1 > Annual report 2011 Direct Banking is Banking as it should be
2 > Key figures of comdirect group Change in % Customers, assets under custody and key products comdirect group* Customers number 2,630,525 2,296, Custody accounts number 1,683,301 1,482, Total assets under custody in million 41,587 42, of which: portfolio volume in million 30,882 32, of which: deposit volume in million 10,705 10, business-to-customer (B2C) business line Customers number 1,632,467 1,559, Custody accounts number 783, , Current accounts number 774, , Tagesgeld PLUS ( call money plus ) accounts number 1,235,770 1,130, Total assets under custody in million 24,896 26, of which: portfolio volume in million 14,324 16, of which: deposit volume in million 10,571 10, Credit volume in million business-to-business (B2B) business line Customers number 998, , Custody accounts number 899, , Total assets under custody in million 16,692 16, of which: portfolio volume in million 16,558 16, of which: deposit volume in million Orders and order volume Executed orders number 18,677,910 15,305, of which: B2C number 9,151,389 7,824, of which: B2B number 9,526,521 7,481, Average order activity per custody account (B2C) number Order volume per executed order (B2C) in 5,308 5, Earnings ratio Net commission income in thousand 182, , Net interest income before provisions in thousand 150, , Administrative expenses in thousand 232, , Pre-tax profit in thousand 108,076 80, Net profit in thousand 111,763 59, Earnings per share in Return on equity before tax 1) in % Cost/income ratio in % Balance sheet key figures Balance sheet total in million 11,381 11, Equity in million Equity ratio 2) in % Regulatory indicators under Basel II 3) Risk weighted assets 4) in million Eligible amount for operational risks in million Core capital in million Own funds for solvency purposes in million Own funds ratio 5) in % Employees figures Employees number 1,148 1, Employees full-time basis number 1, , *) B2C: comdirect bank AG; B2B: ebase GmbH 1) Pre-tax profit/average equity (excluding revaluation reserve) in the reporting period 2) Equity (excluding revaluation reserve)/balance sheet total 3) These figures are calculated on the basis of internal calculations; publication is voluntary and based on national implementation conversion and the figures are not reported to the Supervisory Authority 4) Risk weighted assets in accordance with Section 10 c of the German Banking Act (KWG) (intragroup receivables are zero weighted) 5) Own funds for solvency purposes/(risk weighted assets x eligible amounts for operational risks)
3 > Contents Highlights of financial year Foreword of the CEO 4 The Board of Managing Directors 8 Corporate Governance Report of the Supervisory Board Corporate Governance report Compensation report Group management report Key developments Group structure and business activities Value-driven strategy and management system Market environment Business performance and earnings situation at comdirect group B2C business line B2B business line Financial situation and assets of the comdirect group The share Personnel report Risk report Outlook and opportunity report Supplementary report Details in accordance with Sections 289, 315 of the German Commercial Code (HGB) and explanatory report of the Board of Managing Directors of comdirect bank Declaration of the Board of Managing Directors on Section 312 of the German Stock Corporation Act (AktG) Consolidated financial statements Income statement Balance sheet Statement of changes in equity Cash flow statement Notes Declaration of the Board of Managing Directors Auditor s report Glossary Six-year overview of comdirect bank group Financial calendar 2012 Contacts
4 > Selected comdirect group key figures Pre-tax profit in million Dividend in * * Dividend proposal Number of customers as of in thousand 2,631 Executed orders in million ,151 2, Total assets under custody as of in billion Number of custody accounts as of in thousand Deposit volume B2B Portfolio volume B2C
5 1 Record result tops off successful financial year The best financial year in the company s history: With pre-tax profit of 108.1m, the comdirect group outstripped the figure for 2010 by around a third. The business model has once again proven resilient, even in turbulent times. Strong price fluctuations on the stock exchanges prompted many trading customers to increase their trading activity and expand their portfolio holdings. The rise in net commission income was correspondingly high. Net interest income reflected higher market interest rates on average, with a slight increase in the deposit volume. After-tax profit in particular also benefited from a tax refund following a positive ruling in appeal proceedings relating to the discontinuation of foreign activities in previous financial years. In line with the consistent dividend policy, the Board of Managing Directors and Supervisory Board intend to pass the contributions from the comdirect group s operating profit, including the interest payment in respect of the tax refunds, on to the shareholders in full. The dividend proposal stands at 0.56 per share White label solutions convince financial service providers Making major progress towards becoming Germany s leading B2B direct bank: Once again, ebase substantially expanded its range of products and services as well as its customer portfolio in ebase acts as a partner for financial intermediaries, insurance companies, asset managers and investment companies. ebase gained renowned new customers in the past year, including asset manager KanAM Grund and insurance company Cosmos Direkt. The white label solutions provided by ebase are integrated into the system landscape at CosmosDirekt. For Cosmos Direkt, ebase carries out custody account administration for a new unit-linked pension insurance which enables customers to access over 5,000 fund offerings. The cooperation with KanAM Group comprises custody account administration and services for more than 30,000 customers with a volume of around one billion euros. ebase also implemented a partner-specific white label solution for fund custody account customers of Commerzbank.
