A N N UA L R E P OR T 2 010

KEY FIGU RES

Million € 2010 2009 2008

Business volume* 17,618 19,027 21,974

Ship finance business

New loans 1,674 2,007 4,928

(US-$ equivalent in million) (2,237) (2,891) (7,210)

Loans outstanding as at 31.12. 11,797 11,636 11,992

(US-$ equivalent in million) (15,763) (16,763) (16,681)

Commitments as at 31.12. 1,775 2,470 4,611

(US-$ equivalent in million) (2,372) (3,558) (6,420)

Equity capital

Subscribed capital + reserves 950 950 550

§ 340g HGB reserve 45 45 45

Participation rights / Subordinated liabilities 431 436 441

Profit and loss account

Net interest and commission income 190.9 159.7 169.3

Administrative expenses 30.8 31.0 24.9

Operating profit

- before risk provisions 163.4 133.0 142.7

- after risk provisions 5.0 23.5 1.3

Taxes on income ( - = revenue) - 0.4 22.1 1.0

Net profit / loss 0.0 - 0.3 0.3

Amount transferred to earnings reserves - - -

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

Cost / income ratio 16.1 % 19.4 % 14.7 %

Return on equity before taxes

before risk provisions 19.8 % 23.0 % 33.7 %

after risk provisions 0.6 % 4.1 % 0.3 %

Rating Moody's A3/P-2/D ** A2/P-1/D A2/P-1/C+

* total assets + guarantees + commitments

** since 24. 02. 2011

AN N UAL REPORT 2010

CONTENTS

Senior Management 2

Supervisory Board 4

Trustees 4

Advisory Board 5

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

SHIP PROFILES 48

ANNUAL STATEMENTOF ACCOUNTS 64

Balance Sheet as at 31 December 2010 66

Profit and Loss Account 68

Statement of Shareholders Equity 69

Cash Flow Statement 70

Appendix to the Annual Statement of Accounts 71

ATTESTATIONOF THE LEGAL REPRESENTATIVES 90

AUDITOR S REPORT 91

Figures in brackets refer to the preceding year.

SENIOR MANAGEMENT

Werner WeimannMember of the Board of Managing Directors(Chairman)

2

Tobias MüllerMember of the Board of Managing Directors

Dr. Rainer JakubowskiMember of the Board of Managing Directors

Dr. Stefan OttoMember of the Board of Managing Directors

Werner Weimann joined Deutsche Schiffsbank in December 2008 as a member of theBoard of Managing Directors. He is Speaker of the Board of Managing Directors, responsiblefor domestic markets, management support and staff matters. He joined the Commerzbankgroup in 1976 and after several stages in Germany and abroad he took responsibility forthe bank’s branches in Bremen and Hamburg. Thereafter, he was promoted to RegionalManaging Director North, in charge of business clients in the North, which included theRenewable Energies and Global Shipping Centre of Competence.

Dr. Rainer Jakubowski has been member of the Board of Managing Directors of DeutscheSchiffsbank since May 2009. As Chief Risk Officer, he is responsible for risk management and compliance. He started his career at Deutsche Bank in 1986 with stints in Cologne,Munich, Frankfurt, London and New York, at the end with emphasis on international loanbusiness, before joining Dresdner Bank in Frankfurt in 2005, where he was head of risk management, overseeing domestic small and medium sized companies and international corporate clients, including ship finance and country risk.

Tobias Müller joined Deutsche Schiffsbank in 1998, and has been a member of the Board of Managing Directors since 1999. He is in charge of finance, IT/organisation, operations and internal audit. Before joining Deutsche Schiffsbank he was a partner in the predecessororganisation of pwc as auditor and tax consultant, where, as a member of the management,he was responsible for financial service companies.

Dr. Stefan Otto left Commerzbank’s Mittelstandsbank and joined Deutsche Schiffsbank in October 2009. He is a member of the Board of Managing Directors since April 2011and isoverall head of the foreign markets, capital markets, treasury and business development, aswell as debt, capital markets & transaction management. One central role is the integration of the shipping activities of Commerzbank and Deutsche Schiffsbank. After various periods athome and abroad as an employee of Dresdner Kleinwort Wasserstein in New York, Dr. Ottotook over several leading functions in Dresdner Corporate and Investment Bank. At theMittelstandsbank, he became head of the business development division.

3

Stefan KuchGeneral Manager International Loans

Jeremy ScottGeneral Manager Treasury

Dr. Jan Rolin General Manager Business Development andDebt Capital Markets & Transaction Management

Jeremy Scott joined Deutsche Schiffsbank in April 2005, when he took up responsibility forthe bank’s treasury activities. Previously he was at Bankgesellschaft Berlin for ten years, wherehe led the derivative sales and structured products functions. His initial banking experiencewas gained during a ten year period at Dresdner Bank, where he was responsible, amongother things, for international derivative sales.

Dr. Jan Rolin, a barrister and solicitor, joined the management of Deutsche Schiffsbank in July 2010. He is in charge of the business development and debt capital markets & transactions management. He started off in 2005 in risk management, followed by a stint in Dresdner Bank corporate banking. In 2007 he was head of ship finance at theDresdner Kleinwort investment bank.

Stefan Kuch has been a member of the senior management of Deutsche Schiffsbank since October 2009. He is responsible for the international client relationship management.He started his career in the Export Department of Commerzbank in 1985, later switching toship finance. In 2002 he became head of the Shipping Centre of Competence atCommerzbank, responsible for international loan business.

4

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

5

ADVI SORY BOARD

Klaus Müller-GebelChairmanSolicitor, Frankfurt/Main

Lutz DiederichsDeputy ChairmanVorstandsmitglied UniCredit Bank AG, München

Dr. Hans Christoph AtzpodienMember of the Board of Managing DirectorsThyssen Krupp Marine Systems 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 HarbinsonVice ChairmanCONTI Group, Hamburg

Alfred HartmannChairman of Supervisory BoardHartmann AG, Leer

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

Dr. Hermann KleinMember of the Supervisory BoardGermanischer Lloyd SE, 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. Klaus MevesHamburg

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 DirectorOrion Bulkers 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 ScolaShipownerReederei “Nord” Klaus E Oldendorff GmbH, Hamburg

Niels StolbergPartnerBELUGA 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

The recovery of the world economy from the crash caused by the financial and economic crises was surprisingly strong. Financial markets have stabilised,although the sovereign debt crises of some Europeancountries early in 2010 required a rescue package inorder to maintain financial stability.

Supported by numerous fiscal and monetary inter-ventions, the world economy grew strongly duringthe first six months, but lost some momentumduring the second half of the year and only picked upspeed again towards the end of 2010. The recoveryof the world economy was primarily fed by dynamicemerging Asian countries, with China taking the lead.

Stock increases, rising consumer spending and asset investments in industrial nations by the private sector caused a hike in global production and tradevolumes. Strong expansion, improved consumersentiment and investments in Asia fuelled demandfor imports in this region. The importance of Asiafor the global economy and for ocean transportdemand was increasing. Beneficiaries were the economies of the USA and the euro zone, in theform of higher exports.

The ongoing recovery of the world economy in the year under review had a positive effect on all shipping segments.

The container trade has recovered to a large extent.Trade and charter rates throughout all sizes benefittedheavily from rising demand. Firm time charter ratesfor larger vessels are an indication that the marketoutlook is positive. The ongoing economic recoveryshould, in our opinion, be a firm basis for continuoustrade growth. After two years of restrained ordering,numerous newbuilding contracts for post- Panamavessels (above 4,500 teu), with delivery dates beween2012 and 2014, reflect liner companies´ belief inrecovering container markets and rising cargo volumes.

Towards the end of 2010, demand for bulk carriersand tankers was noticeably down. Tanker markets areinfluenced by a number of factors which are difficult toforecast and can change market balance significantly.In view of an order-book-to fleet-ratio of more than30 % in some tanker segments, and only a fewolder vessels, fleet growth is set to be higher thanin 2010. In addition, the number of vessels used forstorage purposes is down, seriously disrupting themarket balance, which will be hard to correct.

Bulk carrier markets recovered in 2010, but lostmomentum towards the end of the year. Strongfleet growth, which is set to continue for the next24 months, and adverse weather conditions wereresponsible for deteriorating charter rates. Due to strong investment activity and the ongoing industrialisation of emerging countries, we expectrising yet volatile markets. Rates will remain low in2011, but they should at least stay above break-evenlevels. High fleet growth and supply bottlenecks inexporting countries will pose employment risks andput pressure on rates.

Against the background of the IMF forecast for a 4.4 %rise in the global economy, primarily supported byAsian emerging countries, ocean transport and cargovolumes are set to increase, but with newbuildingsaffecting markets and few scrapping candidates, theactual recovery potential depends to a large extenton how the global economy develops.

Although the situation in money and capital marketsimproved only marginally Deutsche Schiffsbankmanaged to stabilise its strong market position withtotal loans (including commitments) of € 13.6 billion.

Deutsche Schiffsbank is one of the leading banks in maritime finance worldwide and combines the traditional strengths of Deutsche Schiffsbank,Commerzbank and the former Dresdner Bank. The

OVERVIEW

8

loan portfolio is spread more or less evenly amongdifferent customer groups, vessel types and countries.

Due to the uncertainties surrounding the financialmarkets and because the seaborne trade is only slowlyrecuperating, Deutsche Schiffsbank – like other shipfinance banks – was selective in its new loan businessin the year under review. The bank´s activities, especiallyduring the first half of the year, were basically limited todrawdowns under existing loan commitments andnecessary restructuring of existing exposure. New loanswere granted primarily to Greek and Asian owners.

Our loan portfolio, to a large extent denominated in US dollars, rose by € 0.2 billion to € 11.8 billion in2010, almost entirely due to a stronger US dollar.

Contractual repayments and extraordinary loan reduc -tions were considerably higher than our loan advances,surpassing drawdowns by € 796 million. Loan advances were about 17 % lower than the previousyear, totaling € 1.7 billion, consisting primarily of draw-downs of existing commitments for newbuildings orrestructuring of existing exposures. Loan commitmentswere down by € 0.7 billion to € 1.8 billion.

Broken down by ship types, our portfolio is still splitalmost evenly between the three standard vesseltypes container (€ 4 billion), tanker (€ 3 billion) andbulker (€ 3 billion). The remaining exposure consistsof specialised tonnage and is highly diversified.

Our determined strategy to reduce the risks of ourexisting loan portfolio resulted in increased stabilityin 2010.

Our interest surplus in 2010 was notably higherthan the year before, totaling € 175 (150) million.

The rise was due to an inflated volume of ship loans,as a result of the US dollar exchange rate, higher

margins, and lower funding costs. Net commissionsrose sharply to € 16.0 (9.7) million.

Administrative expenses stood nearly unchanged at€ 29.3 (29.5) million. Our operating result beforerisk provisions stood at € 163 (133) million. Due to the ongoing pressure on freight rates and vesselvalues in some market segments, a relatively largepart of our shipping loans is at risk. As a consequence,additional funds were allocated to individual riskprovisions.

The bank determinedly pursued the measures tosecure liquidity requirements in 2010 initiated duringthe previous year. We therefore managed to furtherstabilise and strengthen our financial resources, in spite of the ongoing uncertainty in the financial sector. In all these efforts cooperation withCommerzbank remains all-important.

Markets for bonds issued by public bodies deterio-rated in 2010, due to higher spreads. In relation to our total portfolio, write-downs were substantial,almost entirely relating to PIIGS states. We have reduced our business with these states in 2010. Ourbond portfolio contains only paper issued by banksand public bodies, predominantly EU states.

At the end March 2011, Commerzbank AG announcedits intention to integrate Deutsche Schiffsbank. Themerger into Commerzbank AG is to take place priorto the year-end. Shipfinancing will become a corebusiness for Commerzbank AG. After the successfulreorganisation of Deutsche Schiffsbank in the pasttwo years, this merger underlines Commerzbank´slong-term commitment to its ship finance business.This will give us and our customers the stability whichis essential for a long-term and trusting business relationship.

9

The world merchant fleet grew by close to 10 %, to1.35 billion dwt, in the year under review. Althoughfleet growth was strong, the fleet registered fordelivery in 2010 indicated much higher fleet growthat the start of the year. In the bulk, tank and containersector, less than two - thirds of the capacity registeredfor delivery in 2010 actually entered the market.

Nevertheless, the bulk carrier fleet and the offshoresupport and container vessel fleet rose strongly (bulkby as much as +16.5 %). The bulker fleet expansionhad already started in 2009, when the fleet grew by10 %. The bulk carrier fleet expanded to 535 million dwtin 2010, from 459 million dwt the year before, andthe fleet now counts 8,154 vessels above 10,000 dwt.The capesize fleet alone grew by a massive 23 % in2010, following 19 % growth in 2009.

Due to the scrapping and postponement ofdelivery dates, the container fleet did not increase by 2.2 million TEU as indicated by the order book at thestart of the year, but only by 1.4 million TEU or 9.2 %.Given the positive development in the container market,deliveries are expected to pick up further in 2011

and come in close to the registered order book level of 1.65 million TEU at the turn of the year.

Tanker markets will have to cope with a substantialinflux of newbuildings in 2011, with the registeredtanker order book for 2011 delivery representing asmuch as 14 % of the existing fleet. However, delive-ries are expected to continue to be significantlylower than the registered order book. Demolition isnot expected to reduce fleet growth significantly, asthe tanker fleet in most segments is modern andthe phase -out of single -hull tankers in general isfinished. Newbuilding deliveries were higher than inany previous year. At the same time, 13 million dwtwere sold for demolition, this primarily being thedemolition of tankers faced with the deadline for thephasing out of single-hull tonnage.

