Deutsche Bank Luxembourg S.A.

When it was founded in 1970, Deutsche Bank Luxembourg S.A. (also referred to as the “Bank”) was the first foreign subsidiary to be established by Deutsche Bank AG (the “Parent”) after the signing of the Treaties of Rome (1957). Today, it is one of the leading financial service providers in the Grand Duchy of Luxembourg. The Bank is under the direct, sole ownership of the Parent. In accordance with Article 131 (3) of EU Directive 2013/36/EU, the Bank is classed as an Other Systemically Important Institution (O-SII). It is subject to direct prudential supervision by the European Central Bank (ECB). The Bank is a non-trading book institution; its regulatory own funds – consisting of balance sheet equity and eligible subordinated liabilities – amount to approximately € 6 billion as of 31 December 2018 (unchanged compared to the previous year).

Deutsche Bank Luxembourg S.A. looks forward to its 50th anniversary in the Grand Duchy of Luxembourg in 2020. Founded in 1970 as Deutsche Bank's first foreign subsidiary after the signing of the Treaty of Rome (1957), it is today one of Luxembourg's leading financial services providers and is subject to the direct supervision of the European Central Bank. From the very beginning, Deutsche Bank in Luxembourg has focused on international cross-border business. Since the beginnings of the European Economic Community (EEC) in the 1970s, it has developed into a proven centre of competence within the Deutsche Bank Group for medium to long-term financing of listed, owner-managed and other larger companies.

In addition to the above-mentioned financing of companies and public corporations and the corresponding syndicate management, structured financing, asset management and capital market issues in trust were added later. With this broadly diversified, international business model, Deutsche Bank Luxembourg has made a significant positive contribution to the Group's results for many years and across economic cycles. On the occasion of the company anniversary, the author Christopher Kopper has written a chronicle of Deutsche Bank Luxembourg S.A. The richly illustrated publication also shows how the bank, which has been at home on the Kirchberg plateau since 1991, contributes to the economic and social dialogue as well as to cultural life in the Grand Duchy.

Corporate Governance

Since 2014, the Bank’s Articles of Association have provided for a two-tier system of corporate governance comprising a Management Board and a Supervisory Board. The Bank has thus taken its cue from the Parent’s corporate governance system. The Management Board has overall responsibility for managing the Bank’s business activities in accordance with the applicable prudential requirements and on the basis of the business allocation plan adopted by the Supervisory Board.

The Supervisory Board oversees the activities of the Management Board and adopts operational objectives and strategic guidelines in line with the Parent’s requirements regarding overall Group management. The Supervisory Board is supported in its work by two sub-committees: the Audit Committee and the Risk Committee. In addition, Internal Audit, the compliance function and the risk control function report independently to the Supervisory Board if and when required.

Business model

The Bank has a business model that is diversified, client-focused and international, i.e. geared to cross-border business. For many years – and across economic, business and product-related cycles – this has enabled the Bank to make a significant positive contribution to Deutsche Bank AG’s consolidated earnings. At the same time, the Bank’s risk-bearing capacity and risk appetite are based on its own capital and liquidity resources. One defining feature of its business model as a non-trading book institution, and of importance from a client perspective, is the long-term nature of the Bank’s chosen areas of activity:

Corporate Finance (Corporate & Investment Bank)

The Bank is a proven centre of excellence in Deutsche Bank Group for the provision of medium- to long-term financing to listed, owner-managed and other relatively large businesses. Its position as a lender, agent and international service provider to clients in bilateral and syndicated lending is based on decades of expertise in the lead management of international lending syndicates, the legal formulation of credit documentation, particularly in cross-border transactions, and reliable credit administration over their lifecycle. In addition, this area of activity is supported by a dedicated IT application in which the Bank continues to invest.

Structured Finance (Corporate & Investment Bank)

In the segment for high-quality capital goods (e.g. special-purpose vessels, aircraft) and long-term utility and infrastructure projects (e.g. alternative forms of energy, transport routes), the Bank – in concert with other units in Deutsche Bank Group’s international network – has the necessary expertise and the operational resources to reliably assist clients in structured and property-related financing scenarios across the entire maturity spectrum. The Bank also acts as fiduciary issuer, trustee and investor – including within the framework of a € 10 billion capital market issue programme registered on the stock exchange.

Private Asset Management (Wealth Management)

The Bank is a service centre and centre of excellence within the EU and for selected markets in the Europe, Middle East & Africa (EMEA) region in the cross-border and cross-generation management of international private assets. Here, the Bank makes use of the freedom to provide investment advice and distribute financial products across borders within the EU single market in accordance with the applicable provisions. Besides the investment expertise in Luxembourg, wealth management activities also leverage the Bank’s many years of experience and expertise as a centre for lending and financing. The changes implemented in Wealth Management in the 2018 financial year are explored in more detail in the Strategy section.

Investor & Issuer Services

The Bank assists investors (including fund companies) and issuers in a variety of roles under the mandates awarded to it, including as agent, trustee or depositary.

In providing services for fund companies, long-term asset classes such as real estate and private equity capital are front and centre. The Strategy section contains further information on changes affecting the aforementioned service offerings that took place in 2018. In the future, this area of activities will be of minor significance for the results and any mention or description of it may therefore be excluded from future Annual Reports.

In light of the Luxembourg Stock Exchange’s role (“Lux SE”) as a world-leading listing venue, other services for issuers focus primarily on debt securities.

Participation Management

The Bank has many years’ expertise in the domestic and cross-border management and administration of company and financial interests. This is based on its experience of providing company law- and accounting-related support throughout the term of equity and financial investments, on its experience of corporate governance and risk management issues and on the Bank’s capital strength.

The latter allows it to address the opportunities and risks inherent in equity and financial investments and manage them over the long term in accordance with the applicable bank regulatory framework. Following the sale of the bank’s 50% interest in DWS Investment S.A. (formerly Deutsche Asset Management S.A.) in a cross-border transaction in the previous year, there were no significant participation management activities to report for financial year 2018.

Balance sheet, capital, liquidity, interest rate and currency management (Treasury)

The Bank is a non-trading book institution and has its own balance sheet, capital, liquidity, interest rate and currency management function (Treasury) that operates independently of the business units. Nevertheless, the Bank is integrated into Deutsche Bank Group’s overall liquidity management and funding system. In principle, therefore, the Bank is able, within a defined credit limit, to tap the Parent’s funds for refinancing purposes. For further explanatory notes on liquidity and risk management, please refer to the Risk Report.

According to Deutsche Bank AG’s Annual Report, the Bank also operates under the auspices of its parent entity.

Corporate citizen

The Bank has had its home in the Grand Duchy of Luxembourg since 1970 and at its registered office on the Kirchberg Plateau (2, boulevard Konrad Adenauer, L–1115 Luxembourg) designed by the architect and Pritzker architecture award winner Prof. Gottfried Böhm since 1991.

As a member of Private Art Kirchberg (which takes place every two years, most recently on 23 September 2018), through a variety of private tours of art collections and special exhibitions, and as a venue for forums and seasonal concert performances, the Bank has for many years made a relevant contribution to dialogue around economic and social issues as well as to cultural life in the Grand Duchy of Luxembourg.