6 2 Title winner in Germany s biggest bank test Good, better, comdirect: The impressive range of products and services garnered comdirect bank the Deutschlands Beste Bank award in The direct bank came out top, ahead of 49 other credit institutions in the analysis conducted by financial maga zine uro in conjunction with S.W.I. Finance. The test compared accounts and cards, brokerage, loans, investment products, building finance and customer satisfaction levels. In this last cate gory, the score included the results of the uro survey of 130,000 readers. This makes the test the biggest reader survey in the German financial sector. comdirect scored particularly well for product choice and offerings, as well as the fee-free current account with Visa card and fixed-term deposit accounts for longer-term financial investments. Brokerage also achieved a good rating with its wide selection of funds and frequently reduced front-end loads, as well as the particularly favourable building finance offering. Fewer clicks, more added value: the new look website Even clearer, even easier to understand, even more userfriendly that s comdirect bank s website at comdirect.de which was relaunched in November. comdirect set this new simplicity as the standard for the extensive revision of its website, one of the most frequently visited financial websites in Germany. Thanks to improved structures, all the information on products and services is now even easier to find. As an additional research aid, the site has a new full text search function based on Google search engine technology. The bigger click areas and succinct images are based on the latest user experience findings and save users time by enabling them to click quickly through the site and navigate on a targeted basis. All texts were revised to make even more complex issues easier to understand, improving content readability at the same time. The home page also offers considerably more editorial content, providing customers and visitors with information on topics relating to the market and investments on a regular basis. More and more customers are choosing comdirect Convincing performance: The comdirect group gained 334 thousand customers in the past year, once again outstripping the pace of growth in the previous year. The high-performance and fee-free current account with satisfaction guarantee was particularly popular with comdirect bank customers, and in brokerage too, the signals pointed to growth: both traders and investors were convinced by the excellent trading platforms, extended information offering and attractive terms and conditions. In B2B business, ebase took over custody account administration for renowned partners. Thanks to the tailored range of products and services for custody account administration and B2B-type banking, these partners can offer their end customers a wide range of options for payment transactions and financial asset accumulation from a single source. The performance broker is also the favourite broker Title defended: comdirect bank has once again been named Online broker of the year. After gaining the top spot in 2009 and 2010, Germany s performance broker received the most votes for the third time in a row in the survey conducted by financial portal brokerwahl.de. Over 43,000 traders took the opportunity to vote for their favourite broker. The award was presented in March 2011 during the INVEST trade fair in Stuttgart.
7 3 Building finance: first class advice online Serial winner: Once again, comdirect bank secured first place in the Beste Direktbaufinanzierung vermittelt durch Banken (best direct building finance placed by banks) comparison test carried out by financial magazine Focus Money and the Deutsches Institut für Service-Qualität (German Institute for Service Quality). Thanks to its top class Customer Services and particularly attractive terms and conditions, comdirect won the title for the fourth time in a row after ranking first in 2008, 2009 and comdirect will continue to innovate in the field of building finance in future: the latest development is its online live advice, making it the first bank to offer such a service in Germany. The highlight here: during the phone consultation, customers use their PCs to follow live how the adviser optimises the structure of their financing enquiry. A higher repayment rate, unscheduled repayment or a different term this virtual look over the adviser s shoulder enables prospective property buyers to follow the adjustment process live as the adviser compares products from over 250 financing partners. Customers can also experience the new advisory model direct with a consultation in the comdirect building finance offices in Berlin, Frankfurt/Main, Hamburg and Munich. Setting a trend: a new standard in CFD trading Germany s performance broker is setting new standards in trading with contracts for difference (CFD). Since September 2011 and starting from a comparatively low investment amount, investors have been able to participate in the movement in prices of equities, indices, commodities, bonds, futures and currencies using contracts for difference on more than 1,200 underlying assets. Trading is carried out in real time via comdirect s powerful trading platform. It is customisable and easy to use. Commerzbank acts as market maker. The unique feature of CFD trading at comdirect is its high quality: favourable fees, excellent quotations and swift and secure execution. On request, risk limits can be set up free of charge. In addition, comdirect has launched the cfd.comdirect.de information portal which provides comprehensive information on how CFDs work, together with the associated risks and opportunities. CFD trading fits seamlessly into the high-performance and multi-award-winning brokerage offering. An overview is key: the new ETF Informer Since March 2011, it s been even easier to search for exchange traded funds (ETFs) at comdirect: The new ETF Informer section on comdirect.de makes finding exchange traded funds very simple. The tool allows users to quickly search by indices, investment type, sector or individual ETF and provides comprehensive information such as the total expense ratio (TER) and performance. There is a useful intraday display for short-term traders. comdirect s ETF offering stands out from the crowd not only for the wide choice available, but also for its low charges. This combination has convinced private investors in Germany who voted comdirect ETF Direct Bank of the Year in finanzblog award: outstanding information sources More and more people are using the internet to find information on financial issues, and weblogs in particular are gaining in importance. This prompted comdirect to launch the comdirect finanzblog award for the first time in The prize recognises finanzblog authors who provide private investors with regular and comprehensive information on topics relating to money and finance that is easy to understand. These include both professional and hobby bloggers. Out of the 49 blogs submitted, the expert jury, whose members included Prof. Dr. Christoph Neuberger of LMU Munich and financial expert Joachim Goldberg, selected Die Börsenblogger as the first winner of the prize followed by the Best Börsen Blog in the inaugural competition. The finanzblog award 2012 will be presented at the start of May at the inter national blogger conference re:publica 12 in Berlin.