The demolition of container vessels remained relati-vely high, at close to 130,000 TEU, but the demolitionof bulkers only reached 6 million dwt as the chartermarket remained generally healthy during most ofthe year. The strengthening of steel prices observedduring 2009 was maintained throughout 2010 and

4321

150

125

100

75

50

25

0

in % of existing tonnage

Order book

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: Own calculations , based onClarkson Research Ltd. , London

Age structure / Order books

WORLD MERCHANT FLEET

10

scrap prices offered high values for the vessels sold fordemolition. The capacity of scrapped vessels wasslightly down from the record year of 2009, but morethan 800 vessels with a total capacity of 25.9 milliondwt went to the scrapyard, primarily in Bangladesh,India, Pakistan and China.

With the exception of smaller Handysize tankers, boththe tanker and container fleets, are characterised bymodern fleets and limited scrapping potential overthe next few years.

Relative to the fleet size, the proportion of old tonnage was reduced in most segments during 2010,both as a consequence of demolition, but also dueto growing fleets. By the end of 2010, 6 % of thecontainer fleet, 6 % of the tanker fleet and 22 % ofbulk carriers were aged 20 years or more. In variousareas of specialised shipping, the proportion is higher.

Due to the economic downturn in 2009, transportdemand decreased in most segments, resulting inexcess tonnage supply. The economic recovery in2010 led to sharply increased trade volumes andthe idle container fleet as a share of the total fleetwas, according to Alphaliner, reduced from close to 12 % at the start of 2010 to less than 3 % by theend of the year. The employment situation varied in the various size segments, with the larger vesselsclose to full employment during the first months ofthe year and the smaller vessels gradually beingbrought into the market throughout the year. It wasnot until the fourth quarter of 2010 that all segmentshad less than 5 % of the fleet idle.

In addition to the trade recovery, slow steaming ofcontainer vessels continued to increase liner com-panies’ capacity requirements. The use of tankers asfloating storage facilities tied up tonnage, in particu-lar in the larger vessel classes during the first halfof the year. Expectations of increasing oil prices

motivated traders to put oil on tankers and wait tosell that oil at higher prices at a later point in time.The market expectations of increasing oil prices weresignificantly reduced during the year, which explainswhy the use of tankers for storage purposes wassignificantly down. Whereas more than 5% of thetanker fleet was used for temporary floating storage early in 2010, this share had fallen to around 1.5 %by the end of the year. The tankers released to themarket put significant pressure on rates during thesecond half of the year.

Contracting activity increased again during 2010,and in particular new orders for large containerships were placed during the second half of 2010,after close to two years of absence of fresh ordersin this segment. Bulk carriers counting for more than50 % of the total contracting volume. Newbuildingprices were slightly up during 2010, as forward orderbooks with the yards were relatively comfortable andincreasing steel prices led to additional inflationarypressures. Continued interest in ordering large container vessels was seen up to the end of theyear as the charter markets remained strong.

As market perspectives improved in several segmentsduring 2010, owners’ investment activities in the saleand purchase markets gained momentum. In total,66 (55) million dwt worth US $ 23 (16) billionchanged hands in 2010, which illustrates the positivedevelopment in ship values. Second-hand prices for tankers were relatively stable, while bulk carrierprices were up some 5%. Container ship values hada strong recovery on the back of improved charterrates, and market values more than doubled over theyear in some segments. Second-hand sales in the con-tainer market more than doubled in terms of capacitychanging hands. Tanker volumes were also higher in2010, but the number of second-hand transactionsfor bulk carriers was slightly down from 2009.

11

In 2010, Japan was the leading maritime nation,with a share of 15 % measured by GRT and ownernationality. Greece came second with 13%, ahead ofGermany with 9 %. The Chinese merchant fleet follows with 8 %.

With a share of 35 % of container capacity, Germanshipping companies and limited partnership companiesare the undisputed leaders in this segment. Theycontinued to expand their total merchant fleet in 2010 toa total transport capacity of more than 100 million dwt.

The shipping and financial crises have had a noticeableimpact on investment activity and the market forventure capital in limited partnership companies inGermany. The broadly diversified order backlog of Germanowners consisted of 724 units. With a market share ofaround 9 % and a contract value of US $ 35 billion,German companies make up the third largest investorgroup in the world, after Greece (41) and China (36).Due to the lack of demand from investors, investmenthouses only managed to sell shares in limited partner-ship companies amounting to € 1.0 (0.7) billion.

Many owners and limited partnership companies had to restructure in order to be competitive infuture. Apart from more equity, joint commitmentfrom shareholders, banks and owners was needed.The German maritime industry faces anotherdifficult year.

Greek shipping companies, whose presence in the tanker and bulk carrier markets is traditionallystrong, continued to take an opportunistic approachin 2010 with newbuilding contracts amounting to close to US $12 billion, which was only matched byChinese owners with a similar amount invested innewbuildings.

Because it has become more difficult to borrowmoney and in view of relatively large order books forthe bulker and tanker segments, the contracting ofnew tonnage is still well below the boom years of2007 and 2008 when Greece committed US $ 38billion and US $17 billion respectively to newbuildings.Nevertheless, Greek owners are still actively expanding their business.

105

120

135

0

75

60

45

30

15

90

million USD

Age of the vessels: 5 years

Tanker: VLCC

Bulk carrier: Panamax

Container ship: 1,700 TEU geared

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

Second-hand prices

01 02 03 04 05 06 07 08 09 2010I II III IV

12

More than 10% of the global order book measuredin dollar terms is for the account of Greek shippingcompanies. In 2010, Chinese-backed finance wasmore prominent in the Greek market, trying to forgeties with Greek owners interested in building shipsin China. Greek shipping companies continue to be active buyers of second-hand tonnage and placeorders for newbuildings. A number of Greek buyersentered the container ship market, both throughsecond-hand investments and the ordering ofnewbuildings. Supported by state funds and a strategic increase in market share, Chinese ownersremained active buyers of second-hand tonnage,but Greek owners returned to the top spot, with thehighest number of vessels bought.

The capacity of the Norwegian merchant fleetdecreased somewhat to 40 (42) million dwt in theyear under review. It was a mixed year for the Norwegian shipping industry, with bulker earnings healthy, but some of the tanker owners faced difficulties with very low charter rates for smaller tankers.Norwegian shipping companies are traditionallystrong in offshore and “industrial shipping”, i.e. theintegration of specific tonnage into the supply chain.Although a niche market like car carriers developedpositively, with a significant reduction in inactive vessels and improved charter rates during the year,earnings remained at low levels in 2010.

The market for offshore supply vessels remainedweak. The Macondo accident in April 2010 put atemporary hold on activity for the deepwater drillingrigs, but rates were relatively stable at healthy levels.A number of new orders were imminent towards theend of the year as oil prices remained high and largeinvestment programmes in deepwater offshore oilfields were lined up.

The Norwegian shipping community strengthenedduring 2010, both on the bank and finance side as

well as on the ship owning side, both of which areinterested in further investments in newbuildings as well as second-hand tonnage. The slide in bulkcarrier earnings towards the end of the year resultedin an increased focus on counterparty risk, as a number of charterers had vessels on charter at considerably higher rates than in the spot market.

A substantial share of the orders which were registered for delivery in 2010 did not come to themarket and the future of a number of registeredcontracts still remains uncertain. Asian banks reentered international ship financing, whilst thetop banks in China became major lenders to theirdomestic shipowners. The Chinese government’sstimulus measures were shown to be effective withshipbuilding as one of the industries included inChina’s revitalisation plan, benefiting to the point ofseeing the mainland’s shipyards overtaking South Koreato make China the world’s largest shipbuilding nationfor newbuilding orders. Meanwhile, the mainland steelmanufacturers continue to work with major Chineseshipowners to control the transportation costs ofiron ore by fixing vessels on long-term contracts.

13

14

The global economy developed much more stronglythan expected in 2010, and the container sector inparticular benefited from higher trade volumes thaninitially expected for the year. Container freight rateswere substantially higher than in the crisis year of2009 and charter rates recovered gradually during2010, with larger vessels leading the recovery. Agradual recovery was seen in smaller vessels. Fleetgrowth in the container sector was relatively low (9 %)due to scrapping and postponement of newbuildingcontracts. Reduced service speeds further contributedto the container market recovery.

The tanker markets had a weak year despite relativelystrong growth in world oil demand and oil trade. Inparticular the second half of the year turned out tobe disappointing as floating storage was reduced,putting pressure on the larger tankers, whereas theproduct tanker segment continued at low levels.

The dry bulk trade increased strongly thanks to continued strong demand for iron ore, and a boostin seaborne coal trades as China and India enteredthe market. Ordering activity for bulkers picked upconsiderably in 2010. However, fleet growth wasalso high and large fluctuations in Chinese importdemand led to a volatile year for earnings.

Although average earnings for the year were generallyabove break -even levels, the year ended on a softnote as bad weather reduced exports from a numberof exporters and high fleet growth put rates underadditional pressure. In particular the Capesize segment saw earnings sharply reduced towards theyear-end. Bunker costs were relatively high in 2010and prices increased further in the last months ofthe year.

The use of slow steaming was seen in the container sector, but several tanker operators werealso slow steaming their vessels to reduce bunkercosts in a low -charter rate environment. Bulkerswere generally not optimising speed in this way aspotential savings were relatively small comparedwith charter rates during most of the year.

INDIVIDUAL MARKETS

15

CONTAINER VESSELS

US container imports in 2010 were up a massive16 % compared to 2009, based on healthy levels ofprivate investments and stronger consumer spending.Growth in Asia -Europe container traffic was as highas 18 % in 2010, partly based on pickup effectsfrom the recession in 2009. Sharply higher volumeswithin Asia and from Asia to the Middle East, Africaand South America were also observed.

The container fleet ended the year with close to 5,000ships with an aggregate carrying capacity of 14.1 millionTEU. The container fleet expanded by 9 % in 2010and, due to few new orders during the year, the orderbook- to- fleet ratio came down from 36 % at the startof the year to 28 % at the year-end. The containerorder-book continues to lean heavily towards thelarger- sized segments, which are expected to seecontinued strong growth in the years to come asordering activity for large post -Panamax vessels pickedup considerably during the second half of 2010.

01 02 03 04 06 07 08 09 201005I 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

The first fresh orders for post-Panamax containervessels were placed in the summer of 2010, endingalmost two years of absence of orders in this segment.

Although scrapping remained relatively high –127,000 TEU went to the scrapyard – demolitionsslowed sharply during the year as the market improved.Scrapping potential within the fleet remains relativelylow and is primarily limited to small and medium-sized vessels. Liner companies increased revenuesdramatically in 2010, with higher trade volumes andfreight rates which increased by 35 to 60 % from2009 on major trade routes out of Asia.

Approximately 12 % of the fleet was unemployed at the start of 2010, but as cargo volumes resumedand slow steaming continued to utilise capacity, only2.5 % of the fleet was idle by the end of the year.The recovery which first started in larger vessels hadreached all segments by the end of the year, althoughvessels below 1,000 TEU still had 4.5 % of the fleetidle. The ongoing recovery of the world economyshould continue to have a positive effect on trans-port demand and market conditions in the currentyear. In view of the strong market recovery observedlately, the employment conditions and earnings inthe charter market are set to continue to improve.

16

The markets for modern multi -purpose tonnage were mixed in 2010. Container charter rates improved dramatically, but freight rates declinedsignificantly during the fourth quarter as well, reducing earnings due to the necessity of relocatingempty containers. Although there were reports of arecovery in High and Heavy cargo volumes, projectcargoes with long lead times – which helped toprop up the market during 2009 while other cargovolumes fell – seemed to struggle in the yearunder review. A reduction in new projects during the financial crisis is likely to have caused a drop in project cargo volumes. Renewed investment activityis expected to increase project volumes in 2011.

MULTI - PURPOSE VESSELS

The fleet consists of 3,000 vessels with a totaldeadweight capacity of 26.8 million dwt. The averageage of a vessel was 15 years as at year-end. Morethan one third of the MPP fleet is equipped with a heavy - lifting capacity of more than 50 tonnes.

Deliveries were slightly up on 2009 at 145 units witha total of 2.0 million dwt. 1.1 million dwt of capacitywas scrapped during 2010, and it is expected thatthere will a high level of scrapping activity in thecoming years in light of the fact that a large proportionof the MPPs are more than 20 years old. The registered order book presently accounts for 27 %of the fleet, with more than half of the orders registered for delivery in 2011.

17

BULK CARRIERS

Iron ore and coal – the major commodities shippedby bulk carriers – experienced strong demand growthin the reporting year, in particular from emergingmarkets such as China. Chinese policies to fightinflation and measures introduced in the second halfof the year to reduce energy consumption havecaused volatility in Chinese steel production and coalconsumption, which in turn has caused demand forbulk transport to become equally volatile. Given thestatus of the steel and power industry on the politicalagenda in China, the bulker markets are likely to seecontinued volatility stemming from Chinese policymeasures towards those industries over the next years.

The bulker market was able to accommodate a massive fleet growth of 17 % in 2010 as bulkdemand increased by a robust 10 %. Bulk carrier

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

01 02 03 04 05 06 07 08 09 2010I II III IV

charter rates were volatile but generally well abovebreak-even levels, even if the year did end on asoft note, particularly for the largest iron ore and coaltransport vessels. Major exporters of iron ore andcoal experienced heavy rain towards the end of 2010and export levels were significantly down, a trendwhich has continued into 2011. Of particular note in 2010 was the strength of the smaller bulkersegments for Panamax and Handymax vessels, inwhich rates increased by almost 30 % from 2009levels as a result of strong transport demand for notonly coal but also other bulk commodities, as wellas the high volumes of iron ore.

The values of bulk carriers, both newly -built andsecondhand, were relatively stable during the year,with a five- year-old capesize valued slightly belowUSD 52 million at both the end of 2010 and theend of 2009. Bulk carrier demand is expected tomaintain a strong growth pattern over the next yearsbased on demand from emerging and developingmarkets. High fleet growth is, however, expected to put pressure on the market balance and averagebulker rates are expected to weaken somewhatcompared with 2010 rates.

