Deutsche Bank AG Management Hosts Annual Conference Call (Transcript)

Jan.29.14 | About: Deutsche Bank (DB)

Deutsche Bank AG (NYSE:DB)

2013 Earnings Call

January 29, 2014 4:00 am ET

Executives

Thorsten Strauss - Global Head of Communications & Csr

Jürgen Hinrich Fitschen - Co-Chairman of the Management Board and Co-Chief Executive Officer

Anshuman Jain - Co-Chairman of the Management Board and Co-Chief Executive Officer

Stefan Krause - Chief Financial Officer and Member of Management Board

Stephan Leithner - Member of Management Board and Chief Executive Officer of Human Resources, Legal & Compliance, Government & Regulatory Affairs for Europe (Except Germany & UK)

Stewart Wilson Lewis - Member of the Supervisory Board

Rainer Neske - Head of Private & Business Clients and Member of Management Board

Henry Ritchotte - Chief Operating Officer and Member of Management Board

Analysts

Philipp Häßler - equinet AG, Research Division

Thorsten Strauss

[German] All right. We shall start. Good morning, ladies and gentlemen. Dear colleagues, welcome to the Annual Press Conference of Deutsche Bank. This time -- and you might have already realized that it's not in the Apsal [ph], but here at Tanas & Lagers [ph]. So anyone who's still at Apsal [ph] will probably be too late this morning. The Apsal [ph] is closed for refurbishment measures. We are here not because -- for cost-saving reasons, but we are here because the Apsal [ph] is closed for refurbishment measures. We're very happy to have you. We thank you very much for your large interest.

And first and foremost, let me make some organizational remarks. Would you please be so kind as to switch off your mobile phones and BlackBerries totally so we have no technical interferences? At the same time, if you need translation, Channel 1 is the German translation and Channel 2 is the English translation. And the press conference is, of course, also transmitted on the Internet. Here on stage, you will find Stewart Lewis to the outer right, Rainer Neske, Stefan Krause, Jürgen Fitschen, Anshu Jain, Stephan Leithner and Henry Ritchotte. All gentlemen are available for your questions later on. If you want to ask a question, I would be grateful if you would give me a sign, mention your name, and we will answer all the questions in the sequence they come in. So if you might be -- no matter where you are in the sequence, we will take our time to answer all the questions. We would also be grateful if you would give us your name, the medium you're working for, and I think we shall go smoothly through this process without any problems. We start with Jürgen Fitschen, who will start. Thank you.

Jürgen Hinrich Fitschen

[German] Thank you very much, Mr. Strauss. Good morning, ladies and gentlemen. We also would like to welcome you, Anshu and my colleagues here in the podium. We are glad to be able to welcome you here today.

17 months ago -- and I just looked around because many of you were there, and then 3 more months, and then we have reached half time in our journey of 40 months. And therefore, this is certainly a good opportunity for a midpoint update. A midpoint update, we've got to admit. And to do so, first of all, I'd like to look back onto the starting point that we accounted 17 months ago. And those who weren't present at that time will then also understand better what happened during the last 12 months. Then Anshu will talk about the year 2013. And together, we will put our achievement in 2013 into the context of our Strategy 2015+, then we will also look ahead. And following that, we will be available for your questions.

So you remember, 2012, when we took over within the first 100 days, within the GEC, we thought about how to realign the bank considering the circumstances we encountered. At that time, we were mainly dealing with macroeconomic circumstances, which were different from today's. At that time, there was major uncertainty about the biggest economy in the world, which does not compare at all to today's confidence. And quite a few people at that time really believed that the Eurozone might collapse. And the emerging countries, in contrast to today's situation, at that time were the biggest contributor to global economic growth. And we were still in the midst of new regulations being established, not as standardized as initially and promised. And this still bears tremendous challenges for us today. At the same time, those things which still applied at that time also had to be taken into consideration. Today, the increasing global network of the economy, the exchange of goods and the flow of capital; at the same time, the technological progress, which also impacted our industry in a sustainable manner. And then there were other trends, such as the aging of our population, with all of the challenges and business opportunities that entailed.

Looking towards the insight, we were confident with regard to our leading position in Europe's biggest economy. And here, of course, we felt privileged. At the same time, we also appreciated at that time that we already did have an outstanding global network, which enabled us to utilize these trends and globalization, in a positive manner. On the other hand, we also had to admit that we had a couple of weaknesses, which we had to overcome in order to meet our ambitions, namely to put the bank into a leading position. Now without discussing any details, I think we can say at this point that the capital strength and the efficiency within the bank and the possibility to deliver outstanding performance in all business -- now in all of these regards, we were not really outstandingly positioned. And we had to tackle all of this in order to establish a strong and also successfully -- successful bank.

Now the objectives we derived from all of that then represented the mission statement that we drew up. We said that in spite of all of these challenges, it is our ambition to be a global and universal bank, focusing on our clients' needs. And that's the statement which still holds true today. In order to meet this ambition, we asked ourselves which qualitative goals we had to set for that purpose. And the first prerequisite for really making this ambition come true is that all businesses operate perfectly and contribute an outstanding performance, which was not the case at that time. And in order to enable all of us to utilize all of the existing opportunities, we said we need to set up an outstanding infrastructure, which brought us to the Operational Excellence Program, a program which was unprecedented for the bank at that time. And this means that in all of our bank's activities, we wanted to make the bank more efficient and, thus, also better from the point of view of our clients. At the same time, we also had to recognize that the size of the bank was something we could not maintain. So we initiated a process of streamlining, and we launched various activities. We sold assets wherever that was possible. We also discontinued some operations. We became a bit more selective. And at the same time, we also made sure that through an improved capital base, these financial ratios improved in a sustainable manner.

Now all of these objectives -- well, achieving them would have impossible if we had not, at the same time, introduced something, which you were and still are certainly a bit skeptical about. Here, we are fully aware of that. I will come back to that in a few minutes. We said that in order to achieve these objectives, a fundamental change in the mindset of everybody, starting at the very top here on the Management Board and throughout the bank, would be required. And amongst others, this includes the overcoming of that silo mentality, which we had tolerated over the previous 10 years, which, however, would now become a major obstacle.

To give you just one example. Now these qualitative ambitions were then implemented because we wanted to make sure that we not only bring forward honorable statements but we really wanted to walk the talk. And we said we want to make sure that the progress is measurable. And we, therefore, defined some key parameters, which we are willing to be measured against internally and also by you and the journalists and analysts in order to continuously monitor our progress. We felt that this was very important in order to maintain our credibility of what we are talking about.

Anshu, in just a few seconds, is going to take over in order to tell you how far we have advanced on this track in the year 2013. Before handing over to him, however, I would like to seize the opportunity to do what we also sent out to our colleagues at the end of year 2013, namely to announce that we are fully aware of the enormous challenges we have set ourselves. And certainly, this will also entail some painful changes. That's part of the price we have to pay. And we are proud and grateful for the way all of our colleagues have decided to accompany us. Their commitment, their energy and also their enthusiasm represent the basis for what we have achieved so far. And we have reached the point where we wanted to be, and we have reached this point where we can say that the goals that we set ourselves 17 months ago, we view them even more optimistically as the right track.

Then for now, over to you, Anshu.

Anshuman Jain

Thank you very much, Jürgen, and a very warm welcome and a good morning to all of you.

Let me start by casting an eye at the 2013 results. You saw that we booked a fourth quarter loss and a full year IBIT of EUR 2.1 billion. Before we go into long, detailed explanations and lots of deep analysis, let me make one point very clear. This management team is not happy with these results. We consider them disappointing, and we certainly think EUR 2.1 billion is an inadequate return to our shareholders; no debate about that. That said, as many of you would expect, I am going to go deeper and take a harder look at these numbers.

So if you take a look at the Core Bank, you can see that the difference between reported results and that Core Bank profitability of EUR 5.3 billion is very significant, and this is caused by a whole host of nonrecurring one-off costs, which we will go into in more detail. On this page, let me draw your attention, however, to the controllables, things this management team could do something about in 2013. Revenues are semi-controllable, but in a year when interest rates were very low, and frankly, Europe grew less than most of the parts of the world, they were only partially controllable. Costs were; we've taken them down. Balance sheet was; we've taken it down significantly. Risk-weighted assets were; we took those down as well. Our Core Tier 1 ratio, which, as Jürgen pointed out, was below 6% in June 2012, finishes the year at 9.7%, and our leverage ratio, which has now become the key focus for investors and regulators, up from 2.6% to 3.1%.

I said these one-off costs require a closer look. Let's analyze them. So as we've said, we reported EUR 2.1 billion in group IBIT. The single largest cost was the NCOU unit, where we took a EUR 3.2 billion loss. Now on the face of it, a terrible result, but the reality, if you go back to the previous page, EUR 3.8 billion of our capital accretion has come because of the rapid derisking that we've done in NCOU. This was very much part of plans. The EUR 1.2 billion in addressing legacy issues consisted of settlements like FHFA, EC IBOR and so on; again, very regrettable, but things that we had to get behind us. We wound up with a EUR 1.4 billion investment in re-platforming Deutsche Bank. Jürgen talked about the state of our infrastructure 1.5 years ago, and I can also tell you, from a regulatory standpoint, we needed to make this investment to make the bank better, safer and more efficient for the future. The EUR 500 million in required accounting adjustments consists largely of fair value adjustments and CVA adjustments, which, again, we'll be happy to provide more detail on later in Q&A.

Once you made those adjustments -- and it is a leap of faith that we laid out in front of you, the Core Bank adjusted IBIT was actually EUR 8.4 billion. How should we view that performance? I think the best thing to do would be to go back and look at the past decade. I see a lot of familiar faces in this room. That's one good thing. There's a lot of consistency of following this bank. And the reality is if you look back at the decade, the last year when you will find a core operating performance like this was 2006, a very different year, peak of the business cycle, very buoyant markets. In fact, some would say the peak of the bubble, a very different bank, a number of businesses that no longer exist, a balance sheet which was far bigger, very different times. So I think fair to say that we're -- the management team isn't happy with reported results. The fact that we've been able to combat the headwinds we have create all the change that we have and yet produce an operating performance that stacks up so well against anything the bank has done is, at the same time, an achievement we are proud of.

Let's take a deeper look at what's happened with the platform. Jürgen talked about our realization when we started this journey, that steps needed to be taken to address how big, in some ways, Deutsche Bank had become. Well, let's take a look and see what we've done. Assets reduced by 29%, virtually EUR 400 billion from its peak -- and by the way, the bulk of that happening in the last 1.5 years; a 27% risk-weighted asset reduction, without which our Core Tier 1 ratio would be in a very difficult place; and nearly a EUR 2 billion reduction in costs.

The first thing we heard when we went through the consultation period that Jürgen has talked about, when we reached out to our stakeholders, investors and regulators -- by the way, many of you told us -- tackle [ph] , "too big to fail." There's an inherent unfairness in the view that Deutsche Bank is running this big. It was viewed by some aggressive platform, where the costs could be socialized with taxpayers. We've taken that view very seriously. There are 2 reasons, principally, that we've seen banks fail. They've run out of equity to cover their losses or more typically, they're not able to fund themselves. Ladies and gentlemen, please have a look at what we've done at Deutsche Bank. Again, our stress loss is down from EUR 5 billion to EUR 1.9 billion. That's a 60% reduction since the crisis. And our Core Tier 1 capital is up almost fivefold. So if you take a look at the overall ability to cover risk, we've gone from sixfold to 28-fold. Perhaps just as importantly, our funding has gone from 70% wholesale to now 66% long-term stable, very significant. Is our work done? No. Have we made tremendous progress on this front? Absolutely.

