000

Net amountsy

Line item in the statement

of financial position

Carrying amount in the

statement of financial

position

Financial asset/liability

not in the scope of offsetting

disclosure NoteTypes of financial assets/liabilities

Derivatives trading assets 78,274


trading (assets) 55,980,277 55,902,003 5

Derivatives trading liabilities (78,969)


trading (liabilities) (246,734) (167,765) 5

Sale and repurchase agreements (37,673,369)

Amounts payable under repurchase agreements with

the CBR (37,673,369) - 6

Liquidity risk

Liquidity risk is defined as the risk that the Bank will not be able to meet its current and future payment obligations in full, or on time. It also includes the risk that, in the case of a liquidity crisis, refinancing may only be obtained at higher market rates (funding risk) and/or that assets may only be liquidated at a discount to market rates (market liquidity risk). Liquidity risk is not backed by risk capital, since it is a payment risk that must be covered by assets and not a risk of loss to be covered by capital and reserves.

The Treasury in collaboration with the Finance and Global Markets carry out daily analysis of current liquidity which is based on exception clearing reports of the Cash and Banking Operations on cash inflows and estimated payments. A check before the closing of the operational day of whether the amount of liabilities on demand compared to the amount of assets on demand and the open borrowing limit with Deutsche Bank Group provides confidence in the balance between assets and liabilities by maturities. Analysis of changes in customer account balances and calculation of currency structure of average constant customer accounts balance on demand are provided at the meetings of the ALCO on a monthly basis. The ALCO also analyzes usage of the borrowing limit with the Bank.

Liquidity outflows from contingent liabilities and increased draws down on committed credit lines, as well as claims on guarantees, are also taken into consideration.

To minimize liquidity risk the Bank takes actions to maintain a balance between the assets and liabilities with different maturities that will allow it to achieve the liquidity level adequate to meet obligations to clients without a negative impact on profitability. Liquidity management is performed in accordance with the liquidity policy based on both the Deutsche Bank Group standards and Russian legislation including control over compliance with prudential ratios set by the CBR and control over internal liquidity limits set by Deutsche Bank Group and approved by the Supervisory Board.

Several tools have been implemented to measure liquidity risk and evaluate short and long-term liquidity position locally.

The following tables show the undiscounted cash flows on financial assets and liabilities and credit-related commitments on the basis of their earliest possible contractual maturity. The total gross inflow and outflow disclosed in the tables is the contractual, undiscounted cash flow on the financial asset, liability or commitment. The expected cash flows on these financial assets and liabilities and unrecognized

loan commitments can vary significantly from this analysis. For issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee can be called.

The liquidity position as at 31 December 2013 is as follows:

RUB’000

Demand and less than 1 month

From 1 to 6 months

From 6 to 12months

More than 1 year

Total gross amount

inflow(outflow)

Carrying amount

Non-derivative assetsCash and cash equivalents 15,852,657 - - - 15,852,657 15,852,657

Mandatory reserve deposit with the CBR 1,173,620 - - - 1,173,620 1,173,620

Financial instruments held for trading net of derivatives 17,939,725 - - - 17,939,725 17,939,725

Placements with banks 96,123,471 1,464,746 - - 97,588,217 97,561,400

Loans to customers 127,055 2,250,716 1,969,939 3,089,591 7,437,301 7,161,229

Financial assets available-for-sale - - - 1,524 1,524 1,524

Other financial assets 1,641,154 10,491 10,410 2,714 1,664,769 1,664,769

Derivative assetsNet settled derivatives - - 55,712 - 55,712 55,712

Gross settled derivatives 1,517,307

- Inflow 210,330,369 4,315,498 1,146,615 23,410,413 239,202,895

- Outflow (209,586,519) (4,316,038) (1,230,325) (22,552,706) (237,685,588)

Total assets 133,601,532 3,725,413 1,952,351 3,951,536 143,230,832 142,927,943

Non-derivative liabilitiesDeposits and balances from banks (65,512,760) - - - (65,512,760) (65,258,082)

Amounts payable under repurchase agreements with the CBR (6,602,686) - - - (6,602,686) (6,588,588)