9 FOREWORD THE BOARD OF MANAGING DIRECTORS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 5 Dear Shareholders, Attractive products, excellent service and high levels of security these are the features that made us Deutschlands Beste Bank in We were honoured with this award by our satisfied customers, but had our shareholders been surveyed instead, comdirect would probably still have been a contender for the title. This is because in the midst of the euro currency crisis, unsettled markets and turbulent prices, we have stayed the course with our robust business model and achieved a balanced increase in value, profitability and growth. Our performance indicators at the year-end demonstrate just how balanced this development is: strong growth in the number of customers with a rise of almost 15% to an all-time high of 2.6m. Record earnings of around 340m, with a substantial increase in net interest and net commission income. Our ongoing strict cost discipline that is reflected in the disproportionately lower rise in administrative expenses. Together, these produce a record pre-tax profit of 108m, which outstrips the previous year s figure by a good third thanks also to interest payments on a tax refund. The tax refund itself amounting to some 37m is shown in the after-tax profit. It relates to appeal proceedings dating back several years in respect of the tax treatment of foreign activities that had been discontinued at the time. The consolidated net profit of around 112m means we are in position to propose a distribution of 56 cents per share and at the same time strengthen equity with a view to further growth. The balance between short-term growth in profit and long-term increase in value is therefore evident in our distribution policy as well. Being the best bank for customers and shareholders above all means continually improving our good performance. Our example here is our Germany s performance broker campaign under which we launched our offering for
10 6 trading in CFDs. Traders benefit from our powerful trading platform as well as excellent quotations from market maker Commerzbank. Through a series of wide-ranging initiatives we have strengthened our leadership in online securities business for modern investors, which is the core of our business model. And the volume of net investments from our customers of 2.7bn speaks for itself: traders and investors trust the comdirect group, especially in challenging market situations. Such trust has to be continually earned and this is equally true in banking. Here we have made our current account even more convenient and secure. The sustained popularity of our current account and Tagesgeld PLUS account shows that with comprehensive products, simple navigation and friendly Customer Services, we are increasingly convincing branch bank customers to switch to comdirect. Our advisory offering, especially Baufinanzierung PLUS, proves at the same time that we also provide convincing and highly transparent answers to complex questions. We intend to build on these strengths and break down any remaining reservations regarding the direct bank model a central theme in this annual report. We live up to our claim to be a full service bank for modern investors in our business via institutional partners as well. Through ebase, they are able to offer their end customers all the key services for financial asset accumulation: funds, ETFs, call money and fixed-term deposits and in future, an online-type account featuring extended payment transaction functions. Consequently, major companies in very different sectors can offer seamlessly integrated banking services with individual terms and conditions without having to be a bank themselves. Strong growth in customers and assets through new renowned partners in the target segments shows that our subsidiary ebase is on the right path.