18

2010 continued the trend seen in 2009, with thelarger crude tankers seeing average rates close tobreak-even levels while product carriers struggled to meet capital costs as rates – in particular for thesmaller vessels – approached operating costs on anumber of occasions. Tanker rates in 2010 benefitedfrom modest fleet growth of 3.9 % as deliveries ofnewly-built ships were offset to some extent by theremoval of old, single-hulled tankers. The VLCC fleetincreased by just 2.5 % as single-hulled VLCCs wereremoved from the fleet and deliveries were lowerthan in the product tanker segment. The registeredorder-book- to - fleet ratio for the overall tanker fleet at the end of 2010 was 28 %, but the capacity onorder leaned heavily towards the larger vessels. The registered VLCC order book at the end of 2010represented 36 % of the existing fleet, and although

fleet growth for the product tanker segment isexpected to slow in 2011, the VLCC fleet is expectedto see significant growth over the next two years.Scrapping of tanker tonnage was up to 12.7 million dwtin 2010, but removals of tanker tonnage from thefleet in the form of conversions to offshore projectsor bulk tonnage was almost equally importantamounting to nearly 9 million dwt. A few single-hulledtankers remain in the tanker fleet, although only a limited number of them are still actively trading.With an average age of 8 years, the tanker fleet ismore modern, only 6 % of the tanker fleet is 20 yearsold or more, and it is only the smaller segmentsbelow 30,000 dwt that have a significant proportionof older vessels.

The use of tankers for the temporary floating storageof oil was an important factor in the VLCC segmentin 2010, with a reported proportion of close to 9 %of the VLCC fleet being used for this purpose duringthe spring. Floating storage came down significantlyduring the third quarter of the year and accountedfor less than 2 % of the total tanker fleet at the endof the year.

CRUDE OIL AND PRODUCT TANKERS

01 02 03 04 05 06 07 08 09 2010I 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 (Handymax )

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

1- year time charterTanker freight rates

19

Charter rates for many chemical tankers droppedbelow breakeven rates in the second quarter of2009 and have stayed below breakeven ever since.Market rates in 2010 were often not covering muchmore than operating costs and interest payments. A number of these tankers have a large share oftheir employment in European waters with earningsparticularly dependent on European oil demandwhich saw demand hard hit by the recession andseems to be continuing its decline. At the year-end,the active fleet consisted of 46 million dwt, withregistered orders of 10 million dwt, i.e. somewhatmore than twenty per cent of the existing fleet.Until the fourth quarter 2008, the chemical tankermarket was a market which had been developingpositively for years, with strong trade growth in

CHEMICAL TANKERS

cargoes transported, liquid chemicals and oilproducts. The chemical tanker market furthermorebenefitted from higher IMO safety regulationsenacted in 2007, which stipulated that vegetable oils and fats needed to be transported in IMO II tankers, and from growing global use of biofuels.The continued order backlog reflects the positivesentiment which existed before the financial crisis.Fresh orders have been close to non-existent in2009 and 2010 following very weak markets and charter rates often quoted at OPEX levels.

The fleet grew by almost 7 % in 2010, orby 2.8 million dwt, although delivery dates werepostponed and newbuilding contracts cancelled.Scrapping was high in 2010, and as markets stillhave to improve, further scrapping is expected.

20

The influx of new LNG (liquefied natural gas) tankerscontinued, irrespective of the delays in the start - upof LNG production facilities (of which LPG is a by -product), which gave rise to their orders. Transportvolumes of LNG increased by 20 % or 215 milliontonnes. This is the highest increase in volume sincethe early 1980s. A negative factor for demand in2010 was storage. The 9 % increase in demand due to storage in 2009 was reversed and had aneqivalent negative effect in 2010. Last year, 24 newlarge LNG carriers were delivered from shipyards andone small vessel was sold for scrap. This resulted in a 9% capacity growth rate in 2010.

Utilisation of the LNG carrier fleet rose in thesecond half of the year as new projects came onstream, lifting charter rates above US $ 60,000 a day

GAS TANKERS

by the end of the year, after a very weak summerwhen several vessels were idle. Only modest fleetgrowth is expected in 2011, as only eleven vesselsare due to be delivered. A healthy increase is predicted on the demand side. The age profile ofthe LNG fleet is very young. More than 50 % ofthe vessels were delivered after 2000.

Although a positive trend in charter rates for LPGcarriers was seen during the year – in particular inthe second half of the year – average rates remai-ned low. The overall fleet increased by 3.3 % to19.4 million cubic metres in 2010.

21

Drilling rigsOil prices continued to increase during 2010 after therecovery seen during 2009 - from the low 40’iesearly in the year to around 75 $/bbl towards theend of 2009. Brent oil ended 2010 above 90 $/bbl.After a more than 10 % drop in Exploration andProduction spending in 2009, sustained higher oilprices led oil and gas companies to increase spending by around 11 % in 2010. As oil prices areexpected to remain high, many oil companies are reporting further increases in E&P spending for2011. The Macondo accident in April 2010 was how-ever putting drilling activity on hold, in particular inthe US Gulf of Mexico. The Macondo blow -outincreased environmental concern in oil companiesfurther and older rigs have become more difficult to employ.

At the end of 2010 seventy - four jack-ups wereunemployed with a large proportion in the US Gulf.Increased environmental concern and demand forpremium assets have seen modern units withmuch better employment prospects than olderones. It remains to be seen how many of the olderjack-ups will go back into operation, taking highcosts for upgrading and classification into account.

Day rates for deepwater units continued to slideduring the first half of 2010 but kept up surprisinglywell given the post Macondo ban on deepwaterdrilling. Rates for Deepwater units were downaround 15 % in 2010, after a similar decrease in2009, but rates were stable during the second

half of the year. No modern deepwater drilling rigswere cold stacked at the end of 2010. Higher oilprices, and an end to the post-Macondo drilling banwith approval work for new permits started, led toimproved market sentiment and renewed orderingactivity towards the end of the year.

Supply vesselsDemand for offshore supply vessels increased in2010, but the market had still to absorb a highnumber of new deliveries. Charter rates for AHTSvessels in the North Sea remained low during 2010with spot rates similar to 2009 levels. PSV spotrates improved significantly from 2009, although ratesstill were well below 2007-2008 levels. A number ofAHTS vessels were observed doing cargo runs (PSVwork) as rates for this work were more attractive.

A high number of newbuilding deliveries reflect the high ordering before the financial crisis. Thefleet of rig supply vessels and anchor-handling tugsincreased by almost 300 units to 5,191 vesselsduring the year. Nevertheless, the share of old vesselswith low specifications and capacity remains high.At the year-end, the order backlog stands at roughly450 vessels.

Increasing global offshore activity is expected to gradually lead to a more balanced market for off-shore support vessels. The drive in demand fromnew drilling rigs for deepwater activities tends tofavour PSVs as most of these rigs are dynamicallypositioned.

OFFSHORE

22

CAR CARRIERS FERRIES

The ro- ro sector has seen modest growth in recentyears, while investment has focused on the purecar carrier fleet. However, the onset of the globaldownturn saw trade volumes drop dramatically andin response, investment in ro- ro ships halted whiledemolition activity soared.

Investment remained weak in 2010. Meanwhile,with the current fleet being relatively old, a largeproportion may still be sold for scrap, which couldresult in some replacement demand in the future.

The ro-ro fleet is typically divided into four mainvessel types and the fleet, although relatively old,offers unusual flexibility, being able to carry diversecargoes and serve ports that could otherwise bedifficult to access for more conventional vessels,particularly fully cellular container ships.

The average age of a ro-ro vessel stands at a notparticularly youthful 21.3 years, and 55 % of thefleet is more than 20 years of age.

After the boom years 2007 and 2008, where tonnage demand could not be satisfied at times,global car sales and the seaborne movement ofcars fell significantly in the wake of the economiccrisis. More than 50 car carriers were idle at timesin 2009. Car carrier operators responded by sending close to 20% of the fleet to scrapyardsover the last two years.

The economic recovery in 2010 resulted in highercar sales and demand for car carriers improvedduring the year. Stronger car sales were seen in allmajor regions except Western Europe, as incentiveschemes there ran out. The main exporters, Japanand Korea, increased volumes by more than 30 %in 2010 and by the end of 2010 only a few olderunits were still idle.

Charter rates improved correspondingly, althoughthey were still below historical levels by the end ofthe year. With less than 100 vessels registered inthe order books, the order-book- to - fleet ratio hascome down to below 20 %. Continued recovery inglobal car sales is expected, along with limited fleetgrowth in 2011 and 2012.

23

The cruise market continues to grow. As at the year-end, the fleet stood at 441 vessels with a capacityof 471,621 lower berths. In 2010, 19 vessels weredelivered. Global passenger numbers increased on average by 6.6 % in the last ten years. 65 % of the 20 million passengers worldwide are fromNorth America and 28 % are from Europe. Turnoverincreased by 7 % in 2010 and is expected to growagain in 2011.

Six vessels were scrapped and three were converted. Carnival has ordered ten vessels that will be delivered from Italian and German yards by 2014. The leading shipyard groups are STX,Meyer and Fincantieri.

The two largest cruise operators are Carnival and Royal Caribbean Cruise Lines, with a marketshare of 46 % and 22 % respectively. Bookings forhigh -end cabins and luxury cruises continue to rise.For the major cruise operators, operating resultswere satisfactory in 2010 and the outlook for 2011is positive.

CRUISE VESSELS

Due to the diversity of the ro-ro fleet, analysis iscomplex. At the start of September 2010, it comprised1,014 vessels of 9.35 million dwt. These vessels canbe categorised as follows:

• 133 ro-ro/freight/passenger vessels with an average size of 6,659 dwt and an average age of 19.6 years.

• 183 ro -ro/lo-lo vessels averaging 7,540 dwt and 22.6 years of age.

• 580 full ro -ros with an average age of 22years and an average lane length of 1,593 m.

• 109 ro- ro/container vessels. These ships average 22,649 dwt and 19.3 years of age. They have an average lane length of 2,871 m.

The order book comprised 81 vessels totalling 1.07 million dwt – equal to 11.5 % of current fleetcapacity. The ro-ro order book is currently very biased towards the larger end of the sector, with81% of capacity on order for vessels of 10,000 dwtand above.

24

SHIPBUILDING

During 2010, contracting of new tonnage was significantly higher compared to the low activityseen in the aftermath of the financial crisis. Healthyearnings for tankers during the first half of the yeargave shipowners an incentive to invest in new tonnage. Although the number of new contractswas modest during the first quarter, activity pickedup in the second and third quarters. Towards theend of the year, contracting activity dropped alongwith freight rates. Shipbuilding prices continued adownward trend until the end of the first quarterof 2010. Prices started to climb in the second quarter, based on higher demand. Prices softenedsomewhat again towards the end of the year, asdemand from the bulker sector was down.

The demand for new tonnage was driven by healthyearnings in the freight markets. The relatively lowprice level compared with 2008 could also beanother factor driving demand. More than US $70billion was committed to new vessels in 2010, sharply up from 2009.

Whereas South Korea is the largest builder of tankertonnage, China has the dominant position in thebulker order book. Chinese yards turned out the lar-gest volume of ships measured in dwt in 2010,ahead of Korea and Japan in second and thirdplace. Japanese shipowners dominate their coun-try’s order books. In China, more than a third ofnew orders came from domestic accounts, whileKorean shipowners account for less than 10 % oforders at Korean yards.

25

2010 131211090807060504 14

50

45

40

35

30

25

20

15

10

5

0

million cgt

Others

China

South Korea

Japan

EU

Source: Own calculations , based on Clarkson Research Ltd., London

Deliveries

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

Japan

Others

EU China

South Korea

6%

35%

47%

8%

4%

New Orders 2010 (cgt ) Overall 33.8 million cgt

0504030201 06 07 08 09 2010

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

East Asia

Norway

Germany

Greece

Italy

Others

Great Britain

North America

40 %

25 % 7 %

3.5 %

9.5 %

5%

5 %

5 %

Ship loan portfolio by country Exposure at Default ( EaD) in billion €

Although economic growth in the second half of 2010was, over long stretches, somewhat less dynamicthan in the first six months, the development in theworld economy appears to be self-sustaining. Recentdata suggests that consumer spending is increasingin industrial nations, and emerging countries areexpanding strongly. Industrial production, financialinvestments, and commerce in China grew morestrongly than anticipated in 2010, due to an abundance of cash and a vigorous economy.

The ongoing recovery of the world economy in the year under review had a positive effect on themaritime industry. Rising stocks and asset invest-ments by the private sector caused global productionand trade volumes to increase significantly. Emergingcountries are increasingly the backbone of oceantransport demand, with China at the forefront. Theglobal economy grew by 5 per cent in 2010 andthe IMF forecasts a rise of 4.4 per cent in 2011.

Cargo volumes in the container trade increasedduring the year, and freight- and charter rates steadilyrecovered from 2009 levels, only slowing downtowards the end of the year, so that liner companiesmanaged to increase their earnings last year. Growingcargo volumes on the main shipping routes andslow steaming stimulated demand for larger vessels.Due to scrapping, cancellations and postponementof newbuilding contracts, the fleet grew only by 9.2per cent in 2010, instead of 15 per cent as forecast.Charter rates for larger vessels were generally abovebreak-even levels, those for smaller vessels still below.

The bulker trades benefitted from higher demand for iron ore and coal, particularly in growth markets, spearheaded by China. As of the second quarter,transport demand became more volatile and towardsthe end of the year cargo volumes were down, due

to floods and severe weather conditions in Australiaand Brazil. The bulk carrier fleet grew by 16.5 per centand the high order backlog (52 per cent) is expectedto put pressure on the market balance in the next 12 to 24 months.