Next slide please. We're a much better balance bank. We're a much better balanced bank. If you take a look across divisions, as recently as 2004, 10 years ago, 63% of our profitability. Am I not on the same slides here? Okay. So there's a discrepancy between my slides here and the slides up on the screen. Yes, good.

Thorsten Strauss

Now we're on. Now we're on.

Anshuman Jain

And we've gone from that to only 51% of our bottom line coming from CB&S. Perhaps even more importantly, our geographical diversity is the envy of most of our competitors, so 33% from our home market here in Germany, 68% in Europe, but a very good balance and contribution coming from the U.S. and Asia Pacific. Why is that important? Our economies are telling us, and indeed I do believe, that we are headed for a 3-speed world when it comes to GDP growth. Sadly, Europe is stable but unlikely to grow rapidly anytime soon. The U.S., by almost universal consensus, will grow very rapidly. And certainly, Asia, despite its troubles, is looking to grow. So that combination of product balance, as well as regional balance serves us very well.

So now approaching our midpoint, as Jürgen said, let's discuss delivery versus objectives. All of us wait anxiously at the end of the day because the score card belongs to you and you will all write this afternoon what you made of our performance. But I think it's important to very quickly give you a self-assessment for where we stand in this journey. So 17 months through our 40-month journey. On competencies, we've improved core business performance, still have work to do. We're ahead of target on costs; doing well on capital so far, but there is some volatility ahead. I'll talk more about that in a few minutes. On leverage, tremendous progress but we recognize that we're still not ahead of the pack. On clients, there's a vital reconfiguration of how we approach them. Culture happens to be last on this page, but it's at the foremost of our minds. Foundations have been established. More needs to be done.

Let's walk through it. Start with CB&S, first full year of CB&S under its new management, Colin Fan and Rob Rankin. This is a division which, correctly, has borne the brunt of the resource adjustment. Costs have been taken down. We showed you those numbers on balance sheet and leverage. The bulk of that contribution has come from the Investment Bank. It's had a difficult operating environment, and frankly, it's had a series of regulatory adjustments to cope with. Nonetheless, we've been able to generate a very solid profit, EUR 4.7 billion of underlying profits, virtually the same as 2012. Fixed income, particularly, is going through structural changes. We are reworking commodities, residential mortgages, credit and rates, but we are strong in the business, and we are committed to it. It's made a tremendous contribution in the last 1.5 decades, and we believe Deutsche will remain one of the industry leaders in this field. In equities and corporate finance, we're coming from a bit further behind, but frankly, 2013 was a year of both absolute and relative progress.

PBC, we're proud of what we were able to achieve, sound profitability while simultaneously making tremendous progress in some key, very long-term projects. Project Magellan is well on its way towards completion and will give us a scalable robust platform, which will allow us to grow our retail business very significantly. We moved nearly 10,000 German Mittelstand clients from GTB, CB&S into our bricks-and-mortar network into PBC, and that's going really well. Integration of Postbank has gone well as well. For all of that, it's not as if Rainer and his team have had it easy. The business environment for PBC has been challenging, compressed net interest margin driven largely by very low interest rates in Europe, which, by the way, will be with us for a period of time. Very difficult to run a large deposit-gathering business successfully and profitably with interest rates as very low as they are. Even our investment income was down despite improvement in equity markets. So despite all of this, through good cost control and risk control, we've been able to generate very significant results.

GTB is a somewhat similar story to PBC. Again, a deposit-gathering business. Once again, the low interest margin has had an impact. I also have to point out that we've talked about reinvesting in the GTB business. So is our competition. So we've seen margins come under pressure as well. For all of that, once again, the theme of good cost discipline holds us in good stead as well. Werner Steinmüller and his team have achieved very good profitability to move up from EUR 1.1 billion to EUR 1.3 billion. Geographically, we're a little more tilted towards Europe here than the U.S., and that has hurt us. So certainly, we need to rebalance that a bit in the years to come.

Asset Wealth Management is probably our strongest relative performance in 2013. We say that because the enormity of the challenge was significant. Five businesses had to be merged into one. Deutsche Bank was coming from way behind the pack and yet, a doubling of adjusted IBIT from EUR 600 million to EUR 1.2 billion, done largely but not exclusively through cost control. Now the reason to be truly optimistic here is we've doubled this bottom line and yet, our business mix is not what it should be on the Asset Management side. And on the Wealth Management side, we lacked scale. So this very good performance still has Deutsche Bank a great distance behind industry leaders. And there's nothing they have that Deutsche shouldn't be able to aspire to. So the reality is this should be a business that Deutsche should be a global leader in. I think we've laid the foundation. We're on our way.

Now most crucially, let's turn our eyes to costs. Many were skeptical. This is not a field where Deutsche Bank has always distinguished itself and yet, we give ourselves a strong mark here. EUR 2.1 billion in gross reduction in costs, done through things like elimination of 1,200 technology applications, which are 20% of our total. In Asset & Wealth Management, we've replaced 100 legacy systems with one single integrated system. And we've cut our vendor base by nearly 20,000 -- tremendous progress and very good momentum.

We talked about capital and how vital it is. And indeed, through the combination of steps that we've taken, this move from sub-6% to 7.8% last year up to 9.7% at the end of 2013 is one that we consider to be a real strong achievement by this management team. Now clearly, we have to say that 2014 is the year when EU implementation of CRD 4 will be finalized, a number of regulations will be finalized, and hence, we could get some volatility in this ratio. Nonetheless, we're confident that, as we've said before, by 2015, we will achieve our target of being one of the better capitalized in the banks -- banks in the world on a stable basis. On leverage, we're coming from behind the pack, no doubt about that, but we've made tremendous progress. And again, we are committed to achieving that 3% number and keeping it stable there. NCOU, well ahead of plan. We paid a high price. You saw that on an earlier slide. We took a big loss, but we've managed to cut EUR 61 billion of risk-weighted assets. As you can see, that pace will slow down partly because of market circumstances, partly because we've sold a lot of the marketable securities inside NCOU.

Let's now turn and talk about the issue which has been very key to us, certainly as this new management team has taken over. 2013 was the year when we put clients at the center of what we do. A number of changes were made so that we could serve our clients better: the movement of CB&S, Asset Management businesses into AWM, which is where they correctly belong; the movement, as we've said, of CB&S, GTB, Mittelstand clients to PBC; and a much stronger regional access. So where our products continue to be very global, the delivery to our clients is now happening increasingly on a regionalized basis. But perhaps most crucially, we're really pleased to see our unique business model, where on the one hand, we're very close to our Mittelstand clients regionally here in Germany and yet continue to win some of the best, sought after, most prestigious global mandates. We've said before. We'll say it again. No German bank is as global as we are, and certainly, no global bank is as German as we are.

And finally, in terms of my slides before I hand back to Jürgen, one which is very close to my heart. Digitization and the onset of technology is viewed as a threat by many industries. Indeed, perhaps, some of you even in this room, you may consider the onset of the online world as something which is a mixed blessing. And certainly, in our industry, it's viewed that way as well. Not at Deutsche Bank. We start through a very, very good base. So in the 2 hours or so while we'll be here with you this morning, 400,000 retail clients will access DB accounts via mobile phones, tablets or laptops. Clients will make around 130,000 online transfers worth over EUR 100 million. Around 1,000 retail clients will download DB mobile apps. We'll get 1,700 online orders for securities trades. And yet, we're only scratching the surface. If you take a look at the technology horizon, the speed of computing, cloud computing, cost of storage, once in a generation of achievements and developments are coming from that part of the world. We can apply this and intend to apply this in a way which will really create tremendous progress for the bank. We'll start and lead in retail, which is where, as you've seen, the base is very good. But indeed, it's something which will see applied pretty much across the platform.

Thank you very much. So with that, Jürgen, let me hand it back to you.

Jürgen Hinrich Fitschen

[German] Thanks, Anshu. Ladies and gentlemen, you will certainly have noticed that although he didn't exactly go by the slides, Anshu certainly mentioned the levers which we already envisaged 17 months ago. And there's one thing I would like to tackle now. That's the question of culture. Now we know that here, we've got something to prove to you. And we also are aware of the fact that many of you probably believe that we are on politically correct grounds, but that -- nevertheless, we still behave in the old way. Now what did we really bring about in terms of cultural change? We really want you to believe us, namely, that all of the progress that we have made would not have been possible if this had not been accompanied by a mindset throughout the entire bank. And this also applies to the future activities we are pursuing.

So let me recap what we implemented after we added the cultural change as the fifth C to our ambitions. Now we did our homework. First of all, we listened, Anshu and I. We consulted more than 50,000 employees, asking them what they felt about this subject matter. And we also got external support. Let me just mention one. Dr. Hambrecht and some colleagues formed the so-called Independent Compensation Review Panel. And many of the things that we had already done before that time was confirmed by this panel as being absolutely indispensable and correct. And they also delivered -- developed some new initiatives, which we were able to implement immediately. And many others, also amongst you, have supported us very much along this way. And then within the GEC, we really dedicated a lot of time to develop a set of principles, which we then published in summer 2013 as our new values and beliefs and which we also presented to all of our colleagues in the bank. And for many, these represent the basis for the cultural change. We used the senior management conference in order to engage all our colleagues, and we asked them to tell us by the end of the year in which way they engaged in this cultural change using our values and beliefs. And today, we can say with pride that there is no country, no region in the world where this matter has not been discussed intensively with the support of all of our top leaders. In Germany, we also, once again, resorted to external support, namely Professor Huther Andersen [ph] from the Institute of Economics in Cologne. And together with them, we set up a dialogue forum, which all of our managing directors in Germany attended. I admit that we started with a sort of hiccup and people were a bit hesitant initially. But now, then we're getting questions of, "When can we attend the next forum of that kind?" And that's why we already designed a follow-up series of forums of that kind. So you can see, our employees are more than willing to follow us in this cultural change. Therefore, it is really easy for us to implement it. All teams [ph] have become involved, and the colleagues in the ExCo personally interacted with a total of 11,000 staff members to draw their attention to these new values and beliefs. And within 12 weeks after launching our values and beliefs, we have already achieved a 94% of members of our staff. And they will certainly take this to their heart and also change their mindset. I admit that many employees are still wondering, "What does this mean for me personally? How can implement this cultural change? And how does this tally with the other objectives of the bank? How can the bank integrate this in many other activities of our bank?" For example, our compensation process. Now we have also worked on this, and we can tell you at this point our compensation system, to a strong extent, also takes not only the achievements of our bank in financial terms into consideration, but also the way how we achieve these performances. Now we are focusing especially on 2 things in this regard. And once again, this goes back to what Anshu already talked about, namely client-centricity. We are measuring our customer satisfaction, and we decided that we will do so in a standard manner for the entire bank in all divisions without any exceptions. And we also measured the satisfaction of our employees, which is particularly relevant for our executives. And this will allow us to develop this cultural change in a realistic matter and also to implement it.

