Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, thank you for joining the Q4 2019 analyst call of Deutsche Bank. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to James Rivett, Head of Investor Relations. Please go ahead.
Thank you, Stuart, and good afternoon or good morning, everyone, and thank you for joining us. As usual on our call, our CEO, Christian Sewing, will speak first, followed by our Chief Financial Officer, James von Moltke. The presentation, as always, is available for download on the investor relation of our db.com website. Before we get started, let me just remind you that the presentation contains forward-looking statements which may not develop as we currently expect. We therefore ask you to take notice of the precautionary warning at the end of our materials. With that, let me hand over to Christian.
Thank you, James, and good afternoon, everyone, and welcome from me. In December at our Investor Deep Dive, we gave you an update on our strategy to radically transform our bank by 2022. Our performance in the fourth quarter shows two things: A, we have seen further good progress, and B, that our strategy is working. We will continue to execute in a disciplined manner. We are in line with or ahead of all our key targets and objectives that were to be achieved in 2019. Since 2018, we have set realistic targets and delivered against them. We remain disciplined on costs. We delivered our eighth quarter in a row of year-on-year reductions in adjusted costs, excluding transformation charges and bank levies. Our capital ratio increased in the quarter and is at the high end of our international peer group.
Next to capital and costs, where we have delivered now for a while, we are also encouraged by the stabilization that we are seeing in our core businesses. Clients support our focus strategy and are actively reengaging with us, a clear sign that our franchise is intact. This bodes well for our performance in 2020 and beyond. Let me go through these themes in detail, starting with our performance against our 2019 objectives on slide two. Delivering on our near-term objectives sets us up to achieve our long-term goals. In 2019, we executed against all our financial objectives. We promised adjusted costs of EUR 21.5 billion, excluding transformation charges and the impact of the global Prime Finance transfer to BNP Paribas, and we delivered.
Our cost performance was in part driven by the reduction in employees, where we ended the year at under 88,000, down more than 4,000 in the year and in line with our target. Since the end of the first quarter of 2018, we have reduced employees by around 10,000. We committed to keeping our CET1 ratio above 13% at the end of the year, and we delivered. Our CET1 ratio at the end of the fourth quarter was 13.6%. We promised a leverage ratio of 4% at year-end, and we delivered 4.2%. Outperformance against our group capital ratio targets was principally driven by asset reductions in the Capital Release Unit, where we overachieved against our external targets, thanks to good momentum towards the end of the quarter. Let me now go a little deeper into our 2019 performance on slide three.
In the Core bank, which represents our long-term future and strategic vision, we were encouraged by our performance in the face of our transformation and the challenges presented by the environment. Reflecting the improved performance in the fourth quarter, we held Core bank revenues flat in 2019 and grew pre-tax profit by 7%, excluding certain specific revenue and cost items, which James will detail shortly. This is a strong achievement against the magnitude of changes we have gone through in 2019. At a group level the results were obviously negatively impacted by the Capital Release Unit. Even here, we are executing in line or slightly better than our planning assumptions. While we still have considerable work to do, we are happy with our performance this year and in the fourth quarter. Let us look in more detail at the Core bank revenues on slide four.
One of our core objectives when we announced our strategy in the summer was to stabilize and then grow revenues. In the second half of 2019, the first six months of our strategic transformation, we have grown Core bank revenues, excluding specific items, slightly compared to the prior year period. We achieved this result despite many headwinds, including an even tougher interest rate environment and a slowing global economy. Looking at the year-on-year performance by business in the second half of 2019 now. Revenues in the Corporate Bank were flat as we grew loans, principally in Germany, and performed well in Asia to offset the ongoing impact of negative interest rates. As we said in the Investor Deep Dive, we started to actively reprice deposits in the fourth quarter, which should begin to offset some of the impact of negative interest rates during 2020.
We grew revenues in the Investment bank by 7% in the second half and by 22% in the fourth quarter, with a strong recovery in fixed income. The focus and changes we have implemented in the third quarter are paying off. This is our first quarter of year-on-year growth in the Investment bank for 11 quarters, with a strong recovery in our fixed income business. Fixed income revenues increased by more than 30% in the quarter, led by our rates business, which doubled, and ongoing strength in our credit businesses. Our flow business recovered well, helped by the improvement in our credit spreads. Revenues in the Private bank were broadly stable. We offset the headwinds from negative interest rates with growth in loan and investment product revenues, repricing, and benefits of hiring in wealth management in prior periods.
Asset Management continued its recovery, with revenues up 12% in the second half, reflecting higher performance fees in certain core funds. Now let me turn to the progress we have made on costs on slide five. Excluding transformation charges, which James will detail shortly, adjusted costs were EUR 5.1 billion in the fourth quarter and EUR 21.5 billion for the full year, also excluding the costs associated with the Prime Finance platform. The full-year performance was in line with our communicated targets. We made reductions in every major category while continuing to improve our technology and controls. Cost management will be a significant focus under the leadership of Fabrizio Campelli, our Chief Transformation Officer. Let's now turn to capital on slide six. Our commitment was and is to manage our transformation with our existing capital resources. In this respect, we feel even more confident after the fourth quarter.
We ended the year with a CET1 ratio of 13.6%, comfortably meeting our prior guidance. As in the third quarter, we offset the negative impact of transformation effects with the positive impact of risk-weighted assets reduction. As a result, we have increased our CET1 ratio in the second half of 2019. Our year-end CET1 ratio was around 200 basis points above our pillar 2 requirement. As you may remember, our requirement was reduced by 25 basis points by the ECB, with effect from January 1st, 2020. Outperformance on the CET1 ratio largely reflects stronger than anticipated risk-weighted asset reductions in the Capital Release Unit. Since its creation at the start of the third quarter of 2019, we have reduced risk-weighted assets in the CRU by around 30% to EUR 46 billion at year-end.
Looking forward, we reaffirm our commitment to keep our CET1 ratio above 12.5% at all times. Given our performance on capital in 2019, we believe we are in an even stronger position to execute against our capital plan we announced in July 2019, and we have created some room to allocate additional capital to growing our core businesses. More broadly, we have been managing our balance sheet conservatively and intend to keep doing so, as you can see on slide seven. We are focused on maintaining strong credit quality. Provision for credit losses was 17 basis points of loans in 2019, in line with our guidance and at low levels, both historically and relative to our peers. This reflects, again, our conservative underwriting standards, our strong risk management, and our low-risk portfolios.