Average charter rates for large crude oil tankershovered around break-even levels in the year underreview. Nine per cent of the VLCC fleet was used as floating storage facility for part of the time inspring 2010, going down to 3 per cent towards theyear -end, which seriously disrupted the marketbalance. Product tankers were struggling to meetbreak-even requirements, and smaller units onlyjust managed to cover operating costs. Overall, thetanker fleet increased by 3.9 per cent and strongfleet growth is expected in the next two years. Due to the uncertainties surrounding the financialmarkets and because the seaborne trade is onlyslowly recuperating, Deutsche Schiffsbank – like othership finance banks - was very selective in its new loan business in the year under review. The bank´sactivities, especially during the first half of the year,were basically limited to drawdowns under existingloan commitments and necessary restructuring ofexisting exposure. New loans were granted primarily

27

to Greek and Asian owners, while German ownerswere busy restructuring their existing exposure dueto the depressed container trades.

Loans outstanding rose by € 0.2 billion to € 11.8billion in 2010, entirely due to a stronger US dollar(+ € 1.0 billion). Contractual repayments and extra-ordinary loan reductions were considerably higherthan our loan advances, surpassing drawdowns by € 796 million. Loan advances were about 17 percent lower than the previous year, totaling € 1.7billion, consisting primarily of drawdowns of existingcommitments for newbuildings or restructuring ofexisting exposures. Loan commitments were downby € 0.7 billion to € 1.8 billion. Our loan portfolio(including commitments) amounted to € 13.6 billionas at 31 December 2010.

Loans granted to our German customers weresomewhat lower than the previous year, amountingto € 578 (740) million. Our international clientelereceived loans of € 1,267 million, close to twothirds of all drawdowns. Because charter rates had not recovered sufficiently, particularly in thecontainer trade, some of our customers were notable to service their loans as originally agreed, butoverall, owners continued to pay on schedule.Contractual repayments increased slightly to €1,582(1,454) million. Extraordinary loan reductions roseto € 888 (529) million, in spite of difficult marketconditions. Total repayments were €2,470 (1,983)million while loan commitments amounted to €1.8(2.5) billion, 28 per cent lower than at the beginningof 2010. About half is earmarked for drawdown in the current year. In view of the present situationin the financial sector and in numerous shipping markets, and based on current forecasts, it can beassumed that the bank´s new lending business willbe very selective in 2011. Loans and guaranteesmanaged on behalf of syndicate partners stood ataround € 2.8 billion.

90 per cent of our total loan portfolio is in foreigncurrencies and 91 per cent thereof is in US dollars,7 per cent in Japanese yen and 2 per cent in Swissfrancs. Measured in US dollars our portfolio reached14.2 billion.Compared to 2009, the portfolio break-down by country displays only moderate changesin allocation of borrowers. German owners andGerman KGs with their diversified fleet make upclose to 40 per cent of the total portfolio. Greecewas again by far our most important internationalmarket with a share of 25 per cent of all loans and40 per cent of our foreign loans. We are one of theleading lenders to the Greek and German shippingcommunity. Other core markets where we see future growth potential are Asia, although the Asianshare of our portfolio did not change very much,Norway, and well known shipping clients in NorthAmerica, Great Britain and Italy. In Asia we are focusedon the traditional maritime centres of Hong Kongand Singapore. Broken down by ship types, ourportfolio is still split evenly between the three standard vessel types and specialised tonnage.

7 %

4 %4%

5 %

11 %

13 %

25 %

31 %Offshore

Crude oil tankers

Product tankers

Chemicaltankers

Gas tankers

Others Car carriers / RoRo 2 Cruise vessels 2Other types 3

Container ships

Bulk carriers

Ship loan portfolio by ship types Exposure at Default ( EaD) in billion €

28

MUNICIPAL LOANS

As no new loans were granted in our traditionalmunicipal loan business, while € 135.2 million wererepaid, the volume of loans against promissorynotes was down to € 1.11 (1.25) billion as at 31 December 2010. We will try to keep the volumearound that level in the medium term, in orderto have ample cover for issued public Pfandbriefe. It is possible to increase the fund which serves assecurity for the issuance of public Pfandbriefe bypurchasing bonds issued or guaranteed by publicbodies, predominantly EU states.

This fund stood at € 1,615 (1,631) million as at 31 December 2010, composed of 80 per centGerman and 20 per cent foreign municipalitybonds. Our public Pfandbriefe in circulation are thus well covered.

EARNINGS

Our interest surplus in 2010 was notably higherthan the year before, totalling € 175 (150) million.The rise was due to an inflated volume of shiploans, as a result of the US dollar exchange rate,higher margins, and lower funding costs.

Net commissions rose sharply to € 16.0 (9.7) million,as lower commissions for new loans were more thancompensated by commissions for restructured deals.Administrative expenses stood nearly unchanged at € 27.7 (29.5) million. The cost - income - ratioimproved to 15 (19) per cent, which compares veryfavourably to other banks. After covering administrativecosts and including other sundry operating incomeand expenses, our operating result before risk provisions rose to € 165 (133) million.

Due to the ongoing pressure on freight rates and vessel values in some market segments, a considerable part of our shipping loans is at risk. As a consequence, additional funds were allocated toindividual risk provisions. Markets for bonds issued by

2010 0504030201 06 07 08 09

180

160

140

120

100

80

60

40

20

0

million €

Net commissions

Interest surplus

Administrative costs

Earnings review

29

public bodies deteriorated in 2010, due to higherspreads. Our entire bond portfolio, which contains only paper issued by banks and public bodies, hasbeen booked as current assets, and is therefore subject to write-downs to the lower of cost ormarket value. After the necessary write- downs nofurther risks are apparent in our loan portfolio. Inrelation to our total portfolio, write-downs were substantial, almost entirely relating to PIIGS states.We have reduced our business with these states in 2010.

Risk provisions amount to € 159.4 (109.5) millionand the operating surplus from our standard busi-ness activities amounted to € 5.6 (23.5) million.Costs in connection with the implementation ofthe new accounting principles in accordance withthe modernisation of accounting laws are bookedas extraordinary expenses.

After a tax rebate of € 0.4 million, booked to ourprofit and loss account, we managed to break even.

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.

Total equity amounted to € 1,407 (1,424) million.As of 31 December 2010, the capital ratios pursuant to SolvV were 13.5 per cent and 9.5 percent respectively. The equity gives us a solid baseto cope with credit risks, and puts us in a positionto play an important role in ship finance as shipping markets recover.

EQUITY CAPITAL

30

The bank determinedly pursued the measures tosecure liquidity requirements in 2010 initiatedduring the previous year. We therefore managed to further stabilise and strengthen our financialresources, in spite of the ongoing uncertainty in the financial sector. In all these efforts cooperationwith Commerzbank remains all-important.

Commerzbank group granted us credit lines runninginto 5.8 billion, which were not fully utilised as thebank’s liquidity reserves were at all times adequate.

The prime objective in 2010 was long - term funding, and, we therefore deliberately replaced our short - term borrowing with long-term liquidity.Unsecured US dollar drawings from theCommerzbank group, which started in 2009, facilitated the management of our foreign currencyand liquidity requirements. Overall, we borrowed € 1.8 billion.

The sale of ship mortgage Pfandbriefe for € 1.245billion that was originally scheduled for 2009 tookplace in mid 2010, with the lion’s share going to the

FUNDING

group parent and the balance to external investors. For that purpose we bought back some of our ownship mortgage Pfandbriefe held with the EuropeanCentral Bank. € 675 million of our own ship mort-gage Pfandbriefe were still held with the EuropeanCentral Bank as at the year-end.

The bank sold new bonds and promissory notesamounting to € 1.8 (4.5) billion in 2010. Eighty per cent thereof in the form of ship mortgagePfandbriefe, which were sold primarily via ourEMTN program. No money was borrowed from theEuropean Central Bank as at 31 December 2010.Furthermore, a sizeable amount of money marketfunds were obtained from shipping companies orthrough our interbank activity. Close cooperation withour clients turned out to be fruitful for both sides.

Our liquidity reserve stood at € 3.9 billion as at thebalance sheet date, consisting of bonds, eligible forrepo operations with the European Central Bank,excess cover in our two mortgage bond registers,unutilised credit lines with our major shareholderand cash on deposit.

20102009 20102009 20102009 20102009 20102009

million €

Ship mortgage Pfandbriefe

Public Pfandbriefe

Bearer Bonds

Registered bonds

Loans against promissory notes

Initial sale of bonds

3.000

2.750

2.500

2.250

2.000

1.750

1.500

1.250

1.000

750

500

250

0

31

We are still burdened by high funding cost due tothe financial crisis, and spreads for foreign exchangeand cross currency swaps are other major cost factors.

However, over the past two years, the bank hasswitched to long-term hedging of its foreign currencyexposure, thereby maintaining a solid cost structure,albeit at a rather high level.

Unsecured notes in circulation rose to € 5.9 (4.7)billion. Loans against promissory notes still madeup the major share, totalling € 5.2 (3.9) billion. Thevolume of public Pfandbriefe was somewhat downto € 1.4 (1.5) billion and issued ship mortgagePfandbriefe amounted to € 4.5 (4.6) billion as atthe balance sheet date. We did not enter into anyrepo operations with the European Central Bank in 2010 (previous year € 2.1 billion).

Thanks to all these measures, the cost of foreignexchange swaps and the liquidity situation of thebank were comfortable at the year -end, whichshows us that we are on the right track.

At the end March 2011, Commerzbank AG announced its intention to integrate Deutsche Schiffsbank. Themerger into Commerzbank AG is to take place prior tothe year -end.

EVENTS AFTER THEBALANCE SHEET DATE

32

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 shipping markets. The rating system meets the requirementswith regard to the capital adequacy framework(SolvV) AIRBA (advanced internal rating basedapproach).

For all other shipping loans, primarily corporateloans and construction finance, as well as for ourbank portfolio AIRBA procedures are in place. Therating procedure for banks has been approved by the"Bundesanstalt für Finanzdienstleistungsaufsicht"(BaFin) in 2010, for the remainder, the audit has notyet been completed. Equity pre - finance risks aredetermined by means of a simple risk classificationprocedure, in accordance with the SolvV standardrating based approach.

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 areof material value, of which a significant majority areemployed in international trade, specific country risksare only relevant in relation to some constructionfinance, that is only to a limited extent. A balancedportfolio as to vessel types is an essential criterionin our lending policy. Prior to drawdown, and thereafter annually during the term of the loan, theearnings and financial situation of borrowers andcommercial owners are evaluated in detail basedon financial statements and other documents. Bypartly syndicating loans, risks are spread both withregard to customers and vessel types.

RISK MANAGEMENT

Our risk management system allows us, as a shipfinance bank, to efficiently control all potential risksinherent in our business and at the same time to fulfil all legal requirements. Based on variousmechanisms for analysis and early diagnosis, allrelevant risks were documented and kept withinlimits.

Our organisational structure complies with the minimum requirements for risk management(MaRisk) set by the financial services supervisoryauthorities. Essential functions are handled by theRisk Strategy & Portfolio Reporting Department and“Marktfolge Kredit” (a department unrelated to themarketing teams) providing amongst other thingsquarterly credit risk reports and a second opinionon all relevant loan decisions.

Lending and Treasury departments are obliged toreport directly to the Risk Strategy & PortfolioReporting Department, which is in turn responsiblefor ongoing monitoring. Business related risk categories (counterparty risks, market price risksand liquidity risks) as well as operational risks aresubjected to monitoring and control. The object of our internal risk and equity management is tosafeguard the banks risk-bearing capacity, and tomaintain at all times an adequate ratio between therisks and the available funds to cover these risks.

Counterparty risks are defined as potential lossesdue to deteriorating creditworthiness or the failureof business partners. Risks resulting from lending,contractual risks related to our funding activities,and settlement risks belong to this category.

Credit risks are controlled by a set of different riskand 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.

33

Regular reviews of our loans are carried out by therelevant departments. If disruptions in performanceare beginning to emerge, appropriate steps and, if need be, preventive measures are taken. Otherelements in the control of credit risks are the continuous monitoring of the major internationalfreight markets and the consequences rates mighthave on the ability of our customers to service theirloans. This includes the supervision of the structureof our loan portfolio in relation to the respectivecharterers. In addition, we continuously monitor thedevelopment of second-hand values, as well as new-building prices, and shipping markets are analysedwith respect to the age structure of the fleet andnewbuildings on order.

We expect shipping markets to stabilise at a lowlevel in 2011 and for some vessel types and sizes, wesee the need for further individual risk provisions.The ongoing influx of new vessels into the bulkersegment will pose some risk for the employmentsituation with repercussions on rates. The containersegment should continue to recover in the long-runas global container throughput is set to grow, but in2011/2012 freight and charter rates will remain underpressure due to the high influx of new tonnage.The tanker market also shows some stability, butthe outlook is uncertain.

Growing capital needs necessitated selective newloan business.

In order to limit counterparty risks in connectionwith money and foreign exchange transactions, aswell as off-balance sheet deals with, nearly all with 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. For aship mortgage bank they are principally currency orinterest risks.

Currency risks arise because a large majority of ourshipping loans are denominated in foreign currencies(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 andcurrency swaps with numerous prime banks, we manage the currency risk of all foreign currencyloans. Currency limits are monitored on a daily basis.

Interest rate risks result particularly from mismatchesbetween loans and deposits because the variousproducts demanded by our business partners havedifferent terms. We permanently monitor and controlthe interest rate risks in the various currenciesthrough an EDP supported information systemwhere all interest rate periods of the entire lendingbusiness, from the liability side and from the derivative business are brought together for analysis.Taking hedging instruments into account substantiallythe whole loan volume of the bank is financed with matching interest periods. A large part of theremaining receivables relates to investment of thebank’s equity. The responsibility for monitoring inte-rest rate risks lies with the Risk Strategy & PortfolioReporting Department, which continuously updatesthe senior management on the development ofmarket values and their trends, as well as the consequences for the earnings situation of the bankensuing from interest rate changes. The responsibilityfor controlling interest rate risks lies with theTreasury.