Now of course, you will certainly ask, "Give us some examples. How can we understand this better?" Now giving you customer examples is a bit difficult, but I've got one example for you. But apart from that, internally, we also made sure that potential causes of errors are brought under better control in order to eliminate such errors as much as possible. For example, our benchmark of rate submissions are now independently monitored, and we will, thus, make sure that what happened in the past is avoided as much as possible. I already talked about our compensation system. So far, we've been the only ones who have adjusted the vesting period from 3 to 5 years for our deferred payment. Although still being the only ones, we believe that this is the right track because we believe that our employees will fully understand why we are so stringent about these individual items. And of course, if, later on, it still turns out that misconduct of individual persons require certain sanctions, we have made sure that we can also implement such sanctions in a strict manner.

We have also made sure that the discipline which all apply and undergoing, the training activities is intensified. Not participating in mandatory training modules will have consequences irrespective of the position of the respective person. And last but not least, we also know that our cultural change will enable us to better meet the regulatory requirements that we are facing.

And the latest new item that we introduced is our 3 lines of defense. Now I mention this particularly because this describes in an easy-to-understand manner what is essential. Apart from the risks that we do identify in the market and in our transactions, we also have realized that the reputational risk has become more and more significant in our business. And of course, this also impacts the manner we're all dealing with that risk. Now risk management is not restricted to the risk management officer, our Chief Risk Officer, and his team. So part of the cultural change will also have to manifest itself in the increasing awareness of the risk for a financial institute, and this awareness is something we want to foster and promote in all employees of our bank wherever they work.

I told you that I wanted to give you a specific example, show you how relevant this cultural change for us. This is an example which was quite painful. A customer not from Germany wanted to do something which in the past was possible and was also done without any question marks put to it. In this case, however, it was different. The colleagues abroad, they remembered the discussion which we had, for example, at the senior management conference, and they talked to their client and they realized that it was an issue. The client did not really want to understand that on the subject matter, the bank said, "We don't want to do this anymore," although it was a perfectly legal transaction. So our reputation committee dealt with that matter, but they did not reach a consensus. There were some colleagues who didn't want to go forward with that transaction, others wanted to. So the matter was escalated up to us and we decided not to go forward with that transaction. The client, an important client, was highly embarrassed. And once again, the matter was escalated, as defined in our program, and so I became involved personally.

The good news, the client is still our client today. Well, the transaction was then implemented nevertheless but not by us. It was perfectly legal, but we clearly expressed our view that this does not go well with our new approach taken on the market. And nobody will accuse that client of executing a perfectly legal transaction. Of course, the pain to us was that we lose a certainly positive transaction.

Now of course, you will say that, before we really start feeling the pain, we will go forward with such transactions. However, we have clearly pointed out to our entire staff that if they remain strict in such matters, they will certainly not be punished for letting go an opportunity. And implementing this mindset, that's something we want to ensure in a sustainable manner. We've got lots of such examples and we all here upon the podium have got such transactions on our desk time and again. And we are confident yet that this behavior will lead to an important contribution to winning back the trust of the general public in our bank. Of course, there's one thing which is frequently in the headlines and which also relates to the cred of cultural changes: How can it be that there has been so much misconduct which the bank has to pay for heavily?

You know this item in our balance sheet. And if you look at what happened in the sector, Anshu already mentioned the financial consequences, of course, then this is something which hurts us very much. And I can tell you that we are determined to resolve all of these legacy measures, but we always wanted to strike a proper balance. Whenever we feel that we are on the legal -- fully legal side and we also want to contest such matters, and we succeeded in doing so in some matters. In other matters where this is very difficult, we will try to resolve them and set them as quickly as possible.

Whatever we do, the cultural change will certainly make sure that the sources, the possibilities of such errors arising will certainly decrease in number compared to the past. But there's also one thing that we know for sure: No matter how strongly we try to change the mindset of every individual employee, in the future, there will nevertheless always be certain litigations, which you will find throughout an economy. Yet we are confident that we will in the future no longer be above average in terms of litigations and other legal matters arising in an economy.

Now what does all of this mean for the year 2014? Anshu told us what our current status is and how we are starting into the new year. Now there is no doubt 2013 was a tough year, but so will be 2014 as well. And of course, we have got full respect for the challenges lying ahead. Nevertheless, we are still fully confident that we can also master these challenges. At the end of this year, we will have covered about 2/3 of our entire journey. And then when we report on the year 2014, we will also have to be able to prove that we got closer to the objectives that we set ourselves.

So we still have to continue driving the OpEx program in order to increase the efficiency in all of the divisions where this is necessary. So rest assured that we will also once again invest heavily in these projects in 2014. Furthermore, we will continue our streamlining efforts, as announced. And in this context, of course, we will also fully meet the regulatory requirements.

Currently, there's a heated debate ongoing in Brussels. Nevertheless, in spite of these regulatory changes, we believe that we can maintain our business model. And in the upcoming AQR and the subsequent stress test, we believe that we will be confirmed in our efforts. Anshu and I, we have always underlined that, of course, these tests must be accompanied by appropriate trustworthiness. That's why these tests also have to be conducted in a stringent manner. And if I'm saying so, this already indicates that we are absolutely confident that we will pass this test. And then at the end of the year, we'll be one of those 30 or how many banks the ECB defines who will be considered the top banks within ECB.

Now of course, we have not fully settled all of the matters by the end of the year that we're still living with in terms of legal risk and litigation, but we will certainly have reduced this number by the end of the year. So we are quite confident that with the help of all of the colleagues, we will be able to master all of the challenges of the year.

Now once again, please bear in mind what the final target is that we defined 17 months ago. Against this background, you will know that we have set ourselves a very ambitious goal. At that time, 17 months ago, we said if we achieve this, then we have also reaffirmed our ambitions to be one of the leading universal banks. And that's why it is always important for us to remember that we still are fully committed to the objectives we defined at that point. And of course, the next question certainly is, "Then what?" And that's the plus behind 2015, 2015+. 17 months ago we want to focus on the next 3 years because we know that by completing that program successfully, we will see a wide range of options of shaping the future in the time beyond 2015.

Of course, we are absolutely realistic. After 2015, once the crisis is over, whenever that will be, we will see a further phase of consolidation in our industry. And we want to be well prepared for that change and we want to be among the very top of the banks who can further enhance their position within that environment, and that will further reaffirm and bring us closer to our ambition to be one of the leading universal banks in the world.

Now thank you very much for your attention. I now hand back to Thorsten Strauss. And now as usual, we are happy to take your questions. Thank you.

Thorsten Strauss

Ladies and gentlemen, dear colleagues, we already have a whole host of requests from the floor, actually. So everyone, everyone will get a chance, as I promised, as I promised. So you can ask your questions in German and in English as you like it. And it would be great if you could give us your name and the medium you're working for. We'll start with Marcus Swell [ph] from FAZ [ph].

Question-and-Answer Session

Unknown Attendee

What I'm missing is a recommendation with regard to dividend. Are you going to pay a dividend for the year under review? And the EUR 2.3 billion in terms of provisions for legal risks, do they already include FX manipulations? And perhaps you could give us also your new strategy when it comes to the bond business.

Stefan Krause

That's correct. The management board decided that we suggest a dividend of EUR 0.75, which would then be at the same level as for the previous year. When it comes to provisions, on the basis of IFRS, you set up a provision if a payout is likely and you can define an amount. This is not the case when it comes to FX at this very moment. This is why we have not set up a provision yet.

Anshuman Jain

Bond business, let me remind you, the bond business was profitable in 2013 and has been profitable and a huge contributor to the bottom line all along. We remain a top 3, top 4 player. So there was a lot of headlines around the fact that, in the fourth quarter, we underperformed some of our U.S. peers. A combination of reasons: We had one trading adjustment but nothing very significant. We've cut our balance sheet significantly, we're paying a small price for that. And the fact is we are smaller in the U.S. than our U.S. peers, and U.S. has outperformed Europe by a significant amount. Add that all up and you'll get a slight underperformance, but the reality is it still made a very strong contribution to our bottom line. Remains a core business, we'll continue to recalibrate. Colin Fan has done a very good job repositioning that business. And let's remember, in the last 10 years, there have been ups and downs. It is a volatile business and it will remain a volatile business, one we are committed to.

Thorsten Strauss

[German] Next question by [indiscernible].

Unknown Attendee

I would like to know -- you mentioned the work of the compensation panel, but what's decisive is what BaFin says. They also -- they did a review of the compensation practices at several Deutsche -- several German banks. They all failed. I reckon Deutsche Bank did as well. Are there any consequences? Or what are the consequences of this result? Or does it not have any consequences at all? Secondly, you mentioned digitalization, a trend for digitalization. Is there a fixed volume of investments that you're thinking about that's already earmarked and that you might want to communicate to us? And thirdly, the discussion about additional Tier 1 emissions -- originations? Hybrid capital is being issued in Europe, Germany is lagging behind a little. Do you have some concerns that there might no longer be any capacity if you want to loan one, for example, and then it's too big to fail? You said that regulators and investors told you that it's a big problem. You now have -- 80 units were closed in the framework of your streamlining, but I think you have 3,000 to 4,000 subsidiaries, as I'm well informed. I don't know how a living will could be doable.

Stephan Leithner

[German] On your question with regard to the compensation system. The investigation of BaFin was done on the basis of the compensation systems for 2012. This is for the entire industry. And the framework of the compensation panel -- or consulted by the compensation panel, we took several steps, made several changes. And of course, the remarks of the regulators were taken very seriously and we did everything to comply. Now also, however, there will still be challenges ahead of us in the framework of CRD 4 essentially but not only for us but also for others.

Jürgen Hinrich Fitschen

May I just add one thing? Because you referred to the BaFin in that context. When Stephan Leithner mentioned -- what Stephan Leithner said is a general rule. We are in such an intensive dialogue with BaFin that I've never seen before in the previous years. For some of you, this might sound strange, taking some things into consideration, but this is the way it is. And we've tried to understand everything, we tried to understand all the expectations of BaFin and we tried to fulfill everything that has to be fulfilled as quickly as possible, and so I shall hope that we might be able to be even more relaxed when it comes to commenting these things.

Anshuman Jain

Tier 1, and maybe we'll have Stewart Lewis tackle the "too big to fail" question. On the digitalization, let me give you, as I've talked about, what we are doing today. Let me tell you some of the areas of focus to elaborate: helping clients with fraud detection; mobile banking solutions; analysis for customer solutions; in the Investment Bank, direct digital execution of large trade orders. So there's a whole plethora of things that we intend to do. So far, these budgets have already been included inside divisional spending, as we showed you, a EUR 1.4 billion re-platforming spend. Part of that is in new technology spend as well. The one thing you can anticipate, though, is we will create a steering committee and now create a bank-wide focus and have a small team of people really coordinate activities across the board. On Tier 1, yes, you are right, we don't yet have a regulatory approval from the BaFin in order to get clearance for an instrument which will count towards our ratios. But the one thing I can promise you, every place I travel, every large investor I meet, the appetize -- the appetite for Deutsche Tier 1 debt is enormous. We're highly confident. And we have no doubt this will be a supply constraint issuance, I'm fairly confident. Stewart, do you want to take the last?

