(Provisional Translation)

May 20, 2004
Financial Services Agency
The Government of Japan

Administrative Actions on Deutsche Bank AG, Tokyo Branch

1. According to the inspection result [issued in February 2004] by the Financial Services Agency [hereinafter referred to as the ''FSA''] of the Deutsche Bank AG, Tokyo Branch [hereinafter referred to as ''the Branch''] and the Branch's subsequent report to the FSA in response to the FSA's Reporting Order based on Article 24 (1) of the Banking Law, it is confirmed that ,as below, there exist violation of law and basic problems concerning the management's commitment and internal control with regard to compliance in the areas of operating and control of banking business.

[1]	Although the Branch received the previous onsite inspection result from the FSA [issued in February 2000] and took corrective measures planned by the Branch itself, it is confirmed by the FSA's onsite inspection this time around that there still exist many problems on operations and internal controls [including compliance and management control issues] of which the Branch has not improved sufficiently as they were originally planned.
[2]	In particular, as a result of improper operating control between the Branch and the Deutsche Securities Limited, Tokyo Branch [hereinafter referred to as ''Securities Company''] which is a member of the Deutsche Bank Group, and also of insufficient function of firewall and internal supervision between both entities, the following violation and incident were found even after the previous onsite inspection by the FSA;
	1] Since August 2001, the Branch has allowed the Securities Company to practically represent the Branch for operating and executing the financial derivatives transactions with the Branch's clients while the Branch wrongly understand that the Securities Company ''intermediate'' transactions. Such operations controlled by the Securities Company were the violation of Article 47-2 [Article 8 before the amendment] of the Banking Law. When carrying out the transactions under such illegal conditions above represented by the Securities Company on behalf of the Branch, the Branch did not properly monitor and control sales activities and dealings by the Securities Company with the Branch's clients, it is confirmed that there exist many improper transactions. For example, the Branch did not sufficiently confirm the clients' intention regarding their transactions and confirmations for each transactions were not reported by the Securities Company to the Branch. 2] From February 2001 to August 2003, it is found by the FSA's onsite inspection that the traders in the Securities Company traded the bonds in the Branch's banking account with the trading account which belongs to the Securities Company without authorization from the Branch, and that the Branch's internal trading control against the Securities Company was not properly performed.
[3]	Moreover, a chief risk control manager of the control departments in the Branch holds concurrently the posts of officers for authorization of executing lending and investing transactions for ''Tokumeikumiai'' [a kind of limited partnership for investing securitization business] arranged by the Securities Company. A double hatted department is located in the single hatted department in the Branch and offices in the Branch carry out the part of daily operations on behalf of the Securities Company. An officer in the Branch brought out the non-public clients' information electronically at the time of his transferring to other Deutsche Bank Group company, and the Branch inappropriately controlled the information regarding clients' credits. These show that the Branch has not taken necessary measures on the issues of operating and controlling between the Branch and other group companies, even after the previous onsite inspection was held by the FSA.
[4]	As a background of this case, it is confirmed that there were the lack of concrete measures for corrective actions as a result of the previous onsite inspection, appointments of responsible personnel for resolving each issues, and leadership for implementing concrete improvement plan in the operation and control departments in the Branch. In addition, up to the time this onsite inspection began, it is also confirmed that there was not consistency in the management's commitment for directing improvement in operations and controls in the Branch, and in regular follow-up by internal audit department for monitoring its implementation for correcting each issues as well.

2. With the findings above, the FSA today took the following administrative actions to the Branch based on Article 26 (1) of the Banking Law.
   
   Business Improvement Order based on Article 26 (1) of the Banking Law

[1]	To enhance compliance functions, the Branch should establish and strengthen the internal control system regarding legal and compliance issues with due emphasis on the following points [including the enhancement of human resources and organizational aspects];
	1] to clarify the commitment of the management on compliance with laws and other related regulations, and to clarify who should be responsible for the proper banking business in the Branch 2] to reinforce the function of the legal and compliance departments for the Branch 3] to take measures to ensure that relevant laws and regulations are properly understood and followed by the management and employees 4] to establish the firewalls between the Branch and other Deutsche Bank Group Companies in Japan, and to take thorough measures for proper clients' information control 5] to enhance and strengthen the internal control and monitoring functions in the Branch 6] to enhance and strengthen the internal audit system, and to execute the follow-up of internal audit
[2]	To review and strengthen the compliance functions for the operational control and the execution and control of trading securities under Article of 10 (2-2) and the financial derivative transactions under Article 10 (2-14) of the Banking Law and to prevent a recurrence of misconduct, the FSA ordered the Branch to establish and strengthen the operational and internal control system [including the enhancement of human resources and organizational aspects] for the above mentioned securities and derivative transactions with due emphasis on the following points;
	1] Proper management and control of operation 2] Proper provision of information and explanation to clients 3] Proper management and control on the information on client's credit exposure management and condition of client's trade execution and the track record on trading in the Branch 4] To clarify who, among the management and employees, should be held responsible with respect to the securities and derivative transactions
[3]	The Branch must submit the Business Improvement Plan to the FSA by June 21, 2004 and implement it promptly. The plan should follow the above-mentioned [1] to [2] and other issues and findings in the onsite inspection result by the FSA and the subsequent report from the Branch to the FSA [including points to enhance and establish management control for implementing the improvement plan steadily, and to clarify who should be responsible for its completion].
[4]	The Branch must report the progress in the implementation of the plan to the FSA on a quarterly basis until its completion.