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Last year, we started to restructure the retail outlet business in the FINANCIAL SERVICES
Corporate Division. In a further step, Postbank will take over 850 retail outlets from
Deutsche Post. ese are mostly Postbank Centers, where Postbank is currently generat-
ing more than 80% of its new business from the outlet network.
e signing of a purchase agreement for the acquisition of 76.4% of shares in BHW Hold-
ing allowed Postbank to expand its product portfolio and customer base. Its aim is to
further enhance its own sales strength. Postbank is already Germany’s leading retail bank.
e purchase agreement also ensures that Postbank does not acquire any risks associated
with Allgemeine Hypothekenbank Rheinboden AG. Higher nancial costs are planned in
2006 and 2007 for BHW’s integration into Deutsche Postbank AG. Integration is currently
expected to proceed rapidly and smoothly.
Postbank’s extensive experience in monitoring and managing its risks limits the danger
of sudden uctuations in earnings. e banking business is exposed to risks arising from
changes in market prices, possible loan defaults and operational risks. Postbank’s risk limit
system is monitored on a regular basis, as well as being systematically enhanced with an
eye towards the Basel II capital adequacy requirements that apply as of January 1, 2007.
Legal risks from pending legal proceedings
Due to our market leadership position, a large number of the services we oer are subject
to sector-specic regulation in accordance with the Postgesetz. e regulation framework
implemented by the regulatory authorities covers in particular price review and approval
procedures, the formulation of terms of downstream access and general checks for market
abuse. e resulting proceedings may lead to a decline in revenue and earnings.
Legal risks arise, for example, from the appeals pending before the administrative courts
against the regulatory authority’s July 2002 ruling concerning the conditions for the price-
cap procedure, as well as from two appeals respectively against price approvals granted
under the price-cap procedure for the years 2003, 2004 and 2005.
European Commission competition proceedings were initiated on the basis of accusations
about excessive mail prices made by the Deutscher Verband für Post und Telekommuni-
kation (German Association for Posts and Telecommunications). In these proceedings, we
have presented detailed evidence to support our argument that the prices are reasonable.
Conditions determined by the regulator oblige us to allow customers and competitors
downstream access to our network. Proceedings are pending before the administrative
or civil courts and the Court of First Instance of the European Communities against the
relevant rulings by the regulatory authority, the Bundeskartellamt (German Federal Anti-
trust Authority) and the European Commission. Depending on the outcome of the pro-
ceedings, we could be faced with further losses of revenue and earnings. We would like to
highlight the following cases:
Annual Report 2005
72