Stewart Wilson Lewis

Sure. So yes, you're correct, we have many thousands of real entities across the bank. What you have to remember is that recovery and resolution is focused on the key critical economic functions across those legal entities and also on the largest legal entities. So we have less than 100 large legal entities. And our -- we are deeply engaged with all the regulators across the globe on both recovery and resolution plans. And in fact, we're -- we get good feedback and making good progress on our resolution proposals.

Thorsten Strauss

Thanks, Stewart. Frank Neumeister [ph], please.

Unknown Attendee

A question on the leverage ratio. You are at 3.1%, which is well but just keeping your head above the water, I will say, in spite of the easements that we get from Brussels, so to speak. There's a discussion to get this up to 4%, and then you might get into a difficult situation. What do you think? How do you want to make further progress so that you get a little better and not just barely make it? Secondly, if you say 2015+, the years after that, we've seen you are talking about consolidation or you say that Deutsche Bank wants to be the German -- the European consolidator, et cetera. Do you really believe that the regulatory authorities really like that, on favor of more mergers? I really have the impression that what the regulators are really trying to do is to keep things as small as possible. And everyone who has ideas in that direction are being told about the equity they have to provide for any consolidation steps. And then even if that works, I mean what do you want to consolidate away? What are you going for?

Stefan Krause

Perhaps I'll start with your very good question on leverage. Very good question. I mean there's a bit of confusion still according to which balance sheet we use as a basis, capital, et cetera. You said something about an easement. Actually, it was just easing off a worse suggestion, but yes, it is an improvement compared to what CRD 4 now says. Now the Basel III suggestions, which still have to be transposed into law then which are still in the consultation phase, are not part and parcel of CRD 4 yet. For the fully loaded scenario, this would mean 200 billion more when it comes to the total assets, which is a calculatory amount of total assets. Now when it comes to the 250 billion deduction of our total assets, this is what we set ourselves as an additional aim and made good progress here. And we assume that the ratio on the basis of the old CRD 4 will be 3.6 and the 2 additional billions would mean that it would go down to 3.2. Now when it comes to the 4%, I know there are some rumors in the market. I cannot confirm this from the discussions that we have. We still assume that, for Europe, it will be 3% if it came to pass. We will then, of course, have to think about further adjustment steps.

Jürgen Hinrich Fitschen

On the other aspect, just let me clarify this. We said we know that if we implement 2015+ successfully, then we will have further options than we had in June 2012, more options. In June 2012, we were rather in a defensive position. Of course, bearing in mind all the weaknesses, we said there are less alternatives at the moment. This is why we focused on everything that will give us the ability to have more alternatives and options at the end of the day. We don't know how we'll go and what the options will be at the end of the day and at the end of the journey. If you think that nothing will change, well, we meet again in 18 months because we cannot have a situation where industry will remain the same with all the new regulation that is about to come. In Germany you have the first example, where a bank leaves the market, all in all, where do the customers go? This is also part of consolidation, that you can improve your market share organically because the customers will be looking for new partners. So it will be a very moving image, so to speak, and we want to be amongst those who very actively pick and choose what fits our strategy later on.

Thorsten Strauss

Andrea Rex [ph], she's hidden behind there. The floor is all yours.

Unknown Attendee

Mr. Barnier will -- a table is proposed on the separate banking system. Could you give us an impression on the consequences for Deutsche Bank? And also, what do you think about this suggestion in general, separation of the trading sector from the rest of the bank? Secondly, the regulatory authorities already made concrete suggestions for how you should react to LIBOR, what you should change. Do you also have this already for FX? And if yes, I would like to know what the possible changes could be or which change has already happened. And thirdly, there is to be a letter from Mr. Broeksmit to Mr. Jain. Do you want to comment on that, if this is true; and if yes, what it says? Or perhaps you could comment the case in general.

Thorsten Strauss

May I start with the last question? We are in very close contact with Bill's family. At this point in time, Bill's family asked us to keep -- to accept their private sphere and their privacy. We respect this, we accept this and we hope that it's also possible for you to accept this. Thank you.

Jürgen Hinrich Fitschen

Let me comment on LIBOR and Mr. Barnier. It doesn't come as a surprise that, several days before Mr. Barnier, we got something from a Franco-German source. This has a considerable importance because here, the ministers of finance gave us a clear picture of what they want for Europe, and we can live with that quite well. We have never seen such a strong commitment with regard to universal banking. And if the 2 strongest countries in Europe stand behind that, I would really be interested to see how the process could be moved in another direction. So we are comfortable with the general trend. Now that there are still ideas to separate some areas, we can also live with that. We said, for example, several times that we have stopped proprietary trading in its -- in the old shape a long time ago, so we are very relaxed and witnessing everything that happens on the European scale.

Stephan Leithner

Now LIBOR and FX, the changed control systems were already mentioned by Jürgen Fitschen, strengthening of the controls, the buildup of a supervision of benchmark submission, et cetera. All of this was implemented very consistently over the last few years. And also, we made massive investments there, so I believe that we have a completely different framework in this area. You mentioned FX. At this current point in time, we have a number of regulatory inquiries. We cooperate closely. When it comes to the market structures, the underlying market structures, well, they are completely different in several areas and we will have to see where the discussion goes in the next few months. Of course, we will adjust according to the new regulatory requirements. Yes?

Thorsten Strauss

Yuric Eigendoff [ph].

Unknown Attendee

First question on cultural change. You mentioned that German managers, 300 German managers went to the IW. What is the name of the IW for the Anglo-Saxon area? Because if I follow the bank correctly, several of the excesses that we saw over the last few years were developed in London and New York. And then some of my colleagues feel the same as I do, some of my colleagues who have been following banks in the last few years. Since I mentioned the bank in the first article, I learned that in good years, they make fat profits, and in less-good years, they have restructuring unit where you actually fairly and transparently sink the money that you earned in good times. Wouldn't it be also a sign of transparency to show where these losses really occurred? And secondly, Mr. Leithner, you mentioned the risk systems and control systems you invested in. Now what will the future bring there? And what do you do exactly to make sure that we will not have an operating result again? I can't hear this anymore. I mean EUR 8.4 billion in terms of operating result, which in reality, actually. I mean I always deduct 2 billion as a safety margin in order to understand what the new normal is. And this brings me to my new -- my next question. What is the new normal of this bank? What is the sustainable operating result? And how do you deal with this phenomenon? Because I mean we've seen this for years and years. Another point, the new normal with an eye to cultural change, I mean the cultural change costs money and not only when it comes -- and in terms of costs but also in terms of revenues. So in the short term, this can only bring about drops in revenues and income. In the long term, you might hope for additional business, but how do you want to compensate for these drops? And then if I was correctly informed, question to Mr. Jain: In the -- I think, in Davos, you also chaired a committee with bankers and central bankers. I know you cannot talk about this. It was all very confidential, behind closed doors, but is there anything you can talk about, about the takeaway and the general mood on an international scale? And if there is something that you'd take away home as a message, personal message?

Anshuman Jain

One in 5, we'll have Stefan and Stephan take the middle 2 questions. Let me assure you, cultural change is sweeping through the bank in every 1 of our 70-odd locations. And in fact, it's been the most profound, because the need was the most profound, in New York and London. Jürgen talked about deals which we might have done which won't even get past the opening gate today. Let me start with compensation. The quantum of compensation, our top managers now have the bulk of their compensation deferred for 5 years, linked completely to Deutsche Bank stock, and all of that can be clawed back if they are found to have committed wrongdoing. That's a standard which is top both in our industry. In fact, our industry is ahead of any other industry in that regard. The basis of promotions, the red flags, the kind of people we're inducting, the kind of people we're letting go. There is barely a piece of our business in New York and London which has not profoundly changed. And frankly, we paid a price, and we're happy to pay that price in terms of perhaps slightly muted revenue growth. Davos was interesting. It's always a place of find out what consensus is, as opposed to getting a great forecast. And consensus this time was suspiciously optimistic. So virtually everyone I talked to was convinced that the U.S. will grow at between 3.5% to 4% for a long time to come. Everyone seemed to be convinced that Europe would be stable but would not grow anytime soon. People were convinced the dollar would rise and that interest rates would rise as well. And certainly, over the last few days, those have not panned out quite like that. On a more serious note and a constructive note, while I can't give you details, I have to say the discussion between regulators, central bankers and bankers had a very different tone than the one we've had. Much the same group met in Davos last year. There were meetings in Washington. And I have to say, while grave concerns remain, the dialogue has now become mutually constructive and there is more or less an agreement as to what's been achieved, which is a lot of progress on "too big to fail," versus what needs to be done, and that's the fracture with society, the feeling that society is still alienated from our industry, and that's a problem not just for us but for the system overall and for regulators was paramount. There was a strong expectation on their part and an agreement from our's that, that had to remain a top priority. Perhaps, Jürgen, jump on it [ph] .

Jürgen Hinrich Fitschen

There are 2 things I'd like to add. There's one thing where I'd like to contradict you. Your assumption that this costs us is wrong because you just thus assume what's left at the top line in terms of revenues. A lot of the one-off costs that we now incur in dealing with legal matters now is due to the fact that, in the past, we generated some revenues, where we now have to remedy certain things. And apart from that, on a more positive note, the number of investors increases. They only want to do business with us if we can convince them in a sustainable manner what cultural change means for us. You might be surprised to see how many investors want to have an intense dialogue with Anshu and me before giving us the go-ahead signal for cooperating with us in the future. Now briefly also on the Cologne Institute of Economics: Now with half of our employees here being in Germany, it is no surprise that we wanted to focus on the subject matter with our managing directors, especially here in Germany. By the way, we started out this dialogue even before we initiated the cultural dialogue. And due to the positive feedback we have received, we agreed that colleagues from London will be also taken on-board to undergo the same system. And whether we will now do it with the same Cologne-based institute or with a different kind of institute, that's remains to be seen. So this is not just restricted to Germany alone and we're not excluding the others. It's just a normal process which we then roll out on a global basis.

Stefan Krause

Yes, let me go first with your question about more transparency about the NCOU losses. But by the way, it's not only the banks going through restructuring, we also see a lot of rounds of restructuring in other industries as well. Now within the NCOU, here you've got to understand, here we've got 2 types of assets. On the one hand, the finance -- financial portfolio. These are financial products which, from today's point of view, the bank will not pursue any longer following the crisis. And on the other hand, we've got assets in the NCOU which we got during the crisis, such as a casino or the harbors, which represent our non-financial portfolio. And I can tell you, the financial portfolio generates positive revenues. Of course, here we also undertake loan loss provisions. And if I compared it to figures, then it's more or less a balanced result. Of course, there are some administrative costs that we also incur. So we're here on the slightly negative side, but that's not a big amount. And then the non-financial portfolio, on the one hand, includes our harbor and casino businesses. Here we employ a lot of people, so that also represents a lot of costs, but the other hand, we also generate revenues in both engagements. And this also -- this portfolio also includes the BHF. And in both cases, we incur slight losses, but this is not the key driver for the massive losses of the NCOU. The major losses rather stem from the legacy litigation. And to put this into perspective, all of the matters, which we do not want to continue strategically anymore, and the legal matters, for example, FHFA, they are not recognized in non-core unit but they really are charged to the individual divisions. So here, we make a clear distinction whether we still want to pursue that business strategically or not. And of course, this meant a lot of additional costs relating from litigation last year. And then of course, the rules of the game for the portfolio have been set in such a manner that the NCOU can sell these assets as long as they contribute to capital accretion. So you might incur a total loss of 500 million, but if this allows us to release capital of 2 billion, this would be a net capital accretion of 1.5 billion, and then such a transaction would be approved. And capital accretion, which last year alone was 3 billion alone, that is the key -- that was our key motivation to set up this structure in the first place. And this is subject to very strict rules of the game. They must not enter into a transaction which destroys capital but rather leads to capital accretion. But nevertheless, we do have P&L losses, but here we've got a clear separation. And then you were referring to the so-called new normal. Not -- what we're trying to tell you with this number of EUR 8 billion is that our core businesses within the structure of the new bank today have got a performance potential of EUR 8 billion even within a difficult environment. And the reason why we cannot report this EUR 8 billion is that the money that we're earning today must, to one extent, be spent in order to deal with the legacy matters. On the other hand, we also invest massively in order to increase the platform -- the efficiency of our platforms and also the reliability of our platforms. And of course, these costs will still arise in 2014. And our planning assumption is that they will decrease substantially in 2015. And if then you bear in mind that, on one hand, the costs will decrease, which means the reported result will increase and the cost savings will also take effect in those years, and then I leave it up to the market and the analysts to determine our revenue potential because here, we are very conservative in our planning currently. And this will certainly show that the bank in the future will have a strong potential for performance because just look at the operating strength of the divisions within this environment today. So does that answer all of your questions?

