A N N U A L R E P O R T 2 0 0 9

KEY FIGU RES

Million € 2009 2008 2007

Business volume* 19,022 21,974 17,874

Ship finance business

New loans 2,007 4,928 4,923

(US-$ equivalent in million) (2,891) (7,210) (6,790)

Loans outstanding as at 31.12. 11,636 11,992 9,264

(US-$ equivalent in million) (16,763) (16,681) (13,636)

Commitments as at 31.12. 2,470 4,611 4,001

(US-$ equivalent in million) (3,558) (6,420) (5,890)

Equity capital

Subscribed capital + reserves 950 550 550

§ 340g HGB reserve 45 45 45

Participation rights / Subordinated liabilities 436 441 388

Profit and loss account

Net interest and commission income 159.7 169.3 160.6

Administrative expenses 31.0 24.9 24.4

Operating profit

- before risk provisions 133.0 142.7 138.9

- after risk provisions 23.5 1.3 101.3

Taxes 22.1 1.0 48.9

Net profit / loss - 0.3 0.3 52.4

Amount transferred to earnings reserves - - 20.0

Dividend per share ( face-value € 520) - - 290 €

Cost / income ratio 19.4 % 14.7 % 15.2 %

Return on equity before taxes

before risk provisions 23.0 % 33.7 % 34.3 %

after risk provisions 4.1 % 0.3 % 25.0 %

Rating Moody's A2/P-1/D A2/P-1/C+ A2/P-1/C+

* total assets + guarantees + commitments

ANNUAL REPORT 2009

CONTENTS

Supervisory Board 2

Trustees 2

Senior Management 3

Deputy General Managers 4

Advisory Board 4

REPORT OF THE BOARD OFMANAGING DIRECTORS 6

Overview 8

World Merchant Fleet 10

Individual Markets 14

Shipbuilding 24

Business Report 26

REPORT OF THESUPERVISORY BOARD 44

WORKING HAND IN HAND 48

ANNUAL STATEMENTOF ACCOUNTS 62

Balance Sheet as at 31 December 2009 64

Profit and Loss Account 66

Appendix to the Annual Statement of Accounts 67

ATTESTATIONOF THE LEGAL REPRESENTATIVES 84

AUDITOR S REPORT 85

Figures in brackets refer to the preceding year.

2

Jochen KlösgesChairman

Member of the Board of Managing DirectorsCommerzbank AG, Frankfurt /Main

Klaus Müller-GebelDeputy Chairman

Solicitor,Frankfurt /Main

Dr. Thomas BleyMember of the Board of Managing DirectorsEUROHYPO AG,Eschborn

Lutz DiederichsMember of the Board of Managing DirectorsUniCredit Bank AG, München

Irmgard von der FechtBank employeeDeutsche Schiffsbank AG, Hamburg

Ute KösterBank employeeDeutsche Schiffsbank AG, Bremen

SUPERVISORY BOARD

TRUSTEES

Ulrich KellerSenior Civil Servant ( retired)Bremen

Dr. Thomas BrinkmannDeputySolicitor and NotaryBremen

Wilfried LaugwitzDeputySenior Civil ServantHamburg

Dr. Horst-Michael PelikahnDeputySenior Civil ServantHamburg

3

SENIOR MANAGEMENT

Werner WeimannMember of the Board of Managing Directors(Spokesman)

Tobias MüllerMember of the Board of Managing Directors

Dr. Rainer JakubowskiMember of the Board of Managing Directors

Dr. Stefan OttoExecutive Vice President

Stefan KuchGeneral Manager International Loans

Jeremy ScottGeneral Manager Treasury

4

Klaus Müller-GebelChairman

Solicitor, Frankfurt/Main

Udo BandowDeputy Chairman

Honary President Hanseatischen Wertpapierbörse, Hamburg

Lutz DiederichsDeputy Chairman

Member of the Board of Managing DirectorsUniCredit Bank AG, München

Jürgen Bentlage Bremen

C. Andreas BunnemannManaging PartnerHerm. Dauelsberg GmbH & Co. KG, Bremen

Jochen DöhleManaging PartnerPeter Döhle Schiffahrts -KG, Hamburg

Hermann EbelMember of the Board of Managing Directors and PartnerHansa Treuhand Schiffsbeteiligungs GmbH & Co. KG, Hamburg

Sven -Michael EdyeMember of the Board of Managing DirectorsSloman Neptun Schiffahrts -Aktiengesellschaft, Bremen

Shaun HarbinsonManaging DirectorMPC Münchmeyer Petersen Marine GmbH, Hamburg

Alfred HartmannChairman of the Supervisory BoardHartmann AG, Leer

ADVISORY BOARD

DEPUTY GENERAL MANAGERS

Lars BohligInternational Loans

Dr. Benedikt FechtrupManagement Support

Dr. Jochen FryschFinance

Claus GanterRisk Management

Kay-Udo GienckeIT/Organisation

Oliver HenkelDomestic Loans

Frank MassowFinance

Klaus StamerInsurances

Philipp WünschmannDomestic Loans

5

Stefan JüngerhansManaging DirectorJüngerhans Maritime Service GmbH & Co. KG, Haren/Ems

Dr. Hermann KleinMember of the Board of Managing DirectorsGermanischer Lloyd AG, Hamburg

Dr. Bernd KortümManaging PartnerNorddeutsche Vermögen Holding GmbH & Co. KG, Hamburg

Frank LeonhardtManaging PartnerLeonhardt & Blumberg Reederei GmbH & Co. KG, Hamburg

Robert Lorenz-MeyerManaging PartnerErnst Russ GmbH & Co. KG, Hamburg

Thorsten MackenthunManaging DirectorHanseatic Lloyd Reederei GmbH & Co. KG, Bremen

Dr. Jens Meier-HeddePartnerSchlüssel Reederei KG (GmbH & Co.), Bremen

Dr. Klaus Meves Hamburg

Bernard MeyerManaging PartnerMEYER WERFT GmbH, Papenburg

Claus-Peter OffenManaging PartnerReederei Claus-Peter Offen GmbH & Co. KG, Hamburg

Dr. Eberhart von RantzauManaging DirectorDeutsche Afrika-Linien GmbH & Co. KG, Hamburg

Johann-Stefan ReithManaging DirectorOrionbulkers GmbH & Co. KG, Hamburg

Erck RickmersManaging PartnerE. R. Capital Holding GmbH & Cie. KG, Hamburg

Dietrich Scheder-BieschinManaging DirectorMACS Maritime Carrier Shipping GmbH & Co., Hamburg

Dr. Axel SchroederManaging PartnerMPC Münchmeyer Petersen & Co. GmbH (MPC Holding), Hamburg

Jan-Wilhelm SchuchmannManaging DirectorBugsier-, Reederei- und Bergungs -Gesellschaft mbH & Co. KG, Hamburg

Nikolaus H. SchüesShipownerReederei F. Laeisz Schiffahrtsgesellschaft mbH + Co. KG, Hamburg

Christiane E. ScolaShipownerReederei “Nord” Klaus E Oldendorff GmbH, Hamburg

Niels StolbergManaging DirectorBELUGA SHIPPING GmbH, Bremen

Nicholas TellerManaging PartnerE. R. Capital Holding GmbH & Cie. KG, Hamburg

Harald WinterManaging PartnerWalther Möller & Co. (GmbH & Co) / Reederei Gebr. Winter GmbH & Co. KG, Hamburg

Dr. Henning WinterNeumünster

REPORT OF THE BOARD OF MANAGING DIRECTORS

8

OVERVIEW

The financial crisis, which had its origin in theAmerican real estate market and culminated in the collapse of the investment bank Lehman Brothers,spilled over onto industry, retail markets and services in the autumn 2008, leading to a crash ofglobal business activities and the deepest recessionsince the Second World War. Supporting measuresfrom central banks and governments prevented the total breakdown of the capital markets. The economic slide came to a halt mid-2009. After thebig crisis, financial markets have since firmed, and the economic outlook for the global economy brightened noticeably in recent months. Supportedby substantial fiscal and monetary intervention,markets started to recover in the third quarter andthis process should continue over the next twoyears, albeit at a slower pace. The importance ofgovernment supportive measures is set to decreaseover time, while market forces will gain momentum,particularly in the dynamic emerging Asian countries,with China taking the lead. Recovery in industrial nations will be comparatively moderate. However, economic setbacks cannot be excluded, and compared to recent boom years, global trade willgrow only marginally in 2010.

The global economic weakness has had a lastingeffect on the maritime industry. Shipping, the backbone of world trade, was hit hard by theeconomic slump, falling sharply from the very highlevels which existed until mid-2008. Cargo volumes,and subsequently transport demand, decreased,while the world merchant fleet increased, leading to rising excess tonnage, thereby putting more pressure on freight and charter rates. To someextent, both container and tanker markets recordeda slump in earnings. The container trade recoveredsomewhat, but on a low level in the third quarter2009. The dry bulk trade fell to some extent, butproved to be relatively firm thanks to demand from China.

Conditions for ship finance worsened worldwide,both on the equity and the debt side, despitegovernmental measures to stabilise global markets.As funding became more expensive, mainly due to the poor market outlook, banks adjusted theircredit terms or restricted their new loan business,and demand from owners was also down. Thebanks´ activities were basically limited to drawdownsunder existing loan commitments and necessaryrestructuring of existing exposure. It was nearlyimpossible in 2009 to obtain equity for newbuildingprojects. The second-hand market for tankers andcontainer vessels collapsed.

As a consequence of falling charter rates, vesselsoften did not earn enough to pay instalments, interest or even operating expenses. Layups, increasedscrapping, postponement and cancellation ofnewbuilding contracts, brought only marginal reliefin 2009.

The International Monetary Fund (IMF) predicts that the world economy will grow by 3.9 per cent in2010, after a decline of 0.8 per cent in 2009. Thisshould stimulate seaborne trade and bring somerelief to the markets, although the ongoing influx ofnew vessels and only marginal relief from scrapping,postponement and cancellation of newbuilding contracts will pose some risk. Only a few newbuildingorders were placed in 2009.

Deutsche Schiffsbank’s loan advances reached € 2 billion in 2009, about 40 per cent lower thanthe previous year (€ 4.9 billion). Loan commitmentsamounted to € 2.5 (4.6) billion, 46 per cent lowerthan at the beginning of the year. About one thirdthereof is earmarked for drawdown in 2010. Due to weak charter rates, particularly in the containertrade, some of our customers were not able to service their loans as originally agreed, but overall,owners continued to pay on schedule. Contractual

9

repayments decreased slightly to € 1,454 (1,506)million. Although extraordinary loan reductions fellstrongly due to the difficult market situation, theystill amounted to € 0.5 (1.5) billion. Total repaymentsstood at € 2.0 (3.0) billion.

New loan advances were € 24.4 million higherthan repayments. The weaker US dollar was alsoreflected in our loan portfolio which decreased by € 356 million to € 11.6 billion.

The strongly increased funding costs, caused by the upheavals in capital markets, reduced duringthe course of the year. By the middle of the yearthe liquidity situation of the bank was already muchmore relaxed than it could have been expectedfrom the various scenarios projected during thefinancial crisis, thanks to the close cooperation withthe Commerzbank group, our lower shipping loanportfolio, less volatile foreign exchange markets andsubstantial long- term funding.

Our interest surplus and fee income was below theprevious year, totalling € 160 (169) million, due tohigher funding costs in money and capital markets.Our profit and loss account improved noticeablyduring the second half of the year as extra costs forUS dollars dwindled.

Earnings from our money market and foreignexchange derivative transactions, which accompanyour shipping loans, were again satisfactory. Becausewe restrained our new business activities, our netprovisions were, as expected, considerably lowerthan in 2008. Total administrative expenses grew to € 29.5 (24.3) million, due to higher staff andnon-personnel costs. Our operating result beforerisk provisions was just short of € 133 (143) million.

Due to the ongoing pressure on freight rates andvessel values in most market segments, and

prospective loan defaults, a substantial amount was allocated for individual and general risk provisions.Markets for securities recovered, partly substantially,during the course of the year. Our bond portfoliocontains only paper issued by banks, governmentsand public bodies, for the most part from theEuropean Union.

After risk provisions and taxes, our profit and lossaccount showed a net loss of € 0.3 (+ 0.3) million.We view this result as a success achieved underdifficult circumstances.

Because the bank made no profit in 2009, no interest payments will be made for undisclosedpartnerships and profit participation certificates inaccordance with the underlying contracts.

The world merchant fleet grew once again by 7 percent, to 1.2 billion dwt, in the year under review.Fewer vessels than anticipated entered the market,particularly fewer bulk carrier and container vessels.

Nevertheless, the bulk carrier fleet, as well as thestandard tanker and gas tanker fleets (LNG + 28.4per cent) rose strongly. Bulk carriers grew by twiceas much as the year before to 460 (418) milliondwt, and capesize bulkers alone grew by 18 percent. Due to scrapping and postponement ofdelivery dates, the container fleet did not increaseby 1.85 million teu, as expected in the New Year,but only by 0.8 million teu or 6.5 per cent.Provided, this year´s demolitions, postponementsand cancellations of newbuilding contracts are atthe level of 2009, fleet growth should be below10 per cent, instead of 14 per cent as forecast. Tanker markets will also have to cope with a substantial influx of newbuildings, and although single hull tonnage will be phased-out in 2010 in

WORLD MERCHANT FLEET

4321

150

125

100

75

50

25

0

in % of existing tonnage

Order books

0- 4 years

5 -9 years

10-14 years

15-19 years

20 years and older

Crude oil / Product tankers 1 Bulk carriers 2

Container ships 3 Overall 4

Source: Clarkson Research Ltd. , London

Age structure / Order books

accordance with IMO regulations, the fleet willmost probably increase.

Newbuilding deliveries were higher than in any year before. At the same time, demolition, primarilyof bulk carriers (10 million dwt) but also containervessels and tankers, rose strongly, a trend whichhad started in the fourth quarter 2008, amid fallingscrap prices. The capacity of scrapped vessels morethan doubled in 2009, reaching a 13 year high.1,014 vessels with a total capacity of 31.5 million dwtwent to the scrap yards, primarily in Bangladesh,India and Pakistan.

Relative to the fleet size, the proportion of old tonnage was only marginally down. 6 per cent ofcontainer vessels, 8 per cent of tankers, and 23 percent of bulk carriers are aged 20 years or more. Invarious areas of specialised shipping, the proportionis higher.

10

11

Due to the economic downturn, transport demanddecreased in most segments, resulting in excesstonnage supply. On average, 10 per cent of thecontainer fleet capacity was unemployed. Theemployment situation varied in the various segments.Nearly 90 per cent of bulk carriers, 84 per cent ofthe tanker fleet, 73 per cent of container vesselsand only 62 per cent of car carriers were occupied.Slow steaming, especially of container vessels, andthe use of tankers as floating storage facilities, tiedup tonnage. As numerous vessels were no longerearning enough to pay interest and operating costs,owners increasingly started to lay up vessels to savecosts and in order to stabilise market conditions. Of the container carrying tonnage, about 12 percent of the global slot capacity was unemployed atthe end of the year.