11 FOREWORD THE BOARD OF MANAGING DIRECTORS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 7 In both business lines, comdirect (B2C) and ebase (B2B), we will continue to manage our growth on a value and risk-oriented basis in the future as well. A particular focus in this respect is our Treasury portfolio. We actively reduced risks here in 2011; at the year-end only around 70m, or 0.6% of the balance sheet total, was attributable to counterparties in the PIIGS countries within the eurozone. By the end of March 2012, the figure will drop to less than 20m as a result of maturities. Although we monitor developments in our industry very closely, this does not prevent us from giving our customers and partners our full attention. Inspiring them with our performance, expertise and level of service is our aim. For our shareholders, we intend to add value through growth even in turbulent times. With our flexible cost base, we have successfully achieved this in a wide range of market situations, and the entire comdirect team is dedicated to ensuring that this continues. A safe investment in all market phases and the best bank for customers, shareholders and employees: that remains our claim. Sincerely yours, Dr. Thorsten Reitmeyer
12 8 CEO Dr. Thorsten Reitmeyer Our track record has been impressive in 2011 and not just because of our record result. Numerous awards confirm that our products and services precisely meet the requirements that our customers place on a modern bank. We are very proud of this. It is crucial that we continue to focus consistently on transparency and simplicity: we intend to make financial transactions as simple and convenient as possible for our customers. This is why we have enhanced our website to provide an even clearer overview with readily comprehensible information. And an additional information portal supplements our newly launched CFD trading, through which we intend to further expand our leadership in securities trading as Germany s performance broker. Dr. Thorsten Reitmeyer, born 1969, has been CEO (Chief Executive Officer) of comdirect bank AG since 1 December As CEO, he is responsible for Business Development, Corporate Communications, Marketing & Sales as well as Product Management & Treasury.
13 FOREWORD THE BOARD OF MANAGING DIRECTORS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 9 CFO COO Dr. Christian Diekmann 2011 was a particularly turbulent year in the financial markets. However, this did not keep our customers, who are traditionally very keen investors, away from the stock markets. On the contrary, some days the volumes we recorded were three times higher than usual and as a result we achieved significantly higher net commission income for the financial year as a whole as well. Our B2B subsidiary, ebase, also performed well: more and more customers here are relying on the individually tailored custody account and fund solutions. All together, these developments have enabled the comdirect group to report another record result and once again offer our shareholders an above-average dividend yield. Dr. Christian Diekmann, born 1965, has been CFO (Chief Financial Officer) of comdirect bank AG since 1 May In addition to Finance, Controlling & Risk Management, he is responsible for Internal Audit, Legal Services / Compliance, Institutional Business and the B2B activities of ebase (European Bank for Fund Services). Carsten Strauß Innovation and excellent service are already our strengths. We invest a great deal in personnel development to make sure that this remains the case in future as well. Moreover, we are always on the look-out for qualified employees who would like to help us shape the banking experience of the future. Consequently, we also work in cooperation with leading universities and universities of applied science for instance. This way, we ensure that we will continue to bring fresh ideas to the market. The best example of this is our online live advice service for building finance. This allows our customers to follow the process live on their PC and watch as their adviser optimises the financing structure and see how this can result in changes to the interest rate or redemption payments. There is great demand for this practical advisory approach. Carsten Strauß, born 1967, has been member of the Board of Managing Directors responsible for Human Resources of comdirect bank AG since 4 March As COO (Chief Operating Officer), he is responsible for Customer Services, Human Resources & Organisation, Process Management and IT as well as Investment Advice and Building Finance.
15 11 I like shopping on the internet. But banking? That s too complicated for me.
16 12 There is a standing order at comdirect: online financial and securities transactions have to be as easy and convenient as possible. Our customers should only have to spend a minimum amount of time on money transfers, instructions to buy or sell shares and information searches. And this is something we work on every day. You can see the results at comdirect.de. And the response is extremely good. With a monthly average of around 200 million page impressions a month, we operate one of Germany s most frequently visited financial websites. In fact, according to web information company Alexa Rank, comdirect.de is among the 70 most popular websites in Germany overall. Swift searches, convenient services To make banking and securities transactions with us even easier, we continually optimise our website and in November we completed an extensive revision. Now it s significantly quicker to find all the information on our products and services. We further simplified the page structure which is based on the latest findings on user navigation. And we have invested in a new full text search facility based on Google search engine technology. Sometimes it s the little things that make online banking even easier and more convenient. For example, anyone opening a fee-free comdirect current account can use our account switching service. With just a few mouse clicks our customers can automatically generate letters to notify employers, landlords or insurance companies of their new bank details. And customers with a particularly large number of transactions on their current account can use our intelligent filter and search options to find the entry they are seeking immediately making the laborious task of looking through account statements a thing of the past. Another example of simplicity: our order functions such as the one click or comfort order save our customers a great deal of effort. This gives them more time when trading on the stock exchange where everything has to happen really quickly, or simply more time for themselves. Convenient banking on the move With comdirect it s also easy to carry out your banking and securities transactions on the go. All the key banking and brokerage functions can be called up at mobile.comdirect.de. Our free banking app for the ipad and iphone offers two very convenient features. For instance, our app offers multi-bank capability. Users can not only check the balance on their comdirect current account but at almost all banks and savings banks in Germany without having to download a separate app for each one. And the virtual budgeting book helps give customers an overview of their finances at any time at the touch of a finger. So how do we at comdirect know what our customers mean by easy and convenient banking? We listen. Many of the changes we implement each time we revise our website stem from suggestions by our customers. And we also ask: working in conjunction with renowned opinion research organisations we carry out regular representative surveys which we publish as a study series entitled Customer Motives and the findings are also utilised in-house. This is all aimed at understanding our customers as well as we can and making ourselves an even better bank.