Current accounts and deposits from customers (52,571,796) (1,652,028) (10,440) (3,749) (54,238,013) (54,170,249)

Other financial liabilities (4,718) (51,357) (1,937) (10,681) (68,693) (68,693)

Derivative liabilitiesNet settled derivatives - - (55,712) - (55,712) (55,712)

Gross settled derivatives (1,179,998)

- Inflow 96,957,794 5,930,051 1,274,047 22,552,706 126,714,598

- Outflow (97,227,968) (6,065,340) (1,190,875) (23,410,413) (127,894,596)

Total liabilities (124,962,134) (1,838,674) 15,083 (872,137) (127,657,862) (127,321,322)

Net position 8,639,398 1,886,739 1,967,434 3,079,399 15,572,970 15,606,621

Credit related commitments (34,462,176) - - - (34,462,176) (34,462,176)


75

The liquidity position as at 31 December 2012 is as follows:

RUB’000


From 1 to 6 months

From 6 to 12months

More than 1 year

Total gross amount

inflow(outflow)

Carrying amount

Non-derivative assetsCash and cash equivalents 14,156,230 - - - 14,156,230 14,156,230

Mandatory reserve deposit with the CBR 1,358,449 - - - 1,358,449 1,358,449

Financial instruments held for trading net of derivatives 55,613,267 - - - 55,613,267 55,613,267

Placements with banks 89,276,504 1,465,939 - - 90,742,443 90,700,261

Loans to customers 116,132 1,657,198 6,192,470 1,259,611 9,225,411 8,849,410

Financial assets available-for-sale - - - 1,698 1,698 1,698

Other financial assets 37,042 3,622 - - 40,664 40,664

Derivative assetsNet settled derivatives - 44,147 - - 44,147 44,147

Gross settled derivatives 322,863

- Inflow 45,089,166 7,468,265 2,552,921 - 55,110,352

- Outflow (44,973,684) (7,279,693) (2,534,112) - (54,787,489)

Total assets 160,673,106 3,359,478 6,211,279 1,261,309 171,505,172 171,086,989

Non-derivative liabilitiesDeposits and balances from banks (62,824,224) (598,696) (3,713,991) - (67,136,911) (67,052,581)

Amounts payable under repurchase agreements with the CBR (37,724,567) - - - (37,724,567) (37,673,369)

Current accounts and deposits from customers (47,463,907) (1,281,364) (18,719) (3,980) (48,767,970) (48,713,225)

Other financial liabilities (39,140) - - - (39,140) (39,140)

Derivative liabilitiesNet settled derivatives - (45,078) - - (45,078) (45,078)

Gross settled derivatives (201,656)

- Inflow 69,320,161 2,731,135 701,936 - 72,753,232

- Outflow (69,471,170) (2,777,137) (706,581) - (72,954,888)

Total liabilities (148,202,847) (1,971,140) (3,737,355) (3,980) (153,915,322) (153,725,049)

Net position 12,470,259 1,388,338 2,473,924 1,257,329 17,589,850 17,361,940

Credit related commitments (27,512,639) - - - (27,512,639) (27,512,639)

Under Russian law, individuals can withdraw their term deposits at any time, forfeiting in most of the cases the accrued interest. Accordingly, these deposits, excluding accrued interest, are shown in the table above in the category of “Demand and less than 1 month”. The classification of these deposits in accordance with their stated maturity dates as at 31 December is presented below:

The gross nominal inflow (outflow) disclosed in the tables above represents the contractual undiscounted cash flows related to derivative financial assets and liabilities held for risk management purposes. The disclosure shows a net amount for derivatives that are net settled, but a gross inflow and outflow amount for derivative financial assets and liabilities that have simultaneous gross settlement (e.g., forward exchange contracts and currency swaps).

The following tables show the expected maturities of assets and liabilities. Management expects that the cash flows from certain financial assets and liabilities will be different from their contractual terms, either because management has the discretionary ability to manage the cash flows. Management holds a portfolio of securities that are readily marketable and can be used to meet outflows of financial liabilities. Cash flow from these trading securities are included in the “Demand and less than 1 month” category in liquidity and maturity analysis.