Newbuilding prices were decreasing sharply. Theyfell by 30 per cent on an annual average, and stood30 to 40 per cent below the peak of mid-2008 atthe year-end. However, hardly any newbuildingswere ordered. To some extent orders for containervessels were switched to tankers and bulk carriers.

As rates came under pressure, and because ofuncertain employment perspectives, owners´ invest-ment activities in the sale and purchase marketswere very low. Second-hand prices for tankersdecreased by 25 to 35 per cent, while bulk carrierprices were up to 15 per cent higher. Most tanker,bulker or container vessel sales were of the handysized category, because these vessels are less capitalintensive and can be more flexibly employed. In total, 55 (54) million dwt, worth US dollars 17 (36)billion, changed hands in 2009, which illustrates thesubstantial loss in ship values.

A significant number of vessels, mainly smallerand increasingly younger container vessels up to 3,000 teu, and bulk carriers up to 60,000 dwt,

were scrapped, particularly at the onset of 2009.However, due to rising freight rates for break bulk,bulker sales to scrap yards decreased during thecourse of the year. With 18 (10) million dwt, scrapping was still not very high, although 2009was the most active year since 1996. Scrappingpotential is very high and could bring some reliefto the markets in coming years. In 2009, Japan wasfor the first time the leading maritime nation with a share of 15 per cent, ahead of Greece with almost14 per cent. The German merchant fleet followswith 9 per cent and China is in fourth place with 7 per cent.

With a share of 35 per cent of container capacity,German shipping companies and limited partnershipcompanies are the undisputed leaders in this segment. They continued to expand their fleet, phasing in 120 newbuildings of 4.8 million dwt inthe year under review. The transport capacity of thedomestically registered German merchant fleet roseto almost 99 (97) million dwt.

The shipping and financial crisis had a noticeableimpact on investment activity and the market forventure capital in limited partnership companies inGermany. The dominance of container vessels wasdecreasing. The broadly diversified order backlog ofGerman owners consisted of 1,100 units, totalling20 (24.5) million cgt. With a market share of around12 (11) per cent and a contract value of US dollars53 (60) billion, German companies make up thesecond largest investor group in the world. Due to the lack of demand from investors, investment houses only managed to sell shares in limited partnership companies amounting to € 0.8 (2.9) billion.

Many owners and limited partnership companies will have to restructure, in order to be competitivein future. Apart from more equity, joint commitment

12

from shareholders, banks and owners is needed.The German maritime industry faces anotherdifficult year.

Greek shipping companies, whose presence in the tanker and bulk carrier markets is traditionallystrong, fared better in 2009 than originally expected.

However, decreasing freight rates and ship valuesleft their mark in the profit and loss accounts andbalance sheets of owners and IPO companies.Because it has become more difficult to borrowmoney and in view of deteriorating shipping markets,investment was drastically reduced, contracts cancelled or, at least, delivery dates postponed.Nevertheless, Greek owners are still actively expandingtheir business. Some shipping companies, whohave accumulated enough liquidity reserves during boom years to weather adverse market conditions for longer periods, managed to secure financing for

newbuildings or second-hand vessels. Almost one third of the global order book is for the account ofGreek shipping companies.

In 2009, Chinese banks appeared for the first timein the Greek market, trying to forge ties with Greekowners interested to build ships in China. Greekshipping companies expect improved investmentopportunities this year, anticipating further decliningship values. Supported with state funds and againstthe background of a strategic increase in marketshare, Chinese owners bought more second-handvessels than the Greeks for the first time in history.But unlike the Greeks, Chinese owners were primarily interested in older and therefore cheapertonnage, to cover rising domestic transport needs.

The capacity of the Norwegian merchant fleetdecreased somewhat to 42 (44) million dwt in theyear under review. With the exception of a few

00 01 02 03 04 05 06 07 08 2009I II III IV

105

120

135

0

75

60

45

30

15

90

million USD

Age of the vessels: 5 years

Tanker: VLCC

Container ship: 1,700 TEU geared

Bulk carrier: Panamax

Source : Own calculations, based onClarkson Research Ltd., London

Second-hand prices

13

limited partnership companies and some restructu-ring, 2009 was a relatively satisfactory year forNorwegian shipping companies, as they are not soexposed in the container market and because theyare traditionally strong in “industrial shipping”, i.e.the integration of specific tonnage into the supplychain, which is still doing relatively well thanks toexisting contracts. They have tried to mitigate problems in specialised markets, like car carriers,with massive scrappings, which should help tocompensate for the influx of new vessels and toavoid overcapacity.

The market for offshore supply vessels weakened.Rates for semi-submersibles were down and companies substantially reduced their investmentactivities, but in general, the rig market was relativelyfirm, due to the oil price which is rising again.

The Norwegian market is showing signs of a revival,both on the banking side and from some large,established shipping companies who are interestedin second-hand tonnage.

2009 was marked by a surge in defaults by a number of Asian charterers, especially dry-bulk operators that had taken in tonnage at very highrates just before the market collapse. Some ownersresorted to early redeliveries. This contrasted withthe more established Asian shipowners, who hadfixed their vessels out long - term to charterers ableto survive the market downturn.

There were fewer than expected major casualties in the Asian shipowning community, although anumber of owners with large order books were onlyable to avoid defaults by reverting to renegotiationsor deferrals of their newbuilding orders.The drastic collapse of asset values may have beenunder-pinned by new entrants to the market suchas mainland Chinese buyers and private-equity

funds as well as an increase in liquidity from cash-rich established owners re-entering the saleand purchase market.

A number of Asian banks re-entered internationalship financing whilst the top banks in China becamemajor lenders to their domestic shipowners.

The Chinese government´s stimulus measures wereshown to be effective with shipbuilding, as one ofthe industries included in China’s revitalisation plan,benefiting to the point of seeing the mainland’s shipyards overtaking South Korea to become theworld’s largest shipbuilding nation for newbuildingorders. Meanwhile, the mainland steel manufacturerscontinue to work with major Chinese shipowners tocontrol the transportation costs of iron ore by fixingvessels on long-term contracts.

14

The global economic downturn has had a lastingeffect on the maritime industry, although theemployment and earnings situation was somewhatbetter in 2009 than anticipated initially. However,cargo volumes decreased until mid-2009 and, as a consequence, capacity utilization was down, while the fleet size was growing, and as a result,excess tonnage was rising.

In the container and oil trades pressure on freightrates intensified, some market segments recoveredin the third quarter 2009, but at a low level. Shipvalues in these two core markets have decreasedsubstantially. The dry bulk trade fell to some extent,but proved to be relatively firm thanks to demandfrom China. However, the ongoing influx of newvessels, with only marginal relief from scrapping,postponement and cancellation of newbuilding contracts, will pose some risk. Only few newbuildingorders were placed in 2009. Owners, especially inthe container trade, reacted to the worseningemployment situation by dropping or consolidatingliner services, reducing their service speed orcancelling charter contracts. At the beginning of theyear, shipping companies were still profiting fromlow bunker costs, but price rises during the courseof the year had a detrimental effect on earnings.

The container trade, until mid-2008 a stronglyexpanding market, was hit very hard by lower con-sumer spending subsequent to the weak economy,particularly in industrialised nations, and the highinflux of new tonnage. Due to the imbalances bet-ween supply and demand, pressure in this marketsegment was intense, although the fleet grew by6.5 per cent, the lowest rate in the last ten years.Transport capacity only increased by 1.1 million teuin 2009, instead of 1.85 million teu as originallyplanned as numerous newbuilding deliveries werepostponed.

Although demolitions reached a new high - 180vessels totalling 343,000 went to scrap yards -scrapping potential within the fleet remains relativelylow and is primarily limited to small and medium-sized vessels (up to 3,500 teu) some of whichwere already scrapped in 2009. Even thoughdemand picked up during the third quarter, theemployment situation remained tight for all units.Following the major decline, liner companies managed to raise freight rates but pressure on freightand charter rates remains high.

INDIVIDUAL MARKETSCONTAINER VESSELS

15

Cargo volumes, and hence freight rates, decreasedsubstantially, by about 22 per cent, in the trans-Atlantic trade. Approximately 12 per cent of the fleetwas in lay-up at year-end. An economic revival,together with increasing demand from NorthAmerica, especially for European products from thechemical industry and mechanical engineering,could have a positive impact on transport demandand freight rates this year. Cargo volumes on theAsia-Europe leg were also much lower (-15 per cent).

Signs of recovery since the end of 2009, andincreasing freight rates in the first months of 2010,give rise to the hope that the worst is over. Onceagain, fewer vessels than originally anticipated are

expected to come on-stream in the current year, as postponements of deliveries continue. In ouropinion, the capacity increase will not be higherthan 9.5 per cent in 2010. The ongoing recovery of the world economy, with more vessels revertingto slow steaming, should have a positive effect ontransport demand and market conditions in the current year.

In view of considerable imbalances, and as 10 percent of the fleet is still without employment, a quickreturn to market conditions existing before the crisiscannot be expected. The employment conditions andearnings in the container trade are set to improve in the wake of the ongoing recovery.

00 01 02 03 05 06 07 08 200904I II III IV

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

USD/day

Modern tonnage

Panamax (3,600 TEU)

Handysize (1,700 TEU)

Feedermax (800 TEU)

Source: Own calculations, based onClarkson Research Ltd., London

Charter market container ships 1- year time charter

16

The market for multi-purpose vessels was relativelyfirm in the year under review, albeit at a low level,thanks to the characteristics of this type of vessel,such as flexibility with regard to cargo and employmentin niche markets. Although they could not avoid the fallout of the global recession, they benefittedfrom long-term infrastructure projects in China andfrom the installation and extension of wind farms.Therefore, the market situation was somewhat better than in the container and tanker trade.Modern units with heavy lift gear were more oftenin demand.

Charter rates in 2009 for modern vessels wereabout 50 per cent below their high before the crisis.During the year, rates were steady but at a low level.For the time being, a mild recovery is underway.

MULTI - PURPOSE VESSELS

The fleet consists of 3,000 vessels of 26 milliondwt, with an average age of 15 years, as at theyear -end. Deliveries were about level with the previous two years, totalling 151 units of 1.5 milliondwt. Numerous vessels were scrapped and thistrend is set to continue in the coming years. Aboutone third of the vessels with a capacity of up to750 teu are aged 20 years or more.

The order book stands at nearly 29 per cent ofthe fleet and 564, mostly large, container carryingunits (> 1,000 teu) totalling 7.4 million dwt orabout 400,000 teu respectively. About three quartersthereof are scheduled for delivery in 2010.

17

BULK CARRIERS

During the first half of 2009, charter rates recoveredfrom the slump of the previous year, reaching anannual high in June. Following an interim decrease,charter rates picked up again in September.

Chinese iron ore imports reached new recordswhile global demand for raw materials declined.629 million tons of iron ore were exported to Chinain 2009, 42 per cent more than the year before.

Overall, seaborne transport of iron ore rose signifi-cantly, with more than two thirds going to China. Asdemand for iron ore from steel plants outside China

00 01 02 03 04 05 06 07 08 2009I II III IV

120,000

110,000

100,000

90,000

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

USD/day

1- year time charter

Modern tonnage

Capesize

Panamax

Handymax

Source: Own calculations, based onClarkson Research Ltd., London

Dry bulk freight rates

is rising, cargo volumes in 2010 are set to increase substantially. China was also primarily responsiblefor higher coal transports in 2009, importing 127million tons, compared to 41 million tons in 2008.The order book makes up 59 per cent of the fleetcapacity at the year-end, but we expect that fewervessels will be delivered than planned.

18

Global oil consumption decreased by 1.5 per centdue to the economic crisis. OPEC reduced daily oiloutput in 2009 by 8 per cent to 28.7 million barrels, from 31.2 million barrels in 2008, to keepthe oil price from falling. As a result of the crisis,westbound traffic from the Arabian Gulf was primarilyaffected by the decrease in cargo volumes, whereasexports to Asia continued to rise, due to growingrefinery capacity. At the same time, fleet capacityincreased by 7 per cent. Smaller units grew aboveaverage, by 9 per cent, while larger tonnage wasonly up by 5 per cent.

Charter rates decreased during the year, both forcrude oil and product tankers, because demandfrom OECD states was down.

In expectation of higher oil prices and because storage ashore was full, decreasing transport volumes were partly compensated by using tankersas floating storage facilities. On average, more than4 per cent of the tanker fleet was used for storageand, according to one broker, up to 7 per cent (previous year 0) of the VLCC fleet was charteredfor that purpose. Apart from the larger LR1 and LR2types, product tankers did not benefit directly fromstockpiling and spot rates barely covered operatingexpenses. As at the year-end, the order book stoodat one third of the fleet.

CRUDE OIL AND PRODUCT TANKERS

00 01 02 03 04 05 06 07 08 2009I II III IV

30,000

70,000

0

50,000

40,000

20,000

10,000

60,000

USD/day

Modern tonnage

VLCC

Suezmax

Aframax

Product

Source: Own calculations, based onClarkson Research Ltd. , London

1- year time charterTanker freight rates

19

Until the fourth quarter 2008, the chemical tradewas a market which had been developing positivelyfor years, due to the great variety of cargoes transported, primarily liquid chemicals, but also oilproducts. The chemical tanker market has benefittedfrom higher IMO safety regulations enacted in 2007,which stipulate that vegetable oils and fats need tobe transported in IMO II tankers, and from growingglobal need for biofuels. The high order backlogreflects the positive sentiment which existed untilmarkets crashed. Industrial production and demandfor chemical products, and consequently cargo volumes, were down, while fleet capacity was up.The imbalances negatively affected the employmentand earnings situation.

The fleet grew by around 400 vessels totalling 9 million dwt, although delivery dates were postponedand newbuilding contracts cancelled. Units above50,000 dwt increased most. 78 vessels of 1.7million dwt were scrapped in 2009, and 130 units,aged 30 years or more, will probably be phased-outin 2010.

CHEMICAL TANKERS

At the year- end, the active fleet consisted of3,400 vessels, totalling 42 million dwt, and 690newbuilding orders of 14 million dwt, i.e. aroundone third of the existing fleet. Although the marketshould have bottomed out from its low in thesecond half of 2009, demand is set to increaseonly moderately this year.

20

The influx of new LNG ( liquefied natural gas ) tankers continued, irrespective of the delays in thestart-up of LNG production facilities ( to which LPGis a by -product ) which gave rise to their orders.Transport volumes of LNG increased by 5 per cent, butcargoes were transported over shorter distances. Asa result the ton mile performance did not change.Some LNG tankers were used as floating storagefacilities or resorted to slow steaming due to highbunker costs, which generated some additional capacity needs. As the fleet increased substantially,by 15 per cent, the employment situation was notalways satisfactory and owners laid up some oftheir older tonnage. As at the year-end, the ordervolume stood at 43 vessels or 13 per cent of thefleet. No new LNGs were ordered in 2009. Thefleet comprised 338 units totalling 47.7 million dwtat the year -end.