Our loan-to-deposit ratio was 76% at year-end, that reflects a strong and stable funding base supporting our high quality and growing loan portfolio. Our liquidity position also remains strong. Our liquidity coverage ratio of 141% gives us a surplus of EUR 55 billion over required levels. Looking forward, our solid performance in 2019 should provide a good base for future growth. Our achievements last year also begin to highlight the underlying strengths of our franchises and the benefits of our strategic decisions. Slide eight shows some example of the underlying momentum that we can see building. The Corporate Bank operates in a highly attractive market with good returns and stable underlying growth. In 2019, we grew corporate cash transactions by 9% and loans by 5%.
In the Investment bank, as we said in our Investor Deep Dive in December, the actions that we have taken to restructure our operations are bearing fruit, and faster than we expected. We see clear signs of higher client engagement around our more focused business model. In addition, the negative halo effect of our business exits on our core client relationships and adjacent product areas has been less than we anticipated. We are also encouraged by the performance in the Investment bank at the start of the year and are focused on further stabilizing revenues. In the Private bank, we are focused on offsetting the pressure from negative interest rates, as well as executing on the integration of the Postbank and Deutsche Bank retail operations. On both measures, we are off to a solid start.
We grew our loan book by EUR 9 billion across the German and the international franchise and in our wealth management business. In line with our commitments, we generated EUR 200 million of cost synergies from the integration. In Asset Management, we are building on the momentum that we have generated with our fourth consecutive quarter of net inflows in 2019. Let me summarize on slide nine. For this management team, our priority is simple. It's all about execution. In 2019, we have delivered on all our targets. For 2020 and beyond, we aim to continuously deliver quarter by quarter on the strategic objectives and financial targets we have communicated to you. On revenues, the momentum across the Core bank is building. The recent improvement we have seen in our CDS spreads, both in absolute terms and relative to our peers, is very encouraging and supports the business significantly.
Lower CDS and bond spreads make us more attractive for counterparties, while also lowering our funding costs, which helps improve our profitability. We continue to progress on our regulatory remediation agenda. Some of this progress was visible to you in 2019, most notably our performance in the U.S. Federal Reserve CCAR exam, the Financial Stability Board's reduction in our G-SIB classification, and the ECB decision to reduce our Pillar 2 capital requirement. We are determined to maintain our progress with regulators in coming periods. We are confident of sustaining our momentum on cost reduction in 2020 and reaching our EUR 19.5 billion target for adjusted costs, excluding transformation charges and the costs associated with the Prime Finance platform. That puts us on a path to deliver on our EUR 17 billion target in 2022.
On capital, we look ahead with increasing confidence given our solid CET1 ratio in the fourth quarter of 2019. Overall, we are aware of the uncertainties in the external environment, and these are incorporated into our financial plans and the targets that we have laid out in December. Since then, there are even signs that our macroeconomic assumptions may be on the conservative side. Simply, at this stage, we can say that our transformation has started very well. We are on track against all our objectives and are increasingly positive in the outlook. With 70% of the expected total transformation effects now behind us, we are satisfied with what our teams have accomplished in this short timeframe. With that, let me hand over to James.
Thank you, Christian. Let me start with a summary of our financial performance on slide 10. Our results in both the quarter and the year were impacted by our actions to execute on our transformation, which I will detail shortly. In the fourth quarter, revenues adjusted for specific items shown on slide 30 declined by 1%, reflecting the wind down of non-core businesses in the Capital Release Unit. Non-interest expenses of EUR 6.4 billion included approximately EUR 1.3 billion of restructuring and severance, litigation, and transformation charges. Our net loss in the fourth quarter was a little under EUR 1.5 billion, including approximately EUR 400 million of transformation-related deferred tax asset valuation adjustments. Tangible book value per share was EUR 23.41, a 4% decline from the third quarter, mainly reflecting the net loss in the period.
For the full year, we generated a pre-tax loss of EUR 2.6 billion, including EUR 1.1 billion of transformation-related charges, EUR 1 billion of goodwill impairment, as well as EUR 805 million in restructuring and severance, and EUR 473 million of litigation charges. Provision for credit losses was EUR 723 million, in line with our expectations, and at 17 basis points of loans remained relatively low. Our net loss of EUR 5.3 billion included EUR 2.8 billion of transformation-related deferred tax asset valuation adjustments, also in line with our expectations. To execute quickly on our strategic transformation, we took substantial costs in 2019, as you can see on slide 11.
Results in the fourth quarter included around EUR 1.1 billion of pre-tax transformation effects. These items included EUR 608 million of transformation-related charges included in our definition of adjusted costs. These charges principally relate to impairments and accelerated amortization of software intangibles and real estate charges.
Results in the fourth quarter also included a further EUR 400 million deferred tax asset valuation adjustment. For 2019 as a whole, we've taken around 70% of our total planned transformation effects. For 2020 and 2021, we expect a lesser but still significant burden on our results. This year, we currently expect a further EUR 1 billion of pre-tax charges, including EUR 400 million of accelerated software amortization, which is not relevant for capital purposes. We also currently expect a further EUR 400 million of deferred tax asset valuation adjustments. Progress we have made to date gives us confidence that we can successfully manage our capital position through the transformation. Let me now turn to the results for the Core bank in the quarter on slide 12. The Core bank grew revenues by 5% on a reported basis and by 8% excluding specific items.
Operating leverage was positive in the quarter as we reduced adjusted costs, excluding transformation charges, by 2%. Risk-weighted assets were flat as the reduction in operational risk RWA was offset by increases in regulatory inflation and business growth in the Private bank. Leverage exposure increased as we grew business volumes, including 8% loan growth. Let's now look in more detail at costs on slide 13. In the fourth quarter, we reduced adjusted costs by around EUR 380 million, or 7% year-on-year, excluding the impact of foreign exchange translation and the transformation charges I described earlier. Adjusted costs included EUR 102 million of expenses incurred in the fourth quarter associated with the Prime Finance platform being transferred to BNP Paribas, which are reimbursable from December 2019 onwards.
