GlossarY
Additional Tier 1 bond (AT1 bond)
Non-cumulative, fixed-interest bearer bond issued by DekaBank as Additional Tier 1 capital with subsequent adjustment of its interest rate and an unlimited term. If the Common Equity Tier 1 capital ratio falls below a set minimum, the nominal and redemption values of the bearer bond may be reduced in specific circumstances. DekaBank’s issued AT1 bonds are fully eligible as core capital and thus help improve the regulatory ratios.
Advisory-/management mandate
External funds which are managed by a Deka Group investment management company (Kapitalverwaltungsgesellschaft – KVG). For advisory mandates, the Deka Group company acts only as
an adviser, i.e. it is up to the external management company to verify compliance with investment regulations and contractual restrictions before placing orders. For management mandates, by contrast, investment decisions are taken, reviewed and carried out by a Deka Group investment management company.
Asset management net sales
Asset management net sales is an indicator of sales performance and customer acceptance in asset management. This figure essentially consists of total direct sales of mutual and special funds, fund-based asset management, funds of cooperation partners, master funds, advisory/management mandates and ETFs. Sales generated through proprietary investment activities are not included.
Asset management volume
The management volume essentially comprises the income-relevant volume of mutual and special fund products (including ETFs), direct investments in cooperation partner funds, the portion of fund-based asset management activities attributable to cooperation partners, third-party funds and liquidity, master funds and advisory/management mandates and master funds.
Assets under custody
All assets held in custody by the Deka Group as depositary.
Base year
The base year is a historical year that serves as the
reference point for a time series. It is used to compare
data from the current reporting year with data from
a previous reporting year. This allows developments and
progress over time to be recorded in relation to a fixed
point in time and a baseline value in the past. On the
other hand, the reference year is a variable point that can
change over time. In some cases, the reference year is the
same as the base year. The baseline value is stated for
both the base year and the reference year and is the
value of the information expressed as a quantitatively
measured unit or a qualitatively described fact.
Business environment analysis
The annual business environment analysis serves to
ensure transparency regarding the impact that climate
and environmental risks have on the business environment
(including customers, competitors and the
regulatory framework). This can be used as a basis for
examining the resulting impacts on the Deka Group’s
business model and business activities. The analysis
is conducted for a short, medium and long-term time
horizon using various scenarios.
Certificate volume
The certificate volume comprises only the
certificates issued by Deka. It does not include
cooperation certificates.
Climate scenarios
Various climate scenarios are used to assess the
impacts of climate and environmental risks in the medium
and long term. These climate scenarios are based on
narratives published by scientific and regulatory institutions,
particularly the scenarios of the Network for
Greening the Financial System (NGFS).
Cost/income ratio (CIR)
In the Deka Group, this indicator is calculated from the
ratio of total expense (excluding restructuring expense) to
total income (excluding risk provisions in the lending and
securities business) in the financial year.
CRREM
The Carbon Risk Real Estate Monitor (CRREM) is an
important tool for analysing and assessing the specific
emissions of individual properties and the portfolio
as a whole. This science-based tool takes into account
different variables such as the type of use of a property
and its location and provides information on the
maximum levels that should be permitted for energy
consumption and carbon emissions at specific times in
order to meet the Paris climate targets. These CRREM
target pathways are continuously being adjusted on
the basis of current developments and improved data
as part of the research project.
Economic perspective
The economic perspective is one of two approaches
on which the internal capital and liquidity adequacy
assessment processes (ICAAP and ILAAP) are based.
In the context of the ICAAP, the economic perspective
is implemented via the concept of risk-bearing capacity.
It serves to secure the capital of the Deka Group in the
long term, thus making a key contribution to ensuring
the institution’s survival. The aim is also to protect
creditors against losses from an economic view. In the
context of the integrated quantification, management
and monitoring of liquidity risk (ILAAP), the key risk
measure in the economic perspective are the funding
matrices defined by the Board of Management as being
relevant for management purposes and the intraday liquidity balance on the nostro accounts..
Economic result
The economic result is, in principle, determined in
accordance with accounting and measurement policies of
IFRS Accounting Standards. As well as the total of profit or
loss before tax, the economic result also includes changes
in the revaluation reserve before tax as well as the
interest rate- and currency-related valuation result from
financial instruments recognised at amortised cost, which
are not recognised in the income statement under IFRS
Accounting Standards but are relevant for assessing
financial performance. The interest expense in respect of
AT1 bonds (Additional Tier 1 capital), which is recognised
directly in equity, is also included in the economic result.