GAS TANKERS

In the wake of the financial crisis, demand in freight markets for LPG (liquefied petroleum gas),ammonia and petro-chemical gases decreased inthe year under review. The fleet grew by 4 per centto 1,149 vessels totalling 18.8 million cbm, amidproduction cutbacks and delays in the start-up ofnew projects. Twelve LPG tankers were ordered in2009, bringing the order backlog to 13 per cent of the fleet.

21

Drilling rigsOil exploration and production are capital intensiveand oil price sensitive activities. 2009 was a difficult year for the offshore sector as the oil pricedecreased at times to below 40 US dollars perbarrel and because banks restricted new loans.Long lead-times for deep water projects and thefast recovery of the oil price to 60 to 80 US dollarsper barrel brought some market relief.

At the end of 2009 almost 140 jack -ups wereunemployed. The number of jack-ups in cold lay -upkeeps rising. As modern units have better employmentprospects than older ones, it remains to be seenhow many old jack-ups will go back into operation,taking high costs for upgrading and classificationinto account.

Drilling rigs in deep water regions were still operating at full capacity, but, compared to 2008,rates were on average down 15 per cent.

The year-end value of a 300 ft jack-up was down to US dollars 70 million, from an average US 120million at the beginning of the year. Almost nonewbuildings have been ordered. According to forecasts, exploration and production expendituresare set to increase between 5 and 10 per cent.

Supply vesselsDemand for offshore supply vessels has decreasedsince the beginning of 2009. In view of today´sexcess tonnage supply, 2010 will be a difficult yearfor this segment. Charter rates partly dropped bymore than 50 per cent from their highest level atthe end of 2008.

A record number of newbuilding deliveries reflectsthe high ordering of recent years. The fleet of rigsupply vessels and anchor-handling tugs increasedby 137 units to 4,339 vessels during the year.Nevertheless, the share of old vessels with low specifications and capacity remains high. At theyear -end, the order backlog stands at nearly 600vessels. Hardly any newbuilding contracts were cancelled, but some owners managed to postponedelivery dates.

Provided the employment situation for oil rigs andjack-ups improves this year as forecast, demand forsupply vessels might pick up, but with minimaleffect on rates. Although current market conditionsare difficult, a solid demand for vessels can beexpected in the long-run in this market segment,based on continuously rising oil consumption andincreasing offshore exploration. Experts anticipatethat one third of the oil production will be offshoreby the year 2020.

OFFSHORE

22

CAR CARRIERS

After the boom years 2007 and 2008, where tonnage demand could not be satisfied at times, theseaborne movement of cars fell in the wake of theeconomic crisis, from 930,000 cars in September2008 to 360,000 cars in January 2009. In theensuing months exports from Japan and South Koreapicked up somewhat. Government incentives forcar scrapping and the resulting increase in new carsales in Europe and North America was insufficient to fully compensate overcapacity, and charter rateswere considerably lower. Transport demand was 27 per cent lower than the year before.

Owners whose charter contracts either expired last year or will expire this year are affected mostfrom this development. Charterers usually employaround 50 to 60 per cent of the fleet, and expiringcontracts are seldom renewed these days. As aconsequence, owners were often forced to lay upvessels. Up to 114 vessels were either unemployedor in lay-up in 2009, and at the beginning ofFebruary 2010 the number was only down to 95vessels, equal to around 13 per cent of the fleet.

In the year under review, numerous newbuildingswere delivered and fleet capacity grew by almost10 per cent, to 650 vessels, capable of transporting3 million cars. Scrapping activity was vigorous (14 per cent of the fleet) and scrapping potential is high as 23 per cent of the fleet is aged 20 yearsor more. The order backlog is still very high. 145newbuildings, more than one quarter of existingcapacity, are on order, of which 90 units are scheduled to come on-stream in 2010. However,there is a possibility that some newbuilding orderswill be cancelled, postponed or converted into othervessel types, bearing in mind that some orderswere speculative, without loan commitments andlong-term charters in place. No newbuildings wereordered in 2009. Although markets should havebottomed out, the small increase in transport volume will be insufficient to compensate for thehigh influx of newbuildings for the time being.

23

FERRIES

The economic downturn also left its mark on thero/ro ferry trade. Many owners and liner companiesin North and Central Europe and the Mediterraneanwere confronted with up to 30 per cent lower cargovolumes. In spite of the poor state of the economy,some companies managed to record increased passenger numbers of up to 20 per cent, particularlybetween North Africa and the Iberian Peninsula.

The importance of the Baltic States is growing.Passenger numbers in the Baltic trade were up, and earnings were adequate, but cargo volumesdecreased on average by 25 per cent. Lowerindustrial production had a negative impact oncargo volumes. Overall, the ferry trade operated at a low level and it is unlikely to change this year.In view of static cargo volumes and passengernumbers, newbuilding contracts are not an option.Owners are trying to cope with changed marketconditions with cost cutting measures, restructuringand improved efficiency.

The cruise market continues to grow. As at the year -end, the fleet stood at 347 vessels with acapacity of around 400,000 berths. Global passenger numbers and owners´ turnover increasedby 7 per cent. Six vessels were scrapped. At the end of the year, Carnival Cruises had ordered twovessels at an Italian yard - the first order in this segment for nearly two years.

The two largest cruise operators are Carnival andRoyal Caribbean with a market share of 54 and 25 per cent respectively. In the European growthmarket, Germany consolidated its second place,with a share of 18 per cent behind Great Britainwith 36 per cent. During the second half of 2009markets recovered from decreasing advance bookings and increasing pressure on pricing, which had started in last quarter 2008. Prices started toclimb to new levels, first in the American market.Bookings for high-end cabins and luxury cruisescontinue to rise. For the majority of the cruise operators, operating results were satisfactory in 2009.The outlook for 2010 is positive.

Twelve newbuilding deliveries are scheduled for2010, nine for 2011 and another five vessels in 2012increasing berth capacity by 15 per cent. Marketsare expected to prosper for the time being.

CRUISE VESSELS

24

SHIPBUILDING

After six straight years - the longest, and in terms of volume, strongest order boom of all times – theglobal shipbuilding industry passed its peak inSeptember 2008 and got into rough water. Duringthe first half of 2009 newbuilding orders reachedhistoric lows, stabilising at a low level during thesecond half. The order book for the three main vesseltypes decreased noticeably due to cancellations,keeping up the pressure on the industry. In view ofuncertain global economic developments, existingfleet capacity and a high order backlog, a recoverywill take years.

Compared to the previous year, deliveries, predominantly bulk carriers and tankers, increasedto 115.1 (91.5) million dwt. Newbuilding prices dropped sharply in the wake of the financial crisisand have been decreasing continuously ever since.At the year-end, prices were down to levels lastseen in 2004.

Tanker orders totalling 11 million dwt were placed inthe year under review. Most orders came from Greekowners, followed by Japanese, Iranian and Chineseshipping companies. 38 per cent of orders went toChinese yards, followed by Korean and Japanese shipbuilders with 28 and 26 per cent respectively.

As a result of rising freight rates and decreasingnewbuilding prices, order activity for bulk carriersincreased somewhat. China was by far the mostactive nation, placing 30 per cent of all contracts,while Japanese and Greek owners, who are, by tradition, very active in this market segment, only accounted for 5 to 6 per cent. Chinese yardsaccounted for 60 per cent of all orders, three times as much as Japanese yards.

The order book for container vessels stood at 36 per cent of the fleet as at 31 December 2009.Only seven newbuilding contracts were recorded in the year under review.

Asian shipbuilding industry recorded 327 orderstotalling 31.7 million dwt in 2009, with bulk carriersmaking up two thirds. The lion’s share of new contractswent to the two heavyweights in shipbuilding, China(15.5 million dwt) and South Korea (14.9 million dwt),while Japan slipped into third place with only 0.9million dwt. Although deliveries from Chinese yardsincreased above average, they were 40 per centbelow plan. Korean shipbuilders delivered 25 percent less than originally foreseen, probably due tocancellations and postponements rather thanbecause of yards´ lack of efficiency.

1211102009080706050403

40

35

30

25

20

15

10

5

0

million cgt

Others

China

South Korea

Japan

EU

Sources: Institute of Shipping Economics and Logistics, Bremen Lloyd's Register / Fairplay

Clarkson Research Ltd., London

Deliveries

25

Source: Clarkson Research Ltd., London

Japan

Others

EU China

South Korea

2.5%

40.5%

44%

8%

5%

New orders 2009 (cgt ) Overall 8 million cgt

The order backlog at Korean yards decreased to 53 (67) million cgt. Compared to other shipbuildingnations, the order book is spread out more or lessevenly among different vessel types. Measured, incgt, Chinese yards are almost neck and neck (63million cgt), but their focus is on bulk carriers. TheChinese shipbuilding industry could be the first tocome out of the crisis, thanks to the government’sstimulus measures. Korean yards could possiblyextend their activities with wind power generatorsand offshore units.

European yards had to cope with a difficult year.The order intake comprised only 36 vessels totalling0.3 million dwt, primarily ferries and cruise vessels.

Turkey leads with 11 units (0.1 million dwt), equivalentto 30 per cent of the total orders, ahead of Germanshipbuilders with 4 (30) orders and Croatian yardswith one (16) vessel. Polish, Danish and Frenchshipbuilders did not manage to secure any contracts(previous year 22).

The strength of European shipbuilding lies in theconstruction of specialised tonnage and the efficiencyof the subcontractors. There is no future in mereassemblage, but yards have to offer proficient maritime engineering solutions. This is where Germanshipbuilders play a prominent role, focusing on cruise vessels, highly sophisticated ships and offshore vessels.

0403020100 05 06 07 08 2009

million cgt

180

160

140

120

100

80

60

403020100

Order book Source: Clarkson Research Ltd ., London

Others

Container ships

Bulk carriers

Crude oil / Product tankers (incl. Chemical / Oil tankers)

26

BUSINESS REPORT

SHIP FINANCE

Norway

Germany

Greece

Italy

North America

East Asia

Others

4 %

6 %

8 %

4 %

14 %39 %

25%

Ship loan portfolio by country

World trade and global industrial production sharplycontracted as a consequence of the turmoil on themoney and capital markets at the end of 2008.Ocean transport demand was hit especially hard, asglobal trade declined. The formerly booming containertransport fell particularly sharply, primarily due tolower consumer spending in Europe and the USA.

Numerous newbuilding deliveries and the resultingsignificant increase in transport capacity, coupledwith shrinking cargo volumes, affected the marketsand consequently rates came increasingly underpressure on most freight markets. The number ofunemployed units rose continuously and ownerssignificantly curtailed their investment activities.Second-hand prices were much lower and fewervessels changed hands. Newbuilding orders weredown to 28.8 million dwt, 81 per cent below theprevious year and the lowest for the past 15 years.At the same time, owners increasingly cancellednewbuilding contracts or postponed delivery dates.Nevertheless, the influx of new tonnage was higherthan ever before, reaching 105 (91) million dwt.

Our loan portfolio (including commitments) wasdown to € 14.1 billion on 31 December 2009, from € 16.6 billion in 2008. Loans outstandingdecreased to € 11,636 (11,992) million (includingguarantees of € 246 (392) million) as at the year-end.

Loan advances were about 40 per cent lowerthan the previous year, totalling € 2 billion, almost entirely drawdowns of existing commitments fornewbuildings (pre- and post-delivery), complementedby increased numbers of re-financings. The decreasein volume was also due to the US dollar exchangerate at the year-end, which was 3.5 per cent lowerthan the year before.

Loans granted to our German customers amountedto € 740 (1,883) million while their share of thetotal was the same as the previous year. Ourinternational clientele received loans of € 1,267(3,046) million, more than 60 per cent of all newborrowings.

Due to weak charter rates, particularly in the container trade, some of our customers were notable to service their loans as originally agreed, butoverall, owners continued to pay on schedule.Contractual repayments decreased slightly to € 1,454(1,506) million. Although extraordinary loan reductions fell strongly due to the difficult marketsituation, they still amounted to € 529 (1,471) million. Total repayments stood at € 1,983 (2,977)million, corresponding to one sixth of the averagevolume of our ship loans.

27

Loan commitments amounted to € 2.5 (4.6) billion,46 per cent lower than at the beginning of 2009.About one third thereof is earmarked for drawdownin the current year. In view of the present situationin the financial sector and in numerous shippingmarkets, and based on current forecasts, it can beassumed that the bank´s new lending business will be very selective in 2010. Loans and guaranteesmanaged on behalf of syndicate partners stood ataround € 2.9 billion.

89 per cent of our total loan portfolio is in foreigncurrencies and 92 per cent thereof is in US dollars,6 per cent in Japanese yen and 2 per cent in Swissfrancs. Measured in US dollars our portfolio reached15.0 billion.

Compared to 2008, the portfolio breakdown bycountry displays only moderate changes in allocationof borrowers. German owners and German KGswith their diversified fleet make up close to 40 percent of the total portfolio. Greece was again by far

our most important international market with a shareof 25 per cent of all loans and 40 per cent of ourforeign loans. We are one of the leading lenders tothe Greek and German shipping community.Another core market where we see future growthpotential is Asia, where we are focused on the traditional maritime centres of Hong Kong andSingapore, although the Asian share of our portfoliodid not change very much.

Broken down by ship types, our portfolio is still splitevenly between the three standard vessel typesand specialised tonnage.

Crude oil tankers

Product tankers

Chemicaltankers

Gas tankers

Offshore

Others Car carriers / RoRo 2 Cruise vessels / Ferries 2Other types 2

Container vessels

Multi -purpose vessels

Bulk carriers

16 %

12 %

4 %

5 %

5 %

6 %27 %

3

22%

%

Ship loan portfolio by ship types

28

MUNICIPAL LOANS

With new loans of € 50 (60) million and contractualrepayments of € 105 (86) million, turnover in ourtraditional municipal loan business remained low.The volume of loans against promissory notes wassomewhat down to € 1.25 (1.30) billion as at 31 December 2009. We will try to keep the volumearound that level in the medium term, in order tohave ample cover for issued public Pfandbriefe.

Bonds issued or guaranteed by public bodies, predominantly EU states, which can serve as securityfor mortgage bond issues with a nominal value of€ 735 (762) million have been partly allocated toour liquidity reserve.

The fund which serves as security for the issuanceof public Pfandbriefe stood at € 1,631 (1,630) million,composed of 83 per cent German and 17 per centforeign municipalities. Our public Pfandbriefe in circulation are thus well covered.

