DHL 2003 Annual Report Download - page 89
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Safeguarding the Future
Postbank’s business operations are exposed to material risks arising from
changes in market prices and possible loan defaults. Postbank has an extensive set of
instruments at its disposal for monitoring and managing risk, for instance in the areas
of foreign exchange trading, securities trading, and lending. Postbank’s Management
Board has established a limit system, compliance with which is monitored on a daily
basis. Postbank has also designed a system to measure and manage operational risks
and began to implement it in the year under review to fulfill the capital adequacy
requirements set out in the second consultation paper of the Basel Committee on
Banking Supervision (“Basel II”), which will probably be applicable from 2006.
Legal risks arise from the cases pending before the European Commission: in
the competition proceedings, which were initiated on the basis of accusations of
excessive mail prices made by the Deutscher Verband für Post und Telekommunikation
(DVPT – German Association for Posts and Telecommunications), we have presented
the European Commission with detailed evidence of the reasonableness of our prices.
In addition, we are obliged to allow customers and competitors partial access to
our networks in accordance with conditions determined by the regulator. Depending
on the outcome of ongoing proceedings against the final decision by the RegTP in the
administrative courts, the European Court of Justice, and the European Commission,
there could be a substantial decline in revenue and earnings.
Additional risks arise from the pending cases before the Cologne administrative
court against the RegTP’s decision about the parameters of the price-cap procedure in
July 2002 as well as against the RegTP’s concrete price approvals for 2003 and 2004.
The European Commission’s ruling in the state aid proceedings required
Deutsche Post to repay the Federal Republic of Germany state aid of €572 million plus
interest (€907 million in total). Although we immediately filed an appeal against this
ruling, we were required to repay this amount in January 2003.
On January 21, 2004, the European Commission issued a state aid ruling on the
assumption by the Belgium government of telecommunications company Belgacom’s
pension obligations to employees. Some press releases reported that the European
Commission was planning to apply the state aid principles of this decision to Deutsche
Post AG if the European Courts grant Deutsche Post AG’s appeal against the European
Commission’s state aid ruling dated June 19, 2002. According to these press releases,
this could result in a substantial financial burden for Deutsche Post AG.
Management Report