For the full year, adjusted costs also declined by 7% to EUR 21.6 billion, or EUR 21.5 billion, excluding the Prime Finance costs in the fourth quarter.
In both the fourth quarter and the full year, we made progress in all major cost categories. We reduced compensation and benefits expenses, reflecting the reductions in internal workforce. Professional service fees declined as we further improved the efficiency of our external spend. Other costs declined, reflecting reductions across a number of areas, including occupancy. Consistent with our commitments, we kept our IT costs broadly stable and within our target range as we continue our investment program. Let me now move to discuss our capital ratios on slide 14. We increased our CET1 ratio by 24 basis points in the quarter to 13.6%, as we more than offset the transformation effects with de-risking in the Capital Release Unit.
Reductions in risk-weighted assets generated 73 basis points of capital on an exchange rate neutral basis, including approximately 41 basis points from the CRU and approximately 20 basis points from lower market risk in our Core bank. The asset reductions were partly offset by the 47 basis point reduction in the capital ratio from the net loss. For 2020, we reaffirm our target to manage our common equity tier one ratio to be at least 12.5% at all times. On a pro forma basis, our CET1 ratio at 1st January 2020 is 13.3% when considering the impact of the new securitization framework we've discussed with you in previous calls. This gives us capacity to absorb further anticipated regulatory headwinds as well as targeted business growth. We increased our fully loaded leverage ratio by 25 basis points in the quarter to 4.2%, slightly ahead of our 4% guidance.
On an exchange rate neutral basis, we reduced leverage exposure by EUR 110 billion, including a EUR 49 billion reduction in the Capital Release Unit. We also reduced our cash balances by around EUR 29 billion as part of our ongoing liquidity optimization program, combined with a seasonal reduction in Investment bank balances. We reaffirm our leverage ratio target of 4.5% this year, excluding the Prime Finance platform to be transferred, rising to around 5% for 2022. Turning now to our businesses, starting with the Corporate Bank on slide 16. Excluding specific revenue items and approximately EUR 800 million of goodwill impairments, transformation charges, and restructuring and severance, which are detailed by business on slide 29 of the appendix, the Corporate Bank generated a pre-tax profit of EUR 939 million in 2019, with a post-tax return on tangible equity of 7%.
On an underlying basis, the performance in the Corporate Bank was consistent with our financial objectives. However, the performance in the fourth quarter and full year was impacted by our strategic transformation, lower levels of episodic items, and changes to cost allocations, in addition to the challenging interest rate environment. In the fourth quarter, revenues declined by 5% year-on-year, principally driven by lower episodic items. Excluding these items, like credit recoveries and certain smaller one-off gains, which we've discussed with you in previous calls, Corporate Bank revenues were broadly flat as we grew volumes and fee income to offset the impact of lower net interest income, principally in cash management. For the full year too, revenues were broadly flat. Excluding specific items and episodic effects, revenues increased slightly as we grew volumes to offset the negative impact from interest rates.
The benefits of repricing, which we began to roll out more widely late in the fourth quarter of 2019, as well as the full benefits of tiering, should help support our revenue performance over the coming quarters. We feel comfortable that the Corporate Bank can, as we indicated in December, on average, grow revenues at 4% over the next three years. This reflects the progress we are making on our growth initiatives, for example, in Asia, together with the pre-pricing measures I just mentioned. That said, for 2020, our plans assume growth closer to the levels seen last year, principally reflecting lower levels of episodic items. Adjusted costs, excluding transformation charges, increased materially in both the fourth quarter and the full year. The increase reflects higher spending on technology and controls, as well as the change in internal service cost allocations following our recalibration last year.
These effects are in line with the guidance we provided in the third quarter results. We believe that the run rate of these higher costs is largely reflected in our reporting and will be fully reflected after the first quarter of 2020. We should start to see the benefit of ongoing cost reductions being reflected in both sequential and year-on-year comparisons in the second half of 2020. We expect the Corporate Bank to generate positive operating leverage in this year and beyond. Provisions for credit losses were EUR 104 million in the fourth quarter, and EUR 286 million, or 225 basis points for the year. The fourth quarter was impacted by a few idiosyncratic events, the majority of which were outside Germany, with stage one and stage two provisions remaining at low levels. Turning to the Corporate Bank revenue performance by business on slide 17.
Global transaction banking revenues declined by 6%, mainly reflecting lower episodic items. Within global transaction banking, cash management revenues declined, reflecting the impact of the negative interest rate environment, with very limited benefits of tiering or repricing in the period. Trade finance revenues were essentially flat in the quarter, but up 6% for the full year, as lending and trade flows grew strongly in Asia and Germany. Security services revenues declined, reflecting our exit from equities trading and lower episodic items. Commercial banking revenues declined 2% on a reported basis, as growth from lending was offset by spread compression on deposit products. On a full year basis, revenues were up by 4%. Turning now to the Investment bank on slide 18. As Christian mentioned, we're happy with the momentum that we see building in the Investment bank. In the fourth quarter, revenues increased by 22%, excluding specific items.
For the year, revenues declined by 3%, excluding specific items, with fixed income sales and trading essentially flat and lower revenues in origination and advisory. Adjusted costs, excluding transformation charges, declined in both the quarter and the full year. The reductions were driven by lower compensation and benefits expenses, given the reduction in workforce, lower service cost allocations, as well as continued disciplined management of non-compensation costs. Excluding specific revenue items and approximately EUR 430 million of restructuring and severance and transformation charges, the Investment bank generated a pre-tax profit of EUR 863 million in 2019, with a post-tax return on tangible equity of 2%. Consistent with our strategy to invest in our core franchises, we grew loans by 16% in 2019.
Revenues in fixed income sales and trading were EUR 1.2 billion in the fourth quarter, a 31% year-on-year increase on a reported basis, or 34% excluding specific items, as shown on slide 19. Credit trading saw strong year-on-year revenue improvements, reflecting better performance in flow credit across all regions, and particularly Europe, while distressed debt revenues were also higher. Credit trading also benefited from disciplined risk management, targeted investments in prior periods, and increased client activity. In rates, revenues almost doubled from the prior year period, with improved performance across all regions, most notably in Europe. Foreign exchange revenues were broadly flat despite lower market volatility. In emerging markets, our structured businesses continued to perform well with a significantly improved performance in flow trading compared to the prior year. Origination and advisory revenues declined by 12% year-on-year relative to a strong prior year period.