34

Liquidity risks, as well as other management andfunctional risks, are monitored and controlled withclear targets through internal information and controlsystems. This includes exchange rate developments,reserves in our cover fund and liquidity reserves.The external standard for liquidity requirements falling due within one year is set by the LiquidityEnactment (LiqV).The requirements of the LiqVwere continuously fulfilled. As of the third quarter2010, our liquidity risks are an integral part ofCommerzbank group monitoring, in addition to ourinternal procedures controlling short - term and strategic liquidity.

Compared to the scenario projected at thebeginning of the year, our liquidity situation easedgradually and we have completely readjusted ourliquidity sources. Funds from the European CentralBank were reduced to zero during the course of theyear and we do not intend to borrow any moneyfrom the European Central Bank in 2011. Short - term borrowing was replaced with long-termliquidity. The measures taken to hedge currencyrisks also helped to stabilise our liquidity. By usingcross currency swaps, instead of foreign currencyswaps which had been favoured in the past, wemanaged to reduce sensitivity to spot rate changesby two thirds. Extraordinary loan reductions andpostponements of loan drawdowns brought additional relief.

In addition, decreasing volatility in foreign exchangemarkets, and long-term credit lines provided by our major shareholders, improved our liquidity situation. Still, higher funding costs will negativelyaffect our interest surplus in 2011. Meanwhile, weuse our liquidity reserve to some extent for repooperations, and we continue to use the credit lines provided by the Commerzbank group. Takingaccount of these credit lines, in all scenarios simulated, including bottlenecks on the liabilities

The SAP software SEM (Strategic Enterprise Manage-ment) enables us at any time to assess all assets,liabilities and derivative exposures of the bank basedon actual market conditions using mathematicalmethods. In addition, SEM is used to appraise marketprice risks (amongst other things on the basis ofsensitivities and value-at - risk), which includes thecalculation of variations of the present value inaccordance with the guidelines of the BaFin letterof 6 November 2007, which is binding on all banks,and are based on a parallel translation along theyield curve of plus 130 basis points and minus 190basis points respectively. Variations of the presentvalue of more than 20 per cent of the equity needto be reported to the BaFin. The risk volume wascontinuously well below the surveillance threshold.Since the end of 2009, we have also used a tailor-made system to evaluate structured bonds andderivatives.

We do not trade for our own account. All the bank’sderivative transactions are related to our lendingand liability business or they are transacted with ourshipping customers and are then hedged. Ouroff- balance sheet volume declined to € 26.4 (28.6)billion as at the year-end. The net market value ofour derivatives was € +86.4 (+68.2) million.

We have neither issued nor purchased any assetbacked securities or credit default swaps or similar-ly structured bonds or loans. In the first quarter2010 the market value of our bond portfolio wasmore or less at the level of the previous year, butgrowing spreads in the second quarter led to value reductions, which were not recovered in the secondhalf of the year, necessitating write-downs of ourbond portfolio – to a large extent bonds issued bypublic bodies – to the lower of cost or market valuein the total amount € 49.8 million. The situation for bonds issued by banks varied, and substantialwrite -downs were only necessary in a few cases.

35

side as well as substantial non-payments of loaninstalments 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 ofthe CFO, is responsible for financial reporting inconformity with laws and internal and external guidelines. Internal audit is also answerable to the CFO. The reporting of these divisions to one individual allows effective and efficient control of accounting. At the Supervisory Board, the risk committee monitors accounting procedures.

Internal audit provides autonomous, impartial, andrisk oriented services on behalf of the Board ofManaging Directors, aiming to improve the businessprocedures of Deutsche Schiffsbank regarding compliance, security and efficiency. It supports theBoard 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 safeguardbusiness transactions and assets. Internal audit ispart of Commerzbank group audit. It is an instrument

ACCOUNTING-RELATEDINTERNAL CONTROL SYSTEM

36

of the Board of Managing Directors, directly subordi-nated and answerable to the Board.

It is independent, acting on its own initiative. It isautonomous, particularly in giving its judgement andreporting the results of its audit. To fulfil its obligations,internal audit has a complete and unrestricted rightof information.

Internal audit takes a risk-oriented approach and itsaudit extends across all activities and operations ofthe bank, even if they have been outsourced.

Its focus is on the effectiveness and adequacy of riskmanagement, that is to say the risk managementand control system, the reporting system, and the information system as well as financial andaccounting 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 anannual report on all audits made during the courseof the year, detected deficiencies and respectivemeasures taken, and submits these to the entireBoard of Managing Directors.

Components of internal control and risk management systems in relation to accounting

Deutsche Schiffsbank has clearly defined and bindingaccounting standards, which are in line with thoseof the Commerzbank group. They are the basis forcorrect and consistent accounting procedures.Compliance with the standards is checked by theauditor. They are continuously monitored and, ifneed be, updated. In addition, regular staff trainingcourses are provided, giving information about statutory changes and their implementation in thegroup, and about basic accounting 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 areonly taken in accordance with granted powers. Allfinancial functions which could cause a conflict ofinterest are separately organised and dealt 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 which the bank possesses the necessary expertise, particularly thanks to its qualified employees.Training courses help to improve and strengthenaccounting qualifications.

STAFF REPORT

2010 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 tasks in a difficult environment. As a consequence, thebank has continued to increase the number ofqualified staff and provided in-house and externaltraining courses.

At the year -end, 75 female and 90 male employeeswere on the payroll, 8 more than at the end of 2009.The average age stood almost unchanged at around42.5 years. The average period of employment is 9 years and 17 employees have been working withus for more than two decades.

The Board of Managing Directors thanks all employeesfor their material contribution to our respectableresult, in a year which was again very difficult forthe finance sector. To those who retired in 2010, weexpress our appreciation for many years of service.

Last year for the first time, Deutsche Schiffsbankconducted an employee survey. The extraordinarilyhigh participation (83 per cent) shows how muchour employees identify themselves with “their”Schiffsbank. We have analysed the survey results ingreat detail in various meetings and, together withour employees, prepared solutions for the mostpressing problems.

Many thanks also to the members of the StaffCouncil with whom a constructive dialogue wasmaintained on all relevant issues of company andstaff policies.

38

INTEGRATION REPORT

At the end March 2011, Commerzbank AG announced its intention to integrate DeutscheSchiffsbank. The merger into Commerzbank AG is to take place prior to the year-end.

As part of the integration process all shipping loansand shipping activities of Deutsche Schiffsbank,Commerzbank and the former Dresdner Bank willbe centralised in Commerzbank during the secondhalf of 2011. Deutsche Schiffsbank will retain itsname and will be a subdivision of the Asset BasedFinance business segment. In spite of difficult marketconditions, the integration of all shipping activityinto Deutsche Schiffsbank progressed well in theyear under review.

The new organisational and management structureof Deutsche Schiffsbank, which was put in placeand communicated to the staff, as well as the relocation of all Hamburg divisions, which were previously domiciled in various locations, to onebuilding, is a milestone in the integration process.With the development of a new strategy which setsthe framework for profitable and lasting new loan business in the future, another milestone has beenreached. In addition, we will offer our clients infuture professional supplementary services withthorough in -house competence.

As part of the Commerzbank AG, DeutscheSchiffsbank will combine its high level of expertisein ship finance and the traditional strength ofDeutsche Schiffsbank, Commerzbank and DresdnerBank. We will use the combination of the threebanks to strengthen and develop CommerzbankAG´s role in shipping as one of the world’s mostrecognized and established contacts for our globallyoperating shipping customers.

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

remain high in the coming years, and slow steamingand enhancement of ship design and propulsionare becoming more important. Particularly, slowsteaming is a major factor in shipping markets,because demand for extra tonnage is created. Inaddition to container vessels, tankers and bulkerscould also resort to slow steaming in future, therebyutilising further transport capacity.

Strong economic growth, spearheaded by emergingAsian countries, should lead to rising sea transportdemand in the next two years, but high fleetgrowth throughout nearly all shipping markets is anobstacle.

Shipping markets

Although conditions have improved in recent months,the global economic outlook is still precarious.Forecasts for the United States of America havebecome more optimistic, which should have a positive effect on most shipping markets, particularlyin the container segment.

The world economy recovered strongly in 2010,growing by 5.0 %. At the beginning of 2011, theInternational Monetary Fund forecast for thecurrent year was for a 4.4 % rise in the global world economy, and the growth rate for 2012 isexpected to be similar, around 4.5 %. The ongoing economic recovery should, in our opinion, be a firm basis for continuous trade growth. However,heavy fleet expansion is expected to put pressureon the bulk carrier and the tanker markets in thenext 12 to 24 months.

In Japan is the impact of the earthquake and tsunamion energy supplies, the economy and shipping stillevolving. Japan is a major shipping nation and several shipping segments are likely to be affectedby the disruptions to the country’s supply chainsand energy infrastructure. Oil price increases seenover the last weeks have however principally beenon worries over the unrest in the Arab world withBrent crude currently at 115 US$/bbl and futuresabove 100 US$/bbl for the rest of this decade. If thesituation in Libya is not resolved soon, changing oiltrade flows are likely to support the tanker marketas oil exports on tankers out of the Arabian Gulf arelikely to increase. Should the unrest spread to theGulf region however, and reduce oil supplies there,oil prices and tanker markets would be very exposed.

Throughout all shipping sectors, high oil prices leadto efforts to reduce and, optimise environmentallyfriendly fuel consumption. The oil price is forecast to

OUTLOOK

40

Tanker

The phase-out of single-hulled tankers has nowcome to an end and strong fleet growth in the larger tanker segments – VLCC and Suezmax – isexpected in 2011 and 2012, with annual growthrates of 6 to 10 %. The orderbook- to - fleet ratio forthe overall tanker fleet is 26 %, but the capacity on order leans heavily towards the larger vessels,with the ratio for VLCCs at 34 % and Suezmaxes at 38 %.

For product tankers, the ratio is below 20 %. Thesmaller product tanker segment is expected to seeonly modest fleet growth of around 3 to 4 % p.a.,which is down from around 8 % p.a. over the 2006 to 2009 period. Overall tanker fleet growth is expected to average around 5 to 7 % p.a. in 2011 and 2012.

Fleet growth is expected to put considerable pressureon rates for the larger tankers, in a situation whererates are already struggling to meet break-evenrequirements. Uncertainties concerning the outlookremain, however, as the tanker markets are influencedby a number of factors which are difficult to forecastand may change the market balance significantly.The product carrier segment is expected to seecharter rates improve gradually from low levels, as oil demand is increasing and the outlook for fleetgrowth in this segment is moderate.

Bulk

Export volumes hit by heavy rain at the beginningof the year are expected to recover over the comingmonths, but high fleet growth is expected to putgeneral pressure on rates over the next two years.Increased use of slow steaming – which has generallynot been seen in bulker markets over the last years– is expected to counteract some of the fleet growthpressures. The orderbook-to- fleet ratio for bulk carriers at 50 % continues to be a major concern,but the bulker market was able to accommodatemassive fleet growth of 17 % in 2010.

Furthermore, 22 % of the existing fleet is more than 20 years old, thus representing some scrappingpotential and replacement demand. The currentoutlook for the bulk carrier fleet is for further massiveexpansion, with 13 to 16 % annual growth overthe next two years. Bulk demand is expected tomaintain a strong growth pattern over the next few years based on demand from emerging anddeveloping markets. Large investments in the production capacities of coal and iron ore areexpected to make exportable supplies available, although temporary shortfalls and chinese policyactions with bulker rates coming under additionalpressure may be seen.

High fleet growth is expected to put general pressureon the market balance and average bulker rates areexpected to weaken compared with the 2010 rates.However, in the long run demand growth for bulkcommodities is expected to offer protection againstmarket imbalances.

41

Container vessels

Strong consumer spending on top of healthy levels of private investment are paving the way forcontinued strong growth in US container importsthis year. Based on current economic forecasts, US container imports are forecasted to post a gainof around 10 % this year. European economies are expected to continue to generate healthygrowth on the Asia – Europe container trade lane,with volumes forecasted up around 6 % for 2011.Assuming that a relatively large share of current slowsteaming programmes remain in place, charter andfreight rates should stabilise during the year.

As ordering of new capacity has been low in the pasttwo years, the orderbook- to - fleet ratio has comedown from 36 % a year ago to 27 % currently. Post-Panamax ships above 8,000 TEU representthe lion’s share of the capacity on order, and theorderbook- to - fleet ratio in this segment is 91 %.Overall container fleet growth in 2011 and 2012 isexpected to be at 10 % and 9 % respectively.Assuming that slow steaming to a large extentremains in place, increased trade volumes areexpected to improve the market balance over thenext few months. Deliveries from a modest order-book are expected to match trade growth in 2012and a healthy market balance is expected to bemaintained, but newbuilding orders are already picking up again.

Offshore

In view of the firm oil price and the development of deep sea oil fields, Brazil amongst others, budgetsfor offshore activities are set to be high. Explorationand production of offshore oil and gas fields isessential for future energy supply and consequentlythe offshore industry is expected to grow in theyears to come.

42

On this basis our operating profit is set to be substantially better in 2011, and a further smallimprovement is expected in 2012. However, itremains to be seen whether the recovery of the worldeconomy will take hold. Due to the uncertainty inhow the global economy will develop during thenext two years, and our customers’ ability to servicetheir loans, the actual outcome may deviate fromthe forecast.

Under today’s realistic assumptions, we believe thatwe will make a profit in the coming two years.

Deutsche Schiffsbank

Commerzbank’s intention to merge DeutscheSchiffsbank into Commerzbank AG will have a majorimpact on Deutsche Schiffsbank. The following outlook is valid for Deutsche Schiffsbank now and –once the integration has taken place – for the corebusiness of “Deutsche Schiffsbank” withinCommerzbank AG.

The bank aims to play a leading role in its corebusiness of ship finance, and to be adequatelyrepresented in all important shipping segments andregions. However, our emphasis will be on primeborrowers and quality vessels. Deutsche Schiffsbankwill remain a reliable partner for its customers.