EARNINGS

Our interest surplus in 2009 was at the same level as the previous year, totalling € 150.0 million.However, it would have been much lower than in 2008, if the bank had been obliged to pay remuneration for undisclosed partnerships and profit participation certificates in 2009, which is not the case because the bank made no profit.

A higher average volume of ship loans and risinginterest margins had a positive effect on our interestsurplus, which was more than negated by higherfunding costs, especially for US dollars. In the secondhalf of 2009 the strain lessened with a noticeableeffect on our interest surplus.

Because we restrained our new business activities, ournet provisions were, as expected, down considerablyto € 9.7 (19.4) million. Total administrative expensesgrew to € 29.5 (24.3) million, due to higher staffand non-personnel costs. The cost income ratio of19.4 (14.7) per cent still compares very favourablyto other banks. After covering administrative costsand including other sundry operating income andexpenses, our operating result before risk provisionsdecreased by 7 per cent to € 133 million. Thereduction was caused primarily by upheavals in thefinancial markets.

20090403020100 05 06 07 08

160

140

120

100

80

60

40

20

0

million €

Net commissions

Interest surplus

Administrative costs

Earnings review

29

Due to the ongoing pressure on freight rates and vessel values in most market segments, andprospective loan defaults, a substantial amount wasallocated for individual and general risk provisions.

Markets for securities recovered during the courseof the year. Our bond portfolio, which contains onlypaper issued by banks and public bodies, has enti-rely been booked as current assets at the balancesheet date, and is therefore subject to write-downsto the lower of cost or market value. Write-downsfrom the previous year were partly reversed.

The operating result from our standard businessactivities amounted to € 23.5 million. The extraordinary result includes costs for integrating the bank into the Commerzbank group. After taxesof € 22.1 (1.0) million our net loss stood at € 0.3(net profit 0.3) million. The income tax is primarily due because part of the general risk provisions arenot tax deductible.

Because the bank has made no net profit, no interest payments will be made for undisclosedpartnerships and profit participation certificates inaccordance with the underlying contracts.

As of 1 January 2008, the Solvency Regulations(SolvV) apply to the bank and counterparty risks are calculated in accordance with the internationalrating based approach (IRBA) pursuant to Article 59 (1) second sentence no 1 lit. b SolvV. The bankevaluates the probability of failure pursuant toArticle 88 SolvV, the potential loss ratio in case offailure pursuant to Article 92 SolvV, as well as theIRBA conversion factor pursuant to Article 101 (1)SolvV. For the calculation of the operational risks,the bank uses the basic indicator approach pursuantto Article 270 and 271 SolvV.

The bank strengthened its equity considerably inAugust 2009 in order to be well prepared in thesechallenging times. On 10 July 2009 it was decidedat an extraordinary General Meeting to increase the subscribed capital by € 400 million. The fundscame exclusively from the Commerzbank groupwhich now holds 92 per cent (previously 80 percent) of the shares of Deutsche Schiffsbank. Thenew shares with a nominal value of € 88.9 millionwere issued with a premium of € 311.1 million. The total equity amounted to € 1,424 (1,128) millionat the balance sheet date. As at 31 December2009, the capital ratios pursuant to SolvV were 13.7 per cent (total capital) and 9.2 per centrespectively (core capital). The increase in equitygives us a solid base to cope with high credit risks,and puts us in a position to play an important rolein shipfinancing once shipping markets recover.

EQUITY CAPITAL

30

The bank increased its cooperation withCommerzbank for funding purposes, adapting to changed fundamentals and the ongoing uncertainty in the financial sector.

In order to secure our liquidity requirements in the year under review, the Commerzbank groupgranted us short-term credit lines in the amount of € 2.8 billion which were not fully utilised.

We deliberately reduced our short-term funding in 2009 and borrowed medium-term funds intranches totalling € 3 billion from the group parent. A further € 734.9 million was placed with investors.These various measures helped us to fund ourlong-term assets with matching liabilities. Fundingvia secured bonds proved to be difficult due to themarket´s perception of higher shipping risks andbecause Commerzbank group limits with potentialinvestors were heavily utilised. In spring 2009, the European Central Bank introduced repos with a maturity of one year to support European Bankswith their funding. As in 2008, we offered theEuropean Central Bank our own Pfandbriefe as

FUNDING

collateral for repo transactions. A total of € 1.25 billionof tender funds with one year maturities were raisedat attractive levels. Furthermore, the bank intends tosell ship mortgage bonds with longer maturities toCommerzbank group entities in the coming months.

The bank sold new bonds and promissory notesamounting to € 4.5 (5.0) billion in 2009. Nearlyone quarter thereof consisted of secured bonds, inthe form of ship mortgage bonds, which were soldprimarily via our EMTN program. As at 31 December2009, € 2.05 billion were funded via the EuropeanCentral Bank. As security, the bank has offeredbonds, including our own ship mortgage bonds.Further money market funds were obtained throughour interbank activity, and a substantial amountcame from shipping companies, albeit less than in2008.

Our liquidity reserve stood at € 2.9 billion as at the balance sheet date, consisting of bonds, eligiblefor repo operations with the European Central Bank,excess cover in our two mortgage bond registers,unutilised credit lines with our major shareholderand cash on deposit.

million €

Ship mortgage Pfandbriefe

Public Pfandbriefe

Bearer Bonds

Registered bonds

Loans against promissory notes

Initial sale of bonds

20092008 20092008 20092008 20092008 20092008

3.000

2.750

2.500

2.250

2.000

1.750

1.500

1.250

1.000

750

500

250

0

31

Funding has become a lot more expensive due to the financial crisis. Nevertheless, the bank wasable to fund on comparatively attractive terms. Inaddition, following the steep rise in autumn 2008,spreads for foreign exchange and cross currencyswaps declined continuously throughout 2009,reducing our short-term US dollar funding costs byaround 60 basis points. Long-term funding costswhich were at historically high levels in spring fellby more than 100 basis points later in the year.

Unsecured funds in circulation rose to € 4.7(3.9) billion. Loans against promissory notes madeup the major share, totalling € 3.9 (2.3) billion. The volume of public Pfandbriefe stood nearlyunchanged at € 1.5 billion. Issued ship mortgagebonds amounted to € 4.6 (5.3) billion, whereof€ 3.3 (4.3) billion were in circulation at the balancesheet date. Repo operations with the EuropeanCentral Bank amounted to € 2.1 (2.3) billion.

Thanks to these measures, the liquidity situation of the bank was much more relaxed at the year-endthan could have been expected from the variousscenarios projected in the New Year.

No event has occurred since the balance sheet date and the date of this report which could have a material effect on the financial situation of thebank.

EVENTS AFTER THEBALANCE SHEET DATE

32

For all other shipping loans, primarily corporateloans and construction finance, as well as for ourbank portfolio AIRBA procedures are in place. The"Bundesanstalt für Finanzdienstleistungsaufsicht"(BaFin) has not yet completed the audit of theserating tools. Equity pre-finance risks are determinedby means of a simple risk classification procedure,in accordance with the Basel II standard ratingbased approach.

Equity pre-finance and construction finance, and in the latter case especially the contractedequity amounts, are subject to large latent risks, particularly in the prevailing market situation: Equity pre-finance because of the generally highexposure in relation to the values and both financeforms often because of lending based on elevatedvessel costs. Loans for vessels which have beenpurchased during previous years at high prices andwhich have no long-term employment contractswith prime counter parties also demonstrate substantial latent risks.

Our organisational structure complies with the minimum requirements for risk management(MaRisk) set by the financial services supervisoryauthorities. Essential functions are handled by theRisk Control department and “Marktfolge Kredit”(a department unrelated to the marketing teams)providing amongst other things quarterly credit risk reports and a second opinion on all relevantloan decisions.

One lending criterion for ship mortgage loans(based on the rules of the new Pfandbrief Act) isthe determination of vessel values. Vessels whichare registered abroad can only be mortgaged ifthe security is equivalent to that provided underGerman law. As nearly all our security vessels are of material value, of which a significant majority are employed in international trade, specific

RISK MANAGEMENT

Our risk management system allows us, as a shipfinance bank, to efficiently control all potential risks inherent in our business and at the same timeto fulfil all legal requirements. Based on complexmechanisms for analysis and early diagnosis, allrelevant risks were documented and kept within limits.Lending and Treasury departments are obliged toreport directly to the Risk Control department,which is in turn responsible for ongoing monitoring.Business related risk categories (counterparty risks,market price risks and liquidity risks) as well as operational risks are subjected to monitoring andcontrol. The object of our internal risk and equitymanagement is to safeguard the banks risk-bearingcapacity, and to maintain at all times an adequateratio between the risks and the available funds to cover these risks.

Counterparty risks are defined as potential losses due to deteriorating creditworthiness orthe failure of business partners. Risks resulting from lending, contractual risks related to ourfunding activities, and settlement risks belong to this category.

Credit risks are controlled by a set of different risk and volume limits. Limits are primarily set forborrowers, vessel types, a few sensitive countries,construction finance, and for risks related to thesale of venture capital for limited partnerships.

Standard shipping loans based on mortgages are rated in accordance with our rating system analogous to Standard & Poor’s ratings, and reflectthe nature of our credit portfolio and the shippingmarkets. The rating system meets the requirementswith regard to the capital adequacy framework(Basel II) AIRBA (advanced internal rating basedapproach).

33

country risks are only relevant in relation to someconstruction finance, that is only to a limited extent. A balanced portfolio as to vessel types is an essential criterion in our lending policy. Prior todrawdown, and thereafter annually during the termof the loan, the earnings and financial situation ofborrowers and/or commercial owners are evaluatedin detail based on financial statements and otherdocuments. By partly syndicating loans, risks arespread both with regard to customers and vesseltypes.

Regular reviews of our loans are carried out by the relevant departments. If disruptions in performance are beginning to emerge, appropriatesteps and, if need be, preventive measures aretaken. Other elements in the control of credit risks are the continuous monitoring of the majorinternational freight markets and the consequencesrates might have on the ability of our customers to service their loans. This includes the supervisionof the structure of our loan portfolio in relation to the respective charterers. In addition, we continuously monitor the development of second-hand values, as well as newbuilding prices, and shipping markets are analysed with respect to the age structure of the fleet and newbuildings on order.

Freight rates and ship values are set to remain under pressure. As a consequence, we see theneed for further individual risk provisions in 2010,mainly for container vessels. The risks might increase if large charterers get into financial difficulties.

Growing capital needs, primarily due to down-grading of creditworthiness and delayed loan repayments necessitated a substantial equity capitalincrease, which was carried out in August 2009.

In order to limit counterparty risks in connectionwith money and foreign exchange transactions, as well as off-balance sheet deals with, nearly allwith OECD banks, individual limits are set and continuously monitored for each contractual partner.Our foreign exchange dealings are part of the CLS(Continuous Linked Settlement) system which considerably reduces our settlement risks in thisimportant market segment.

Market price risks are defined as potential lossesdue to price changes in the financial markets. Fora ship mortgage bank they are principally currencyor interest risks.

Currency risks arise because a large majority ofour shipping loans are denominated in foreign cur-rencies (in particular US dollars) while the long-term financing of these borrowings occurs predominantlyin euros by means of ship mortgage bonds, publicPfandbriefe and loans against promissory notes. By entering into forward exchange transactions and currency swaps with numerous prime banks,we eliminate the currency risk of all foreign currency loans. Currency limits are monitored on a daily basis.

Until 2007, US dollars could always be obtained at Libor without additional spreads. Funding, in US dollars, became more expensive especiallyduring the last quarter of 2008. In the wake ofthe normalisation of the foreign exchange market in 2009, surcharges declined from an original 100basis points to below 30 at times, but they are still a burden our to our funding costs.

Interest rate risks result particularly from mismatches between loans and deposits becausethe various products demanded by our businesspartners have different terms. We permanently monitor and control the interest rate risks in the

34

net market value of our derivatives was € + 68.2(+ 93.2) million.

We have neither issued nor purchased any assetbacked securities or credit default swaps or similarlystructured bonds or loans. While growing spreads in the first quarter 2009 necessitated write-downsof our bond portfolio to the lower of cost ormarket value, surcharges declined noticeably in the remaining three quarters. Overall, the marketvalue of our bond portfolio rose in 2009 by € 75.1 million. Nevertheless, it is obvious thatbond values from some issuing parties remainunder pressure.

Liquidity risks, as well as other managementand functional risks, are monitored and controlledwith clear targets through internal information and control systems. This includes exchange ratedevelopments, reserves in our cover fund andliquidity reserves. The external standard for liquidityrequirements falling due within one year is set bythe Liquidity Enactment (LiqV).The requirementsof the LiqV were continuously fulfilled.

In view of the global financial crisis, which is not yet over, we have relied heavily on our securitiesportfolio and credit lines provided by theCommerzbank group in order to maintain ourliquidity. Compared to the scenario projected at the beginning of the year, our liquidity situationeased, helped by fewer drawdowns, amongst otherreasons because delivery dates for newbuildingswere postponed together with higher than expectedloan repayments by our customers. In addition,decreasing volatility in foreign exchange markets,and long-term credit lines provided by our majorshareholders, improved our liquidity situation. Still,higher funding costs will negatively affect ourinterest surplus in 2010.

various currencies through an EDP supported information system where all interest rate periods of the entire lending business, from the liability sideand from the derivative business are brought together for analysis. Taking hedging instrumentsinto account substantially the whole loan volume of the bank is financed with matching interestperiods. A large part of the remaining receivablesrelates to investment of the bank’s equity. Theresponsibility for monitoring interest rate risks lieswith the Risk Control department, which continuouslyupdates the senior management on the develop-ment of market values and their trends, as well asthe consequences for the earnings situation of thebank ensuing from interest rate changes. Theresponsibility for controlling interest rate risks lieswith the Treasury.

The SAP software SEM (Strategic EnterpriseManagement) enables us at any time to assess all assets, liabilities and derivative exposures of thebank based on actual market conditions usingmathematical methods. Variations of the presentvalue are calculated in accordance with the guidelinesof the BaFin letter of 6 November 2007, which isbinding on all banks, and are based on a paralleltranslation along the yield curve of plus 130 basispoints and minus 190 basis points respectively.Variations of the present value of more than 20 per cent of the equity need to be reported to theBaFin. The risk volume was continuously below thesurveillance threshold. Since the end of 2009, wehave also used a tailor-made system to evaluatestructured bonds and derivatives.

We do not trade for our own account. All the bank’s derivative transactions are related to ourlending and liability business or they are transactedwith our shipping customers and are thenhedged. Our off-balance sheet volume declined to € 28.6 (30.9) billion as at the year-end. The

35

We plan our liquidity requirements in close cooperation with the Commerzbank group, whichputs various short and medium-term credits lines at our disposal. Taking account of these credit lines,in all scenarios simulated, including bottlenecks on the liabilities side as well as substantial non-payments of loan instalments on the asset side, the bank has sufficient liquidity.