Unknown Attendee

Yes. Can I have a quick follow up? Yes, I just would like to know one thing. Also with regard to the divisions, of course, they can all earn their money, but the question is, are the cuts deep enough also, for example, in investment banking in order to ensure that you will operate on a reasonable risk level in the future? Because here, really, you're subject to what the regulators are telling you. This is also something for Anshu.

Stefan Krause

Well, from the point of view of our P&L, let me tell you that as of today already, we've got a modified income structure from investment banking, a much more standardized, much lower market gains from valuation, and we also expect that, in the future, this will be also customer development. We do not have an income from proprietary trading anymore, which used to be very high in the past, so this cultural change has taken place here as well. The regulatory cuts will certainly lead to margin compression here and there, and will also lead to an increase of capital in some divisions, and will also have some impact onto return on capital. But this is also why we lowered our expectations, and therefore, we already reported somewhat lower return on capital expected probably for 2015.

Anshuman Jain

Via [ph] , when we calibrated CB&S, and we're very happy with the model we now have. As I have said, cost base is far lower, balance sheet is a lot smaller, risk-weighted assets are lower, and there's a much higher reliance now on volume and transparent processing as opposed to bespoke solutions. There's a net investment in equities and Corporate Finance, and there is going to be a need to continue to grow in the U.S. and in Asia, both of where we see customer activity picking up and remaining strong. But I think the bulk of what we needed to do is in place. The deal is strong. We're happy with what we have.

Thorsten Strauss

[indiscernible]

Unknown Attendee

Luyan Noihan [ph] from German television. One personal short question. Why are you convinced that you are still the right person to lead the cultural change within the Deutsche Bank?

Anshuman Jain

Well, simply, because I believe in it, and I'm highly aware that down from the top is what really matters. And in my mind, I think a lot of what is to come, is something which I'm utterly dedicated to. And there's no doubt in the minds of any of our staff or our clients that I am suitable and the person that does exemplify a lot of values, which we now stand for.

Thorsten Strauss

[indiscernible]

Unknown Attendee

Mr. Silvide [ph]. Now that you mentioned that you changed the use of your own capital and external capital for the benefit...

Unknown Executive

Well, could you please pull the microphone a bit closer?

Unknown Attendee

And the second question is what would happen if the bank were forced to have 25% of shareholders' equity, which some economies demand?

Stefan Krause

[German] come from. And if the shareholders' equity were really set at a minimum of 25%, well, the interest paid on this capital would be so low that no investment, no pension fund would be willing to invest in this. Or we would have to increase our prices or limit our total assets in such a manner that this would not be available as a funding tool for the industry or for the economy anymore. So the real economy would be worse off than the banks within such a model. And apart from that, of course, the ratio between equity and borrowed capital has changed. Of course, we are saying that higher leverage cannot lead to the high return on capital as in the past. Currently, we've got a very low interest rate environment and the CDS spreads also have decreased further. So we are still in a very comfortable situation because we are highly competitive in terms of funding, clearly, below our rating, and we also have used this possibility to go into long-term funding. So this not -- it don't lead to any disadvantage for the bank for the time being. But of course, if the interest rate landscape should change massively in the long run, then this could change again. But currently, we expect that the interest rate level will not change dramatically in the near- and medium-term future.

Thorsten Strauss

Philip Häßler, please?

Philipp Häßler - equinet AG, Research Division

Well, a quick and maybe a boring question about numbers. Loan loss provisioning, plus 18%. Well, that's rather unusual compared to what you see elsewhere. And what are the reasons for this? Could you please elaborate? And secondly, Mr. Fitschen, you talked about employee satisfaction, which is part of this cultural change. Have you already measured this? Because you can read a lot about uncertainty among the employees, employees who want to leave the bank and want to apply with other potential banks. It this also part of the cultural change that this bank is undergoing? So is this normal? Or is that kind of fluctuation above average? So what's the employee satisfaction, and where are you aiming for? And third question. Now what's the limit between protecting your own bank on one hand and the smart republic PR expert who wants to be at ease with everybody? Well, we've got quite a problems in the public, don't we? Now where's the borderline? When do you have to start defending yourselves in order to protect your own company, although this does not mean that you will not be everybody's darling in the public?

Stewart Wilson Lewis

Loss provisions. You have to distinguish between the Core Bank, where our loan-loss provisions are very stable, around 28, 29 basis points. And then you have to look at the noncore operations, where we've seen accelerated derisking and that's been the principal driver of the increase in NLPs.

Stephan Leithner

Yes, I would like to respond to your question about employee satisfaction. Now when we started out with the cultural change, we conducted that survey, which Mr. Fitschen mentioned. We got 52,000 feedback questionnaires. And then we conducted that survey continuously during the last couple of months, but of course, we did not ask our employees every day, "How do you feel today?" We rather wanted to find that how many do we reach and how many are committed actually. And the statistics are very positive, more than 90% 12 weeks ago, told us that they feel involved in that change process. Of course, now you're saying that they're always individual employees who don't want to go along with that and who want to leave the bank. And as a Director of Industrial Relations, I can tell you that in private client management, the colleagues, which we recruited there worldwide against the background of strategic momentum has been tremendous, and we see the same in Investment Bank and to changes [ph] Touched upon the selective investment that we're pursuing there. And I've got 2 more specific examples for you. We've -- Postbank and Deutsche Bank have got about 2,000 trainees, 1,000 for each. And we are an attractive employer for a very critical, young generation, and we're one of the leading employers for this generation in Germany. And against this background, I think it is fascinating to see how many talents we were able to attract from the big law firms in Germany, for example. And just a few weeks ago, the person in charge of risk practices in McKinsey was recruited by the bank. So I think the momentum that we have got in terms of finding young talents is a very positive one. But on the other hand, of course, we do accept the fact that there's some individual employees who don't want to go along in this restructuring process.

Jürgen Hinrich Fitschen

Well, and then there was your third question. I'm not quite sure whether you were referring to specific cases or rather in general terms. The basic principle that is guiding us is not to be everybody's darling in a populist manner because then we would be boring and not trustworthy for you. And you would be quite right in accusing us of not being as transparent as we claim to be. So if somebody speaks out and we've got good reasons to deal with this in an objective manner, then we will do so even if this means that the public will not like what we're saying. But of course, the underlying principle always has to be not to go for any dispute but rather to deal with matters in an objective manner.

Thorsten Strauss

Right, so we have 2 hands going up at the same time. Mr. Latcaff [ph] and Mr. Kuller [ph]. We'll start with Mr. Latcaff [ph].

Unknown Attendee

One question with regard to the cultural change that we mentioned several times, now looking to the United States, looking at the income of Jamie Dimon for the business here, actually, we have the impression that lessons have not been learned. Now what about Deutsche Bank? You -- there will have to be a decision on compensation sooner or later. Or perhaps it has already been taken? Secondly, cultural change is carried on. Will there be a reduction of personnel, of headcount? And then Asset Management. The results were basically achieved by cost savings, cost synergies by merging the 5 different areas. Now what is the strategy looking forwards if you want to play, for example, in the same ranks as UBS or others, for example? Then the emerging market crisis. Do you have concerns that this could have detrimental effect on the business or the world economy?

Stephan Leithner

On your first question with regard to the changes in compensation system. We already mentioned that the compensation panel that we established last year suggested a restructuring of the compensation systems. And we already presented this to the AGM in May, where it was approved of by a majority of 88%. So the change is going on, is in full flow and the rest is up to the Supervisory Board to know [ph] the compensation. But we will be -- will we be below EUR 10 million? Will we be below EUR 10 million?

Jürgen Hinrich Fitschen

We're not there yet. Just to add on to what Stephan Leithner mentioned. I mean, our contracts are also changed in order to also express the cultural change, our compensation, and it's, of course, for the Supervisory Board to decide. Also, this depends on how happy our customers are, how happy our people are as it was measured. So you can't say, "Okay, there is cultural change but nothing changes about compensation." Yes, it has changed and it will continue to change because it's part and parcel of the program.

Anshuman Jain

On Asset Management, you're quite right. Step 1, we always said that anytime you're doing an integration across so many platforms, a lot of the initial gains have come from synergy and the elimination of duplication. We've also made no secret of the fact that we have aspirations, significant aspirations to be a global wealth management leader. It's not a business which you can grow overnight. There are 3 pre-conditions: you've got to be global, you have to have sophisticated products, and you've got to have a network of very senior people who inspire deep trust with clients. The first 2 you can do relatively quickly; the third one takes time. That's not an excuse. We've made our ambitions clear. Simultaneous to cutting costs in the back office, in IT and so on and so forth, we have begun a process of reinvesting in our wealth management network. Jürgen and myself, the board is all out there meeting clients in a regular basis. And I can tell you, there's a clear gap here and there's an invitation to Deutsche Bank. Clients are a bit surprised that it's taken us so long to come in with such a strong statement. Confident we will achieve it but we will have to be patient. The financial results in the short run will continue to be more efficiency driven than revenue driven. But we are sure that we'll be able to meet and exceed our targets over time. On emerging markets, I think both Jürgen and I should offer you a perspective. A markets' perspective, first. Emerging markets have been highly volatile now for several months ever since the fed announced tapering. And by the way, if you go back historically and you take a look at the action on emerging markets, anytime we start to get a repatriation of capital back into developed markets, those countries which run high deficits and have a high dependence on foreign capital flows, always feel the pinch. It's a zero-sum game. We saw that happening towards the second half of last year, and you've recently seen quite a lot of volatility as well. We think things will remain volatile. But fundamentally and structurally, the position is different we believe this time around than the Asian crisis or the Mexican crisis we see -- that we saw in the last 1.5 decades. Most of these countries have very high savings rates. Many have stored up very significant foreign exchange reserves and their short-term dependence is not as high as it was. By the way, I should mention Argentina and Russia as well when I talk about prior crises. So yes, we think things will remain volatile and choppy, especially as the U.S. picks up. Not only will we see the end of tapering, we'll see the end of easy monetary policy eventually as well. All of which will require or will create testing times for emerging economies, but we remain fundamentally optimistic.