We expect shipping and financial markets to recoverin 2011 and 2012, funding conditions to improveand, as a result, higher margins and rising interestsurplus. Net commissions are also set to increase,as Commerzbank products are now offered to customers of Deutsche Schiffsbank. The anticipatedrecovery will also positively affect our risk provisions,which are expected to be considerably lower thanduring the past two years. Administrative expenseswill most probably be somewhat higher in 2011,due to integration costs and an increased workforce,but should go down again to 2010 levels in 2012.

Deutsche Schiffsbank will be selective in its newloan business, irrespective of vessel type, focusingon prime customers. Our credit terms will reflecthigher risks in ship finance and more expensivefunding costs. Furthermore, we do not exclude thepossibility of volatile credit spreads, which couldlead to fluctuating values in our bond portfolio.

REPORT OF TH E SUPERVISORY BOARD

46

The Supervisory Board has carried out its responsi-bilities to continuously oversee management activitiesduring the financial year 2010 in accordance withlaw and statutes. The Board convened twice, oncein the first and second half of the year and held a telephone conference in the second half of theyear. 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 concerning business policy and management. TheSupervisory Board was notified by the Board ofManaging Directors quarterly in writing and, in individual cases, verbally about the bank’s businessdevelopment. Furthermore, budget and corporateplanning as well as important individual events weredebated thoroughly and the Supervisory Boardapproved both the budget planning for the years2011 and 2012, and the corporate plan, for the years2010/2011 and 2011/2012.In addition, forecastsand developments on the shipping markets, andthe consequences this might have for the bank, werediscussed with the Supervisory Board. The Board of Managing Directors kept the Supervisory Boardinformed about the securities portfolio, municipalloans and compliance with legal provisions andcompany guidelines. In this way, an active flow of information and an exchange of views between the Supervisory Board and the Board of ManagingDirectors were always maintained. In conformitywith new regulatory requirements, the SupervisoryBoard adjusted the remuneration of the Board ofManaging Directors to correspond with the existingremuneration structure of the Commerzbank group.

The rules of the Supervisory Board still require the existence of two committees, the Chairman’sCommittee and the Risk Committee. The Chairman’sCommittee held two meetings and the Risk

Committee, which also functions as the AuditCommittee in accordance with the rules of procedure,convened three times. It dealt with all risk matters,particularly matters presented by the Board ofManaging Directors concerning the development ofshipping markets, the risk strategy of the bank andrisk provisions. In addition, it dealt with informationreceived from the Board of Managing Directorsregarding municipal loans and the securities portfolio,funding and liquidity, and equity situation. Whennecessary, the Chairman´s Committee and the Risk Committee approved business and measuressubmitted.

PricewaterhouseCoopers AG Wirtschaftsprüfungs-gesellschaft, Hamburg which was given the mandateby the Supervisory Board, has audited the AnnualAccounts 2010 including the Accounting and theBusiness Report. No objections were raised. The Annual Accounts therefore accurately reflect theassets, as well as the financial and earnings positionof Deutsche Schiffsbank AG. The audit report waspresented to all members of the Supervisory Board.

The auditor participated in the meetings of the Risk Committee in November 2010 and February2011 and reported on the procedures and the statusof its audit of the annual accounts for the year 2010.In addition, the auditor participated in the auditmeeting of the Supervisory Board on 26 May 2011.He reported on his most important findings andanswered questions about the balance sheet andthe audit report. The Supervisory Board has alsoexamined the Annual Accounts and the BusinessReport and has taken 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 26 May 2011 the Supervisory Boardapproved and thereby confirmed the Annual Accounts.

REPORT OF THE SUPERVISORY BOARD

47

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 unqualifiedaudit report:

“Having dutifully examined and appraised the report, we confirm that

1. all declarations made therein are correct2. 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 give cause for any different material appraisal,other than the one given by the Board ofManaging Directors.”

The Supervisory Board inspected the ManagingDirectors´ report and approved it, and the unqualifiedaudit report. Having finished its examination of theBoard of Managing Directors´ report on the bank’srelationship to affiliates, the Supervisory Board raised no objections.

With effect from 1 April 2011 Dr. Stefan Otto wasappointed an additional member of the Board ofManaging Directors.

Mr. Udo Bandow and Dr. Jens Meier-Hedde retiredduring the year under review from the AdvisoryBoard on which they served since 2003 and 1988respectively. We have expressed our thanks andappreciation to all retirees for their dedication. Dr. Hans Christoph Atzpodien was newly appointedto the Advisory Board.

The members of the Supervisory Board expresstheir 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 2010, given the difficulties in the financialsector and in shipping.

Hamburg, 26 May 2011

THE SUPERVISORY BOARDJochen Klösges Chairman

The expression “form follows function“ is associated with industrial design. Nowhere elsethis is more evident than in shipbuilding. Technicalrequirements determine the design.

Shape, economic efficiency and security of a vessel form an unseparable unit. The right shapeof the hull leads to low fuel consumption and tosecure handling even in heavy sea. The variety ofcargos influences form, size, superstructure andthe necessary gear to load and discharge a vessel– characteristic criteria which affect the design.

S H I P P R O F I LE S

A container vessel plows the seas with its slim and sharp bow.Wide hulls make space for many containers on deck.

On deck, lashings secure up to eight containers stacked on top of each other. Below deck, stacks of up to eleven ISO boxes aresecurely held in place in cell guides. The wide stern gives an ideaof the loading capacity: Up to 14,000 boxes in 22 parallel rows.From the huge bridge, the captain can keep an eye on the cargoand on the vessel.

C O N TA I N E R V E S S E L S

Equipped with powerful cranes and huge ballast tanks in the hull, they can be employed in numerous ways:

Multi - purpose vessels and specialised ships handle the heaviest cargoswith their own gear, balancing the cargo weight with ballast water.

They are used to transport entire industrial plants, cranes and unwieldycargo like pipes or propellers for wind generators.

M U LT I - P U R P O S E V E S S E LS

Bulk carriers transport coke, ore, corn and other unpackaged bulkcommodities in the huge cargo holds of their massive hulls.Equipped with their own cranes, handy bulkers can carry up to30,000 tons below their folding hatch covers. Up to ten times asmuch can be transported in a capesize carrier beneath just nineside - rolling hatch covers, but they are not geared.

Characteristics: plane decks with hatches.

B U LK CA R R I E R S

Up to two million barrels fit into the uncoated steel tanks of the largest tankers. Thanks to the coating of the inner surface of theirtanks, chemical tankers can be employed flexibly for transportation of oil products and chemical commodities, and they can carry miscellaneous fluids at the same time.

Laden tankers rest low in the water. The bridge extends from port to starboard in order to facilitate navigation and manoeuvring.

TA N K E R S

G A S TA N K E R S

At around 15 bars pressure, petroleum gases like propane and butane stay liquid at normal room temperature on LPG (liquefied petroleum gas) tankers. LNG tankers transport liquefied natural gas, cooled down to minus 160 degrees Celsius.

The spherical shape of the tanks on LNG tankers offers the best pressure distribution and minimal costs for insulation. Rectangulartanks are more common on LPG tankers.

Loading and unloading of gas tankers occurs via pipes which are also used to regulate the pressure.

O F F S H O R E

Far out at sea, design knows no boundaries: Working platforms forwind turbines, drilling rigs as well as specialised vessels for research,supply and technology – no construction is alike.

Nowhere else in shipbuilding forms are customised with such consistency in conformity with function and security.

C R U I S E V E S S E LS

When being afloat turns into floating. Elegance, aesthetics, dazzling luxury, forms to lose oneself in.

Cruising starts at the pier, when the sight of these white behemoths lets the mind wander beyond the horizon.

AN N UAL STATEM ENT O F ACCOU N TS 2010

1. Cash reservea) cash on hand 497.78 8

b) balances with central banks 110,667,512.77 22,841(including: with Deutsche Schiffsbank) (110,667,512.77) (22,840)

110,668,010.55 22,849

2. Amounts due from banksa) municipal loans 366,590,355.32 525,546

b) other amounts due 479,000,101.67 127,520(including: on demand) (258,808,355.68) (83,986)

845,590,456.99 653,066

3. Amounts due from customers a) ship mortgage loans 11,229,080,992.36 11,045,888

b) municipal loans 767,758,429.45 747,704

c) other amounts due 115,026,283.80 104,243

12,111,865,705.61 11,897,835

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

aa) public sector issuers 324,414,979.20 272,146(including: eligible as collateral for Deutsche Bundesbank advances) (306,033,964.25) (248,586)

ab) other issuers 1,455,288,047.20 1,940,122(including: eligible as collateral for Deutsche Bundesbank advances) (1,397,238,501.13) (1,866,732)

1,779,703,026.40 2,212,268

b) own bonds 677,770,446.06 1,353,678(par value) (676,608,000.00) (1,352,148)

2,457,473,472.46 3,565,946

5. Investments in affiliated companies 2,738.39 3

6. Intangible assets 3,205,988.97 4,233

7. Tangible fixed assets 3,082,599.57 5,802

8. Other assets 191,680,618.10 135,973

9. Accrued and deferred itemsa) from issuing and lending business 18,559,316.54 24,908

b) other items 241,194.48 0

18,800,511.02 24,908

Total assets 15,742,370,101.66 16,310,615

66

Assets

31.12.2010 31.12.2009

€ € thousand €

AANNNNUUAALL BBAALLAANNCCEE SSHHEEEETT AASS AATT 3311 DDEECCEEMMBBEERR 22001100

Liabilities and Shareholders´ equity

1. Liabilities to banksa) registrered ship mortgage bonds issued 144,795,397.81 236,704

b) registered public Pfandbriefe issued 31,816,589.04 25,619

c) other liabilities 4,914,818,880.49 5,541,490(including: on demand) (131,429,611.71) (203,367)

5,091,430,867.34 5,803,813

2. Liabilities to customersa) registrered ship mortgage bonds issued 2,074,908,339.19 2,126,311

b) registered public Pfandbriefe issued 1,100,604,414.70 1,129,252

c) other liabilities 2,895,965,611.61 2,540,034(including: on demand) (27,092,031.17) (23,853)

6,071,478,365.50 5,795,597

3. Certificated liabilities bonds issueda) ship mortgage bonds 2,307,341,044.37 2,311,031

b) public Pfandbriefe 307,068,052.00 317,121

c) other bonds 257,747,820.05 518,439

2,872,156,916.42 3,146,591

4. Other liabilities 208,761,981.70 74,827

5. Accrued and deferred items from issuing and lending business 22,394,728.13 27,068

6. Provisionsa) provisions for pensions and similar obligations 25,900,137.00 24,563

b) tax provisions 0.00 792

c) other provisions 23,864,613.76 5,982

49,764,750.76 31,337

7. Subordinated liabilities 261,513,000.00 266,513

8. Participation rights 169,500,000.00 169,500(including: maturing in less than two years) (64,500,000.00) (40,000)

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

10. Equity capitala) subscribed capital

aa) share capital 146,996,720.00 146,997ab) undisclosed partnerships 126,646,794.46 126,647

273,643,514.46 273,644

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

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 0950,369,491.81 950,369

Total liabilities and shareholders´equity 15,742,370,101.66 16,310,615

1. Contingent liabilities liabilities under guarantees and indemnities 101,506,794.60 246,027

2. Other commitmentsirrevocable loan commitments 1,775,271,000.00 2,470,348

31.12.2010 31.12.2009

€ € thousand €

67

1. Interest income froma) lending and money market operations 279,398,927.66 383,211

b) fixed-interest securities and government debt 38,784,792.67 75,588

318,183,720.33 458,799

2. Interest expenses 143,263,866.88 308,770174,919,853.45 150,029

3. Commissions received 16,635,712.93 10,785

4. Commissions paid 635,882.99 1,09315,999,829.94 9,692

5. Other operating income 11,634,405.64 4,643

6. General administrative expensesa) staff expenses

aa) wages and salaries 12,119,163.80 11,187ab) social security contributions, expenses for pensions

and other employee benefits 2,867,626.82 4,917(including: pension expenses) (1,302,427.38) (3,371)

14,986,790.62 16,104

b) other administrative expenses 12,683,956.97 13,40627,670,747.59 29,510

7. Amortisation and depreciation of intangible and tangible fixed assets 1,566,500.88 1,438

8. Other operating expenses 8,308,608.87 433

9. Write-downs of and adjustments to amounts due and specific securities as well as allocationsto provisions for possible loan losses 159,387,556.51 111,606

10. Income from revaluations of investmentsin non-affiliated and affiliated companies and securities handled as fixed assets 0.00 2,081

11. Result from ordinary activities 5,620,675.18 23,458

12. Extraordinary expenses 6,040,524.87 1,571

13. Income taxes - 456,532.73 22,087

14. Other taxes not included under item 8 36,683.04 54- 419,849.69 22,141

15. Net loss 0.00 254

16. Profit carried forward from the previous year 0.00 254

17. Distributable profit 0.00 0

68

PPRROOFFIITT AANNDD LLOOSSSS AACCCCOOUUNNTT

1 January to 31 December 2010 2009

€ € thousand €

SSTTAATTEEMMEENNTT OOFF SS HHAARR EEHH OOLLDDEERR SS EEQQUU IITTYY

69

share- undisclosed capital earnings disposable totalcapital partnerships reserve reserves profit equity

as at 31.12.2008 58,110 126,647 177,246 188,376 254 550,633

Capital increase 88,887 311,103 399,990

Annual result -254 -254

as at 31.12.2009 146,997 126,647 488,349 188,376 0 950,369

Annual result 0 0

as at 31.12.2010 146,997 126,647 488,349 188,376 0 950,369

thousand € subscribed capital

70

thousand € 2010 2009

Net income for the year before extraordinary items 6,041 1,317The net income for the year includes non-cash items and adjustments to reconcile net profit to net cash from operating activities

Write-downs and revaluations on fixed assets and financial assets 158,745 121,164Changes in provisions 13,180 106Profit or loss from the sale of fixed assets and financial assets -3,981 -2,315Other adjustments (net) -175,376 -127,710

Sub-total -1,382 -7,438Change in assets and liabilities from operating activities aftercorrection for non-cash items

Amounts due- from banks -197,726 507,321- from customers - 331,136 160,183

Securities 1,068,337 -260,513Other assets from operating activities 6,129 72,856Liabilities

- to banks -708,920 820,801- to customers 282,755 - 463,188

Securitized liabilities -268,517 -1,370,737Other liabilities from operating activities 87,886 62,743

Interest and dividends received 301,600 1,079,776Interest paid -126,760 -1,013,590Extraordinary receipts 0 0Extraordinary payments 0 0Income tax payments - 23,407 -2,087Cash flow from operating activities 88,859 - 413,873Proceeds from the sale of

- financial assets 0 2,312- fixed assets 5,286 10

Payments due for acquisition of- financial assets 0 0- fixed assets -1,326 -481

Cash flow from investment activities 3,960 1,841Proceeds from capital increases 0 399,990Dividend payments 0 0Changes in subordinated capital and other hybrid capital - 5,000 - 5,113Cash flow from financing activities - 5,000 394,877Cash and cash equivalents (cash reserve)at the end of the previous period 22,849 40,004

Cash flow from operating activities 88,859 - 413,873Cash flow from investment activities 3,960 1,841Cash flow provided by financing activities - 5,000 394,877

Cash and cash equivalents at the end of the period 110,668 22,849

CCAASSHH FFLLOOWW SSTTAATTEEMMEENNTT

71

AAPPPPEENNDDIIXX

Accounting regulations

The Annual Statement of Accounts as at 31 December2010 has been drawn up in accordance with the regu-lations of the Commercial Code (HGB) in conjunctionwith the Bank Accounting Regulation (RechKredV)under consideration of the provisions of theCompanies Act (AktG) and the Pfandbrief Act (FandBG).