Contractual maturities of these trading securities as at 31 December are as follows:

2013RUB’000

2012RUB’000

Demand and less than 1 month 90,311 200,121

From 1 to 6 months 97,499 72,940

From 6 to 12 months 16,776 -

204,586 273,061

2013RUB’000

2012RUB’000

Demand and less than 1 month 896,879 -

From 1 to 6 months 3,894,000 1,255,530

From 6 to 12 months 626,934 1,478,182

More than 1 year 12,521,912 52,879,555

17,939,725 55,613,267


77

The table below shows an analysis, by expected maturities, of the amounts recognized in the statement of financial position as at 31 December 2013:

RUB’000


From 1 to 6 months

From 6 to 12months

More than 1 year No maturity Total

ASSETSCash and cash equivalents 15,852,657 - - - - 15,852,657

Mandatory reserve deposit with the CBR - - - - 1,173,620 1,173,620

Financial instruments held for trading 18,676,254 50,873 58,706 726,911 - 19,512,744

Placements with banks 96,116,830 1,444,570 - - - 97,561,400


Financial assets available-for-sale - - - - 1,524 1,524

Deferred tax asset - - - - 385,179 385,179

Other assets 1,635,524 2,341,164 32,432 88,801 - 4,097,921

Property, equipment and intangible assets - - - - 557,968 557,968

Total assets 132,384,415 5,996,026 1,992,918 3,812,592 2,118,291 146,304,242

LIABILITIESFinancial instruments held for trading 265,588 186,722 59,316 724,084 - 1,235,710

Deposits and balances from banks 65,258,082 - - - - 65,258,082

Amounts payable under repurchase agreements with the CBR 6,588,588 - - - - 6,588,588

Current accounts and deposits from customers 52,529,599 1,628,655 8,246 3,749 - 54,170,249

Other liabilities 24,995 2,052,960 1,040,945 131,660 - 3,250,560

Total liabilities 124,666,852 3,868,337 1,108,507 859,493 - 130,503,189

Credit related commitments 7,717,563 2,127,689 884,411 2,953,099 2,118,291 15,801,053

The table below shows an analysis, by expected maturities, of the amounts recognized in the statement of financial position as at 31 December 2012:

The Bank also calculates mandatory liquidity ratios on a daily basis in accordance with the requirements of the CBR. These ratios include:

- instant liquidity ratio (N2), which is calculated as the ratio of highly liquid assets to liabilities payable on demand

- current liquidity ratio (N3), which is calculated as the ratio of liquid assets to liabilities maturing within 30 calendar days

- long-term liquidity ratio (N4), which is calculated as the ratio of assets maturing after 1 year to the equity and liabilities maturing after 1 year.

The following table shows the mandatory liquidity ratios calculated as at 31 December 2013 and 2012.

RUB’000


From 1 to 6 months

From 6 to 12months

More than 1 year No maturity Total

ASSETSCash and cash equivalents 14,156,230 - - - - 14,156,230

Mandatory reserve deposit with the CBR - - - - 1,358,449 1,358,449

Financial instruments held for trading 55,730,908 231,478 17,891 - - 55,980,277

Placements with banks 89,264,988 1,435,273 - - - 90,700,261


Financial assets available-for-sale - - - - 1,698 1,698

Deferred tax asset - - - - 347,411 347,411

Other assets 75,753 1,457,614 520,273 89,781 - 2,143,421

Property, equipment and intangible assets - - - - 824,911 824,911

Total assets 159,324,434 4,636,386 6,696,287 1,172,492 2,532,469 174,362,068

LIABILITIESFinancial instruments held for trading 151,125 90,601 5,008 - - 246,734

Deposits and balances from banks 62,772,278 598,696 3,681,607 - - 67,052,581

Amounts payable under repurchase agreements with the CBR 37,673,369 - - - - 37,673,369

Current accounts and deposits from customers 47,348,514 1,342,786 17,976 3,949 - 48,713,225

Other liabilities 217,163 626,941 2,891,333 193,752 - 3,929,189

Total liabilities 148,162,449 2,659,024 6,595,924 197,701 - 157,615,098

Credit related commitments 11,161,985 1,977,362 100,363 974,791 2,532,469 16,746,970

Requirement2013

%2012

%

Instant liquidity ratio (N2) Not less than 15% 163.6% 188.2%

Current liquidity ratio (N3) Not less than 50% 175.9% 155.8%

Long-term liquidity ratio (N4) Not more than 120% 7.3% 6.7%


79

23. Capital management

The Bank’s lead regulator, the CBR, sets and monitors capital requirements for the Bank.