Advisory revenues were significantly lower following a strong third quarter, where we saw several transactions booked earlier than anticipated. Revenues in debt origination increased by 27%, outperforming a growing market, with market share gains in both investment grade and high yield. In equity origination, we continue to win mandates with our activity level in the fourth quarter similar to third quarter levels and consistent with our expectations that we announced with our strategy last July. Let's now turn to the Private bank on slide 20. The Private bank continued to execute on its strategic priorities in the fourth quarter and full year, with revenues excluding specific items broadly stable and reductions in adjusted costs, excluding transformation charges.
Excluding specific revenue items and approximately EUR 900 million of restructuring and severance, goodwill, and transformation charges, the Private bank generated a pre-tax profit of EUR 524 million in 2019, with a 3% post-tax return on tangible equity. Revenues in the fourth quarter and the full year were impacted by the negative interest rate headwinds, partly offset by growth in loans and assets under management and the benefits of repricing efforts. Excluding transformation charges, we reduced adjusted costs by 5% in the quarter and 4% in the full year, including the EUR 200 million in German merger cost synergies we had previously indicated. Provision for credit losses was broadly stable in the full year and at 15 basis points of loans, reflects the conservative nature of our portfolios and strong underwriting standards.
Revenues in the Private bank declined by 4% on a reported basis, or 2% excluding specific items, as you can see on slide 21. We grew revenues in our international operations and wealth management to broadly offset lower revenues in Germany. Revenues in Germany declined by 7%, primarily reflecting higher funding and liquidity related costs, as well as lower contributions from asset sale transactions. We're working on a series of loan and assets under management growth and repricing measures in our home market to help mitigate the interest rate headwinds. In our international business, we grew revenues by 3% as growth in loan and investment products, combined with repricing measures more than offset the interest rate headwinds. Wealth management grew revenues by 11%, excluding the impact of Sal. Oppenheim workout activities. This reflects our relationship manager hiring programs in prior periods, as well as strong market conditions.
Let me now turn to Asset Management on slide 22. As you will have seen in their results published this morning, DWS continued its strong performance. To remind you, Asset Management includes certain items that are not part of the standalone DWS financials. Excluding restructuring and severance and transformation charges, Asset Management pre-tax profit of EUR 539 million increased by 31% year-on-year, despite higher non-controlling interests following the IPO in the first quarter of 2018. Asset Management enjoyed its best revenue quarter since the second quarter of 2017, with revenues also growing 31% year-on-year in the fourth quarter, and by 7% in the full year. Assets under management were EUR 768 billion at quarter end, up by EUR 103 billion, or 16% during the year. The growth in AUM was driven both by market performance and four consecutive quarters of net inflows.
Our flagship products delivered significant outperformance, while the number of four and five-star rated funds further increased. Non-interest expenses in the fourth quarter increased, reflecting higher compensation and benefits expenses. For the full year, non-interest expenses were broadly stable, given management's ongoing efforts to control expenses. As a result of the strong revenue performance and cost discipline, Asset Management generated significant positive operating leverage with a 6 percentage point improvement in the full year cost income ratio to 73% on a segment basis. The DWS adjusted cost income ratio was 68% for 2019. The strong performance in Asset Management revenues in the fourth quarter was principally driven by significantly higher performance fees, as you can see on slide 23.
Performance and transaction fees were EUR 104 million in the fourth quarter, up from EUR 23 million in the prior year period, driven primarily by performance fees in our flagship multi-asset products in Germany. Consistent with the guidance that DWS management gave this morning, we would expect for performance and transaction fees to normalize in 2020 compared to the elevated levels recorded last year. Management fees grew by 6% year-on-year, reflecting the strong market conditions and consecutive quarters of net inflows, which more than offset the impact of margin compression. Net inflows were EUR 12 billion in the quarter and EUR 25 billion in the full year, mainly in our targeted growth areas of passive alternatives and multi-asset. Other revenues were EUR 15 million positive versus a negative EUR 30 million in the prior year quarter, partly reflecting a positive change in the fair value of guarantees.
With that, let me turn to Corporate and Other on slide 24. Corporate and Other reported a pre-tax loss of EUR 154 million in the quarter, compared with a pre-tax loss of EUR 109 million in the same period last year. The improved year-on-year performance reflected higher revenues from valuation and timing differences, mainly due to interest rate effects offset by higher litigation costs. Funding and liquidity charges increased, reflecting certain funding costs held centrally as part of our new funds transfer pricing framework I have described on previous occasions. As we noted in July, these costs should be around EUR 200 million per year in 2020 and should materially amortize over a five-year period.
Let me now discuss the Capital Release Unit on slide 25. The Capital Release Unit continued to execute on its de-leveraging plan in the fourth quarter as we move towards a smaller and simpler balance sheet.
As Christian detailed earlier, we reduced risk-weighted assets and leverage exposure in the CRU slightly faster than our internal projections, while the net income drag was less than we planned. Revenues in the fourth quarter were negative EUR 164 million, excluding DVA, within the range we provided at the Investor Deep Dive. Revenues were impacted by mark-to-market effects, as well as hedging and de-risking costs. Non-interest expenses of EUR 691 million declined by EUR 75 million from the third quarter, principally driven by lower compensation and benefit costs, given the front office headcount reductions. We reduced risk-weighted assets by EUR 10 billion in the quarter, including EUR 3 billion of operational risk. Leverage exposure declined by EUR 50 billion in the quarter, mainly driven by reductions in equities. Before I close, a few words on our 2020 financial targets on slide 26.
The progress we have made already gives us a clear line of sight on what we can achieve in 2020. For this year, we have three key targets. First, as described, to build on the momentum we have generated over the past two years and deliver on our 2020 adjusted cost target of EUR 19.5 billion, excluding transformation charges and the impact of the Prime Finance transfer. Second, to maintain our CET1 ratio above 12.5% as we manage the remaining part of our transformation, a target we are confident of hitting given our stronger starting point. Third, to raise our fully loaded leverage ratio to 4.5%, excluding the balances we hold for BNP Paribas and Prime Finance, principally reflecting the further deleveraging by the Capital Release Unit.