Jürgen Hinrich Fitschen

Let me add to that. Let me add to that because, unfortunately, also when it comes to some corporate clients, people might have the idea that they should no longer be -- stay invested in the emerging markets. I think that would be a wrong decision or even fatal for some companies. For some, it might even be a good idea to enter now because the markets are not that hot as they were in the past. And yes, the momentum will be more choppy, as was said, or difficult as in industrial as in developed countries, for example but we take that into consideration. Now when tapering was announced in May, the market participants were running much too fast and this cannot always be avoided. So -- but we must also avoid that we actually not view all the emerging nations with the same lens. Acronyms like BRIC, et cetera, don't help because you have to take an individual look at every country in order to make the right investment decisions. I would hope that the German corporate clients would still be going for these markets very intensively because they will develop some of the future for Europeans as well.

Thorsten Strauss

Mr. Kuller [ph], Mr. Huffner [ph], Nick Kumfert [ph]. We have 22 requests for the floor. Mr. Faile [ph], Jack, I saw you. Right.

Unknown Attendee

Mr. Kuller [ph]. I'm hurrying up. I shall be brief. Perhaps 3 questions.

Unknown Executive

We -- you have every time that you need.

Unknown Attendee

Our 3 questions with regard to future plans in more concrete terms. When? What do you think? Will you turn the tide when the one-off effects will no longer hit the operating result in the way they do at the moment? Second question, where exactly do you want to invest in the next few years? Perhaps you can give us concrete example of businesses and also geographies. One has the impression that you have a weak position or a bad position in the United States, and perhaps, you don't even have the means in order to invest at this very moment. Perhaps you can make a comment on that. And the third question refers to LIBOR, et cetera. It's not easy to understand why, for example, in Brussels, more than EUR 700 million are being paid for a settlement or a fine, while at the same time, there is not a lot of talk on personnel and staff consequences. The same question arises if you might have to go for a settlement in the amounts of EUR 1 billion, for example, with Anglo-Saxon thirties [ph] . Why do you pay millions and billions than the ones responsible?

Stefan Krause

I start with the first question. So looking forward when it comes to planning, for 2014, we still reckon that we will have considerable burdens from this area. 2014 is also the year where we will invest into the futures, where we will invest heavily, OpEx investments will play a major role. And from the various reports that we still have some investments to make in order to get our organization where we want to be ourselves and where the regulators want to see us with regard to quality and efficiency. Now second point, yes, there are still some pending legal items, legal matters. They are well-known. This is why we also reckon that in 2014, we will see further burdens. But I mean, we did a great job with the NCOU to derisk at enormous speed, but of course, this led to considerable losses, but capital was accreted on the other hand. We reckon that we will see a slowing down in 2014 because we will have some assets now, but it will take a bit longer before we can bring them on the market. This depends also on market liquidity, on appetite, interest, et cetera, and a good economic development would probably be helpful here, and what happens to generate lesser losses. Now 2015, there will be still some investment amounts. The legal costs will probably normalize. And then if you focus on 2015, we believe that the higher share of the operating result will then become part of the reported result and not eaten up by these one-off effects. 2014 will still be difficult. 2015, you should see the first clear successes.

Anshuman Jain

Particularly our U.S. franchise. Let me make a clear point here. Very few European firms have been able to build the domestic business that we have. We are highly relevant to U.S. clients. We showed you some examples of some of the top benchmarked U.S. names now routinely using Deutsche Bank to issue equity, to advise them on mergers, to help them solve problems. 2012, the AIG selldown was the most covetous equity placement pretty much in our industry. Who was chosen? Deutsche Bank. Last year, Twitter's IPO. I can carry on. Now there's no doubt about the fact that we're optimistic on U.S. growth on the one hand. On the other hand, we see the FBO rule coming. So we have to balance our investment in the U.S. We have to make sure that our balance sheet there is manageable, and yet, keep up with the competition and keep our strong position. But I don't want anyone to think that, somehow, Deutsche is not in a strong position. Look at the numbers, look at our market share, the story is constructive and improving. Yes, in areas like equities, Corporate Finance and wealth management, we don't have the scale that we would enjoy and we will selectively continue to invest. By the way, I should point out that, for example, in transaction banking on a global basis, we're looking to add scale and acquire more clients. But lest you think this is all about investment in Investment Banking and wealth management, Rainer, can you talk a bit about some of the investments we're making in retail and in your business in particular?

Rainer Neske

Yes, Mr. Kuller, you know that, now, when it comes to Postbank, for example, we have an integration, which is, yes, which is concentrating on the shareholders side. We have to create cost advantages. This is something that the investors expect, but, and this is very close to my heart, at the same time, it's important to invest in order to keep up with developments and be in good shape for the future. So things that you can see in 2013, which will be continued in 2014, are investments in total [ph] technology platform, for example. So together with the colleagues or families area, for example, we put a considerable focus on having future-oriented technology because it's no use if we have the cost synergies or the cost synergies and then are left with enormous investments to make in the future. The investments that we made in last year when it comes to the Mittelstand's business, SMEs [ph] et cetera, was such that we migrated the customers, we increased the coverage and we became more regional via our network of branches. Technology, product offer, quality, et cetera, is something -- and integration, is something that has to go hand-in-hand. And our future revenues will heavily depend on us being able to deliver all of that at the same time.

Stephan Leithner

LIBOR, on your LIBOR question, why we settled with the EU Commission or looked for settlement, and filed a settlement with the EU Commission, it was the best way forward. The European antitrust law is complex. It also depends on the size of the market share, and the turnover and the sales figures. So the amount of the fines, a lot of that was said and written already. Now when it comes to personnel consequence, you don't hear anything about is -- well my impression is quite contrary. I'm quite astonished that you say that because you have reports in newspapers every day. We do have the first consequences. If we uncover misbehavior, we do consequences immediately and we've done so since 2011, and we will continue to do so if there is direct misbehavior. And as you say, there is investigations in the broader contexts, which is still going on in U.K. and the United States, BaFin in Germany, et cetera. And once this has come to a close, we then, of course, also live up to the question of responsibilities in the broader context.

Thorsten Strauss

Alexander Huffner [ph]. Mr. Prend [ph] is asking himself, "When is his turn?" After Nick Kumfert [ph] is your turn.

Unknown Attendee

Mr. Fitschen. I wanted to -- I have an additional question to what you said on BaFin. Now over the last few weeks and months, one had the impression that BaFin actually is focusing on you quite a bit. So is this also your internal impression? How has the relationship with BaFin developed over the past weeks and months? Are you talking at a normal -- in a normal professional tone, so to speak? And what makes you so optimistic, as we have heard last week that the sale of BHF will be going forward at the end of February? Now on the litigation matters that you want to resolve this year, does this also include Kush [ph] ? And what are the perspectives? They were different terms at settlement, which did not work out or disappeared in some cupboards. Are there alternatives to the general noise, background noise that we've heard recently? And one special question on FX fixing. There was one bank, I think yesterday, I think it was UBS or something or RBS, which said it's going out of that business in the medium or long term. You said you will go out of [indiscernible] gold. Are there similar plans for other benchmarking processes?

Jürgen Hinrich Fitschen

You asked a general question on Kush [ph], and I will hand over this question to Stephan Leithner. When it comes to relationship with BaFin, don't be led by the tone of voice by one letter. Please take a note of the fact that we -- our relationship with BaFin is by openness, constructive cooperation on both sides, so it is a bit of concern that you take just one document in order to try to establish a [indiscernible] problematic relationship with BaFin. This is not in line with our experience. Stephan?

Stephan Leithner

Well, when it comes to litigation, it was mentioned that last year, we settled with the European Commission when it comes to LIBOR, but also with regards to mortgages resulting from the crisis. So there are 2 topics, which are on focus for 2014: the regulatory topics around LIBOR and also the remaining mortgage matters in the United States, for example. Kush [ph], we do not comment on a pending matter. You asked about us -- about the fixings and what Deutsche Bank's position is here. We...

[Audio Gap]

In the last 1.5 years, we're through from some sufficient processes, LIBOR similar processes, and this is why we also saw the development in the area of gold. It's nothing unusual. It's just the result of a critical review of where Deutsche Bank should be involved. Now in the FX market, it's a little different. It's not a question very much of the submission or the contribution of the bank to such a fixing, but they are being evaluated on the basis of trade flows, so stopping trade between -- shortly before 5 and shortly after 5 would not be an answer. You have to have well-controlled processes or make sure they exist in these windows. Now still the question remains where we want to participate in terms of submission and this is something that we will review on a continuous basis.

Thorsten Strauss

Nick, you're next.

Unknown Attendee

I'll ask my question in English, all my questions. Again on pay, I'm trying to square the circle on the different comments you guys are making this morning. And I've got to ask, are you losing qualified staff at CB&S because you cannot pay as well as other banks, both in the size of total compensation, and the fact that you are stretching bonuses to 5 years with cliff resting? And is that the reason you guys haven't extended that to a wider group of people? I mean, surely, that will be something that, if you were leading from the top, then more people would do so? Furthermore, one more -- a tiny one, bonuses. Will the pool for 2013 go up, down or sideways. A question for Stewart or Stefan Krause. Do your risk-weighted assets still have EUR 1 billion of equity for financial-crisis-related litigation? And then, a cheeky one for Mr. Ritchotte as well, if possible. How far through are you in the process of moving staff to cheaper locations? People are always talk about Deutsche Bank cutting staff, cutting staff, but a lot of it is like what you're doing in Florida, moving people over to or Dublin. How far -- can you give us some color on that?

Anshuman Jain

Let me start Nicholas [ph]. No, we are not losing material -- critical staff in CB&S. Don't forget, what we are doing is something which the whole industry is doing at varying speeds. Yes, the CRD 4 regulation on compensation is Europe specific, so clearly, that will present a relative tilting of the playing field, which is unfortunate and we've talked about that many times. But the things we are talking about, I can assure you, our whole industry has to do. When capital, which is underpinning the investment bank goes up multiple fold, returns on equity drop. Compensation ratios are dropping as well. So what we're doing at Deutsche Bank, is at the lead and we're proud to be in the lead. But we don't believe -- we are keeping an eye at the competition and the pack that we are competing with for talent, and we don't feel there's been a material change in that proposition. Don't forget we don't just tether and anchor people to the bank on compensation alone. We did in the past to an extent. We paid a price. And frankly, for the people that want to just be here to maximize their short-term money, if you wind up losing them, so be it, more than happy to do that. Will there be a short-term cost? We said that already, there will be a short-term cost to cultural change. As Jürgen's pointed out, it's a revenue cost, not a long term IBIT cost. So that would be the first part of the answer. The second thing you asked is, why are we restricting our 5-year best to the top managers? Very simple reason: the top managers have control over the organization. So we feel linking them to the organization is fair. The further down the organization you go, frankly, the higher the salary and the cash component ought to be. And to link them as heavily to Deutsche Bank stock, when they cannot control their eventual outcome, wouldn't be as fair. So I what we have is the right blend, top managers linked for a long time with clawbacks purely to Deutsche Bank stock. And as we get further down the organization, the mix changes.