The Bank defines as capital those items defined by statutory regulation as capital. Under the current capital requirements set by the CBR banks have to maintain a ratio of capital to risk weighted assets (statutory capital ratio) above the prescribed minimum level. As at 31 December 2013, this minimum level is 10%. The ratio is calculated based on financial statements prepared in accordance with Russian Banking Accounting Standards and the risk weighting is determined in accordance with the CBR’s credit risk ratios specific for individual classes of assets. In accordance with statutory regulations capital includes charter capital, reserve funds, retained earnings less net book value of intangible assets and deferred expenses.

The calculation of capital adequacy based on requirements set by the CBR as at 31 December is as follows:

Starting from 1 April 2013 the Bank calculates the amount of capital and capital adequacy ratios in accordance with the CBR requirements based on Basel III requirements. The amount of capital and capital adequacy ratios were used by the CBR in 2013 for information purposes and not for supervision purposes. Beginning 1 January 2014 the new ratios will be used for supervision purpose. The calculation of capital adequacy ratios (N1.0, N1.1, N1.2) based on requirements set by the CBR using Russian Banking Accounting Standards as at 31 December 2013 is as follows:

The comparative information is not presented because the ratios were not calculated for periods earlier than 1 April 2013.

2013RUB’000

2012RUB’000

Primary capital 13,135,378 13,135,378

Additional capital 1,617,949 2,930,717

Total capital 14,753,327 16,066,095

Risk weighted assets 77,156,408 80,260,153 Capital adequacy ratio 19.1% 20.0%

2012RUB’000

Core capital 13,135,396

Additional capital -

Tier I capital 13,135,396

Unaudited profit for the period 1,617,949

Tier II capital 14,753,345

Risk weighted assets 80,693,639

Base capital adequacy ratio (N1.1, not less than 5%) 16.3%

Primary capital adequacy ratio (N1.2, not less than 6%) 16.3%

Equity capital adequacy ratio (N1.0, not less than 6%) 18.3%

24. Contingencies

Litigation

Management is unaware of any significant actual, pending or threatened claims against the Bank.

Taxation contingencies

The taxation system in the Russian Federation continues to evolve and is characterised by frequent changes in legislation, official pronouncements and court decisions, which are sometimes contradictory and subject to varying interpretation by different tax authorities. Taxes are subject to review and investigation by a number of authorities who have the authority to impose severe fines, penalties and interest charges. A tax year remains open for review by the tax authorities during the three subsequent calendar years; however, under certain circumstances a tax year may remain open longer. Recent events within the Russian Federation suggest that the tax authorities are taking a more assertive position in their interpretation and enforcement of tax legislation.

These circumstances may create tax risks in the Russian Federation that are substantially more significant than in other countries. Management believes that it has provided adequately for tax liabilities based on its interpretations of applicable Russian tax legislation, official pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on the financial position of the Bank, if the authorities were successful in enforcing their interpretations, could be significant.

Starting from 1 January 2012 new transfer pricing rules came into force in Russia. These provide the possibility for tax authorities to make transfer pricing adjustments and impose additional tax liabilities in respect of controllable transactions if their prices deviate from the market range or profitability range. According to the provisions of transfer pricing rules, the taxpayer should sequentially apply five market price determination methods prescribed by the Tax Code.

Tax liabilities arising from transactions between companies are determined using actual transaction prices. It is possible, with the evolution of the interpretation of transfer pricing rules in the Russian Federation and changes in the approach of the Russian tax authorities, that such transfer prices could be challenged. Since the current Russian transfer pricing rules became effective relatively recently, the impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position of the Bank and/or the overall operations of the Bank.

Based on the facts available, no provision for potential tax liabilities is made in these financial statements, as management believes it is not likely that an outflow of funds will be required to settle such obligations.

