Deutsche Postbank Funding Trust III
(a statutory trust formed under the Delaware Statutory Trust Act with its principal place of business in New York, NY, U.S.A.)
Financial Report
Annual Financial Report 2023
Pursuant to Section 5:25c of the Netherlands Financial Supervision Act (Wet op het financieel toezicht)
Management Report
Deutsche Postbank Funding Trust III (the "Trust") was set up to issue the noncumulative trust preferred securities (the "Trust Preferred Securities"), to issue a Trust Common Security to Deutsche Bank AG ("Deutsche Bank" or "DB AG") and to use all proceeds derived from such issuances to purchase noncumulative Class B Preferred Securities (the "Class B Preferred Securities") issued by Deutsche Postbank Funding LLC III (the "Company").
Under the Class B Preferred Securities, the Trust is entitled to receive Capital Payments on the Liquidation Preference Amount of € 1,000 per Class B Preferred Security which are payable annually in arrears on June 7 of each year. Capital Payments payable on each Capital Payment Date will generally accrue from and including the immediately preceding Capital Payment Date up to but excluding the relevant Capital Payment Date at a rate per annum (the "Stated Rate") as described in detail in the prospectus dated June 3, 2005 (the "Prospectus").
Capital Payments on the Class B Preferred Securities are generally paid out of the Company's Operating Profits or from payments received by the Company under the Support Undertaking. If the Company does not declare (and is not deemed to have declared) a Capital Payment on the Class B Preferred Securities in respect of any Capital Payment Period, the Trust as holder of the Class B Preferred Securities will have no right to receive a Capital Payment on the Class B Preferred Securities in respect of such Capital Payment Period, and the Company will have no obligation to pay a Capital Payment on the Class B Preferred Securities in respect of such Capital Payment Period, whether or not Capital Payments are declared (or deemed to have been declared) and paid on the Class B Preferred Securities in respect of any future Capital Payment Period. Capital Payments on the Class B Preferred Securities will only be authorized to be declared and paid on any Capital Payment Date to the extent that:
- The Company has an amount of Operating Profits for the Capital Payment Period ending on the day immediately preceding such Capital Payment Date at least equal to the amount of such Capital Payments, and
- Deutsche Bank AG has Distributable Profits for the preceding fiscal year for which audited unconsolidated financial statements are available in an amount at least equal to the aggregate amount of such Capital Payments and all capital payments, dividends or other distributions on Parity Securities, if any, which Distributable Profits for the preceding fiscal year are allocated among Capital Payments and capital payments, dividends or other distributions on Parity Securities, pro rata.
The terms "Capital Payments", "Capital Payment Date", "Capital Payment Period", Operating Profit", "Distributable Profits" and "Parity Securities" and other capitalized terms are described in detail in the Prospectus relating to the Trust Preferred Securities dated June 3, 2005.
During the year ended December 31, 2023, the Company and DB AG had sufficient Operating Profit and Distributable Profits, respectively to make Capital Payments at the Stated Rate and the Trust received Capital Payments from the Company at such rate and when due under the LLC Agreement. As a consequence, the Trust made Capital Payments on the Trust Preferred Securities at such rate at the scheduled date pursuant to the Trust Agreement. The Trust made no payments or other distributions on the Trust Common Security.
Under the Services Agreement, the Servicer is obligated, among other things, to provide legal, accounting, tax and other general support services to the Trust, to maintain compliance with all
applicable U. S. local, state and federal laws, and to provide administrative, record keeping and secretarial services for the Trust. The fees and expenses of the Trust and all other obligations of the Trust are paid by the Company. During the year ended December 31, 2023, the Trust received all such services and the Company paid such fees, expenses and obligations as provided in the Services Agreement.
Results of Operations
During the year ended December 31, 2023, the Company and Deutsche Bank had sufficient Operating Profit and Distributable Profits respectively to make Capital Payments at the stated rate and the Trust received Capital Payments from the Company at such rate and when due under the LLC Agreement. Consequently, the Trust made Capital Payments on the Trust Preferred Securities at such rate at the scheduled date pursuant to the Trust Agreement. The Trust made no payments or other distributions on the Trust Common Security. Overall, net loss in the year ended December 31, 2023, was EUR 14,893.
