Group financing
Group Treasury at DB AG is responsible for DB Group financing, without any change in ownership rights. This ensures that all Group companies are able to borrow and invest funds at optimal terms and conditions. Before obtaining funds from external sources, we first conduct intra-Group financing transactions. When borrowing non-Group funds, it has been the case to date that DB AG takes out short-term loans in its own name, whereas long-term capital is generally obtained through the Group’s financing company, DB Finance. The funds are passed on to the Group companies as short-term credit lines, which can be utilized as part of cash pooling on internal current accounts and/or through fixed short-term credit, or in the form of long-term loans.
Group Treasury operates as an in-house bank, although it provides a service function rather than acting as a profit center. The Group companies conduct business dealings with the Group Treasury (foreign exchange transactions, cash pooling, cash investments and taking up of loans). The conditions are set in line with market rates according to the at arm’s length principle. This means that the agreed interest rates are in line with those quoted by banks, assuming they were not intended to yield a profit. Market rates also mean that credit margins are adjusted in line with creditworthiness: the credit margin for the infrastructure companies is largely in line with the credit margins of DB AG in the money and capital markets. The credit margins for non-infrastructure companies are higher and are based on an internal metric-based credit rating and the credit margins quoted on the capital market.
The Group Financing Directive applies to DB Cargo AG from January 1, 2025, as part of the Group Coordination Agreement (Konzernkoordinierungsvertrags; KKV) in accordance with the comply or explain mechanism. This means that DB Cargo AG must generally comply with the directive, but DB Cargo AG is entitled to non-compliance with written justification. As part of the restructuring plan, DB AG is providing DB Cargo AG with a credit line of € 325 million, a financing facility with mezzanine capital of € 842 million and a bridging loan of € 434 million for the losses in 2024. These arrangements involve standard market covenants.
Consolidation of the Group finance function in DB AG gives us a uniform market presence in the money and capital markets, and allows us to achieve economies of scale and cost benefits. In addition, central Group financing enables us to adequately monitor financial transactions and achieve comprehensive risk management.