The new accounting principles, in accordance withthe modernisation of accounting laws (BilMoG),were implemented in 2010.

As of 2010, the balance sheet format is inconformity with the regulations (RechKredV) forGerman Pfandbrief banks. The figures from theprevious year were adjusted accordingly.

Accounting policies

The cash reserve is valued at par.

Amounts due from banks and customers have beenvalued at par. The difference between par value andthe 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 value

adjustments, 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 those constructionloans where the mortgage registration will regularlytake place at a later date.

Securities and our own bonds have been allocatedto the liquidity reserve and are subject to theprinciple of the lower of cost or market value inaccordance with the regulations for current assets.

Intangible assets, land and buildings, as well as plantand equipment are shown with their acquisition costsless 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 deferreditems.

Pension obligations are determined on the basis of actuarial opinions. The quantification is based on the Projected-unit-credit-method. Expenses inconnection with interest accrued for long-termprovisions are booked as other operating expenses.

All identifiable risks and doubtful liabilities have beentaken into account by establishing correspondingprovisions. Business which does not apply for balancesheet purposes has been taken into account in therisk calculations.

Derivative financial tools are used exclusively ashedging instruments against existing foreign-currencyand interest-rate risks and are directly related to our

to the Statement of Acccounts 2010

72

lending and liability business. We do not trade forour own account.

All derivative financial tools are individually valuedat the balance sheet date. Results relating to thesame hedging relationship are balanced. Net lossesare booked as provisions. Interest rate risks relatingto derivative financial tools that are monitoredthrough the bank´s asset and liability managementare not individually valued. Accrued interest onderivatives is shown under the item other assets, orother liabilities. Up-fronts of derivatives are shownunder accrued and deferred items.

As of 2010, latent taxes are determined fortemporary differences between the value of anasset, liability or of accrued and deferred items asshown in the balance sheet and its assigned value intax terms, which will be remedied in all probabilityin future business years. Latent taxes are calculatedin accordance with tax regulations that are valid at the balance sheet date and are expected to bevalid at the time when the temporary differenceswill be remedied, by applying individual tax rates(corporate income tax 15 per cent, solidaritysurcharge 5.5 per cent, and trade income tax 15.85per cent). We do not exercise the option pursuantto Article 274 (1) second sentence of the GermanCommercial Code (HGB) to capitalise any net futuretax relief. Future tax reliefs are primarily related tocontingency reserves according to Article 340f HGB,parts of general risk provisions and provisions foranticipated losses related to uncompletedtransactions.

Contingent liabilities are reported at par lessprovisions.

Currency conversions

Foreign currencies are converted in accordance withthe regulations of Article 256a in conjunction withArticle 340h HGB. Assets and liabilities denominatedin foreign currencies are converted at the referencerate set by the European Central Bank at the balancesheet date and forward exchange transactions atthe forward rate. Income and expenses are bookedin the profit and loss accounts at the exchangerates of the day. Swap rates for forward exchangetransactions are split and booked on an accrualsbasis. All claims and liabilities for each currency arealways specifically covered. In addition to the losses,profits from currency conversions are therefore alsorecorded in the profit and loss accounts as otheroperating income.

Changes in accounting policies and valuation methods

Income and expenses resulting from the firstapplication of the German Accounting LawModernisation Act (BilMoG) are reported underextraordinary income and expenses. DeutscheSchiffsbank makes use of its right not to adjust theprevious year´s figures, and for new informationwhich is required according to BilMoG, previousyear´s figures will not be calculated.

73

31.12.2010 31.12.2009Amounts due from banks 845,590 653,066with a residual term ofup to three months 484,124 193,429more than three months to one year 93,236 35,846more than one year to five years 233,603 380,530more than five years 34,627 43,261

Amounts due from customers 12,111,866 11,897,835with undefined notice period 0 0with a residual term ofup to three months 819,373 888,780more than three months to one year 1,194,611 1,407,242more than one year to five years 4,988,198 4,664,050more than five years 5,109,684 4,937,763

Bonds 2,457,473 3,565,946whereof: due the following year 612,658 487,040

Liabilities to banks 5,091,431 5,803,813with a residual term ofup to three months 1,521, 599 957,594

more than three months to one year 547,535 2,397,257more than one year to five years 2,909,558 2,334,526more than five years 112,739 114,436

Liabilities to customers 6,071,479 5,795,597with a residual term ofup to three months 840,516 664,093more than three months to one year 213,744 135,114more than one year to five years 912,141 828,363more than five years 4,105,078 4,168,027

Certificated liabilities 2,872,157 3,146,591whereof: due the following years 829,778 992,890

Sub-division according to residual termsthousend €

Liabilities

Assets

COMMENTS TO THE BALANCE SHEET

74

Assets which serve as security for the issuance of ship mortgage Pfandbriefe and Public Pfandbriefethousand €

31.12.2010 31.12.2009

Amounts due from banks 390,347 545,573

Amounts due from customers 6,162,368 5,991,162

Bonds and otherfixed - interest securities 728,041 575,504

7,280,756 7,112,239

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

31.12.2010 31.12.2009

Affiliated companies

Amounts due from banks 112,098 210

Amounts due from customers 162 988

Bonds and otherfixed-interest securities 50,162 48,490

Liabilities to banks 4,327,438 2,786,404

Liabilities to customers 7 781

Certificated liabilities *) 1,102,251 -

Companies with a participation relationship

Amounts due from banks 146 22

Bonds and otherfixed-interest securities 0 0

Liabilities to banks 117 0*) to our knowledge

Contracts with affiliated companies are generallymade on standard terms and conditions. Significanttransactions, made on non-standard terms andconditions which would necessitate reporting inaccordance with Article 285 (21) HGB, did not occur.

Bonds and other fixed-interest securities

All bonds and other fixed-interest bearing securitiesin the balance-sheet figure of € 2,457.5 million(previous year € 3,565.9 million) are negotiable,whereof securities in the amount of € 2,410.5million (previous year € 3,503.9 million) arequoted on stock exchanges.

75

At the date of the balance sheet, no bonds(previous year € 2,050.0 million) were pledged forborrowings under open market operations of theDeutsche Bundesbank and securities in the amountof € 363.5 million (previous year € 0.0 million)were pledged under repurchase agreements.

Hedging relationships

In hedging micro hedging units, interest-basedchanges in market values of individual credit andliability transactions and derivatives will be practi-cally fully offset during the entire term by changes

in the values of the underlying hedging derivatives.The terms and conditions of the hedging instruments(for instance volume, term, interest payment dates,and coupons) are in each case practically identicalto the terms and conditions of the underlying transactions. The effectiveness of the hedging relation-ship is verified prospectively, using the critical-terms-match and the market-date-shift-methodrespectively.

Assets, debt and pending transactions recorded inhedging relationships:

Book-/nominal value 1) Hedged risk 2)

ship loans 456.6 16.7

municipal loans 476.1 72.6

bonds 1,006.9 97.1

in circulation 6,575.3 -379.0

derivatives 1,776.3 88.2

million €

1) derivatives are listet at nominal value, the other items at book value2) cumulated changes in market values of underlying transactions by virtue of the hedged risks

76

Investments Intangible Tangible Totalin affiliated assets fixed assetscompanies

Acquisition costs

previous year 3 8,598 12,302 20,903

additions 0 119 1,206 1,325

disposals 0 174 6,065 6,239

as at 31.12.2010 3 8,543 7,443 15,989

Depreciation

previous year 0 4,365 6,500 10,865

disposals 0 174 2,560 2,734

depreciation in financial year 0 1,146 420 1,566

as at 31.12.2010 0 5,337 4,360 9,697

Residual book value

previous year 3 4,233 5,802 10,038

as at 31.12.2010 3 3,206 3,083 6,292

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/Liberiaamounts to 100 per cent. The company has anequity of € 43 thousand, the result for 2009 was € 1 thousand.

Of the land and buildings shown under tangiblefixed assets, the proportion used by the bank itself amounts to € 0.9 million (previous year€ 2.9 million. Plant and equipment are valued at € 1.8 million (previous year € 1.0 million).

Other assets

The other assets consist primarily of accruedinterest on derivative transactions in the amount of € 148.9 million (previous year € 116.4 million).In addition, tax receivables of € 41.2 million(previous year € 18.2 million) are shown.

Summary of investmentsthousand €

77

Accrued and deferred items

On the asset side, accrued and deferred itemsinclude premiums from credit transactions in thesum of € 3.2 million (previous year € 4.5 million)and discounts from liability transactions of € 6.7million (previous year € 8.6 million). Discountsincurred on asset transactions amounting to € 5.7 million (previous year € 6.1 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 € 158.4 million(previous year € 62.9 million), interest forsubordinated liabilities of € 6.3 million (previousyear € 6.4 million) and accrued interest on aderivative transaction in the amount of € 43.3million (previous year € 4.8 million).

Provisions

Pension provisions are calculated in accordancewith actuarial principles at a discount rate of 5.15per cent, using the projected unit credit methodbased on Heubeck-Richttafeln 2005 G (thedisability rate is factored in with 75 per cent). Ourcalculation is based on general wage and salaryincreases of 2.5 per cent, which include anexpected career trend; pension increases areestimated at 1.8 per cent and the assessmentceiling is expected to grow by 2 per cent. Changes in the assessment of pensions caused bythe modernisation of accounting laws (BilMoG)necessitate a € 6.3 million increase in provisions,which will have been accumulated at the latest by31. December 2024.

Other provisions consist primarily of provisions for anticipated losses in connection with hedgingrelationships, respectively, market valuations ofderivatives in the amount of € 11.9 million andprovisions for loans (€ 5.6 million; previous year€ 0.4 million).

The assessment of risk facing claims under balancesheet contingent liabilites and other commitmentsis calculated in accordance with the principles for the determination of provisions. Accordingly, nofurther provisions are necessary.

78

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

30,100 € 6.00 11.11.2011

Subordinated liabilitiesMore than 10 per cent of the total amount

In addition, fund in the amount of € 231,413 thousandhas been borrowed due during the period 2010 to 2023bearing interest between 4.08 per cent and 7.09 percent as well as of 6 months Euribor + 0.80 per cent.

During the financial year 2010 the interest expensesfor the subordinated liabilities – without expenses for hedging operations – amounted to € 14,862thousand (previous year € 14,430 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 Article 10(5a) of the Banking Law (KWG)the subordinated liabilities are to be added to theequity capital in the amount of € 225.6 million.

Year of issue Par value Currency Dividend Maturity Repayment

thousand € % 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

The holders of the participation rights receive anannual dividend ahead of the profit share of theshareholders. They share in the loss and rankbehind all other creditors of the Bank, provided that their claims are not likewise subordinated.

No payments will be made for the year 2010 inaccordance with the underlying contracts.

According to Article 10 (5) KWG, the participationrights are to be added to the equity capital in theamount of € 105.0 million.

At the annual meeting of 18 May 2006, the Board ofManaging Directors was authorized 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.

79

Share capital

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

As at 31. December 2010, the share holders areCommerzbank Inlandsbanken Holding GmbHFrankfurt/Main, with 260,334 registered shares(around 92 per cent) and UniCredit Bank AG,Munich, with 22,352 registered shares (around 8 percent). Commerzbank Inlandsbanken Holding GmbH

is a 100 per cent subsidiary of Commerzbank AG,Frankfurt/Main. We have been notified of the directand indirect majority shareholding in accordancewith Article 20 (4) of the Companies Act (AktG).

At the annual meeting on 23 May 2005 the Board of Managing Directors was authorized until22 May 2010 to increase the share capital with anamount not exceeding € 25 million. We did notmake use of this right.

Silent participations

If and provided the Bank has made sufficientprofit, the silent partners receive an annual dividendahead of 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 rights ofsilent 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 2010 inaccordance with the underlying contracts.

According to Article 10 (4) KWG, the deposits ofsilent partners in the amount of € 75.5 million areto be added in full to the equity capital.