The idea behind the internal control system and risk management system of Deutsche Schiffsbank,with regard to accounting procedures, is to warrantcredibility of the annual and semi-annual reports in accordance with generally accepted accounting principles. This goal is achieved by embedding bothsystems in our organisational structure, geared tothe needs of the bank.

Risks in connection with accounting procedures can arise from incorrect input into financial reporting.Therefore, the process of financial reporting is subjected to specific, tight controls.

Organisation

The CFO, a member of the Board of ManagingDirectors, is accountable for internal control and riskmanagement in relation to accounting principles.The finance department, under the supervision of the CFO, is responsible for financial reporting inconformity with laws and internal and external guidelines. Internal audit is also answerable to theCFO. The reporting of these divisions to one individual allows effective and efficient control ofaccounting.

At the Supervisory Board, the risk committee monitors accounting procedures.

Internal audit provides autonomous, impartial, and risk oriented services on behalf of the Board ofManaging Directors, aiming to improve the businessprocedures of Deutsche Schiffsbank regarding compliance, security and efficiency. It supports the Board of Managing Directors by systematically evaluating the effectiveness and adequacy of riskmanagement and internal control system as well asbusiness procedures. In addition it works alongsideimportant projects and gives recommendations ifnecessary. Internal audit thereby helps to safeguard

INTERNAL CONTROL SYSTEM

36

business transactions and assets. Internal audit is part of Commerzbank group audit. It is an instrument of the Board of Managing Directors,directly subordinated and answerable to the Board.It is independent, acting on its own initiative. It is autonomous, particularly in giving its judgementand reporting the results of its audit. To fulfil its obligations, internal audit has a complete and unrestricted right of information.

Internal audit takes a risk-oriented approach and its audit extends across all activities and operationsof the bank, even if they have been outsourced. Its focus is on the effectiveness and adequacy ofrisk management, that is to say the risk managementand control system, the reporting system, and theinformation system as well as financial and accounting matters.

The timely elimination of detected deficiencies will be monitored separately by internal audit. Ifdeadlines are not met, escalating procedures areimplemented. In addition to individual reports, internal audit issues quarterly status reports, and an annual report on all audits made during thecourse of the year, detected deficiencies andrespective measures taken, and submits these tothe entire Board of Managing Directors and togroup audit.

Components of internal control and riskmanagement systems in relation to accounting

Deutsche Schiffsbank has clearly defined and binding accounting standards, which are in line with those of the Commerzbank group. They arethe basis for correct and consistent accounting procedures. Compliance with the standards is checked by the auditor. They are continuouslymonitored and, if need be, updated. In addition,regular staff training courses are provided, givinginformation about statutory changes and theirimplementation in the group, and about basicaccounting standards.

Several organisational measures were taken tosecure compliance with accounting standards inorder to achieve reliable financial reporting. Forinstance, the IT systems contain numerous accuracychecks, which are an integral part of other systemsused in accounting. In addition, any action by a person which affects accounting must always bechecked by a second person (four eyes principle).

Other measures to assure correct accounting inDeutsche Schiffsbank are clear guidelines according to qualifications and responsibility.Decisions are only taken in accordance with grantedpowers. All financial functions which could cause a conflict of interest are separately organised anddealt with.

IT systems also play a major role in the preparationof the annual accounts, and consequently have tofulfil the requirements of internal control and riskmanagement systems. Deutsche Schiffsbank utilisesa variety of software systems in the preparation ofits accounts. In addition to standard software, thebank uses programs tailor-made to its needs whichare regularly examined by internal auditors.

37

All systems used in accounting are controlled by a sophisticated system allowing varying degrees of access.

Valuation methods are also employed in the preparation of the annual accounts. They are moreclosely described in the appendix.

Deutsche Schiffsbank is solely responsible forthe preparation of its annual accounts, for whichthe bank possesses the necessary expertise, particularly thanks to its qualified employees.Training courses help to improve and strengthenaccounting qualifications.

STAFF REPORT

2009 was again a very demanding year for ourstaff who handled all challenges with competence,experience and great commitment, especially inview of market uncertainties and additional workload.The growing importance of corporate demands andrisk management required solving complex tasksamid an increasingly difficult environment. As aconsequence, the bank has continued to increasethe number of qualified staff and provided in-houseand external training courses.

At the year-end, 79 female and 78 male employeeswere on the payroll, 6 more than at the end of 2008.The average age stood almost unchanged at around42 years. The average period of employment is 9 years and 18 employees have been working with us for more than two decades.

The Board of Managing Directors thanks allemployees for their material contribution to ourrespectable result, in a year which was again verydifficult for the finance sector. To those who retired in 2009, we express our appreciation formany years of service.

Many thanks also to the members of the StaffCouncil, with whom a constructive dialogue wasmaintained on all relevant issues of company andstaff policies. Particularly noteworthy is the satis-factory conclusion of the negotiations in connectionwith the transfer of all the shipping activity of theCommerzbank group to Deutsche Schiffsbank, inDecember 2009, and the relocation of all domesticbranches of Deutsche Schiffsbank to Hamburg,which is necessary for successful integration.

38

INTEGRATION REPORT

Following the takeover of Dresdner Bank AG, and the increase of the subscribed capital in June2009, Commerzbank AG indirectly holds around 92 per cent of the shares in Deutsche SchiffsbankAG. It is the intention to integrate all shipping loans and shipping activities of the three banks,Deutsche Schiffsbank, Commerzbank and DresdnerBank, step by step into Deutsche Schiffsbank. This process should be completed by mid-2011. Inspite of difficult market conditions, the integration of all shipping activity in Deutsche Schiffsbank progressed well in 2009. The Board of ManagingDirectors decided to relocate all domestic branchesto Hamburg by mid-2013, in order to consolidate all resources in one location. With the successful conclusion of negotiations with the staff committeeson all relevant matters, one major obstacle to thesuccessful integration and transformation of thenew Deutsche Schiffsbank has been eliminated.

RELATIONSHIP WITHAFFILIATED COMPANIESDue the integration of Deutsche Schiffsbank AGand its subsidiaries into Commerzbank group, theBoard of Managing Directors is obliged to report onits releationship with affiliated companies pursuantto article 312 of the corporate law.

At the end of this report,the Board of Managing Directors declares:

“That, based on the facts known at the time thatbusiness transactions were concluded, or measurestaken or omitted, Deutsche Schiffsbank has receivedquid pro quo for every business transaction and hasnot been put at a disadvantage because measureswere taken or omitted.”

39

In times of crisis, global trade usually contractsfaster than the world economy, because globaltrade is not primarily dependent on global economic output, but only on parts thereof, i.e.industrial production. Industries need fuel, rawmaterials and components that need to be trans-ported over long distances, and finished productsare sent to every corner of the world. Due to thecost advantages, approximately 90 per cent ofthe goods is transported by sea. Developments in the automobile and steel industry show that theindustrial sector can experience a much strongerdownturn than the transport-neutral service sector.On the other hand, in times of an economicupswing, industry, and consequently global trade,will grow above the average.

The International Monetary Fund predicts that the world economy will grow by 3.9 per cent in2010, after a decline of 0.8 per cent in 2009. This should stimulate seaborne trade and bringsome relief to the markets, although the ongoinginflux of new vessels and only marginal relieffrom scrapping, postponement and cancellation of newbuilding contracts will pose some risk.

As globalisation is set to continue, the shippingindustry will grow again in the medium- term withgrowth potential in the long - run.

The container trade expanded strongly until mid-2008,benefitting to a great degree from globalisation. In the wake of the financial crisis, this segmentrecorded the biggest slump in its history. Scrappingpotential is rather small and limited to smaller andmid-sized vessels, up to 3,500 teu, notwithstandingthere was significant demolition activity in 2009.Because demand picked up somewhat in the thirdquarter, the employment situation in the dominatingEast-West long-haul business improved to some

Shipping markets

The upheavals in money and capital markets pushed the world economy and global trade, andas a consequence shipping and ship finance, into a deep crisis. Shipping, the backbone of worldtrade, was hit hard by the economic slump, falling sharply from the very high levels which existed until mid-2008. Cargo volumes, and subsequently transport demand, decreased, whilethe world merchant fleet increased, leading to rising excess tonnage, thereby putting more pressure on freight and charter rates. To someextent, both container and tanker markets recordeda slump in earnings. The container trade recoveredsomewhat, but on a low level in the third quarter2009. The dry bulk trade fell to some extent, butproved to be relatively firm thanks to demand from China.

Due to the crisis in the financial markets and inshipping, conditions for ship finance worsenedworldwide, both on the equity and the debt side,despite governmental measures to stabilise globalmarkets. As funding became more expensive, mainly due to the poor market outlook, banks adjusted their credit terms or restricted their newloan business. It was nearly impossible in 2009 to obtain equity for newbuilding projects. Thesecond-hand market for tankers and containervessels collapsed.

As a consequence of falling charter rates, vesselsoften did not earn enough to pay instalments, interest or even operating expenses. Layups, increased scrapping, postponement and cancellingof newbuilding contracts, brought only marginal relief in 2009. In view of the high order backlog, it is hard to say when we will see a sustained recovery in ship values and charter rates.

OUTLOOK

40

market. Drastically reduced steel production in the industrialised nations started to pick up slowlyin the third quarter 2009. Global investments ininfrastructure projects should foster higher transportdemand in the medium to long term. A collapse inthe markets was avoided in 2009, because deliverydates were postponed for numerous newbuildings.This process should continue in 2010. However,due to the high order backlog, the risk of growingovercapacity still exists. Positive aspects are the fairly good outlook, the strong demand for iron oreand coal, the considerable potential for cancellati-ons of newbuilding contracts and, considering that34 per cent of the fleet is aged 20 years or more,for demolition. If industrial production continues torise, the dry bulk trade might follow suit.

The tanker fleet grew strongly, by 8 per cent, in2009, ameliorated somewhat by the use ofvessels as oil storage facilities, while transportdemand was down. Transport capacity is expectedto increase further in 2010 (13 per cent) whiledemand is anticipated to rise only moderately.Scrapping potential in 2010 is around 12 per cent,due to the IMO regulations for the phase-out ofsingle hull tonnage. However, these factors will be insufficient to avoid an increase in the fleet. Due to the overall economic situation, which is difficult to appraise, and the high volatility in thetanker segment, we assume that the tanker marketwill remain weak for another one or two years,somewhat above the level of 2009.

Overall, charter rates should remain at a low level in 2010. Based on existing market imbalances, we believe that 2010 will be a difficult year formost segments, although the employment situationmight improve during the course of the year, provided the world economy recovers, fewer new-buildings are delivered than originally anticipated,and old vessels are increasingly scrapped.

extent, and liner companies managed to raisefreight rates following the collapse. Nevertheless,pressure on freight and charter rates remains high.Laid-up tonnage continued to grow throughout theyear, to around 11 per cent of the fleet capacity by the end of 2009, but is set to decline in thecoming months. For 2010, we expect a moderaterise in freight rates and stabilisation of charterrates at a low level. Fleet capacity is expected toincrease to around 6 per cent next year, less severethan originally anticipated, thanks to delivery postponements and scrapping. Another positiveaspect is the forecast 10 per cent rise in containerthroughput. The fleet capacity increase in 2011could again be around 6 per cent. Slow steaming,which is increasingly practised, should also generateadditional capacity needs. Vessels with a capacity of 10,000 teu or more make up nearly half of thecontainer tonnage on order, because they benefitfrom economies of scale. For the time being, we do not expect that the influx of these vessels willhave a significant impact on the employment situation for smaller vessels. According to ports and shipping companies, demand has increasedstrongly since the end of 2009, and to some extentdouble digit growth rates have been recorded. This trend should go on, provided the economicupswing continues. However, all these develop-ments will be insufficient to eliminate imbalances in the next two years. Break-even rates throughoutall container sectors can only be expected from2012 on.

Bulk carrier markets recovered quicker than anticipated from the loss in cargo volumes and thedrop in charter rates. China, the biggest importerworldwide, managed to maintain its economicgrowth (+ 8 per cent), because public measures to sustain the economy took hold quickly after thecollapse of financial markets, thereby contributingsubstantially to the strength of the bulk carrier

41

The offshore market was a very positive segment of the maritime industry well into the third quarter2008, thanks to extensive investments by the oil andgas industry. The fleet was operating at full capacity,charter rates were high and in addition, many long-term charters were available.

Because of sharply decreasing oil and gas prices,and budget cuts, particularly by small and medium-sized oil companies, exploration and developmentactivities were noticeably down in 2009 and lay-ups were on the rise.

Oil prices were volatile but have gone up and analysts expect higher budgets for offshore activityin 2010. Values and rates for deep water unitsshould remain firm. However, the fleet (drilling rigs,FPSOs and supply vessels) is growing strongly.Numerous newbuilding projects are in the pipeline,but in view of enormous costs and difficulties inobtaining loans, they will not all be completed.

The offshore industry could be one of the first markets to overcome the crisis, in spite of capacityincreases. Particularly modern units should havegood employment opportunities.

42

The risk situation of the bank remains serious andwe expect relatively high risk provisions in 2010.Although our loan portfolio is well balanced withemphasis on prime customers, we foresee higherindividual risk provisions, due to the uncertaintiessurrounding freight rates and ship values.

In addition, we do not exclude the possibility of rising credit spreads, which could lead to valuereductions in our bond portfolio.

Based on a cautiously optimistic outlook, ouroperating result in 2010 could be similar to 2009.Due to the major uncertainties surrounding theworld economy and the capability of our customersto service their loans, actual developments coulddeviate substantially from estimates. Under today´srealistic assumptions, we would consider it a success if the bank manages to break even in the next two years.

Deutsche Schiffsbank

Loan volume is set to go down in 2010, and loan commitments will decrease as well. In the current year, an amount of € 1.9 billion (includingundrawn credit lines) can be disbursed. We alsoexpect extraordinary loan reductions in future, albeit on a lower level. Due to the uncertainties surrounding the financial and shipping markets,Deutsche Schiffsbank will be cautious and selective in its new loan business.

The size of our loan volume depends to a largeextent on the US dollar exchange rate, which is influenced by developments in the euro-zoneand the world economy, and is hard to predict. As the exchange rate will probably continue to be very volatile, we will – as far as possible – fund ourselves in US dollars.

Net commissions will contribute less to the operating result than in 2009, due to theconstraints on new business. We intend to expandour product range in future, offering our customerscommercial products from the Commerzbank group,with the aim of achieving higher net commissionsin the medium-term.

The bank´s integration into the Commerzbankgroup creates increased administrative expenses,notably with more staff in the Treasury, IT/Organisation and Risk Control departments. Staff increases will be quite substantial in someareas in order to ensure the reporting requirementsof the Commerzbank group.

43

R E P O R T O F T H E S U P E R V I S O RY B OA R D

46

The Supervisory Board has carried out its responsibili-ties to continuously oversee management activitiesduring the financial year 2009 in accordance with lawand statutes. The Board convened four times, twice in the first and second half of the year. One of thosemeetings was an inaugural session following electionof the new Supervisory Board in the first half ofthe year. As a non-listed company the bank thereby fulfilled the requirements of the corporate law.