17 13 You ve obviously never visited comdirect.de As easy and convenient as possible: that s banking and brokerage with comdirect. And every day we strive to be even better.
18 14 Corporate Governance / Report of the Supervisory Board 16 / Joint report by the Board of Managing Directors and the Supervisory Board of comdirect bank in accordance with Section 3.10 of the GermanCorporate Governance Code 20 / Compensation of the Board of Managing Directors and Supervisory Board 22 /
19 FOREWORD THE BOARD OF MANAGING DIRECTORS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 15 > Corporate Governance Management and control at comdirect bank are based on generally accepted high standards and comply with the respective valid and applicable legal framework conditions and regulations as well as the requirements of the German Corporate Governance Code (GCGC), unless expressly excluded in the Declaration of Compliance. The recommendations and suggestions in the current version of the GCGC are implemented with only a few exceptions. With the support of the Corporate Governance Officer, the Board of Managing Directors and Supervisory Board closely monitor developments in the ongoing Corporate Governance discussion and systematically refine the standards in place at comdirect bank. The guiding principles of our responsible company management are cooperation based on trust between the Board of Managing Directors, which manages the company, and the Supervisory Board, which advises and monitors the Board of Managing Directors and exercises its control function efficiently and independently, focus on company interest at all times, responsible and effective risk management, compliance with and monitoring of legal requirements and supervisory regulations, as well as timely and transparent communication both internally and outside the company. These principles are firmly established in all areas of the bank and determine the framework parameters for strategic decisions and business policy. Details regarding the tasks of and cooperation between the executive bodies are provided in the Corporate Governance statement, which is available as a download on our website. The principles governing risk management and control are outlined in the risk report (pages 89 to 98). Information on the compliance function is contained in our Corporate Governance report on pages 20 to 21, while our communication with shareholders is detailed in the section The share in the group management report (pages 80 to 82).
20 16 > Report of the Supervisory Board Cooperation between the Board of Managing Directors and the Supervisory Board The Supervisory Board worked in close partnership with the Board of Managing Directors of comdirect bank in financial year 2011, providing regular advice and monitoring the management of the company. We have comprehensively performed all of the duties incumbent upon the Supervisory Board under the legal framework conditions and regulations, the German Corporate Governance Code (GCGC), the bank s Articles of Association and the Rules of Procedure of the Supervisory Board. Furthermore, the Chairman of the Supervisory Board was given detailed information on all events that were of significant importance for the assessment of the situation and development as well as for the management of the company, including in regular meetings with the full Board of Managing Directors. He maintained frequent contact with the CEO and in particular, conferred with him with respect to the strategy, business development and risk management of comdirect bank. In addition, the Chairman arranged for important matters to be addressed by the Supervisory Board committees. Main focus of advice and monitoring activities in 2011 The Supervisory Board met at four regularly convened meetings in financial year 2011 on 10 March, before the annual general meeting on 12 May, 25 August and 24 November Progress reports on the status of implementation of the complus programme launched in 2008 remained a central topic. We obtained extensive information on the further development of the range of products and services offered by comdirect bank AG. The Board of Managing Directors kept us continually informed with regard to the various major projects carried out in 2011, such as the introduction of CFD trading and limit functions in OTC trading. Another focus was the strategic further development of ebase and the B2B business line. In addition, together with the Board of Managing Directors we have started to discuss the future strategy following completion of complus in As part of our deliberations, we obtained information on the bank s development on the basis of the mediumterm planning and also looked at the agenda for the following year. Moreover, the Supervisory Board regularly examined the risk position of the bank, with one of the main focal areas being the discussion on the overall risk strategy in line with the minimum requirements for risk management (MaRisk). In view of the ongoing financial market crisis, the focus also remained on the current market and credit risk situation in comdirect's Treasury portfolio and on reducing its exposure to the PIIGS states in particular. Furthermore, the comdirect bank s Board of Managing Directors kept us informed about the performance of key indicators and their impact on the bank's earnings situation, financial situation and assets. In this context, we also monitored the market and competitive environment of comdirect bank. In addition to face-to-face meetings, the Supervisory Board used the written ballot procedure and conference calls to adopt resolutions based on the recommendations of the Presiding Committee, including the resolution specifying the criteria to be used to assess the variable compensation component for the Board of Managing Directors for financial years 2011 and The Supervisory Board also adopted a resolution on the new compensation model for certain specialist functions and managers, the new compensation model for members of the Board of Managing Directors of comdirect bank AG and a group company loan increase. In financial year 2011, Dr. Christian Diekmann and Mr Carsten Strauß were each appointed as members of the Board of Managing Directors for a further five years by the Supervisory Board. Activities of the committees In order to improve the efficiency of Supervisory Board activities and to deal with complex issues, some matters were referred to the Presiding Committee or Audit Committee for a decision or for the purpose of preparing resolutions.