Consistent with our previous guidance, we expect provisions for credit losses to increase to around 20 basis points of loans in 2020, reflecting a continued normalization of credit and lower recoveries. Finally, as we've discussed with you before, we've continued to work on plans to merge our German retail subsidiary, PFK, into our parent company, DBAG. We are increasingly confident of the feasibility and viability of this decision and have begun the discussions with all the relevant stakeholders. This merger should generate significant adjusted cost savings and avoid potential funding cost increases associated with the implementation of NSFR. Although there are remaining uncertainties regarding the financial impact of this transaction, a conservative estimate of the potential impact is built into our capital plan as discussed in December. The pre-tax implementation costs are fully reflected in our planning.
The tax impact, if any, could be incremental to the EUR 400 million of deferred tax asset valuation adjustments we already anticipate and I described earlier. Looking further ahead, the progress towards our short-term financial objectives gives us confidence in our ability to deliver on our 2022 targets, including a post-tax return on tangible equity of 8%. With that, let me hand back to James, and we look forward to your questions.
Stuart, let's now open the lines for questions.
Okay. Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you're using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star followed by one at this time. One moment for the first question. First question is from the line of Andrew Stimpson of Bank of America. Please go ahead.
Afternoon, everyone. Thanks for taking my questions. First question on capital. It was a decently sized beat on capital today, but James, I think you said on a media call that you're still thinking that would trough at about 12.7%. I'm just wondering what the moving parts are from here, and whether there was a bit more seasonality in the risk-weighted assets this quarter that you'd expect to come back in the first quarter, or if there's more inflation, or why not think that you could be above that 12.7% trough level during 2020? Then secondly, please, on the Corporate Bank, revenues and costs were both a little weak. I just wondered if you could talk around, A, on revenues, the pressure on margins and how you think that will develop. I think you said you expected flat revenues in 20. I'm not sure if I heard that correctly.
If you could just clarify that. B, on costs, the greater tech spend there, presumably on things like compliance and AML is a factor in there. Just how progressed those projects are and whether there's an investment phase that we should expect to reduce at some stage during 2020 or maybe it's even after that, please. Thank you.
Sure, Andy. Thanks for the questions. I'll take both, but I'm sure Christian will want to add to the Corporate Bank discussion. First of all, I guess what I'd say is, at this point, we don't want to move that guidance up, but I'd say it's a conservative position that we're taking here. To give you a sense of the moving parts as you asked about, 13.6% is what we report for December 31st. We talk about the inflation. I mentioned the securitization framework. If you go back to the December presentation, the reg inflation in all of 2020, we would look at it as being about 60 basis points. If you pro forma that, we have 13 basis points as a kind of foundational position.
Everything else that happens this year, whether it's deleveraging in the Capital Release Unit, some degree of losses from restructurings, earnings in the Core bank, and investments in balance sheet growth in the Core bank, all of that nets out against that 13%. How big a buffer we carry against the 12.5% minimum, we're going to have to see based on both the timing of all of these events as well as frankly the market opportunities for the businesses to grow balance sheet to support client activity. With all of those things baked into the pie, as you may have heard me say on the media call, we think there's clearly a larger margin for error and potentially some ability to grow balance sheet beyond what had been originally foreseen in the plan.
I think I'd like to be conservative at this point in thinking about where we trough, given all the moving parts and also the timing that I mentioned. I hope that's helpful as to why we're not moving guidance today, but we're obviously very cognizant that the market is looking for us to maintain a healthy buffer to the 12.5%. On the Corporate Bank, again, Christian will want to add, but as he mentioned, there are a lot of moving parts in that revenue line. I think the starting point is three of the four major businesses on a full year, four of five major businesses grew revenues.
Cash management, Trust and Agency, trade finance, commercial bank are all growing, and there was a bit of a decline in security services for a number of reasons, including our own perimeter. Competing with that growth is, of course, the interest rate environment. Some of the episodic items that we mentioned, a little bit of FTP charges coming through to that business. That nets out to the numbers that we're reporting. We do think the underlying trends, remember in the third quarter, we reported 6% year-on-year growth, and we said the underlying trend was in the low single digits. In the fourth quarter, that reversed largely driven by the episodic items. We would argue that the underlying trends are just as they were in the third quarter, with a little bit more transient pressure on interest rates given central bank actions in the second half.
That, of course, we'll now work to offset given repricing, tiering, and all the other items that we also described to you. Christian, I'm sure will want to add strategically.
Well, there is not a lot to add because I think you named it on the corporate side. Underlying, we are happy with the progress we are doing, Andy. I think on the IDD in December, Stefan Hoops was talking about the deposit charging, the growth in Asia, the increased payment fees, the growth in the TAS business, and all that, only to name a few, is supporting the underlying 4% growth. James was referring to the episodic items, which we plan a little bit more conservative for 2020. The underlying engagement, the client feedback, and that what we can see in terms of mandate, clearly supports that what we told you on the investor day. These items, which I just mentioned, deposit charging, growth in Asia, the increased payment fees, each of those is estimated to provide approximately EUR 100 million over the next three years.
Hence, we will start seeing that in 2020, and it makes us comfortable that we achieve our goals. On the capital side, I have nothing to add. James all laid it out exactly to the point.
Andy, I'm reminded, sorry for the long answer, but you asked about the investment cycle in Corporate Bank, and I think this is also an important area to describe to you. Look, first of all, as you remember, there was a restatement exercise we went through last year. There have been changes in funds transfer pricing and internal cost allocation. A lot of moving parts inside our segments, and in some ways, none more so than the Corporate Bank. We think we are at or very close to, if you like, a finalization, a final basis for our external reporting of that segment, which now gives us a clear basis for future reporting and performance. In other words, comparisons would not be influenced by these items.
That said, as you point out, there have been investments, the technology and particularly KYC cost increases are real and pertain to that business. I would say we seek to continue investing in IT in that business. It's a critical element of our competitive position. Frankly, it's the largest beneficiary, if you like, of a reallocation of our tech budget away from equities as we wind down that business. KYC remains critical, although in that area, one would hope that in the not too distant future, we crest the wave in terms of our investment and begin to deliver efficiencies based on the accumulative investment of the past several years.