Year of issue Par value Currency Dividend Maturity Repayment

thousand € % 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

80

Equity capitalThe regulatory equity captial is presented belowthousand €

31.12.2010 31.12.2009

Core capital

Share capital 146,997 146,997

Silent participations 75,500 88,000

Capital reserve 488,349 488,349

Earnings reserve 188,376 188,376

Fund for general bank risks 45,000 45,000

Deductions (Article 10 (2a) sentence 2,

no 2 KWG) -4,352 -5,275

939,870 951,447

Supplementary capital 467,426 472,996

1,407,296 1,424,443

Amounts in foreign currencies

The assets include amounts in foreign currenciesequivalent to € 10,565.1 million (previous year€ 10,243.7 million), and the liabilities include amounts in foreign currencies totaling € 3,928.4million (previous year € 2,704.3 million).

In addition, there are unsettled spot transactions of € 0.0 million (previous year € 195.2 million) andpayment liabilities of € 6,683.5 million (previousyear € 7,771.3 million).

81

Nominal value Currentvalue

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

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

Interest related transactions 2,571.9 3,616.7 6,294.6 6,018.7 9,280.2 10,727.9 18,146.7 20,363.3 203.5 144.1

OTC-products

Interest swaps (same currency) 2,571.9 3,612.9 6,016.2 5,901.4 9,154.3 10,460.9 17,742.4 19,975.2 203.7 144.1

Swap options 0.0 0.0 0.0 13.9 22.0 32.0 22.0 45.9 - 0.2 0.0

Other interest contracts 0.0 3.8 278.4 103.4 103.9 235.0 382.3 342.2 0.0 0.0

Currency related transactions 6,187.2 6,283.0 1,668.1 1,496.8 387.5 453.0 8,242.8 8,232.8 -204.0 - 59.7

OTC-products

Currency options 20.2 5.3 0.0 12.9 0.0 0.0 20.2 18.2 0.0 0.0

Forward foreign exchange

transactions 5,321.9 5,526.8 23.8 217.5 6.1 0.0 5,351.8 5,744.3 - 85.7 - 66.9

Cross-Currency-Swaps 845.1 750.9 1,644.3 1,266.4 381.4 453.0 2,870.8 2,470.3 -118.3 7.2

Total 8,759.1 9,899.7 7,962.7 7,515.5 9,667.7 11,180.9 26,389.5 28,596.1 - 0.5 84.4

Financial derivativesmillion € (as at 31.12.)

The current value is identical with the market valueor the value determined on the basis of generallyaccepted valuation methods (i.e. present valuemethod) as at 31 December 2010. The evaluationof each currency is based on current interest yieldcurves.

An exchange rate difference resulting from foreignexchange contracts with a book value of € 158.4million (previous year € 62.9 million) is recordedunder other liabilities.

82

Interest expenses

Interest expenses include no dividends to ourundisclosed partners.

Other operating income

Other operating income consist of earnings fromforeign currency valuations in the amount of€ 6.3 million (previous year € 2.0 million), profitfrom the sale of our office building in Hamburg (€ 1.9 million), income from the reversal ofprovisions (€ 0.4 million; previous year € 0.9million) and rental income (€ 0.4 million as in the previous year)

Other operating expenses

Other operating expenses consist primarily ofprovisions for anticipated losses in connection withhedging relationships, respectively, market valuationsof derivatives in the amount of € 6.3 million, as well as expenses in connection with accruedinterest for pension provisions (€ 1.6 million).

Extraordinary expenses

Costs that have arisen in connection with the initialapplication of the modernisation of accounting laws(BilMoG) are booked as extraordinary expenses. Werecorded initial costs in the amount of € 5.6 million,relating to the provisions for anticipated losses inconnection with hedging relationships, and € 0.5million for early retirement programs, pre-retirementbenefits and the modifications relating to pensions.

Taxes on income and earnings

Taxes on income and earnings amount to minus € 0.5 million (previous year € 22.1 million). This tax rebate relates exclusively to previous years,whereas taxes for the year 2009 in the amount of € 20.5 million were attributable to normalbusiness operations, minus € 0.5 million forextraordinary expenses and € 2.1 million related to previous years.

Distributable profit

As in the previous year, the distributable profitamounts to € 0.0 million.

COMMENTS TO THE PROFIT AND LOSS ACCOUNT

83

INFORMATION ACCORDING TO THE PFANDBRIEF ACT

Cover calculationmillion €

31.12.2010 31.12.2009

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

Ship mortgage bonds

Liabilities requiring cover 4,559.9 4,828.8 5,009.8 4,697.8 4,914.0 5,139.7

whereof bonds in circulation (4,471.0) (4,693.2) (4,876.1) (4,600.5) (4,806.0) (5,033.4)

whereof derivatives * (88.9) (135.6) (133.7) (97.3) (108.0) (106.3)

Covering assets 5,727.6 6,082.9 6,108.2 5,523.5 5,854.5 5,885.5

whereof loans serving as cover (5,409.8) (5,710.7) (5,728.6) (5,258.6) (5,554.7) (5,581.0)

whereof additional covering assets (Art. 26 PfandBG) (215.0) (228.0) (231.5) (152.9) (164.8) (166.8)

whereof derivatives * (0.0) (36.7) (39.8) (0.0) (11.0) (11.3)

Present value after interest stress test 1,098.4 745.8

Shortfall from currency stress test - 45.4 -3.0

Cover surplus / deficit 1,167.7 1,254.1 1,053.0 825.7 940.5 742.8

Public Pfandbriefe

Bonds in circulation 1,414.3 1,563.4 1,750.3 1,446.1 1,558.3 1,742.4

Covering assets 1,614.8 1,752.1 1,877.3 1,631.4 1,734.4 1,855.6

whereof loans serving as cover (1,110.9) (1,203.6) (1,287.6) (1,246.2) (1.334.0) (1,424.8)

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

whereof dervatives (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)

Cover surplus 200.5 188.7 127.0 185.3 176.1 113.2

* exclusively to secure currency risks

84

Term structuremillion €

PublicPfandbriefe

Ship mortgagebonds

31.12.2010 31.12.2009

Bonds in circulationwith a residual term of

up to 1 year 629.7 802.3

more than 1 to 2 years 591.8 1,301.9

more than 2 to 3 years 686.1 166.8

more than 3 to 4 years 770.9 116.1

more than 4 to 5 years 170.3 270.9

more than 5 to 10 years 1,179.5 1,185.8

more than 10 years 442.7 756.74,471.0 4,600.5

Covering assetswith a remaining interest period of

up to 1 year 5,459.2 5,166.5

more than 1 to 2 years 142.4 154.7

more than 2 to 3 years 84.5 99.1

more than 3 to 4 years 7.3 56.6

more than 4 to 5 years 7.8 40.1

more than 5 to 10 years 26.4 6.5

more than 10 years 0.0 0.05,727.6 5,523.5

Bonds in circulationwith a residual term of

up to 1 year 39.0 10.0

more than 1 to 2 years 127.5 35.8

more than 2 to 3 years -3.6 152.5

more than 3 to 4 years 28.3 0.0

more than 4 to 5 years 131.1 24.7

more than 5 to 10 years 241.7 315.7

more than 10 years 850.3 907.41,414.3 1,446.1

Covering assetswith a remaining interest period of

up to 1 year 462.9 369.9

more than 1 to 2 years 93.0 200.4

more than 2 to 3 years 157.9 68.0

more than 3 to 4 years 122.2 157.9

more than 4 to 5 years 72.1 122.3

more than 5 to 10 years 330.6 299.6

more than 10 years 376.1 413.31,614.8 1,631.4

85

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 €

31.12.2010 31.12.2009

up to € 500,000 11.0 14.2

more than € 500,000 up to € 5 million 1,069.9 1,004.7

more than € 5 million 4,646.7 4,504.65,727.6 5,523.5

31.12.2010 31.12.2009

Antigua and Barbuda 17.4 17.8

Bahamas 248.2 274.9

Chile 1.5 4.2

Germany 2,326.3 2,299.7

Gibraltar 19.0 19.5

Greece 474.9 441.8

United Kingdom 90.3 74.1

Hongkong 202.2 210.3

Isle of Man 75.2 54.5

Israel 0.0 0.0

Italy 163.4 162.0

Cayman Islands 4.4 4.6

Liberia 315.6 346.7

Malta 273.0 261.5

Marshall Islands 519.0 547.9

Netherlands 65.1 68.7

Norway 70.3 0.0

Austria 0.0 0.0

Panama 210.0 184.4

Portugal 2.6 6.4

Singapore 52.9 41.3

Turkey 14.8 16.0

Vanuatu 3.0 1.6

Cyprus 260.7 220.7

5,409.8 5,258.6

Germany 0.0 0.0

5,409.8 5,258.6Total

86

Compulsory auction salesnumber

31.12.2010 31.12.2009Inland Ocean Total Inland Ocean Total

waterways going waterways goingvessels vessels vessels vessels

completed - - - - 3 3

pending completion - 2 2 - - -

Taking possession of vessels or ships under construction

During the financial year 2010 the Bank did nottake possession of vessels in order to avoid losses(previous year one ocean going vessel).

Interest in arrears

Interest in arrears from borrowers (maturities up to 30 September of the financial year)amounted to € 0.2 million (previous year € 0.4 million). As in the previous year, thearrears are related to ocean going vessels.

87

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).

31.12.2010 31.12.2009

States

Belgium 25.0 0.0

Greece 0.0 45.0

Italy 85.0 57.9

Lithuania 10.0 10.0

Poland 40.0 0.0

Spain 0.0 20.0

Hungary 20.0 20.0

180.0 152.9

Regional and local authoritiesGermany 722.6 702.6

Spain 20.0 0.0

742.6 702.6

Other debtors domiciled in:

Germany 574.7 633.4

Greece 27.5 27.5

Japan 10.0 10.0

Irland 0.0 25.0

Austria 70.0 70.0

Slovenia 10.0 10.0

692.2 775.9

1,614.8 1,631.4

88

Consolidated accounts

On 31 December 2010, the CommerzbankAktiengesellschaft, Frankfurt am Main directly ownsmore than 50 per cent of our company.

Deutsche Schiffsbank AG is consolidated in thegroup accounts of Commerzbank AG, that areprepared in accordance with approved andpublished International Accounting Standards (IAS),respectively, International Financial ReportingStandards (IFRS). Accounting, valuation andconsolidation methods that deviate from Germanlaw are annotated. Consolidated accounts ofCommerzbank AG are published in the ElectronicFederal Gazette.

Staff

The annual average number of staff employed was 159 (previous year 155); 78 (previous year 79) female and 81 (previousyear 76) male.

Remuneration of boards

Total remuneration of the Board of ManagingDirectors for the financial year 2010 amounted to € 1.216 million (previous year € 965 thousand),and of the Supervisory Board € 119 thousand(previous year € 119 thousand).Payments to former members of the Board ofManaging Directors and their surviving dependantstotalled € 920 thousand (previous year€ 947 thousand). As at the year-end the pensionobligations for these individuals amounted to € 10.9 million (previous year € 8.9 million),whereof € 2.1 million will be accumulated until2024 at the latest in conformity with BilMoG.

OTHER INFORMATION

89

Werner Weimann(Chairman)

Dr. Rainer Jakubowski

Tobias Müller

Supervisory Board

Board ofManagingDirectors

BOARDS

Jochen Klösges Chairman

Member of the Board of Managing Directors Commerzbank AG, Frankfurt/Main

Klaus Müller-Gebel Deputy Chairman

Rechtsanwalt, Frankfurt/Main

Dr. Thomas Bley Member of the Board of Managing Directors

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 employeeDeutsche Schiffsbank AG, Bremen

Bremen and Hamburg, 28 March 2011

Deutsche Schiffsbank Aktiengesellschaft

Weimann Dr. Jakubowski Müller

90

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, 28 March 2011

Weimann Dr. Jakubowski Müller

ATTESTATION OF THE LEGAL REPRESENTATIVES

91

REPETITION OF THE AU D ITOR S R EPORT

“Auditor's report *

We have audited the annual financial statements,comprising the balance sheet, the incomestatement, statement of changes in equity, cash flowstatement and the notes to the financial statements,together with the bookkeeping system, and themanagement report of the Deutsche SchiffsbankAktiengesellschaft, Bremen and Hamburg, for thebusiness year from January 1 to December 31, 2010.The maintenance of the books and records and the preparation of the annual financial statementsand management report in accordance withGerman commercial law are the responsibility ofthe Company’s Board of Managing Directors. Our responsibility is to express an opinion on theannual financial statements, together with thebookkeeping system, and the management reportbased 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 by the Institut der Wirtschaftsprüfer (Institute ofPublic Auditors in Germany) (IDW). Those standardsrequire that we plan and perform the audit suchthat misstatements materially affecting thepresentation of the net assets, financial position and 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 are taken into account in the determination of auditprocedures. The effectiveness of the accounting-related internal control system and the evidencesupporting the disclosures in the books and records,

the annual financial statements and themanagementreport are examined primarily on a test basis withinthe framework of the audit. The audit includesassessing the accounting principles used andsignificant estimates made by the Company’s Boardof Managing Directors, as well as evaluating theoverall presentation of the annual financialstatements and management report. We believethat our audit provides a reasonable basis for ouropinion.

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 ofoperations of the Company in accordance with(German) principles of proper accounting. Themanagement report is consistent with the annualfinancial statements and as a whole provides asuitable view of the Company's position and suitablypresents the opportunities and risks of futuredevelopment."

Hamburg, 27 April 2011

PricewaterhouseCoopersAktiengesellschaft 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.

Photographs / Image sources:

Andreas DeppingDietmar Hasenpusch Enno KapitzaRainer KwiotekPeter Neumann / YPS-Collection Eberhard PetzoldSabine Vielmo

Beluga Group Cruise Advice Meyer Werft NuestromarPicture Alliance Qatargas Shipphoto Statoil Torm A/S

London

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

Asia

Commerzbank AG, Shipping Desk AsiaMs. Liang Pin Wong8 Shenton Way # 42-01Singapore 068811Telephone: +65 6311 0756Telefax: +65 6226 2792Email: liangpin.wong@commerzbank.com

Deutsche Schiffsbank Aktiengesellschaft

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

Domstraße 1820095 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

Greece

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