21 FOREWORD THE BOARD OF MANAGING DIRECTORS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 17 The Audit Committee of the Supervisory Board met three times in the reporting year on 10 March, before the annual general meeting of the bank on 12 May and on 24 November. The topics intended for discussion at the Audit Committee meeting in August were dealt with and discussed by the full Supervisory Board as a result of the temporary shortage of committee members due to Dr. Kassow's resignation. The meetings were also attended by at least one representative from the auditors commissioned for the year-end audit and review of the interim financial statements respectively. At the meeting on 10 March 2011, the Audit Committee of the Supervisory Board dealt with the preliminary examination of the financial statements and dependency report as well as the independence of the auditors of the annual and consolidated financial statements. Topics discussed at the other meetings included the report from the auditors conducting the review of the interim financial statements. At all meetings, the Audit Committee of the Supervisory Board discussed in depth the status and further development of risk management and the risk position of the bank and its subsidiary. In addition to the respective current market and credit risk situation in comdirect s Treasury portfolio, the focus was on the investment of deposits with other companies in the Commerzbank Group and other counterparties. The underlying investment strategy and the plans for further greater utilisation of the Commerzbank Group for money market and capital market transactions were regularly discussed by the Audit Committee. The Audit Committee received the Compliance Officer s report and was informed about the overall audit report from Internal Audit for the financial year. The Chairman of the Audit Committee obtained comprehensive information from the Head of Internal Audit prior to the meeting. There were no major findings in the reporting year. At the meeting of the Audit Committee on 12 May 2011, the Chairman was authorised to sign the contract commissioning the auditors PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Frankfurt/Main, Hamburg branch, selected by the annual general meeting on the same date, to audit the annual and consolidated financial statements, including the management reports as of 31 December In November it approved the commissioning of PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Frankfurt/Main, Hamburg branch, with tax advisory services for financial year We have obtained a certificate of independence from the auditors. No business, financial, personal or other relationships exist between the auditors and their executive bodies and audit managers on the one hand and comdirect bank and its Board members on the other, which could give rise to doubts with regard to their independence. In addition, the Audit Committee of the Supervisory Board dealt with the results of the annual custody account/ Securities Trading Act audit, company audit and foreign trade audit as well as the main areas of the audit of the annual financial statements The Presiding Committee of the Supervisory Board met once during the reporting year on 24 November. Furthermore, after extensive deliberation in each case, resolutions were adopted by means of the circulation procedure. These related to the recommendation to the Supervisory Board to determine the variable compensation component for the members of the Board of Managing Directors for financial year 2010 as well as to specify the criteria to be used to assess the variable compensation component and agreed targets for financial year 2011 and financial year 2012, the recommendation to the Supervisory Board to increase loans granted to the Commerzbank Group, as well as the acceptance of seats on other boards by members of the Board of Managing Directors. The Supervisory Board approved the above recommendations of the Presiding Committee by means of the written ballot procedure and conference calls. A detailed report on the activities of the committees was provided at the full Supervisory Board meeting. The Supervisory Board has not formed any committees other than the Presiding Committee and the Audit Committee.