That's very helpful. Thank you very much.
Next question is from Daniele Brupbacher from UBS. Please go ahead.
Good afternoon, and thank you. First question is just on the rate headwinds. On the media call again, you mentioned those, and I think you quantified them at around EUR 230 million in the Private bank. I was wondering whether you could give us similar numbers for other units and how you think about that going into 2020, what more is to come here. Probably in this context as well, how you think about then how much of that can be compensated by volumes and margins. It feels like your working assumption seems to be that this should be largely compensated by volumes, but if you could just confirm that. You mentioned a few times the FTP model and that impact also the divisional, or I think you mentioned in the context of the Corporate Bank.
I know you described it in the past, could you be a little bit more specific and give us some numbers around what that really means? Is there still a transition period? Do we have to take that into account when we model future revenues for the divisions? Just very lastly, also on the media call, you stressed the importance of the U.S. market for Deutsche. I think that's well understood. Could you just give us some examples of sub-markets where you feel you're gaining or regaining market share? That would be very useful. Thank you.
Daniele, potentially I take the first one and the FTP is then done by James, and the last one we can do together. We simply gave the one number for the Private bank because obviously this is most dependent and sensitive to the interest rate, in particular to the decision which we saw in September last year. Yes, we are planning to compensate that in full going forward, also in that business. How? We said that in the Private bank, but also in the Corporate Bank, we are consistently growing loans. By the way, we're not increasing our risk appetite, so within the risk framework we have. For instance, we drove an initiative in the German mortgage business last year in the Private bank, which went very well. We are very active, as Manfred Knof said on the IDD in December, in swapping deposits into investment funds.
Actually, we are making good progress on that. Also in January, that looks quite favorable, what the Private bank is doing. As for the Corporate Bank, as I just lined out, there are other initiatives, not only the active repricing, where we have very constructive discussions with our clients, and where we think we will see the first positive impact from the repricing in 2020. Also there we have the underlying growth in the other business segments, being the growth in Asia and trade finance, and so on. Overall, while obviously, this interest rate environment is hurting, we have reacted appropriately and think we can compensate that. For the FTP, James, potentially you.
Sure. We've talked about this a little bit, the work that Dixit and the treasury team have been doing together with the business to revamp our funds transfer pricing framework. What we're doing is essentially aligning it with the liquidity buffers, the unsecured spread, the capital charges that the businesses bring to the balance sheet. If you like, benefits and burdens of balance sheet usage in a way that aligns that charging more closely with clear drivers and frankly, the regulatory environment that we operate in. That's the principle behind it. We think it gives the businesses much better, more precise and also more controllable drivers and also funding costs numbers that they can then build into their third-party pricing. We will provide some disclosure of the impacts of these businesses as we get to the annual report, so that you can trace it through.
The number in Corporate Bank year-on-year is probably in and around EUR 20 million. There are, frankly, other treasury effects as well that go in and out. It's one of a number of factors. To your point, we will and we have at this point, gotten on to a steady state of FTP in the first and second quarters of next year. There'll still be some small variances driven by it. Your market share question has to do with the United States and IB. I'll leave that to Christian and maybe add some.
Yeah. I think the first answer to that is what we have done globally, Daniele, also refers to the U.S. We believe that with the focus of the business on that, where we are relevant and where we have a leading market position, we can also grow our business in the U.S. Exactly that we have done there. Just give you some examples, like in the high yield issuance, but also in the investment-grade issuance, but in particular in areas where we have been strong and will be strong, like commercial real estate. We clearly have performed well in 2019, and we have seen increasing revenues. Again, with the risk appetite we have in place with the risk management, we are confident that we can stay the course.
You have heard a little bit from James that obviously we are starting from a better position from a capital point of view that also allow us here and there, of course, in a selective way, to also allocate a bit more capital to the one or the other business where we are strong, and we are making use of it. I think the focus which we have applied for the Investment bank, but also Corporate Bank globally, is also applying to the U.S. There we see the growth in those areas where we are leading.
Thank you.
Next question is from Andrew Lim from Societe Generale. Please go ahead.
Hi. Good afternoon. Thanks for taking my questions. I just wanted a bit more clarity on that capital guidance that you gave. I think last year you said that you would have AQR and TRIM impacts amounting to about 40 basis points. You didn't talk about it here. Are you saying that this falls into 2020 and is within that 60 basis points impact that brings you down to around 13%? Just on the Corporate Bank, if you can clarify on that tech spend. Your overall costs have jumped up for the fourth quarter. I think you said that that was going to be the run rate going forward, and that we should wait till the second half of this year before we can start to see that maybe come down a little bit. Perhaps if you could give a bit more color there. Thank you.
Let me jump in on the CET1 guidance. Yes. The regulatory impacts barring one smaller item were recognized in 2019. We go into 2020 really almost 100% in line with the guidance we gave you in December. There's one small item that moved from Q4 to Q1. By and large, you should focus on that EUR 15 billion number that we gave you for reg inflation on the RWA line for 2020.
Yeah. On the costs on the Corporate Bank, we have seen higher adjusted costs, mainly from higher technology costs and control costs. Also changes in the way we have charged the internal services to the businesses. Of course, with the efficiencies which we have in mind and in plan for the group, that over time will also positively affect the Corporate Bank. Again, we are absolutely in line with our plan. The adjusted return on equity for the Corporate Bank was around 7%. We gave you the target for 2022 that is driven by growth, which we outlined, but also by taking certain efficiencies, which are also beneficial to the Corporate Bank over time.
That's great. Thank you very much.
Next question is from Jernej Omahen from Goldman Sachs. Please go ahead.
Yeah. Hi.
I have two questions, please. The first one is on page two when you lay out the achievements for this year. I don't want to take away from these achievements because I agree with you. I think that they are substantial. Obviously there's one category missing here, which is the profitability or the profitability target. I wanted to ask you the profitability question in the following way. For the full year and for the quarter, what was the underlying return on tangible equity for the bank as a whole? I guess by underlying, I would just also like to ask a sub-question as to what your preferred definition of that would be. My second question would be on the performance of the Investment bank.