Risk Report
The Trust is affected mainly by market, credit and liquidity risk, all of which are managed by Deutsche Bank AG.
Market risk
Market risk denotes the potential risk that may lead to losses in financial transactions due to changes in interest rates, spreads, volatilities, commodity prices, exchange rates, and equity prices. The market risk in form of interest rate risk of the assets and liabilities of the Trust offset each other.
Liquidity risk
Liquidity risk is defined as the risk of being unable to meet current or future payment obligations. Since the terms of the assets and liabilities are equivalent, the liquidity risk is insignificant.
Credit risk
Credit risk is the risk of possible losses arising from the inability of a counterparty to discharge its payment obligations or from a deterioration of its credit rating. The Trust's assets are subject to the credit risk of Deutsche Bank AG, which has an investment grade rating.
Events after the Reporting Period
There have been no events after the Reporting Period ended that had a material impact on the financial statements.
Outlook
Payments by the Company on the Class B Preferred Securities are the source of funds for the Capital Payments on the Trust Preferred Securities. In turn, the Company has invested substantially all proceeds from the issuance of the Class B Preferred Securities in Initial Debt Securities issued by DB AG. Under the Initial Debt Securities, interest is paid at the same dates as Capital Payments are scheduled under the Class B Preferred Securities. The Company is also a party to the Services Agreement with the Trust and receives similar services as the Trust. The Trust expects that the Company and DB AG will continue to meet their respective obligations under the Class B Preferred Securities and the Initial Obligation, the Services Agreement and the other agreements made in connection with the Trust Preferred Securities.
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Report of Independent Auditors
The Trustees and Stockholder
Deutsche Postbank Funding Trust III
Opinion
We have audited the consolidated financial statements of Deutsche Postbank Funding Trust III (the Trust), which comprise the consolidated statement of financial condition as of December 31, 2023, and the related consolidated statements of operations, changes in equity and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Trust at December 31, 2023, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Trust and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Trust's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:
- Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Trust's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.
April 25,2024
A member firm of Ernst & Young Global Limited
DEUTSCHE POSTBANK FUNDING TRUST III | ||
Consolidated Statement of Financial Condition | ||
December 31, 2023 | ||
Assets | ||
Cash | € | 76,322 |
Subordinated receivable | 300,027,000 | |
Accrued interest receivable | 5,329,980 | |
Total assets | € | 305,433,302 |
Liabilities, Preferred Securities Subject to Redemption and Equity | ||
Accrued interest payable | € | 5,312,802 |
Accrued expense | 63,536 | |
Total liabilities | 5,376,338 | |
Preferred securities subject to redemption | € | 300,000,000 |
Equity: | ||
Common stock, €1,000 stated value per share. Authorized, issued, and | ||
outstanding 1 share | 1,000 | |
Additional paid in capital | 173,298 | |
Accumulated deficit | (143,334) | |
Total stockholder's equity | 30,964 | |
Noncontrolling interest | 26,000 | |
Total equity | 56,964 | |
Total liabilities, preferred securities subject to redemption and equity | € | 305,433,302 |
See accompanying notes to consolidated financial statements.
DEUTSCHE POSTBANK FUNDING TRUST III
Consolidated Statement of Operations
Year ended December 31, 2023
Interest income | € | 8,086,228 |
Interest expense | (8,055,522) | |
Net interest income | 30,706 | |
Noninterest expenses | (45,599) | |
Net loss | € | (14,893) |
See accompanying notes to consolidated financial statements.