Thorsten Strauss

I think your question on risk-weighted assets.

Unknown Attendee

No, well, maybe on the bonus pool as well. You haven't described the bonus pool.

Anshuman Jain

Sorry, I'll have Stephan Leithner take that and then Henry. There was a risk-weighted asset question as well which...

Stewart Wilson Lewis

Yes, we still have the EUR 1 billion capital charge.

Stephan Leithner

Now in contrast to some of the other banks, we haven't communicated our bonus pool figures yet. Therefore, with regard to the pool composition, I have got to ask you to wait for March 20, where you will see a comprehensive report, including on the bonus pool.

Henry Ritchotte

Program, as you see from Slide 18, and maybe we can get Slide 18 back up. We're about EUR 500 million ahead on all of our targets. And of course, our focus on getting the right people in the right locations is an important part of that process. I'm pleased to say that we've opened over 3,000 workstations, work points, for people in places like Berlin, Jacksonville, Birmingham, Mumbai, and that process is going really well. But as you can see on Slide 18, a very significant part of our real estate program is all about getting more efficiencies out of the real estate we do have. We've already lost 60,000 square meters of space in 2013. We'll do more and that's really a very significant focus of ours over the course of 2014 and 2015 as well.

Thorsten Strauss

Now Mrs. Rendel, then Mrs. Hultman and Mr. Ludman, who are also waiting. Yes?

Unknown Attendee

My question also is about the transparency that you have mentioned. Two years ago, Deutsche Bank announced that it wanted to carry out a comprehensive study of the influence of investment banking on food price. This study was also to be published. Now we've heard a lot of statements by you on the subject matter during the last few years. However, that study, which you had published -- that you had announced, was not published. Now my question is does this study exist? And if so, when and where is it going to be published? And if it exists, but if it is not to be published, will you tell me why this is so? Or was that study never performed in the first place?

Jürgen Hinrich Fitschen

I think you are now referring to statements made by David Folkerts-Landau in Berlin. And as far as I know, the results have been available on the internet since January last year. And I hope that this will also meet the need for information that we had indicated.

Unknown Attendee

No, no. I'm not fully satisfied with that. I said that statements were published, but we would like to know how you drew the conclusions that you published. So the study proper would be very interesting to us.

Jürgen Hinrich Fitschen

Well, we already announced that we will follow up on this subject matter in April this year. You will be invited to that meeting just as other critics. Rest assured that we know that there is still some more need for trying to reach a consensus. But there are some reservations because there are accusations being made, which others deny. And there's even one thing, which critics do not want: they do not want the banks to walk away from that business at all. They just want to make sure that together, we restrict the excesses, and for that purpose, we're going to invite about 40 experts, also including the most outspoken critics. And we always said that if we find hard evidence showing that there are distortions caused by the financial institutes that we then with also withdraw from that business. However, we haven't found any solution yet. There is initiatives, which you are certainly familiar with, and that workshop that we are going to organize is to contribute to at least finding a basis for a good dialogue, hoping that at the end of the day, we will also be able to find a consensual solution.

Thorsten Strauss

Well, Tito Voat [ph] is going to be on the list of invitations for that workshop to be held in April and many others who are involved in its subject matter will also receive their invitations. And you can tell us what you think is not right and we will tell you what our views are, and maybe, then, we will be able to reach a consensus. But you will all be on the list of the people invited. Then Mr. Hana then Nina Lutner [ph] after that. Yes, the microphone seems to be off. It seems we've got a technical problem there.

Unknown Attendee

Yes, sorry, that was my mistake. My question is about the fixed-income business. I know it's already been touched upon. But as it is the main sources of revenues of Deutsche Bank, the performance is quite significant. Now I'd like to know what you mean by recalibration. You said you wanted to have a closer look at it, and it was also said that you're committed to that. What does this mean specifically? Now which businesses could you discontinue or reduce in scope? Then my question is on the bonus cap of the EU. According to that, the bonuses must be kept at 200% of the fixed income. Now if I am well-informed, then the key risk takers, that is about 1,200 employees of Deutsche Bank, are clearly above that. How do you want to resolve that? And then a very simple question about numbers. In your financial data supplement, I noticed that you do not disclose the headcount of the individual divisions and somewhat miraculously, that disappeared from the numbers after the last quarter. We only see your front office headcount.

Anshuman Jain

And then maybe Stephan. Stephan, you can take the headcount question. Recalibration simply means adjusting the business. Fixed income is a very dynamic business. We must have done 5 or 6 recalibrations over the past decade. So the business model pre the crisis, during the crisis, post-crisis and now post-regulation has changed every time. What does that mean? Fewer people, higher automation, end of prop trading, end of certain highly exotic derivative businesses, end of securitizations, growth in volumes, so on and so forth. We've done the recalibration in 2013. Again, we are very responsive to market direction and market circumstances, so this is not a business where you can ever say, "We are done modulating." But for the most part, we're happy with what we've got. And let me repeat again. It has been a steadfast stellar generator of bottom line and ROE to the bank and to its shareholders. It was in 2013. It will continue to be. Stephan?

Stephan Leithner

Yes. You asked about the change of the EU regulation on the bonus cap. It is true that there are still a lot of unresolved questions. As you all know, when it comes to the relevant risk takers affected by regulation, EBA is still trying to define that number. And in Germany, we still see some further questions in terms of implementation. So certainly, this will mean a major change for the overall system, but only a small part of our workforce will be affected. As you can see from the previous year's figures, you can see that the part of variable compensation related to total compensation is 0.3, that is 30%, which means the question of the cap doesn't apply to the workforce in general. Then you also asked about our headcount in the divisions. Unfortunately, I do not have these numbers readily available. Let me, nevertheless, put this into the overall context. At the end of the year, at the end of the fourth quarter, we had 98,000 employees in the group. At the end of the previous year, the figure had been the same. So we will close that gap and also supply the information to you for the individual divisions. But this is not an attempt to hide any major shift that occurred.

Stefan Krause

Yes, I just would like to add one more thing because I've got the numbers, if that's okay. We will publish our headcount for the divisions only in March. But to give you just a glimpse of it, in the infrastructure, we've got 40,200; 1,450 in the NCOU; about 38,000 employees in PBC; 6,100 in Asset & Wealth Management; 4,060 employees in GTB; and 8,435 employees in CB&S. But you always have to bear in mind that there are employees in infrastructure that are serving all of the divisions. And somehow, our competitors always do direct allocation. So if you compare this to other banks, then this is very difficult to see where is the line separating infrastructure and the front office, just for the sake of comparison that you might undertake.

Thorsten Strauss

So thank you very much. Don't get nervous. We want to proceed as follows because the colleagues from television also want to do their interviews. We've got Nina Lutner [ph], Miss Stoltenberg [ph] Mr. Obertreisen [ph], Mr. Muslim [ph], Mr. Joe [ph], Mr. Feo [ph], Jack Hewing [ph], R. Canning [ph], Mr. Velt [ph]. And following that, we want to do the following: then we want to ask questions off television and if you've done any -- got any further questions, my colleagues, also from the Press Office, will be around and we will also then answer further questions. But here, we really want to make a cut because the colleagues from television are still waiting patiently and hope for your understanding. And now I hand over to Miss Lutner [ph].

Unknown Attendee

I've got 3 questions. One of them is a follow-up question on the previous one. The question about the bonus cap. Now there are some lawyers who say that this is not really enforceable unless the employees affected will agree to that due to contractual reasons. So based upon labor law, what's your view on this? Now my question is about provisions for litigation. You said that you haven't formed any provisions for FX yet, so does this mean that in the first quarter or in the entire year 2014, further provisions have to be taken for legal risk in this regard? And my last question, the U.S. banks are currently outspeeding the European banks in terms of their profit. Now can you give us your view of what this is due to? Do we have to say, retrospectively, that the decision in the U.S. taken to mandatorily strength the capital of the banks, was the better decision? Should that one, also, have been taken in Europe? Or is it due to the fact that in the U.S., there's only one regulator, whereas in Europe, you've got to deal with several ones, the national and the EU regulator? That's my question.

Stephan Leithner

Well, the first 2 questions. You indicate quite rightly that there are still a lot of unresolved questions. The question of enforcing the EU cap also against the backdrop of labor law, that is a minor question. There's a structural change happening in the industry, and I think many of the employees also have understood what the general direction will be. So I do not think that this will be a challenge in implementation. Then you asked about the provisions for legal risks, Mr. Krause already indicated the underlying principles of our provision forming practice is, so we have already formed provisions to the amount of EUR 2.2 billion, but of course, there are new matters, the probability of which will only rise to such an extent this year that this will also justify provisions to be formed. So this year, again, certainly, we will see the need for further provisions to be formed. But by the same token as in the fourth quarter, we will deal with certain matters for which provisions have already been formed. Just look at the fourth quarter, there were some major matters which were resolved, and so here we reduced the amount of provisions formed by more or less the same amount than what provisions were still there.

Anshuman Jain

Due to a number of factors, it's a complex combination of things. First and foremost, let's face it, the U.S. economy from a very high base is growing much faster than economies pretty much in any other part of the OECD, so that pie is simply growing and growing faster. And by the way, the bulk of that benefit is coming to retail. So a combination of fast GDP growth and quantitative easing, where specifically U.S. authorities have been buying mortgages, creates a very fertile ground of the retail business and for the loan business. In combination with that, yes, I would agree that even though there is some U.S. regulatory uncertainty, Dodd-Frank, Book of Rule [ph] , et cetera, Europe is still at an earlier stage, with single supervisory mechanisms, bank separation, legal and financial transaction stacks, CRD 4 compensation -- I can carry on. So yes, it is -- but again, this is a game of snakes and ladders. There was a time when the U.S. was more challenged than Europe-based central -- universal banks. For now, there has been some momentum, which the U.S. has enjoyed. But again, I would remind you that we have a strong U.S. business and we're participating in it.

Thorsten Strauss

Miss Stoltenberg from Bergencycle [ph]

Unknown Attendee

Now I've got a couple of questions related to Asset Management, wealth management, where the biggest restructuring activities are underway, and there was an outflow of EUR 12 billion. What regions were affected and what product did this relate to? You mentioned low-margin product. Apart from cash, what else was that? And then up to 2015, you said your goal is to save EUR 0.7 billion. Well, how much of this has been achieved and was this just a reduction of headcount and shutting down various IT systems?

And my third question is the following. Looking at your numbers, you want to become one of the leading asset wealth managers in the world. Now here I've got a problem with my own imagination. If I look at your IBIT target of 1.7 that you want to achieve, now unadjusted, we have reached only 0.8, and if I look at the return on equity of 8.5, for the Core Bank, you're aiming for 15%. If you look at your target of EUR 1 billion asset under management you want to achieve, you now stand -- you've been standing at EUR 930 billion in spite of very friendly market environment. So how do you want to tap the potential in order to reach your targets at the end of the day?