Again, I think it's healthy to see that the revenues are up year-on-year, particularly in FICC, that you're up a third, or 33% year-on-year in the quarter. Again, it was a very good quarter for FICC. Your global competitors on average are up 64% in FICC year-on-year, which suggests that the market share loss continues, and I just wonder to what extent do you feel you have stemmed that market share attrition? The final sub-question, I guess that's now number three. I said it's going to be two, I'm sorry. The final sub-question on the Investment bank is revenues are up, but returns, as I understand it, or as you present it, are down to 1%. How do you think about that as well? Thank you very much.
Let me potentially start with my view on the Investment bank, and then for the return questions, I hand over to James. First of all, Jernej, if you have been three years down revenue-wise year-over-year, it is very reassuring that also in the Investment bank with the focus which we have decided in July, we see the turnaround. To be very honest, we have seen that momentum and that turnaround now consistently since September. We did the necessary changes for certain business within the Investment bank in July and August, and from September on, we see quite a good momentum. Now, are we already there from a profitability point of view and also from a growth rate point of view, where potentially all our peers are? No, because we always said that this is a long-term transformation.
We need to focus, we need to adjust, we need to also invest into the simplification of our FICC business, which we are doing. Hence, I do believe that also in particular from a profitability point of view and from a further growth point of view, that will be a gradual improvement. However, the most important is the client engagement. The client engagement is clearly up. That obviously is supported by our CDS prices, that is also supported simply by the focus and clarity we have now what we serve in the Investment bank and whatnot. Last but not least, from a market share point of view, now let's wait, I think, for all the institutions coming out with their numbers for the fourth quarter, including all Europeans.
Secondly, I would also say in the FICC business, let's not only do year-on-year, but quarter-over-quarter. In particular, I think in the FICC business quarter-over-quarter, we are not looking too bad. Hence, I think we should take a little bit more time to justify or to judge on our market shares. James.
Sure. Jernej, on profitability, obviously we are acutely aware of a sizable loss this year, net income loss. Hence the focus that we put on the transformation effects to help you understand what the underlying performance looks like. Of course, we want to limit the time we speak about underlying performance. To answer your question, I think the Core bank numbers, excluding transformation charges, is probably the best number to look at. That number pre-tax is about EUR 2.8 billion against EUR 42.5 billion of allocated equity. If you tax affect it gives you an ROTCE somewhere in the 4%-5% range. It's that number we have to drive up, as we talked about, to 9% as being our goal in 2022.
The way we've presented the transformation charges is intended, and also, by the way, the BNP Paribas transaction, which includes leverage and expenses, is intended to give you a sense of all the things that then fall away by 2022. Making 2022 pretty much a clean year barring small restructuring expense and obviously the net loss, if you like, or the loss mostly from expenses that remains in CRU, that we want to lift from that point. I think that gives you probably the best answer and also why it is that we've done our presentation and restatement the way we have all of which you can find in the FDS. On page 10 is the Core bank representation.
That's very helpful. Thank you very much.
Next question is from Adam Terelak from Mediobanca. Please go ahead.
Good afternoon. First I've got a question on capital outlook and then a follow-up on the Investment bank balance sheet. On the capital outlook, can you just confirm that your year-end CRU balance sheet targets still hold for 2020? Then one of the moving pieces I think we haven't got much color on is operational risk. You clearly come in ahead again this quarter. Could you give us some guidance on where that might go, as it remains pretty material for the walk this year? If it does come down further, does that change the EUR 25 billion guidance you have for Basel IV in 2024, which I understand has a reduction of op risk embedded into it? Just a technical point, is there an AT1 accrual in CET1 capital at year-end?
Finally, moving on to the Investment bank, you flagged lower leverage ratio denominator from liquidity management. I want to understand how much funding benefit has come through into the fourth quarter print as a result, and how much more you can do on liquidity. I've also noticed that the LCR is actually up Q on Q despite this. Is this something in the denominator we need to worry about that might rebound into the first quarter? Thank you.
Lots of questions, and questions that warm a former treasurer's heart. Capital Release Unit, we are sticking to the targets that we laid out. We think we've given ourselves a helpful hand in terms of where we got to at the end of last year. It gives us a little bit more flexibility in terms of timing and the manner of disposal of assets, which is encouraging. On the op risk RWA, as you say, we have, I think, been very successful in bringing forward effects that we described to you in July as potential outcomes. With the hard work, particularly of our risk colleagues, we were able to exceed our own expectations as to how much and how soon we were able to achieve methodology and model-related benefits in RWA. At this point, I would probably guide to flat from here.
We're not expecting additional significant moves there. We do expect, and have built into our forward capital planning, some additional benefit, as you point out, with the impact of B4 or overall Basel IV glide path. On the leverage ratio, we've been talking to you and also to our fixed income investors for some time on work we've been doing to improve the efficiency of our balance sheet. The leverage ratio did benefit, as you point out, seasonally from lower cash. We think that by and large is sustainable. Also seasonally from pending settlements, which as you know, do go up again as activity increases. The leverage ratio I wouldn't expect to stick in the first quarter necessarily. Perhaps dip and then go back over the course of the year to our year-end target. I don't see anything, frankly, unusual in the LCR.
We have been working to bring it down, frankly, as we drive efficiency in the balance sheet. What you're seeing is significant declines in the outflow component of the LCR ratio essentially offsetting declines in the HQLA and net inflows. We've been seeing essentially efficiency offset the reduction in cash and liquidity reserves, which is good for the company and our earnings profile. In other words, improving earnings efficiency without sacrificing the stress liquidity value that we see on our balance sheet. The AT1 coupon is accrued when paid. That's a 2020 event.
It's built to catch up.
Exactly. As you've seen in prior years, first and second quarters are burdened with some catch-up there. That's all, of course, built into our capital planning.
Great. Thank you.
Next question is from Kian Abouhossein from JP Morgan. Please go ahead.