The Board of Managing Directors kept the SupervisoryBoard informed regarding the bank’s position anddevelopment as well as about basic questions concerningbusiness policy and management. The SupervisoryBoard was notified by the Board of Managing Directorsquarterly in writing and, in individual cases, verballyabout the bank’s business development. In addition,forecasts and developments on the shipping markets,as well as important individual events, were debatedthoroughly. The Board of Managing Directors kept the Supervisory Board informed about the purchase ofbonds, derivative transactions, large loans and municipalloans. In view of the financial crisis and declining shipping markets, measures to increase equity werediscussed in close consultation with the SupervisoryBoard. In this way, an active flow of information andan exchange of views between the Supervisory Boardand the Board of Managing Directors were alwaysmaintained.

At its meeting on 10 July 2009 new rules and regulations for the Supervisory Board were introduced.Amongst others, the Finance and PersonnelCommittee was replaced by two other committees,the Chairman´s Committee and the Risk Committee.

The Finance and Personnel Committee of theSupervisory Board held two meetings in the first sixmonths. In addition, it dealt regularly with all loanswhich had to be presented to them in accordancewith the law and statutes. In accordance with these

requirements, the Committee approved businesssubmitted.

Decisions by the Chairman´s Committee were takenunanimously outside meetings. The Risk Committeeheld one meeting in the second half of the year. All risk matters were discussed and, when necessary,the Risk Committee approved business and measuressubmitted.

PricewaterhouseCoopers AG Wirtschaftsprüfungs-gesellschaft, Hamburg, which was given the mandateby the Supervisory Board, has audited the AnnualAccounts including the Accounting and the BusinessReport. No objections were raised. The AnnualAccounts therefore accurately reflect the assets, as well as the financial and earnings position ofDeutsche Schiffsbank AG. The audit report was presented to all members of the Supervisory Board.

The auditor participated in the audit meeting of theSupervisory Board on 6 May 2010. He reported onhis most important findings and answered questi-ons about the balance sheet and the audit report.The Supervisory Board has also examined theAnnual Accounts and the Business Report and hastaken affirmative note of the auditor’s conclusions.

Having finished its examination of the Annual Reportthe Supervisory Board raised no objections. Therefore,at its meeting on 6 May 2010 the Supervisory Boardapproved and thereby confirmed the Annual Accounts.

Furthermore, the Board of Managing Directors´report on the bank´s relationship to affiliates andthe respective audit report were submitted to theSupervisory Board. Having finished his examination,the auditor raised no objections to the ManagingDirectors´ report and issued the following unqualified audit report. “Having dutifully examinedand appraised the report, we confirm that

REPORT OF THE SUPERVISORY BOARD

47

1. all declarations made therein are correct 2. the services charged by the company in the

mentioned business transactions were not unreasonably high respectively that any disadvantages were rectified

3. the measures mentioned in the report do not give cause for any different material appraisal, other than the one given by the Board of Managing Directors

The Supervisory Board inspected the ManagingDirectors´ report and approved both the ManagingDirector´s report and the unqualified audit report.Having finished its examination of the Board ofManaging Directors´ report on the bank´s relationshipto affiliates the Supervisory Board raised no objections.

On 19 February 2009, Dr. Andreas Georgi resigned asDeputy Chairman of the Supervisory Board, and conse-quently also resigned as Chairman of the Advisory Board.

Having reached the end of his term of office,Mr. Michael Keuth retired from the Supervisory Boardat the close of the meeting on 7 May 2009. TheSupervisory Board explicitly expressed its gratitude forhis cooperation and personal commitment as staffrepresentative. Dr. Thomas Bley, member of theBoard of Managing Directors of Eurohypo AG,Eschborn and Ms. Ute Köster, Deutsche Schiffsbank AG,Bremen, as staff representative were newly appointed to the Supervisory Board. The other memberswere re-elected. During its inaugural session theSupervisory Board nominated Dr. Stefan Schmittmannas its Chairman and Mr. Klaus Müller-Gebel as DeputyChairman. Mr. Klaus Müller-Gebel was also nominatedas Chairman, and Mr. Lutz Diederichs as DeputyChairman of the Advisory Board.

As from 10 July 2009, Dr. Stefan Schmittmann resignedas member of the Supervisory Board and as its Chairman, a role which he held since 28 November

2008. The Supervisory Board thanks him for his commitment. Mr. Jochen Klösges, member of theBoard of Managing Directors of Commerzbank AG,Frankfurt/Main, was newly appointed to theSupervisory Board on 10 July 2010 at an extraordinaryGeneral Meeting, and on the same day he was electedby the Supervisory Board of Deutsche Schiffsbank AGto become its newly appointed Chairman.

With effect from 7 May 2009 Dr. Rainer Jakubowskiwas appointed an additional member of the Board of Managing Directors. On 15 September 2009 Mr. Ulrich W. Ellerbeck retired as member of the Board of Managing Directors. He has representedDeutsche Schiffsbank in Germany and abroad with greatentrepreneurial skill and expertise. The SupervisoryBoard thanks him very much for his commitment.

Having reached the end of his term of office, Dr. Heinrich Schulte retired on 7 May 2009 from theAdvisory Board which he served since 1997. Wehave expressed our thanks and appreciation to allretirees for their dedication. Mr. Stefan Jüngerhans,Mr. Thorsten Mackenthun, Mr. Johann-Stephan Reith,Mr. Dietrich Scheder-Bieschin and Mr. Niels Stolbergwere newly appointed to the Advisory Board in thethird quarter 2009.

The members of the Supervisory Board express their thanks to all employees, the staff council, themanagement and the Board of Managing Directorsfor their commitment and performance, which werefundamental to the company´s break-even result inthe year 2009, given the difficulties in the financialsector and in shipping.

Bremen and Hamburg, 6 May 2010

THE SUPERVISORY BOARDJochen Klösges Chairman

all areas of shipping – be it on board, in harbours or in shipyards.

Experts see themselves as team players,where the strengths of each individual are combined to form a well - functioningwhole.

Working hand in hand is a key success factor in the maritime industry, and extremely necessary throughout

Working

Each individual must do the right thing inhis field at the right time. It is a challengefor the men on deck as well as for theengineer in the engine room and the officeron the bridge.

In this way, operating procedures arecombined, with the aim of achieving precise,mutually reliant cooperation and efficientperformance on board.

All procedures on board a vessel must becoordinated reliably and accurately.

Prima facie, many activities on board look rather simple, irrespective ofvessels’ type or size. However, during thedays at sea and the often very short stays in port, every crew member is fulfilling hisspecific tasks – on deck, in the engine room, navigating the vessel or cooking in thegalley. Each one of them has his placeamong the crew and is part of the wholewith his individual duties.

frequently have to be handled, but also to safeguard each individual.

Working so closely together, there is no margin for error, for instance when lashingunwieldy parts for wind turbines or whilepreparing heavy pieces of iron for loading.Even the reception of mooring lines fromonboard the vessel is part of establishedwork routines.

Dockside, teamwork is essential. Loading and discharging cargoes requiresmany hands, not only because heavy loads

Ship planners also play an important role in the smooth and orderly process at the terminals. Working at the wharf is, as in the past, characterised by manuallabour, carried out by skilled and dependable dock hands. Their experience,their knowledge and their proficiency with tools and machinery guarantees safe work routines.

or automation, brought on primarily by technical progress, only entered thevocabulary during the last few decades. Fuel saving, optimized hull shapes andwater flow around the propeller blades, have become more important.

Trendsetting technologies are being developed by teams of specialists of variousprofessions united by one common goal.

All over the world, shipbuilding has a tradition dating back thousands of years. Terms like productivity and efficiency

Also in the shipbuilding industry, crews are working together where each individualwith his special knowledge and skill is anintegral part. Each detail is already factoredin while the end product is still in theplanning phase.

Because of the high demands for work-manship it is imperative that these partnersrely on each other. Therefore, every helpinghand in the maritime industry is of greatimportance for overall success.

A N N UA L S TAT E M E N T O F AC CO U N T S 2 0 0 9

1. Cash reservea) cash on hand 8,355.85 8

b) balances with central banks 22,840,313.39 39,996(including: with Deutsche Bundesbank) (22,840,313.39) (39,996)

22,848,669.24 40,004

2. Amounts due from banksa) on demand 83,985,642.51 464,329

b) other amounts due 569,080,225.35 812,869(including: municipal loans) (525,545,800.84) (632,911)

653,065,867.86 1,277,198

3. Amounts due from customers 11,897,834,925.30 12,209,410(including: ship mortgage loans) (11,045,888,050.76) (11,401,851)

(including: municipal loans) (747,703,808.90) (696,855)

4. Bonds and other fixed-interest securitiesa) bonds and notes

aa) public sector issuers 272,145,921.54 306,820(including: eligible as collateral for Deutsche Bundesbank advances) (248,585,589.14) (286,592)

ab) other issuers 1,940,122,212.70 2.000,482(including: eligible as collateral for Deutsche Bundesbank advances) (1,866,731,734.62) (1,855,630)

2,212,268,134.24 2,307,302

b) own bonds 1,353,678,091.80 1,009,809(par value) (1,352,148,000.00) (1,002,547)

3,565,946,226.04 3,317,111

5. Investments in affiliated companies 2,738.39 3

6. Intangible assets 4,232,882.99 4,945

7. Tangible fixed assets 5,802,023.16 6,054

8. Other assets 135,972,676.64 95,124

9. Accrued and deferred items 24,908,572.85 20,852(including: from issuing and lending business) (24,908,572.85) (20,830)

Total assets 16,310,614,582.47 16,970,701

64

Assets

31.12.2009 31.12.2008

€ € thousand €

AANNNNUUAALL BBAALLAANNCCEE SSHHEEEETT AASS AATT 3311 DDEECCEEMMBBEERR 22000099

Liabilities and Shareholders’ equity

1. Liabilities to banksa) on demand 203,366,595.84 32,566

b) with fixed maturity or period of notice 5,600,445,928.99 4,983,808(including: registered ship mortgage bonds issued) (236,703,589.45) (264,656)(including: registered public Pfandbriefe issued) (25,619,455.48) (30,619)

5,803,812,524.83 5,016,374

2. Liabilities to customersa) on demand 23,852,501.68 29,594

b) with fixed maturity or period of notice 5,771,744,441.86 6,229,365(including: registered ship mortgage bonds issued) (2,126,311,152.25) (2,256,958)(including: registered public Pfandbriefe issued) (1,129,252,209.82) (1,157,830)

5,795,596,943.54 6,258,959

3. Certificated liabilities bonds issued 3,146,591,402.34 4,575,775(including: ship mortgage bonds) (2,311,030,622.09) (2,912,569)(including: public Pfandbriefe) (317,120,785.81) (317,284)

4. Other liabilities 74,826,923.55 26,752

5. Accrued and deferred items 27,068,056.72 26,423(including: from issuing and lending business) (27,068,056.72) (26,423)

6. Provisionsa) provisions for pensions and similar obligations 24,562,720.00 23,096

b) tax provisions 791,734.00 2,728

c) other provisions 5,981,785.68 3,83531,336,239.68 29,659

7. Subordinated liabilities 266,513,000.00 271,626

8. Participation rights 169,500,000.00 169,500(including: maturing in less than two years) (40,000,000.00) (0)

9. Fund for general bank risks 45,000,000.00 45,000

10. Equity capitala) subscribed capital

aa) share capital 146,996,720.00 58,110ab) undisclosed partnerships 126,646,794.46 126,647

273,643,514.46 184,757

b) capital reserve 488,349,487.64 177,246

c) revenue reservesca) legal reserve 1,312,997.55 1,313cb) other revenue reserves 187,063,492.16 187,063

188,376,489.71 188,376

d) distributable profit 0.00 254950,369,491.81 550,633

Total liabilities and shareholders’ equity 16,310,614,582.47 16,970,701

1. Contingent liabilities liabilities under guarantees and indemnities 246,027,111.16 391,728

2. Other commitmentsirrevocable loan commitments 2,470,348,351.24 4,611,255

31.12.2009 31.12.2008

€ € thousand €

65

1. Interest income froma) lending and money market operations 383,210,926.18 674,062

b) fixed-interest securitiesand government debt 75,588,345.22 129,357

458,799,271.40 803,419

2. Interest expenses 308,770,242.28 653,531150,029,029.12 149,888

3. Commissions received 10,784,783.00 24,808

4. Commissions paid 1,092,537.04 5,4149,692,245.96 19,394

5. Other operating income 4,642,781.70 510

6. General administrative expensesa) staff expenses

aa) wages and salaries 11,186,621.98 10,723ab) social security contributions, expenses

for pensions and other employee benefits 4,917,442.24 3,652(including: pension expenses) (3,371,225.15) (2,230)

16,104,064.22 14,375

b) other administrative expenses 13,405,819.33 9,90729,509,883.55 24,282

7. Amortisation and depreciation ofintangible and tangible fixed assets 1,437,963.46 568

8. Other operating expenses 433,041.62 2,266

9. Write -downs of and adjustments to amounts dueand specific securities as well as allocations to provisionsfor possible loan losses 111,606,365.63 132,585

10. Write -downs of and adjustments to investmentsin non-affiliated and affiliated companies andsecurities handled as fixed assets 0.00 8,778

11. Income from participation interests,shares in affiliated companies and securities fixed as capital assets 2,080,852.13 0

12. Result from ordinary activities 23,457,654.65 1,313

13. Extraordinary expenses 1,570,738.00 0

14. Income taxes 22,087,248.72 1,001

15. Other taxes not included under item 8 53,527.66 5822,140,776.38 1,059

16. Net loss ( previous year: profit) 253,859.73 254

17. Profit carried forward from the previous year 253,859.73 0

18. Distributable Profit 0.00 254

66

PPRROOFFIITT AANNDD LLOOSSSS AACCCCOOUUNNTT

1 January to 31 December 2009 2008

€ € thousand €

67

AAPPPPEENNDDIIXX

Accounting regulations

The Annual Statement of Accounts as at 31 December2009 has been drawn up in accordance with theregulations of the Commercial Code (HGB) in conjunctionwith the Bank Accounting Regulation (RechKredV),under consideration of the provisions of the CompaniesAct (AktG) and the Pfandbrief Act (PfandBG).

Accounting policies

Amounts due from banks and customers have been valued at par. The difference between par valueand the amount paid out is - as far as interest isconcerned - shown under accrued and deferred items.All identifiable risks in the credit business are coveredwith individual value adjustments and provisions. In addition, there are overall value adjustments andgeneral bank risk reserves pursuant to Art. 340f HGB.

Individual value adjustments are made for identifiedloans that are at risk, for an amount covering theexpected loss, which is determined by taking the totalclaim less the net present value of all payments stillexpected to come. These expected payments includeinterest payments, loan repayments and funds fromthe forced sale of securities.