Anshuman Jain

All we can is that we have not targeted assets under management necessarily as the most important indicator of health. There's a number of areas where you have very, very low margins and high assets under management, which frankly, at the end, are not very profitable at all. And as we rebalance, we have lost some of those assets, which is completely fine. Indeed, it's even part of our strategy. You're right in saying that our bottom line is still trailing that of many top asset and wealth managers, and indeed, 2015 does not capture the full picture. So where 3 years was enough for the other divisions to complete their recalibration, as we said earlier. In wealth management, it does take a lot of time. Asset Management will be faster. Wealth management will take longer in order to become a trusted global advisor of scale. We have a number of strong businesses, not just in Europe, but in the U.S. and in Asia as well. But to be where the top other peers are will take us a period of time. And indeed, do not concentrate too much on net inflows and outflows. That's not the metric that Deutsche Bank is totally focused on. We are focused on the number of clients, trusted relationships and bottom line. That's really the program. Stefan, maybe you can elaborate a bit on the one-offs and the costs.

Stefan Krause

Now in Asset Management, we did have outflows, but we also had inflows of EUR 11 billion in wealth management, so that area is growing. Results have contributed to the improvement of performance. And if you look at the individual products, then it's mainly the institutional business insurances, apart from cash to one, which we reduced in size. You know that, here, the margins are extremely low. And of course, this is a business where we did have outflows. As you look at the regional breakdown, and it's a fairly balanced picture, also in the other product categories, we had inflows in alternative fund solutions, we had inflows in alternative real assets and we had outflows in the passive business.

Unknown Attendee

But what countries?

Stefan Krause

Well, regionally speaking, it's a fairly balanced picture, there are no major differences. So it's U.S. and U.S., not so much -- U.S. and Europe, not so much in Asia in the institutional business.

Unknown Attendee

Mr. Obertreisen. A question on responsibility to Anshu Jain. There are many people in banking circles who say that for many, many years, you used to be the Head of the Investment Bank. Now how can he not know anything about excesses, noncompliances, breaking of the laws? Was there something you want to say to these people? And then, are there any complaints from BaFin or other regulators in those respects?

Anshuman Jain

I'm very proud of the overall buildup of the Investment Bank over the 1.5 decades. Deutsche went from being, frankly, a non-player in the area to being one of the market dominant ones. Sadly, along the way, particularly in the last 4 years of the bubble, we made certain mistakes as well. And I can tell you, they were industry-wide mistakes. I can tell you that there were structural mistakes, and indeed, many of them were. Nonetheless, I do take full accountability for that. So I have sympathy with that issue. Having said that, if you want people to lead investment banking, I doubt you'll be able to find people with experience that wouldn't have similar accountability. So unless you feel these businesses ought to be run by people with no history, and I certainly wouldn't recommend that to most people, I would argue, my only argument back would be, yes, they were excesses, yes, I have to take accountability and I do take accountability. But equally, there are very, very few funds that can raise their hand and say that they were not prey to them during that very troublesome period right before 2008.

Thorsten Strauss

Okay. Mr. Mosler [ph].

Unknown Attendee

Yes, Mr. Hana Mosler, FAZ. Well, I'd like to pick up where the previous speaker stopped. I also wanted to ask a question. Mr. Jain, what did you know of the interest rates fixing or also people you let go because of their misbehavior? What did you know about their behavior, about the agreements on interest rates with other banks?

Anshuman Jain

A number of times, I'll make it again. The first time we were made aware that there was serious shortcomings was in 2011, which is when we did the search and found the problematic e-mails.

Unknown Attendee

Sebastian Yorsk [ph]. I'd like to be brief. Two questions on the gold price manipulation, FX manipulation, there were lots of speculations over the last few weeks. Also, when it comes to consequences drawn from that, would you like to take the opportunity in order to give us some information on the interim state? How many people were put on leave or suspended because of FX? Were there any suspensions or terminations because of gold manipulations? And do you see any systematic misbehavior at Deutsche Bank comparable to LIBOR? Now on the separation of banks, well, yes, Mr. Barnier only tables his suggestion now, and his proposal, we don't know what will come from the EU, but we do have a national law, which has been around for quite a while. Can you say what the consequences will be for Deutsche Bank on that level? What would have to be outsourced? What it means for the costs and the profitability of the group?

Stephan Leithner

Gold. Well, in autumn, also, investigations were also communicated in public, where we said 2 weeks ago that we want to go out of the fixing. We are working to make structural adjustments. And end result -- the interim result, well, an official one does not exist. And we always say that whenever we find misbehavior, misdemeanor, we will act, but we also want to wait for the result of the entire investigation.

Jürgen Hinrich Fitschen

On the separation of banks, yes, Mr. Yorsk [ph] , there were decisions being made in Germany and France. Our stance on that is unchanged. We would welcome. If it were not to become reality, should it be, we don't -- we're not sure about the different details -- [indiscernible] details. But it will not damage our culture in any way. And we already mentioned we already gave an answer to the post [ph] of Mr. Barnier. We do not believe that it will be the basis of something, which will be relevant for the -- or which will be applicable for the entire Eurozone.

Thorsten Strauss

Mr. Feo?

Unknown Executive

In a letter to Deutsche Bank, BaFin in November of last year complained that you -- of wrong accounting in the balance sheet. This would also be inacceptable, but this was in November. In December, however, you came to an agreement and settlement with Monte dei Paschi. What is the situation now? Are these accusations or complaints still applicable in that phase or no longer? Has the situation improved?

Thorsten Strauss

You mean the accusation or complaints on wrong accounting?

Stefan Krause

Perhaps I should give an explanation. The transaction with the Banca Monte dei Paschi was a reversed repo. And at the point in time when it was accounted for in 2008, it was probably accounted for. Also, KPMG confirmed this, et cetera. So there is no differing opinion with BaFin. Now during the investigation, new facts occurred. And because of balance sheet reviews in Italy as well, so new facts arose, and this changed the character of this transaction and we, of course, adjusted the accounting to this new information. And this is actually what happened. Interestingly enough, this was just an accounting change, which nicer [ph] had a P&L effect or a balance sheet effect. So there was no material discrepancy or it had no material impact on any parameters of the bank or any financials of the bank. So it was not wrong accounting. We just adjusted accounting in line with new findings, in line with new facts that we were made aware of in the course of the investigation.

Unknown Attendee

An additional question. Can I ask an additional question just very briefly. The new facts that have occurred, could you be a little more explicit on that, please?

Stefan Krause

Well, it's a pending -- it's a pending method, so we can make no statement on that. We made the adjustment but I cannot make any statements on that. Other than that, with the settlement, this transaction has also been settled, so it plays no role anymore in our books. So...

Thorsten Strauss

Jack?

Unknown Attendee

Two questions. First one about going back to the emerging markets issue. I would just be interested to hear how the turmoil in the currency markets at the moment is affecting Deutsche Bank's business? You're a very important player in the currency markets. Is it a chance for you to make profits? Are there a lot of risks? Maybe you could talk a little bit about that. The second thing has to do with Basel III. The perception in the market was that the changes made to the Basel III regulations that were announced the beginning of this month were a positive for Deutsche Bank. Maybe I misunderstood, but I thought I heard Mr. Krause say that it was actually going to cost Deutsche Bank more than the old rules. Maybe you can just clarify me -- clarify that for me?

Anshuman Jain

On the first one, in emerging market foreign exchange on behalf of our clients, and there's no doubt that there has been a great deal of volatility, really, over the past quarter, and we anticipate that will continue. Our own situation there is very orderly, and indeed, we don't expect that to change very much. Yes, we do expect markets to remain thin and choppy largely, by the way, as the U.S. and the tapering continues. And as I said earlier, especially if and once U.S. rates start to move, we actually think yen [ph] foreign exchange could be in for a protracted period of considerable volatility. Stefan, I'll have you take the second one.

Stefan Krause

Well, yes, clarifying again, there was, perhaps, it was a bit confusing, my statement. Now the markets already considered the small stringent requirements of Basel III. So it showed that there was some happiness that the extreme requirements of the Basel paper would not be implemented, but that some of the suggestions that did not make sense, and which would have given wrong incentives to banks, were done away with. However, the fact that the suggestion of the proposal was not as strong as it was anticipated does not mean that you still, it still requires adjustment to the CRD 4. In fact, further [ph] there was a suggestion, which has a high value as a balance sheet exposure, CRD 4 was markedly below and the new proposal is somewhere in between at the lower end compared to CRD 4, for example. However, the market, of course, includes all the suggestions in its pricing, and so it was only logical that there was a market reaction with regard to this sort of easing. But it has nothing to do with our exposure rate in which we communicate, which will lead to further requirement. So the EUR 4.5 billion program was designed in such a way that we had a little buffer. Now for CRD 4, it's EUR 3.6 billion, and so the additional Basel III rules, if they materialize in the way they are supposed to materialize, which we don't know at the moment, we will be at approximately EUR 3.2 billion, which is still above the minimum value. But there was some fear in the market or concern in the market that it will be even more difficult.

Thorsten Strauss

Mike Canning, floor is yours.

Unknown Attendee

I'd like to cast a further glance into the future. You say that on the one hand, you want to be one of the leading consolidators in Europe, actively though. So probably, you will go to make acquisitions after 2015, if possible. But you also say that the economic outlook in the United States and Asia is much better. So probably, you want to rebalance, also, the business and put a stronger balance on these regions so does it mean that you want to consolidate in Europe? And in United States and Asia, you want to make further acquisitions or grow more organically? How would that look like? And then with regard to the United States, are your knees or legs shaky? Do have some concerns here because of further thinking about the Dodd-Frank loopholes? Are there any anticipations what this could mean for Deutsche Bank?

Jürgen Hinrich Fitschen

You rightly mentioned the differences between the regions that we have to face up to. And of course, this has to be included into our reactions and answers. Again, let me restate again. We assume and expect that the banking sector will consolidate, that the number of banks that will be going down, and which will also be influenced by the need for a critical mass, reduced costs, et cetera. So we will have to adjust in line with the market developments. We do not want to be a bank which has the same clout or weight in every region. So please assume that once we have properly reacted -- that we will probably react to the preconditions that we find in the United States. With regard to the relative weight in the global fee pool, of course, there will be a special focus, which will not necessarily mean that we have to make acquisitions. And the emerging countries will continue to show growth momentum, will still remain attractive for German clients and this will also play an important role. Please do not underestimate that consolidation also means that organic growth has to be done or can be done more intelligently and more efficiently. And these are the factors which will play a role when we try to strike the right balance.

Thorsten Strauss

Mr. Epps [ph]?

Unknown Attendee

You mentioned a difficult situation in the private business -- in the retail business. Do you think that you will have to make further savings, say, close down branches? What will be the effect in particular on Postbank. And then an additional question. Should there be an accusation in the Munich, what effect would that have on your managerial duties, Mr. Fitschen?

Rainer Neske

Well, for us, there is no reason to change our strategy, particularly when it comes to Postbank, but also when it comes to Deutsche Bank. We are very successful in our branch business. We reacted to the trends at a very early point. Also, we have to -- we can't -- the right strategic answer, also with the re-platforming, et cetera, et cetera, I'm very relaxed.

Jürgen Hinrich Fitschen

I reckon that I have to answer the second part. Mr. Strauss is getting nervous. Very easy, I will say the same that I always said. I neither lied nor did I commit any fraud. And I had the possibility to make this directly also to the public prosecutor. The -- I still trust in the course of events.

Thorsten Strauss

The nervousness has passed. Thank you very much for participating. We thank you very much for your patience. We also thank you very much for your understanding, that the gentlemen will leave immediately to answer questions of the TV stations. You will find food outside. Thank you very much for coming. See you again soon.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!