Operating leases

Future lease payments (net of VAT and operating costs) under operating leases are detailed below:

2013RUB’000

2012RUB’000

Less than 1 year 448,214 490,861

Between 1 and 5 years 1,959,969 1,976,130

More than 5 years - 274,685

Total operating lease rentals payable 2,408,183 2,741,676


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The Bank leases a number of premises under operating leases. The leases typically run for an initial period of one to six years, with an option to renew the lease after that date. Lease payments are usually increased annually to reflect market rentals.

During 2013 RUB 398,769 thousand is recognized as an expense in profit or loss in respect of operating leases (2012: RUB 335,579 thousand).

Credit related commitments

The Bank issues guarantees and letters of credit on behalf of its customers. These instruments bear a credit risk similar to that of loans granted. The amounts outstanding are as follows:

2013RUB’000

2012RUB’000

Guarantees issued maturing within 12 months 8,969,567 8,158,123 Rated from iAAA to iAAA- 67,454 7,025

Rated from iAA+ to iAA- 500,396 4,399,858

Rated from iA+ to iA- 1,335,649 1,304,147

Rated from iBBB+ to iBBB- 4,262,791 1,489,773

Rated from iBB+ to iBB- 946,534 488,507

Rated from iB+ to iB- 591,783 394,815

Rated below iCCC+ 1,257,505 67,935

Individuals 2,455 1,063

Not rated 5,000 5,000

Guarantees issued maturing after 12 months 4,915,833 3,700,825 Rated from iAAA to iAAA- - 76,673

Rated from iAA+ to iAA- 128,955 277,827

Rated from iA+ to iA- 867,678 331,779

Rated from iBBB+ to iBBB- 593,458 2,667,650

Rated from iBB+ to iBB- 3,294,212 265,734

Rated from iB+ to iB- 31,531 28,482

Rated below iCCC+ - 50,000

Individuals - 2,680

Import letters of credit maturing within 12 months 8,643,561 5,432,902 Rated from iAA+ to iAA- 16,089 76,966

Rated from iA+ to iA- 844,387 240,989

Rated from iBBB+ to iBBB- 247,796 -

Rated from iBB+ to iBB- 471,261 263,418

Rated from iB+ to iB- 6,933,299 4,805,636

Rated below iCCC+ 130,729 45,893

Import letters of credit maturing after 12 months 46,074 846,791 Rated from iA+ to iA- - 758,908

Rated from iBBB+ to iB- 46,074 87,883

22,575,035 18,138,641

As at 31 December 2013, the Bank had RUB 11,887,140 thousand (31 December 2012: RUB 9,373,998 thousand) in undrawn loan commitments.

The total outstanding contractual amount of undrawn loan lines, undrawn guarantee lines, gurantees and import letter of credit does not necessarily represent future cash requirements, as many of these commitments may expire or terminate without being funded.

Custody activities

The Bank provides custody services to its customers, whereby it holds securities on behalf of customers and receives fee income for providing these services. These securities are not assets of the Bank and are not recognized in the statement of financial position.

Trust activities

The Bank provides trust services to individuals, trusts, retirement benefit plans and other institutions, whereby it holds and manages assets or invests funds received in various financial instruments at the direction of the customer. The Bank receives fee income for providing these services. Trust assets are not assets of the Bank and are not recognized in the statement of financial position. The Bank is not exposed to any credit risk relating to such placements, as it does not guarantee these investments.

25. Related party transactions

Deutsche Bank AG Frankfurt is the sole participant of the Bank and the party with ultimate control over the Bank. Deutsche Bank AG Frankfurt prepares publicly available financial statements.

For the purposes of these financial statements the following are considered to be related parties:

• the Bank’s participant

• key management of the Deutsche Bank Group and the Bank and their immediate families

• enterprises in which the participant, Deutsche Bank Group companies, management of Deutsche Bank Group and the Bank or their immediate families have control or significant influence (Deutsche Bank Group companies).

In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.

Related party transactions are based on market prices.