General value adjustments are made for loanswhich have not been subjected to individual valueadjustments, but are subject to latent risks bycomparing the average net loan risk provisions of thepast ten years to the risk carrying loan volume. Thisprocedure is in line with the procedure described in the report of the bank expert committee of theInstitute of Public Auditors in Germany, IncorporatedAssociation (IDW).

Ship mortgage loans also include thoseconstruction loans where the mortgage registrationwill regularly take place at a later date.

Based on a Board resolution, securities previouslybooked as fixed assets are now booked as liquidityreserve, because these securities are no longerintended to be continuously in the Bank’s portfolio.

The value of securities and own bonds of thecurrent assets is shown in the balance sheet, asbefore, in accordance with the principle of lowerof cost or market value.

Intangible assets, land and buildings, as well as plantand equipment are shown with their acquisitioncosts less scheduled straight-line depreciation.

Liabilities are shown with their redemption amount.The difference between the value at par and theissue price is allocated to accrued and deferred items.

Pension obligations are valued in accordance with actuarial principles under application of theHeubeck Richttafeln 2005G and at a discount rateof 6 per cent. All identifiable risks and doubtfulliabilities have been taken into account byestablishing corresponding provisions. Businesswhich does not apply for balance sheet purposeshas been taken into account in the risk calculations.

Derivatives used for hedging purposes are off-balance sheet transactions, which means theydo not appear as assets or liabilities in the balancesheet. As of 31 December 2009, accrued intereston derivatives is shown under the item otherassets, or other liabilities. Up-fronts of derivativesare shown under accrued and deferred items.

Currency conversions were carried out on the basis of the provisions of Art. 340h HGB, applyingthe spot middle rate for buying and selling on thebalance sheet date.

to the Statement of Accounts 2009

68

31.12.2009 31.12.2008Other amounts due from banks 569,081 812,869with a residual term ofup to 3 months 109,444 207,376more than 3 months to 1 year 35,846 80,135more than 1 year to 5 years 380,530 380,455more than 5 years 43,261 144,903

Amounts due from customers 11,897,835 12,209,410with undefined notice period 0 0with a residual term ofup to 3 months 888,780 600,626more than 3 months to 1 year 1,407,242 1,353,107more than 1 year to 5 years 4,664,050 4,988,802more than 5 years 4,937,763 5,266,875

Bonds 3,565,946 3,317,111whereof: due the following year 487,040 290,605

Liabilities to banks with fixed term or period of notice 5,600,446 4,983,807with a residual term ofup to 3 months 754,227 3,401,941more than 3 months to 1 year 2,397,257 1,153,366more than 1 year to 5 years 2,334,526 276,500more than 5 years 114,436 152,000

Liabilities to customers with fixed term or period of notice 5,771,744 6,229,365with a residual term ofup to 3 months 640,240 660,722more than 3 months to 1 year 135,114 240,543more than 1 year to 5 years 828,363 884,102more than 5 years 4,168,027 4,443,998

Certificated liabilities 3,146,591 4,575,775whereof: due the following year 992,890 1,687,911

Sub-division according to residual termsthousand €

Liabilities

Assets

COMMENTS TO THE BALANCE SHEET

69

Amounts due from and liabilities to affiliated companies as well as companies with whom we maintain a participation relationship thousand €

31.12.2009 31.12.2008

Affiliated companies

Amounts due from banks 210 0

Amounts due from customers 988 872

Bonds and other fixed- interest securities 48,490 0

Liabilities to banks 2,786,404 0

Liabilities to customers 781 38

Companies with a participation relationship

Amounts due from banks 22 329,493

Bonds and other fixed- interest securities 0 27,394

Liabilities to banks 0 1,255,226

Since 12 January 2009, Deutsche Schiffsbank AG is incorporated as subsidiary into the consolidatedaccounts of Commerzbank AG, Frankfurt am Main.

Bonds and other fixed-interest securities

All bonds and other fixed-interest bearing securitiesin the balance-sheet figure of € 3,565.9 million(previous year € 3,317.1 million) are negotiable,whereof securities in the amount of € 3,503.9 million(previous year € 3,291.4 million) are quoted onstock exchanges.

Securities with a nominal value of € 406.4 millionare again booked as liquidity reserve, because thebusiness policy of the bank has changed,necessitating write -downs of € 33.5 million.

As in the previous year, subordinated assets do notbelong to our portfolio.

At the date of the balance sheet, bonds in theamount of € 2,050 million (previous year € 2,270.0million) were pledged for borrowings under openmarket operations of the Deutsche Bundesbankand, as in the previous year, no securities werepledged under repurchase agreements.

70

Securities as part Investments Intangible Tangible Totalof fixed assets in affiliated assets fixed assets

companies

Acquisition costs

previous year 413,947 3 8,267 12,357 434,574

additions 0 * 0 331 150 481

transfers 9,975 0 0 205 10,180

disposals -403,972 0 0 0 -403,972

as at 31.12.2009 0 3 8,598 12,302 20,903

Depreciations

previous year 17,151 0 3,322 6,303 26,776

disposals 9,975 0 0 198 10,173

depreciations in financial year 0 0 1,043 395 1,438

transfers -7,176 0 0 0 -7,176

as at 31.12.2009 0 0 4,365 6,500 10,865

Residual book value

previous year 396,796 3 4,945 6,054 407,798

as at 31.12.2009 0 3 4,233 5,802 10,038

Investments in affiliated companies carried in the balance sheet are not negotiable on stockexchanges.

The share in the capital of the affiliated company NEB-Shipping Co., Monrovia/Liberia,amounts to 100 per cent. The company has an equity of € 42 thousand, the result for 2008was listed with € 1 thousand.

Of the land and buildings shown under tangiblefixed assets, the proportion used by the Bank itselfamounts to € 2.9 million (previous year € 3.0million). Plant and equipment are valued at € 1.0 million (previous year € 1.1 million).

Other assets

The other assets consist primarily of accruedinterest on derivative transactions in the amount of € 116.4 million (previous year € 114.5 million,booked as amounts due from banks andcustomers) In addition, tax receivables of € 18.2million (previous year € 39.9 million) are shown.

Summary of investments thousand €

* incl. capitalised interest on zerobonds

71

Accrued and deferred items

On the asset side, accrued and deferred itemsinclude premiums from credit transactions in thesum of € 4.5 million (previous year € 4.3 million)and discounts from liability transactions of € 8.6million (previous year € 11.1 million). Discountsincurred on asset transactions amounting to € 6.1 million (previous year € 6.6 million) areshown under accrued and deferred items on theliabilities side.

Other liabilities

The other liabilities consist primarily of a balancingitem related to currency conversion of swaptransactions in the amount of € 62.9 million(previous year, other assets € 54.3 million), interestfor subordinated liabilities of € 6.4 (previous yearinterest for subordinated liabilities, undisclosedpartnerships and participation rights in the amountof € 25.2 million) and accrued interest on aderivative transaction in the amount of € 4.8 million(previous year € 10.3 million, booked as liabilitiesto banks).

Equity capitalThe regulatory equity is presented belowthousand €

31.12.2009 31.12.2008

Core capital

Share capital 146,997 58,110

Silent participations 88,000 126,647

Capital reserve 488,349 177,246

Earnings reserves 188,376 188,376

Fund for general bank risks 45,000 45,000

Deductions (Art. 10 (2a) sent. 2, no. 2 KWG) -5,275 -5,090

951,447 590,289

Supplementary capital 472,996 537,734

1,424,443 1,128,023

72

Par value Currency Interest rate Due ontsd € % p. a.

30,100 € 6.00 11.11.2011

Subordinated liabilitiesmore than 10 % ofthe total amount

In addition, funds in the amount of € 236,413thousand had been borrowed, due during theperiod 2010 to 2023 bearing interest between4.08 and 7.09 per cent as well as of 6 monthsEuribor + 0.80 per cent.

During the financial year 2009 the interestexpenses for the subordinated liabilities – withoutexpenses for hedging operations – amounted to € 14,430 thousand (previous year € 14,215 thousand).

In the event of insolvency or liquidation of theBank, amounts due to creditors of the above loansrank behind the amounts due to creditors who arenot subordinated. These creditors are precludedfrom giving notice prior to maturity of their loans.

According to Art. 10 (5a) of the Banking Law (KWG),the subordinated liabilities are to be added to theequity capital in the amount of € 239.4 million.

73

The holders of the participation rights receive anannual dividend ahead of the profit share of theshareholders. They share in the loss (annual deficit)and rank behind all other creditors of the Bank,provided that their claims are not likewisesubordinated.

No payments will be made for the year 2009 inaccordance with the underlying contracts.

According to Art. 10 (5) KWG, the participation rightsare to be added to the equity capital in the amount of € 129.5 million.

At the annual meeting of 18 May 2006, the Board ofManaging Directors was authorised until 17 May 2011to issue participation rights in the total amount of€ 150 million either in one lump sum or in portions.During the financial year 2007 we made use of thisright in the amount of € 25 million.

Share capital

The share capital of € 147.0 million comprises282,686 registered shares.

On 31 December 2008, Commerzbank InlandsbankenHolding AG, Frankfurt/Main, and GENUJO VierteBeteiligungs GmbH, Frankfurt/Main, each held130,157 (approx. 46 per cent) and Beteiligungs- und

Handelsgesellschaft in Hamburg mbH, Hamburg,held 22,352 (approx. 8 per cent) shares.Commerzbank Inlandsbanken Holding AG,Frankfurt/Main, and GENUJO Vierte BeteiligungsGmbH, Frankfurt/Main are each 100 per centsubsidiaries of Commerzbank AG, Frankfurt/Main;Beteiligungs- und Handelsgesellschaft in HamburgmbH, Hamburg is a 100 per cent subsidiary ofUniCredit Bank AG, München. In accordance with Art. 20 (1) AktG we received notifications of holdingsexceeding 25 per cent.

At an extraordinary General Meeting on 10 July 2009, it was decided to increase the share capital by up to € 111.1 million by issuing up to 213,675 new sharesagainst cash payment. As from 1 July 2009 the newshares are entitled to a share of the profit. The newshares with a face value of € 520 were offered to theshareholders, proportional to their current participation,at a strike price of € 2,340 per share. The offer endedon 31 July 2009. If a shareholder did not make use of his right, the capital increase was reduced by anamount equal to the shareholder´s forgone share option.

As not all shareholders made use of their right, theshare capital increased by € 88.9 million.

Year of issue Par value Currency Dividend Maturity Repayment

tsd € % p.a of capital

2000 40,000 € 7.65 31.12.2010 30.06.2011

2001 24,500 € 6.80 -7.16 31.12.2011 02.07.2012

2005 80,000 € 4.70 31.12.2020 30.06.2021resp.

02.07.2021

2007 25,000 € 5.37-5.38 31.12.2017 02.07.2018

Participation rights

74

Silent participations

If and provided the Bank has made sufficient profit,the silent partners receive an annual dividend aheadof the profit share of the shareholders.

The silent partners´ share in the current loss inaccordance with the articles of association. In caseof insolvency or liquidation of the Bank, the rightsof silent partners as to profit sharing and repaymentof their deposits rank behind those of all creditors(incl. holders of participation rights andsubordinated creditors).

No payments will be made for the year 2009 inaccordance with the underlying contracts.

According to Art. 10 (4) KWG, the deposits of silentpartners in the amount of € 88.0 million are to beadded in full to the equity capital.

Capital reserve

Following the capital increase, the capital reserverose by € 311.1 million to € 488.3 million.

Earnings reserves

As in the previous year, the legal reserve amountsto € 1.3 million.

As in the previous year, the other earnings reservesamount to € 187.1 million.

Year of issue Par value Currency Dividend Maturity Repayment

tsd € % p. a. of deposits

2000 38,647 € 8.34 - 8.77 31.12.2010 30.06.2011

2001 12,500 € 7.65 - 7.92 31.12.2011 30.06.2012resp.

02.07.2012

2005 38,000 € 5.31 - 5.50 no fixed term -

2005 5,000 € 5.30 31.12.2015 30.06.2016

2005 5,000 € 5.18 31.12.2017 30.06.2018

2006 16,500 € 6.06 - 6.075 31.12.2017 02.07.2018

2007 11,000 € 5.90 31.12.2019 30.06.2020

Nominal Value CurrentValue

Residual Term< 1 year >1 - 5 years > 5 years Total

2009 2008 2009 2008 2009 2008 2009 2008 2009 2008

Interest related transactions 3,616.7 6,352.0 6,018.7 5,598.9 10,727.9 8,651.8 20,363.3 20,602.7 144.1 48.2

OTC-products

Interest swaps (same currency) 3,612.9 3,231.6 5,901.4 5,470.7 10,460.9 8,298.0 19,975.2 17,000.3 144.1 55.3

Swaptions 0.0 0.0 13.9 14.4 32.0 92.0 45.9 106.4 0.0 -10.4

Other interest contracts 3.8 3,120.4 103.4 113.8 235.0 261.8 342.2 3,496.0 0.0 3.3

Currency related transactions 6,283.0 8,168.4 1,496.8 1,820.9 453.0 279.8 8,232.8 10,269.1 - 59.7 45.0

OTC-products

Currency options 5.3 50.8 12.9 0.0 0.0 0.0 18.2 50.8 0.0 0.0

Forward foreign exchange 5,526.8 7,274.5 217.5 224.9 0.0 0.0 5,744.3 7,499.4 - 66.9 166.7

Cross currency swaps 750.9 843.1 1,266.4 1,596.0 453.0 279.8 2,470.3 2,718.9 7.2 -121.7

Total 9,899.7 14,520.4 7,515.5 7,419.8 11,180.9 8,931.6 28,596.1 30,871.8 84.4 93.2

75

Financial derivativesmillion € (as at 31. 12. )

Amounts in foreign currencies

The assets include amounts in foreign currenciesequivalent to € 10,243.7 million (previous year€ 10,428.4 million) and the liabilities includeamounts in foreign currencies totalling € 2,704.3million (previous year € 1,115.5 million). Inaddition, there are unsettled spot transactions of

€ 195.2 million (previous year € 140.1 million) and payment liabilities of € 7,771.3 million(previous year € 9,485.5 million) arising frominterest rate and foreign exchange swaps.

The current value is identical with the market value or the value determined on the basis ofgenerally accepted valuation methods (i.e. presentvalue method) as at 31 December 2009. Theevaluation of each currency is based on currentinterest yield curves.

An exchange rate difference resulting from foreignexchange contracts with a book value of € 62.9million is recorded under other liabilities. Premiums

received or paid for currency options are shownunder other liabilities resp. other assets.

These transactions are directly related to our lendingand funding business and serve to hedge against therisk from exchange rate and interest rate fluctuations.There are no trading positions.

76

Interest expenses

Interest expenses include no dividends to ourundisclosed partners (previous year € 8.6 million).