Furthermore, the economic result takes into account
potential future charges that are considered possible in
the future but that are not yet permitted to be recognised
under IFRS due to the fact that accurate details
are not yet available. The economic result is therefore a
control variable on an accrual basis, whose high level of
transparency enables recipients of the external financial
reporting to consider the company from the
management perspective.
ESG scorecard
ESG scorecards enable the Bank to assess the risks
associated with ESG factors for both the borrower and
the specific financing each time a limit is set, increased
or extended and when monitoring existing business.
ESG scorecards take into account physical and transitory
climate transition risks, labour and human rights criteria
and governance issues on a segment-specific basis.
Fund assets according to BVI
Fund assets according to BVI comprise the fund assets of
the mutual funds, special funds, funds-of-funds and the
master fund. In contrast to the method for determining
the asset management volume of the Deka Group, direct
investments in cooperation partner funds, the proportion
of asset management products attributable to
cooperation partner funds, third-party funds and
liquidity, and advisory/management and asset management
mandates are not attributed to the Deka Group
fund volume according to BVI.
Gross certificate sales
Gross certificate sales are an indicator of certificate sales
performance. Redemptions and maturities are not taken
into account, since the impact on earnings is primarily
determined by the issue volume. Gross certificate sales
include both certificates issued by Deka and cooperation
certificates issued by other institutions and sold via sales
support platforms.
Gross loan volume
In accordance with the definition set out in section 19 (1)
of the German Banking Act (Kreditwesengesetz), the
gross loan volume includes debt instruments issued by
public authorities and bills of exchange, amounts due
from banks and customers, bonds and other fixed-interest
securities, shares and other non-fixed-interest
securities including fund units, equity investments and
shares in affiliated companies, equalisation claims against
the public sector, items for which lease agreements have
been concluded as the lessor, irrespective of their
recognition in the balance sheet, other assets where they
are subject to counterparty risk, sureties and guarantees,
irrevocable lending commitments as well as market values
of derivatives. In addition, the gross loan volume includes
underlying risks from derivative transactions, transactions
for the purposes of covering guarantee payments on
guarantee funds, as well as the volume of off-balance
sheet counterparty risks.
IEA
The International Energy Agency (IEA) is an organisation
dedicated to promoting a secure, sustainable
and affordable supply of energy worldwide. It provides
comprehensive analyses, data and political recommendations
to support the global energy industry. The IEA’s
Net Zero by 2050 climate roadmap is a detailed plan
that aims to reduce global carbon emissions from
energy to zero by 2050. This plan requires a complete
transformation of energy production, distribution
and use, with a focus on renewable energies such
as solar and wind power.
Locked-in emissions
Unavoidable emissions that will continue even if
immediate reduction measures are implemented, due
to existing infrastructure and technologies or long-term
contracts. These emissions are “locked in” as they
depend on investments that have already been made.
Net funds inflow according to BVI
Net funds inflow according to BVI is the difference
between funds inflow from unit certificate sales and
funds outflow from unit certificate redemptions. In
contrast to the method for determining the Deka Group’s
net sales, cooperation partner funds and advisory/
management and asset management mandates are not
attributed to the Deka Group’s net funds inflow according
to BVI. Net sales from proprietary investments are
included in net funds inflow according to BVI only.
Normative perspective
The normative perspective is one of two approaches
on which the internal capital and liquidity adequacy
assessment processes (ICAAP and ILAAP) are based. In
the context of the ICAAP, the normative perspective
includes all internal instruments, regulations, controls and
processes aimed at ensuring that regulatory and supervisory
capital requirements are met on an ongoing basis,
i.e. also prospectively, over the next few years. This means
that it directly pursues the objective of ensuring that the
institution can continue as a going concern. In the context
of the integrated quantification, management and
monitoring of liquidity risk (ILAAP), the key risk measures
in the normative perspective are the LCR and NSFR in accordance with the requirements of the CRR.
Number of (active) employees
The number of employees is the effective number of
active full-time employees at the reporting date, with
part-timers being counted in proportion to their working
hours. Active employees means staff members who are
actively involved in DekaBank’s work processes. This
includes the Board of Management, other managers,
core staff members, contract staff and temporary staff.
Vocational and other trainees, interns and employees
on long-term leave are not included.