22 18 Efficiency of Supervisory Board activities The Supervisory Board reviews the efficiency of its activities on an annual basis. Following the extensive efficiency review conducted in March 2010, we discussed the current status in our meeting on 10 March The activities of the Supervisory Board and its committees were once again unanimously judged to be efficient. No conflicts of interest were reported with regard to a member of the Supervisory Board. The Corporate Governance Officer provided a comprehensive written report to the Supervisory Board and prepared the Declaration of Compliance with the German Corporate Governance Code from the Board of Managing Directors and the Supervisory Board in accordance with Section 161 of the German Stock Corporation Act (AktG). The declaration was approved at our meeting on 14 March In line with the recommendation in the GCGC, we adopted a resolution on the objectives for the composition of the Supervisory Board at the meeting on 25 August 2011; details of this are provided in the joint Corporate Governance report by the Board of Managing Directors and the Supervisory Board. Approval of the annual financial statements and dependency report The annual financial statements of comdirect bank (in accordance with the German Commercial Code, HGB), the management report of comdirect bank (in accordance with the German Commercial Code, HGB) and the consolidated financial statements and group management report (in accordance with IFRS), including the underlying bookkeeping for financial year 2011, have been examined and audited by the auditors, who issued an unqualified audit certification. The above documentation, the audit reports and the proposal of the Board of Managing Directors for the appropriation of the distributable profit were promptly made available to the members of the Supervisory Board. The German public accountants who sign the annual financial statements, amongst others, took part in the meeting of the Audit Committee on 14 March 2012 and the subsequent meeting of the Supervisory Board dealing with the approval of the annual accounts. They reported on the key findings of the audit and answered questions. The result of the audit was discussed thoroughly with the Audit Committee. The Audit Committee then proposed to the Supervisory Board that the annual financial statements be approved. The Supervisory Board has acknowledged the results of the audit. Within the scope of the legal provisions, it has examined the annual financial statements and management report, the consolidated financial statements and group management report and the proposal of the Board of Managing Directors for the appropriation of the distributable profit and raised no objections. In its meeting on 14 March 2012, the Supervisory Board approved the annual financial statements and consolidated financial statements prepared by the Board of Managing Directors. Accordingly, the annual financial statements are regarded as adopted. The Supervisory Board endorses the proposal for the appropriation of the distributable profit. Furthermore, the report of the Board of Managing Directors on the bank s relationship with affiliated companies was submitted to the Supervisory Board together with the associated auditors report. After completing the audit, the auditors raised no objection to the report of the Board of Managing Directors and issued the following unqualified certification: After conducting our audit in accordance with the professional standards, we confirm that the actual details of the report are accurate and the fees paid by the company for the legal transactions detailed in the report were not disproportionately high, nor were any disadvantages compensated. The Supervisory Board examined the report of the Board of Managing Directors and approves the report as well as the auditors findings of the audit. After completing its examination, the Supervisory Board finds no cause for objection to the concluding statement concerning the relationship with affiliated companies made by the Board of Managing Directors in the report.
23 FOREWORD THE BOARD OF MANAGING DIRECTORS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 19 As part of the audit, the auditors also assess whether the Board of Managing Directors has implemented a monitoring system and has fulfilled the legal requirements concerning the early detection of risks that are likely to threaten the existence of the company. The auditors have confirmed that the risks described in the management report are presented accurately and that the measures taken by the Board of Managing Directors in accordance with Section 91 (2) of the German Stock Corporation Act (AktG) are conducive to early detection of developments that are likely to threaten the continued existence of the company. Furthermore, the auditor confirmed the effectiveness of the accounting-related internal control system with a positive assessment. Changes in the Supervisory Board Dr. Achim Kassow resigned from the Supervisory Board with effect from 30 June Ms Karin Katerbau was appointed by the courts as an interim member of the Supervisory Board with effect from 11 October 2011 until the annual general meeting in At the Supervisory Board meeting on 24 November 2011, Mr Annuscheit was elected Deputy Chairman of the Supervisory Board and a member of the Presiding Committee. Mr Rönnberg was elected Chairman of the Audit Committee of the Supervisory Board of comdirect bank AG. Ms Katerbau was elected as a member of the Audit Committee. We would like to take this opportunity to thank Dr. Kassow for his dedicated commitment and outstanding performance on the Supervisory Board of comdirect bank. Thanks for excellent performance We would like to thank the members of the Board of Managing Directors and all of the employees of comdirect bank for an excellent performance once again in financial year We would like to thank the staff council for their constructive cooperation at all times. Frankfurt, 14 March 2012 The Supervisory Board
24 20 > Joint report by the Board of Managing Directors and the Supervisory Board of comdirect bank in accordance with Section 3.10 of the GCGC Implementation of the recommendations of the German Corporate Governance Code The Government Commission for the German Corporate Governance Code (GCGC) refrained from revising the GCGC in 2011 and the version of 26 May 2010 therefore remains valid. comdirect bank had already declared in the previous year that in accordance with the Code recommendations of the GCGC it will take diversity into consideration when filling Supervisory Board, Management Board and managerial positions in the company and strive to achieve an appropriate degree of female representation. The first half of 2011 saw the launch of a project aimed at increasing the proportion of women in managerial positions in the comdirect group. The measures to support women include cooperation with women s networks at universities, diversity training and mentoring programmes. At the end of 2011, the proportion of female managers stood at more than 20%; in the training programmes for junior specialists and