DEUTSCHE POSTBANK FUNDING TRUST III
Consolidated Statement of Changes in Equity
Year ended December 31, 2023
Additional | Total | ||||||
Common | paid-in | Accumulated | stockholder's | Noncontrolling | Total | ||
stock | capital | deficit | equity | interest | equity | ||
Balance at December 31, 2022 | € | 1,000 | 173,298 | (128,441) | 45,857 | 26,000 | 71,857 |
Additional paid-in capital | - | - | - | - | - | - | |
Net loss | - | - | (14,893) | (14,893) | - | (14,893) | |
Balance at December 31, 2023 | € | 1,000 | 173,298 | (143,334) | 30,964 | 26,000 | 56,964 |
See accompanying notes to consolidated financial statements.
DEUTSCHE POSTBANK FUNDING TRUST III
Consolidated Statement of Cash Flows
Year ended December 31, 2023
Cash flows from operating activities: | ||
Net income | € | (14,893) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
(Increase) decrease in operating assets: | ||
Accrued interest receivable | (1,725,359) | |
Increase (decrease) in operating liabilities: | ||
Accrued interest payable | 1,725,502 | |
Accrued expenses | 6,049 | |
Net cash provided by operating activities | (8,701) | |
Contributions from members | - | |
Net cash provided by financing activities | € | - |
Cash beginning of year | 85,023 | |
Cash, end of year | € | 76,322 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for: | ||
Interest | € | 6,243,000 |
See accompanying notes to consolidated financial statements.
DEUTSCHE POSTBANK FUNDING TRUST III
Notes to Consolidated Financial Statements
December 31, 2023
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Organization
Deutsche Postbank Funding Trust III is a statutory business trust created on April 20, 2005 under the laws of the State of Delaware. Deutsche Postbank Funding Trust III was created for the sole purpose of issuing €300,000,000 of preferred securities subject to redemption (the Trust Preferred Securities) to investors, and a €1,000 Trust Common Security to Deutsche Postbank AG. The proceeds from the issuance of the Trust Preferred Securities were used to purchase all of the Class B Preferred Securities from Deutsche Postbank Funding LLC III (the Company), a majority-owned consolidated subsidiary of Deutsche Postbank Funding Trust III. The Company also issued a Class A Preferred Security and a Company Common Security to DB AG. Deutsche Postbank Funding Trust III does not engage in any business other than holding the Class B Preferred Securities, collecting interest and other payments (the Capital Payments) with respect to the Class B Preferred Securities, paying Capital Payments to the holders of the Trust Preferred Securities, and performing ancillary activities.
On November 29, 2016, the Trust Agreement was amended to allow for the appointment of new Regular Trustees other than employees of Affiliates of the Bank.
These consolidated financial statements include Deutsche Postbank Funding Trust III and the Company (together, the Trust).
The consolidated financial statements and all transactions entered into by the Trust are denominated in Euros, the Trust's functional currency. Capitalized terms herein have the same meaning as in the Amended and Restated Trust Agreement dated June 7, 2005 (the Agreement).
On April 25, 2018, Deutsche Post Bank Funding LLC III received a capital contribution of €70,000 from Deutsche Postbank AG.
During 2018, Deutsche Postbank AG sold the Trust Common Security and the Company Common Security to DB AG. The assignment and transfer of ownership was effective May 10, 2018. The terms of the Trust Preferred Securities and both the Class A and Class B Preferred Securities of the Company are not affected by the transaction.
On May 25, 2018 Deutsche Postbank AG was merged into Deutsche Bank Privat- und Geschäftskunden Aktiengesellschaft. The merged entity was named DB Privat- und Firmenkundenbank AG.
On May 15, 2020, DB Privat- und Firmenkundenbank AG was merged into Deutsche Bank Aktiengesellschaft. Deutsche Bank Aktiengesellschaft (the Successor Bank), is a bank duly organized and existing under the laws of Germany, is now the successor of DB Privat- und Firmenkundenbank AG. - Summary of Significant Accounting Policies
The accompanying consolidated financial statements have been prepared from the separate records maintained by the Trust, and may not necessarily be indicative of the consolidated
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Deutsche Bank AG published this content on 26 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2024 15:00:25 UTC.