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The outstanding balances and the related average effective interest rates as at 31 December 2013 and related profit or loss amounts of transactions for the year ended 31 December 2013 with related parties are as follows:

Participant Deutsche Bank Group companies

RUB’000Average effective

interest rate, % RUB’000 Average effective

interest rate, %

Statement of financial position

ASSETSCash and cash equivalents

- RUB 61,279 - - -

- EUR 2,130,536 - - -

- USD 160,443 - 208,512 -

- other 43,021 - - -

Financial instruments held for trading

- RUB - - 277,586 -

- EUR - - 34,849 -

- USD - - 258,377 -

Placements with banks

- USD - - 89,940,591 0.30%

Other assets

- RUB - - 4,457 -

- EUR 100,025 - 1,847,087 -

- USD 941 - 626 -

LIABILITIESFinancial instruments held for trading

- RUB - - 44,100 -

- EUR - - 340,986 -

- USD - - 145,397 -

Deposits and balances from banks

- RUB 4 010 382 2.85% 34,867,704 0.00%

- EUR - - 3,302,557 -

- USD - - 3,868,427 -

Other liabilities

- EUR 175,273 - 1,018,490 -

- other - - 754 -

Items not recognized in the statement of financial position

- Guarantees issued 17,388 - 2,203,253 -

- Guarantees received 403,101 - 7,728,022 -

Profit (loss)

Interest income 6 190 - 312 402 -

Interest expense (59 727) - (23 113) -

Net gain on financial instruments held for trading 235 - (2,350,122) -

Fee and commission income 25 206 - 889 564 -

Fee and commission expense (21 988) - (22 633) -

Other income 216,026 - 4,031,514 -

General and administrative expenses (84,516) - (621,321) -

The outstanding balances and the related average effective interest rates as at 31 December 2012 and related profit or loss amounts of transactions for the year ended 31 December 2012 with related parties are as follows:

Participant Deutsche Bank Group companies

RUB’000Average effective

interest rate, % RUB’000 Average effective

interest rate, %

Statement of financial position

ASSETSCash and cash equivalents

- RUB 60,696 - - -

- EUR 1,822,908 - 161 -

- USD 83,698 - 2,064 -

- other 190,337 - - -

Financial instruments held for trading

- RUB - - 52,917 -

- EUR - - 128 -

- USD - - 5,434 -

Placements with banks

- RUB - - - -

- EUR - - 3,218,422 0.50%

- USD - - 79,732,860 0.37%

- other - - - -

Other assets

- RUB - - 1,304 -

- EUR 21,142 - 1,414,392 -

- USD 18 - 58,942 -

LIABILITIES Financial instruments held for trading

- RUB - - 43,664 -

- EUR - - 499 -

- USD - - 82,830 -

Deposits and balances from banks

- RUB 3,425,922 2.85% 25,632,908 -

- EUR - - 2,218,175 0.74%

-USD 45,306 - 396,177 1.02%

Other liabilities

- EUR 188,651 - 982,085 -

-- USD - - 58,819 -

- other - - 22,095 -

Items not recognized in the statement of financial position

- Guarantees issued 16,090 3,898,268

- Guarantees received 147,258 5,423,157

Profit (loss)

Interest income - - 399,263 -

Interest expense (185) - (81,616) -

Net gain on financial instruments held for trading 715 - 1,461,393 -

Fee and commission income 28,691 - 617,480 -

Fee and commission expense 7,977 - 5,364 -

Other income 135,322 - 3,980,558 -

General and administrative expenses (259,491) - (468,951) -


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Transactions with the members of the Supervisory Board and the Management Board

Total remuneration included in personnel expenses for the years ended 31 December 2013 and 2012 is as follows:

2013RUB’000

2012RUB’000

Short-term employee benefits 878,744 857,313

Long-term benefits 335,526 373,042

1,214,270 1,230,355

26. Financial assets and liabilities: fair values and accounting classifications

As at 31 December 2013 and 2012, management concluded that the fair values of all financial assets and financial liabilities are not materially different from their carrying values because of their short term nature and market interest rates.

The estimates of fair value are intended to approximate the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. However given the uncertainties and the use of subjective judgment, the fair value should not be interpreted as being realisable in an immediate sale of the assets or transfer of liabilities.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations.