executives, the share amounted to 30%. As these levels are already high and significantly above the average for German companies, we have decided not to introduce any fixed quota for women. Nonetheless, sections (When filling managerial positions in the enterprise, the Management Board shall take diversity into consideration) and (When appointing the Management Board, the Supervisory Board shall also respect diversity) continue to be implemented in full. At its meeting in August 2011, the Supervisory Board revised the person specification for its members including its objectives for the composition of the executive body. This text now reads: The aim is for the composition of the Supervisory Board to ensure the qualified supervision of and advice for the management of the bank by the Supervisory Board, whereby it cannot be expected that every single member of the Supervisory Board possesses all the necessary expertise and experience to the full extent. Nevertheless, at least one member of the Supervisory Board should be available as a competent contact partner for each aspect of Supervisory Board acti vity so that the extensive expertise and experience is reflected by the members of the Supervisory Board as a whole. However, certain indispensible general knowledge, expertise and experience is required of every member of the Supervisory Board. Taking into account the general age limit of 72 years set by the Supervisory Board, candidates are to be proposed who through their integrity, motivation, independence and character are in a position to perform the tasks of a Supervisory Board member of a modern retail bank and to maintain and enhance the reputation of comdirect bank in the public domain. Diversity is to be taken into account in the composition of the Supervisory Board; on the shareholder side, at least one woman must be represented on the Supervisory Board. As a result of the now included quantitative target for female representation on the Supervisory Board, comdirect bank now implements Section clause 3 of the GCGC in full. The current composition of the Supervisory Board meets the objectives. In contrast, a new deviation from the recommendations of the GCGC arises as a result of the adjustment to the compensation system for the Board of Managing Directors carried out in the year under review in implementation of the executive compensation regulation for banks (InstitutsVergV). The regulations collide with the recommendation in Section of the GCGC, whereby retroactive changes to the performance targets or the comparison parameters should be excluded with regard to the variable compensation components for members of the Board of Managing Directors; a deviation from the GCGC is therefore unavoidable. As in the previous year, the second deviation relates to Section of the Code. According to this recommendation, the Supervisory Board should form a nomination committee which is composed solely of representatives of the shareholders and which suggests suitable candidates to the Supervisory Board for its election proposals to the annual general meeting. The Supervisory Board of comdirect bank comprises a total of six members, four of whom are shareholder representatives. Forming an additional committee from its membership would in our opinion be an excessive structuring of the Board. In addition, there are no apparent reasons as to why the full Supervisory Board should not itself be able to achieve the improved transparency of the selection procedure intended by the Government Commission through the introduction of nomination committees.
25 FOREWORD THE BOARD OF MANAGING DIRECTORS CORPORATE GOVERNANCE GROUP MANAGEMENT REPORT CONSOLIDATED FINANCIAL STATEMENTS 21 Further information on the German Corporate Governance Code In addition to the Declaration of Compliance, each year the Board of Managing Directors and the Supervisory Board provide information about compliance with the suggestions in the GCGC. We also comply with the suggestions with only a few exceptions. The deviations arise where implementation of some suggestions does not appear reasonable in comdirect bank s specific situation or where the additional benefit to shareholders appears doubtful. In Section 3.6, the GCGC suggests that in supervisory boards with codetermination, representatives of the shareholders and the employees should prepare the supervisory board meetings separately. As in-depth exchanges of information take place in the Supervisory Board of comdirect bank, we consider such preparations to be unnecessary. Meetings are only prepared separately when required. Contrary to the suggestion in Section clause 5 of the GCGC, profit-oriented compensation of the Supervisory Board does not contain a component that relates to the long-term success of the company, but rather is tied to the possible payment of a dividend. We consider the different calculation basis for performance-related components for the compensation of the Board of Managing Directors and the Supervisory Board to be appropriate. The Corporate Governance statement, including the Declaration of Compliance, adopted on 14 March 2012 at the accounts meeting of the Supervisory Board as well as the Corporate Governance and compensation report for financial year 2011 are available on the company website at Previous versions of the above documents as well as the Articles of Association and the full German Corporate Governance Code can also be viewed there. In addition, the website includes information on the latest changes to our Corporate Governance standards. Compliance The sustainability, effectiveness and independence of the compliance function at comdirect bank (Compliance Office) as well as the responsibilities, rights and obligations of this office are regulated in the compliance policy. The role of the Compliance Officer is assumed by the Head of Legal Services/Compliance, Mr Dietmar Gabor; he is also the Money Laundering and Corporate Governance Officer at comdirect bank. When implementing the Act Implementing the Second E-Money Directive", comdirect bank s Money Laundering Officer has also assumed the function of the central office to prevent criminal offences (Section 25c German Banking Act, KWG) and established an anti-fraud policy, a cross-divisional criminal offences network and a web-based whistleblower system via which customers, employees and other third parties can provide information online regarding financial fraud at any time. In accordance with the supervisory regulations, comdirect bank s Compliance Office is also responsible for monitoring whether the controlling specified in the work and organisational instructions is carried out correctly and regularly by the specialist departments (ICS control monitoring). This showed that the process-dependent internal control system (ICS) is effective. Directors Dealings Only one notifiable acquisition and disposal transaction was carried out by Board members and executives in special positions at comdirect bank in financial year 2011: Date Name Position Transaction Price No. Amount Carsten Strauß Member of the Board of Managing Directors Disposal ,000 95,697.60