NZAM
Since October 2021, Deka Investment GmbH and
Deka Vermögensmanagement GmbH have been
members of the Net Zero Asset Managers Initiative
(NZAM), which was founded in December 2020. Within
this international alliance, participating asset managers
commit to supporting the achievement of “net zero
greenhouse gas emissions” by 2050 at the latest in the
context of their activities, in order to limit the rise in
global average temperatures to 1.5°C compared with
pre-industrial levels, in line with the Paris climate targets.
To achieve this goal, the signatories undertake to align
their portfolios accordingly in the course of strategic
and tactical asset allocation and to define interim
targets for a reduction in the greenhouse gas emissions
for an initial portion of assets under management, which
must be met as early as 2030.
Payments to the alliance partners
Payments made to the alliance partners (savings banks
and Landesbanks) from Asset Management and certificates business are made up of the partners’ portions of investment fund entry charges, sales commissions, sales performance fees,
asset management fees and other payments from asset
management. The payments to alliance partners have
also included commissions on certificates.
Poseidon Principles
The Poseidon Principles are an international framework
created by and for financial institutions and allow
climate considerations to be taken into account in
lending decisions, to promote the decarbonisation of
the international shipping industry. The goal is to reduce
greenhouse gas emissions in shipping by at least
20 percent, with the aim of achieving a 30 percent
reduction compared with 2008 levels by 2030 and of
reaching net zero by around 2050.
Resilience analysis
The significance analysis, business environment analysis
and climate scenario analyses are the main tools used
to analyse resilience.
Return on equity (RoE)
Return on equity before tax at the Deka Group is calculated
as the return on balance sheet equity. The annualised
economic result is expressed relative to the average balance
sheet equity excluding Additional Tier 1 (AT1) capital and
adjusted for intangible assets. Average balance sheet
equity is calculated based on the capital at the previous
year-end and the last quarterly financial statements.
At business division level, return on equity before tax is
calculated as regulatory return on equity. This involves
expressing the annualised economic result (before income
distribution of the Treasury function) relative to the average
regulatory capital employed. The average is calculated
using monthly risk-weighted assets (without transitional provisions) multiplied by 13 percent
(the strategic target for regulatory capital employed),
starting with the figure at the previous year-end.
Risk appetite
Risk appetite refers to the overall aggregate risk of
individual risk types that the Deka Group is prepared to
enter into, within the limits of its risk capacity, in order to
achieve its strategic objectives and business plan. In the
economic perspective, the risk appetite for risks affecting
profit and loss is defined in the risk-bearing capacity
analysis as the allocated risk capital (allocation) for overall
risk at Group level. The maximum permissible risk
appetite is equal to risk capacity less a management
buffer and a buffer for climate and environmental risks.
With regard to liquidity risk, the Deka Group has defined
its risk appetite in the economic perspective as the
scenario that gives it an indefinite survival period in a hypothetical stress scenario involving a simultaneous institution-specific and market-wide stress event. This hypothetical stress scenario is illustrated in the “combined stress scenario” funding matrix. Permanent solvency and an unlimited survival horizon are achieved by setting a limit of at least 0 on the liquidity balances of all relevant maturity bands for periods of up to 20 years.
Risk-bearing capacity
The aim of the risk-bearing capacity analysis is to ensure
the adequacy of capital resources from an economic view.
Sufficient assets must be available to cover risk events,
even those which materialise extremely rarely. This
involves combining all risk types with a holding period
of one year and a correspondingly high confidence level
of 99.9 percent, which is consistent with DekaBank’s
target rating. The overall risk is then compared against
the internal capital, which corresponds to the risk
capacity, and the risk appetite defined by the Board
of Management.
Significance analysis
The significance analysis is specifically designed to
identify and assess ESG risks and is carried out each
year as part of the risk inventory. The analysis looks at
the impacts of ESG risk drivers on the main risk types.
It covers the entire portfolio and all business activities
of the Deka Group.
Suppliers and service providers
The Deka Group defines suppliers as companies that
provide physical goods that are needed for day-to-day
operations. This includes providers of IT hardware and
office equipment, for example. These goods are essential
to ensure physical and technological operations at the
Deka Group. In contrast, a service provider provides
specialist services that support the Deka Group in its
business activities. Such services may include IT support,
facility management, consultancy services, accountancy
services or customer services. Service providers use their
specialist knowledge and human resources to improve
efficiency and optimise the Bank’s operations.