The Bank uses valuation techniques to establish the fair value of instruments where prices, quoted in active markets, are not available. Valuation techniques used for financial instruments include modeling techniques, the use of indicative quotes for proxy instruments, quotes from less recent and less regular transactions and broker quotes.

For some financial instruments a rate or other parameter, rather than a price, is quoted. Where this is the case then the market rate or parameter is used as an input to a valuation model to determine fair value. For some instruments, modeling techniques follow industry standard models for example, discounted cash flow analysis and standard option pricing models. These models are dependent upon estimated future cash flows, discount factors and volatility levels.

Frequently, valuation models require multiple parameter inputs. Where possible, parameter inputs are based on observable data or are derived from the prices of relevant instruments traded in active markets. Where observable data is not available for parameter inputs then other market information is considered, for example, indicative broker quotes and consensus pricing information.

Fair value hierarchy

The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

• Level 1: quoted market price (unadjusted) in an active market for an identical instrument.

• Level 2: inputs other than quotes prices included within Level 1 that are observable either directly (i.e, as prices) or indirectly (i.e, derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

• Level 3: inputs that are unobservable. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The table below analyses financial instruments measured at fair value on reccuring basis at 31 December 2013, by the level in the fair value hierarchy into which the fair value measurement is categorized. The amounts are based on the values recognized in the statement of financial position:

The table below analyses financial instruments measured at fair value on recurring basis at 31 December 2012, by the level in the fair value hierarchy into which the fair value measurement is categorized. The amounts are based on the values recognized in the statement of financial position:

For all financial instruments measured at fair value categorized in Level 2, discounted cash flow techniques are used to estimate fair values, except for structured derivatives contracts included in derivative assets and liabilities. Fair values for these instruments are estimated using stochastic volatility option pricing models. All inputs to the valuation models are directly observable or derived from similar traded contracts.

The carrying values of all financial instruments not measured at fair value on a recurring basis approximates their fair values.

RUB ’000 Level 1 Level 2 Level 3 Total

ASSETSFinancial instruments held for trading 17,939,725 - Debt and other fixed income instruments 16,373,825 1,565,900 - 1,573,019

- Derivative assets - 1,573,019 - 19,512,744

16,373,825 3,138,919 -

LIABILITIESFinancial instruments held for trading - 1,235,710 - 1,235,710

- 1,235,710 - 1,235,710

RUB ’000 Level 1 Level 2 Level 3 Total

ASSETSFinancial instruments held for trading 55,613,267 - Debt and other fixed income instruments 53,233,005 2,380,262 - 367,010

- Derivative assets - 367,010 - 55,980,277

53,233,005 2,747,272 -

LIABILITIESFinancial instruments held for trading - 246,734 - 246,734

- 246,734 - 246,734



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04

FurtherDetails

04 Further Details

Details ofDeutsche Bank Ltd., Moscow

Full NameLimited Liability Company “Deutsche Bank”

Short NameDeutsche Bank Ltd.

Address82 Sadovnicheskaya street bldg 2, 115035, Moscow, Russia

Switchboard Telephone Number(7-495) 797-5000

Fax(7-495) 797-5017

Internethttp://www.deutsche-bank.ru

General e-mail [email protected]

Beginning of activitiesMay 1998

LicencesGeneral Banking Licence No. 3328 dated October 9, 2003;issued by the Bank of Russiа

Professional Participant Licence for Brokerage OperationsNo. 177-05600-100000 dated September 4, 2001Professional Participant Licence for Dealership OperationsNo. 177-05608-010000 dated September 4, 2001Professional Participant Licence for Depository OperationsNo. 177-05616-000100 dated September 4, 2001Professional Participant Licence for Securities ManagementNo.177-09679-001000 dated November 14, 2006License No. 22-000-1-00060 for the execution of SpecializedDepository Operations for Investment Funds, Unit Investment Fundsand Non-Government Pension Funds dated January 25, 2006License No. 800 for a stock market agent effecting futures and options transactionson the territory of the RF, dated 20 December,2008, valid till 20 December, 2008.issued by the Federal Financial Markets Service of Russia.

Results 2013 - Deutsche Bank · 11 Dear ladies and gentlemen, In 2013, Deutsche Bank Ltd....

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