Other operating income

Other operating income consist of earnings from foreign currency valuations in the amount of€ 2.0 million (previous year expense of €1.9million), profit from the sale of a vessel which thebank had taken over in order to avoid losses (€1.3million, previous year none), income from thereversal of provisions ( € 0.9 million, previous year0.1million) and rental income ( € 0.4 million as inthe previous year ).

Taxes on income and earnings

Taxes on income and earnings in the amount of € 20.5 million (previous year 0.7 million) are to be attributed to normal business operations and minus € 0.5 million (previous year none)extraordinary expenses. In addition, the itemincludes expenses of € 2.1 million (previous year€ 0.3 million), which are related to previous years.

Extraordinary expenses

In connection with the integration of all shippingactivity of the Commerzbank group into DeutscheSchiffsbank provisions were made relating to thepersonnel department.

Distributable profit

The distributable profit amounts to € 0.0 million(previous year € 0.3 million).

COMMENTS TO THE PROFIT AND LOSS ACCOUNT

77

INFORMATION ACCORDING TO THE PFANDBRIEF ACT

Cover calculationmillion €

31.12.2009 31.12.2008

Nominal Present Risk adjusted Nominal Present Risk adjustedvalue value present value value value present value

Ship mortgage bonds

Liabilities requiring cover 4,697.8 4,914.0 5,139.7 5,328.2 5,635.4 5,923.2

whereof bonds in circulation (4,600.5) (4,806.0) (5,033.4) (5,328.2) (5,555.3) (5,843.3)

whereof derivatives * (97.3) (108.0) (106.3) (80.1) (79.9)

Covering assets 5,523.5 5,854.5 5,885.5 5,643.4 6,080.0 6,121.4

whereof loans serving as cover (5,258.6) (5,554.7) (5,581.0) (5,251.1) (5,570.8) (5,603.6)

whereof additional covering assets ( Art. 26 PfandBG) (152.9) (164.8) (166.8) (153.4) (168.0) (172.3)

whereof derivatives * (0.0) (11.0) (11.3) (133.7) (222.9) (223.8)

Present value after interest stress test 745.8 198.2

Shortfall from currency stress test -3.0 -3.5

Cover surplus / deficit 825.7 940.5 742.8 315.2 444.6 194.7

Public Pfandbriefe

Bonds in circulation 1,446.1 1,558.3 1,742.4 1,478.1 1,603.0 1,841.6

Covering assets 1,631.4 1,734.4 1,855.6 1,635.1 1,746.8 1,903.0

whereof loans serving as cover (1,246.2) (1,334.0) (1,424.8) (1,301.2) (1,393.2) (1,507.6)

whereof additional covering assets ( Art. 20 (2) PfandBG) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)

whereof derivatives (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)

Cover surplus 185.3 176.1 113.2 157.0 143.8 61.4

* exclusively to secure currency risks

78

Term structuremillion €

PublicPfandbriefe

Ship mortgagebonds

31.12.2009 31.12.2008

Bonds in circulationwith a residual term ofup to 1 year 802.3 1,399.1

more than 1 to 2 years 1,301.9 467.5

more than 2 to 3 years 166.8 895.0

more than 3 to 4 years 116.1 175.0

more than 4 to 5 years 270.9 98.8

more than 5 to 10 years 1,185.8 1,374.8

more than 10 years 756.7 918.04,600.5 5,328.2

Covering assetswith a remaining interest period ofup to 1 year 5,166.5 5,127.3

more than 1 to 2 years 154.7 208.3

more than 2 to 3 years 99.1 168.2

more than 3 to 4 years 56.6 47.2

more than 4 to 5 years 40.1 49.6

more than 5 to 10 years 6.5 42.8

more than 10 years 0.0 0.05,523.5 5,643.4

Bonds in circulationwith a residual term ofup to 1 year 10.0 0.0

more than 1 to 2 years 35.8 7.0

more than 2 to 3 years 152.5 42.3

more than 3 to 4 years 0.0 142.5

more than 4 to 5 years 24.7 0.0

more than 5 to 10 years 315.7 303.6

more than 10 years 907.4 982.71,446.1 1,478.1

Covering assetswith a remaining interest period ofup to 1 year 369.9 316.0

more than 1 to 2 years 200.4 110.2

more than 2 to 3 years 68.0 202.8

more than 3 to 4 years 157.9 70.6

more than 4 to 5 years 122.3 156.2

more than 5 to 10 years 299.6 324.3

more than 10 years 413.3 455.01,631.4 1,635.1

79

Country of registry of mortgaged vessels and ships under constructionmillion €

Ocean-going vessels

Inland waterways vessels

RECEIVABLES AS COVER FOR SHIP MORTGAGE BONDS

Size categoriesmillion €

31.12.2009 31.12.2008

up to € 500,000 14.2 16.6

of more than € 500,000 up to € 5,000,000 1,004.7 822.2

of more than € 5,000,000 4,504.6 4,804.65,523.5 5,643.4

31.12.2009 31.12.2008

Antigua and Barbuda 17.8 15.2

Bahamas 274.9 262.5

Cayman Islands 4.6 5.3

Chile 4.2 6.1

Cyprus 220.7 203.1

Germany 2,299.7 2,365.4

Gibraltar 19.5 3.7

Greece 441.8 501.1

Hongkong 210.3 237.0

Isle of Man 54.5 76.4

Israel 0.0 1.3

Italy 162.0 124.7

Liberia 346.7 321.3

Malta 261.5 209.6

Marshall Islands 547.9 419.1

Netherlands 68.7 75.6

Panama 184.4 206.1

Portugal 6.4 7.7

Singapore 41.3 125.1

Turkey 16.0 16.4

United Kingdom 74.1 68.3

Vanuatu 1.6 0.0

5,258.6 5,251.0

Germany - 0,1

5,258.6 5,251.1Total

80

Compulsory auction salesnumber

31.12.2009 31.12.2008Inland Ocean Total Inland Ocean Total

waterways -going waterways -goingvessels vessels vessels vessels

completed - 3 3 - - -

pending completion - - - - 1 1

Taking possession of vessels or ships under construction

In order to avoid losses, the Bank took possessionof one vessel during the financial year 2009, andsold it again the same year.

Interest in arrears

Interest in arrears from borrowers (maturities up to 30 September of the financial year) amountedto € 0.4 million (previous year none).

Redemptions on loans serving as covermillion €

31.12.2009 31.12.2008Inland Ocean Total Inland Ocean Total

waterways -going waterways -goingvessels vessels vessels vessels

repayments 0.1 494.1 494.2 0.0 454.3 454.3

prepayments 0.0 208.6 208.6 0.0 477.9 477.9

0.1 702.7 702.8 0.0 932.2 932.2

81

Domicile of debtors resp. guaranteeing entitiesmillion €

RECEIVABLES AS COVER FOR PUBLIC PFANDBRIEFE

Payments in arrears

As in the previous year, there were no payments in arrears (90 days and more).

31.12.2009 31.12.2008

States

Greece 45.0 45.0

Hungary 20.0 20.0

Italy 57.9 57.5

Lithuania 10.0 10.0

Spain 20.0 20.0

152.9 152.5

Regional and local authorities(only domiciled in Germany) 702.6 652.6

Other debtors domiciled in:Austria 70.0 70.0

Germany 633.4 687.5

Greece 27.5 27.5

Japan 10.0 10.0

Ireland 25.0 25.0

Slovenia 10.0 10.0

775.9 830.0

1,631.4 1,635.1

Consolidated accounts

On 31 December 2009, the CommerzbankAktiengesellschaft, Frankfurt am Main directly ownsmore than 50 per cent of our company.

As of 12 January 2009, Deutsche Schiffsbank AG is consolidated in the group accounts ofCommerzbank AG, that are prepared in accordancewith approved and published InternationalAccounting Standards (IAS), respectively,International Financial Reporting Standards (IFRS).Accounting, valuation and consolidation methodsthat deviate from German law are annotated.Consolidated accounts of Commerzbank AG arepublished in the Electronic Federal Gazette.

Staff

The annual average number of staff employed was 155 (previous year 148); 79 (previous year 76) employees thereof femaleand 76 (previous year 72) male.

Remuneration of boards

Total remuneration of the Board of ManagingDirectors for the financial year 2009 amounted to € 965 thousand (previous year € 659 thousand)and of the Supervisoring Board € 119 thousand(previous year € 136 thousand).

Payments to former members of the Board ofManaging Directors and their surviving dependantstotalled € 947 thousand (previous year € 802thousand). Provisions for pensions for this group of people amount to € 8,904 thousand (previous year € 7,868 thousand) at the end of the financial year.

82

OTHER INFORMATION

83

Offices held in Supervisory Boards

Werner Weimann(Speaker since1.10. 2009)

Ulrich W. Ellerbeck Helm AG, Hamburg (Chairman),

(up to 15.9.2009) MPC Münchmeyer Petersen Capital AG, Hamburg

Dr. Rainer Jakubowski( from 7. 5. 2009)

Tobias Müller

SupervisoryBoard

Board ofManagingDirectors

BOARDS

Jochen Klösges Chairman

( from 10.7. 2009) Member of the Board of Managing Directors Commerzbank AG, Frankfurt/Main

Dr. Stefan Schmittmann Chairman

(up to 10.7. 2009) Member of the Board of Managing Directors Commerzbank AG, Frankfurt/Main

Klaus Müller-Gebel Deputy Chairman

Lawyer, Frankfurt/Main

Dr. Andreas Georgi Deputy Chairman

(up to 19.2.2009) Member of the Board of Managing Directors (up to 19.1.2009)Dresdner Bank AG, Frankfurt /Main

Dr. Thomas Bley Member of the Board of Managing Directors

( from 7. 5. 2009) EUROHYPO AG, Eschborn

Lutz Diederichs Member of the Board of Managing Directors

UniCredit Bank AG, München

Irmgard von der Fecht Bank employeeDeutsche Schiffsbank AG, Hamburg

Ute Köster Bank employee( from 7. 5. 2009) Deutsche Schiffsbank AG, Bremen

Michael Keuth Bank employee(up to 7. 5. 2009) Deutsche Schiffsbank AG, Bremen

Bremen and Hamburg, 25 March 2010

Deutsche Schiffsbank Aktiengesellschaft

Weimann Dr. Jakubowski Müller

84

We confirm that to the best of our knowledge

- the annual financial statements have been prepared in accordance with the accounting principles and give a true and fair view of the net assets, financial position and results of operation ofDeutsche Schiffsbank AG.

- the business report gives a true and fair view of the bank’s business development including the business result and the situation of Deutsche Schiffsbank AG and that the opportunities and risks of future development are suitably presented.

Bremen and Hamburg, 25 March 2010

Werner Weimann Dr. Rainer Jakubowski Tobias Müller

ATTESTATION OF THE LEGAL REPRESENTATIVES

85

“Auditor's report *

We have audited the annual financial statements,comprising the balance sheet, the incomestatement and the notes to the financialstatements, together with the bookkeeping system,and the management report of the DeutscheSchiffsbank AG, Bremen and Hamburg, for thebusiness year from 1 January to 31 December 2009.The maintenance of the books and records and thepreparation of the annual financial statements andmanagement report in accordance with Germancommercial law are the responsibility of theCompany’s management. Our responsibility is toexpress an opinion on the annual financialstatements, together with the bookkeeping system,and the management report based on our audit.

We conducted our audit of the annual financialstatements in accordance with § (Article) 317 HGB("Handelsgesetzbuch": "German CommercialCode") and German generally accepted standardsfor the audit of financial statements promulgated bythe Institut der Wirtschaftsprüfer (Institute of PublicAuditors in Germany) (IDW). Those standardsrequire that we plan and perform the audit suchthat misstatements materially affecting thepresentation of the net assets, financial positionand results of operations in the annual financialstatements in accordance with (German) principlesof proper accounting and in the managementreport are detected with reasonable assurance.Knowledge of the business activities and theeconomic and legal environment of the Companyand expectations as to possible misstatements aretaken into account in the determination of auditprocedures. The effectiveness of the accounting-related internal control system and the evidencesupporting the disclosures in the books andrecords, the annual financial statements and themanagement report are examined primarily on a

test basis within the framework of the audit. Theaudit includes assessing the accounting principlesused and significant estimates made by theCompany’s Board of Managing Directors, as well as evaluating the overall presentation of the annualfinancial statements and management report. Webelieve that our audit provides a reasonable basisfor our opinion.

Our audit has not led to any reservations.

In our opinion based on the findings of our audit,the annual financial statements comply with thelegal requirements and give a true and fair view of the net assets, financial position and results of operations of the Company in accordance with(German) principles of proper accounting. The management report is consistent with theannual financial statements and as a whole providesa suitable view of the Company's position andsuitably presents the opportunities and risks offuture development."

Bremen and Hamburg, 16 April 2010

PricewaterhouseCoopers AG Wirtschaftsprüfungsgesellschaft

Gero Martens ppa. Uwe GollumWirtschaftsprüfer Wirtschaftsprüfer

(German Public Auditor) (German Public Auditor)

* Voluntary translation. It should be noted that only the Germanauditor's report which is based on the audit of the German version of the company's annual financial statements, is authoritative.

REPETITION OF THE AUD ITOR S R EPORT

Photographs / Image sources:

Herbert Böttcher (1)

Dietmar Hasenpusch (1)

Enno Kapitza (2)

Michael Lange (2)

Eberhard Petzold (12)

Sabine Vielmo (10)

Peter Neumann / YPS-Collection (3)

Boris Rostami (6)

Beluga Shipping (1)

Markus Brandes (1)

Aleksi Lindström (1)

Princess Cruises (1)

Statoil (2)

Representative Office London

Mr. Jeremy G. HodgsonNo. 1 PoultryLondon EC2R 8JRTelephone: +44 20 7643 2244Telefax: +44 20 7643 2201Email: dsb.london@schiffsbank.com

Consultant Asia

Mr. Michael L. SmithTurnbull Smith LimitedShipping Consultants1607 Asian House1, Hennessy RoadWanchai, Hong KongTelephone: +852 2527 0118Telefax: +852 2865 1362Email: mlsmith@hk.super.net

Deutsche Schiffsbank Aktiengesellschaft

Domshof 1728195 BremenP.O. Box 10 62 6928062 BremenGermanyTelephone: +49 421 36 09 - 0Telefax: +49 421 36 09 - 326

Katharinenstraße 1320457 HamburgP.O. Box 11 19 1320419 HamburgGermanyTelephone: +49 40 37 699 - 0Telefax: +49 40 37 699 -178

Email: info@schiffsbank.comInternet: www.schiffsbank.comSWIFT: DESBDE22

Representative Office Greece

Mr. Angelos Roupas-Pantaleon149 Karaiskou StreetPiraeus 18535, GreeceTelephone: +30 210 429 7950Telefax: +30 210 429 7959Email:dsb.greece@schiffsbank.com