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the group may reclassify certain financial assets out of the financial assets at fai 598091

Deutsche Bank AG (2011)

Notes to the Consolidated Financial Statements [extract]

01 Significant Accounting Policies [extract]

Financial Assets and Liabilities [extract]

Reclassification of Financial Assets [extract]

The Group may reclassify certain financial assets out of the financial assets at fair value through profit or loss classification (trading assets) and the AFS classification into the loans classification. For assets to be reclassified there must be a clear change in management intent with respect to the assets since initial recognition and the financial asset must meet the definition of a loan at the reclassification date. Additionally, there must be an intent and ability to hold the asset for the foreseeable future at the reclassification date. There is no single specific period that defines foreseeable future. Rather, it is a matter requiring management judgment. In exercising this judgment, the Group established the following minimum requirements for what constitutes foreseeable future. At the time of reclassification,

  • there must be no intent to dispose of the asset through sale or securitization within one year and no internal or external requirement that would restrict the Group”s ability to hold or require sale; and
  • the business plan going forward should not be to profit from short-term movements in price.

Financial assets proposed for reclassification which meet these criteria are considered based on the facts and circumstances of each financial asset under consideration. A positive management assertion is required after taking into account the ability and plausibility to execute the strategy to hold.

In addition to the above criteria the Group also requires that persuasive evidence exists to assert that the expected repayment of the asset exceeds the estimated fair value and the returns on the asset will be optimized by holding it for the foreseeable future.

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