Yes. Hi. Thanks for taking my questions. Two more detailed ones and one just more general. First of all, the EUR 100 million-plus in tiering of deposits benefits, the net number of EUR 100 million-plus. Can you talk about how much you have achieved at this point? Actually, where you book it, in what division, in the fourth quarter? Secondly, the BNP transaction. You mentioned the associated benefit on the revenue side that you booked, and you talked about part of it being booked. I'm wondering how much more there is to come, and in what quarter, and should we assume there's more to come in the 2020 year, in the first quarter, and where do you actually book that reimbursement? Third one is just on fixed income. The environment from what I can see is very strong in credit.
The breakdown you gave at the investor day illustrates you're very heavily credit-biased now in fixed income. Clearly, you indicated the year has started well. Can you be a little bit more specific around your thoughts around your fixed income business, considering your material gearing to the best part of performance year to date? How you're seeing the environment from your business perspective on the credit side?
Thanks, Kian. Tiering goes to the businesses essentially through funds transfer pricing. The benefits accrue to them in proportion to the liquidity reserves that they generate for the company. We began to see that benefit in November when it became effective. Essentially two-thirds of the run rate you would have seen in Q4. On the BNP Paribas side, that transaction, so we don't want to confuse you with this presentation, but we want to stay consistent with our original targets that we set for EUR 21.5 billion for this year, EUR 19.5 billion for next year. We haven't moved them to reflect the incremental expense relative to our original planning, which had not foreseen that we keep the prime finance business operating as part of our expense base, but rather had we not pursued the transaction with BNP Paribas, it would have run down much more quickly.
What we're describing to you is the incremental expenses that we will book in essentially operating that business for BNP Paribas at the level that is reimbursable under the agreement and that will be reflected in CRU revenues as a positive. We call out EUR 102 million in the fourth quarter. That is the level of expenses that would have been reimbursable had the transaction closed on the 1st of October. It affected the 1st of December, so we are eligible to have about one-third of that reimbursed for the fourth quarter. Going forward, it'll be the full run rate through 2019. Over time, a slightly declining reimbursable cost base, frankly, as we transfer over time small elements of the business to them or personnel and infrastructure to BNP Paribas.
What we will essentially adjust out of our cost base is the reimbursement recapture that essentially nets out at the pre-tax profit line.
Kian, on your fixed income question. Overall in fixed income, be it in rates and currencies, emerging markets, we did changes last year, as we said on the investor day, and it simply gains momentum. It's not only a credit story. I also said that the improved CDS level and the perception around Deutsche Bank also in the debt capital markets obviously help us in our day-to-day flow business. We are satisfied with the momentum we see in the various products. Now, on the credit side, this is our strength. Let me also talk a little bit more broadly from an economic point of view. I think we are even seeing a slight improvement in the economic environment globally. At least two uncertainties have been slightly taken away with the phase one of the trade agreement between the U.S. and China.
We also have less uncertainty all around Brexit, and we can see that in economic forecasts, which are slightly up compared to our last earnings call end of October. We also see in our portfolio that there is no deterioration from an overall credit point of view. Yes, momentum, given our changes in that business, is clearly picking up, not only in credit but also in the others. On the credit side, these are I think one of our key strengths we have, and we are dealing in an economic environment which is still weaker than we have seen it in 2017 or 2018, but clearly a slight upgrade since October.
Christian, if I may just add one more quick one. If I look at your performances here, the restructure clearly is on plan. You could make some arguments around revenues and the transaction bank, et cetera, but generally you explained that very well. Where do you see from a bottom-up perspective, leaving macro issues aside or geopolitical issues, what's keeping you up at night? What are you most concerned about or where you believe, okay, this is an area where we really need to still turn around that particular issue?
Kian, to be honest, it's a very simple answer. We have to apply day by day the same discipline on execution like we have done it for the last 20 months. If we do this, we have so granular plans. We are playing so much to the strengths of Deutsche Bank in each and every business. If we keep that discipline, if we keep that execution focus, I'm not worried.
Okay. Thank you very much.
Next question is from Jon Peace from Credit Suisse. Please go ahead.
Yeah, thank you. I had a couple of questions to help understand the run rate in the C&O line, the corporate center. Firstly, the valuation and timing differences has been quite positive now for about six quarters, and particularly this quarter. Should we expect this to reverse at some point? If so, what would the triggers be for recognizing that? The second question is on the funding line in C&O, which was quite negative this quarter. How should we think about that as a trend? Will you be allocating more of that into the divisions? Thanks.
Thanks, Jon. Great question. It's rare that we get questions on the corporate and other slide on page 24 in the deck. It is a good question because corporate and other, some elements of it, frankly, are hard to run rate. If I were to just go quickly through the lines that you see here, funding and liquidity, as we've mentioned, has the EUR 200 million drag from the FTP amortization that we've outlined. Other than that, it should clear to zero. There's obviously going to be, in every given quarter, there's going to be a little bit of variance in the clear out from treasury. Valuation and timing, as you point out, is volatile. The principal drivers are essentially interest rate hedging of the balance sheet as well as FX hedging.
It depends on both the level of rates, steepness of the yield curve, and also FX basis, which are the main drivers of that. You had a 2018 that there was a fair amount that went adverse, particularly FX basis. In 2019, some of that FX basis reversed, and at the end of the year, we got some uplift from interest rates. Frankly, it's hard to predict, and we manage it as close to zero as we can within the range of tools in hedging and also from an accounting perspective that we can. The shareholder expenses should be relatively stable. We've guided to around EUR 400 million in shareholder expenses consistently. We operate to an OECD definition of expenses that are applicably not part of the businesses.
The only real variance you see there is when there is significant restructuring and severance that applies to activities that are outside of the businesses. Litigation, of course, varies, but it's litigation that is not specifically pertaining to events or matters that are inside the businesses. Non-controlling interests is really the reversal at this level of the DWS minorities that we report in the segment. Others, lots of other things, as you can imagine should kind of clear out relatively neutral. I hope that's helpful for your modeling.
Yes. Thank you.
Next question is from Amit Goel from Barclays. Please go ahead.
Hi, thank you. I've got a kind of question on the FICC business and on the Investment bank. Clearly, there are a few headlines in the press in the last few days about various kind of compensation-related and timing discussions. When I look at how headcount evolves over the course of the year, I see kind of last year there was about a 5% drop into Q2. I'm just kind of curious how you're looking to manage that this year as we kind of go into Q2 and what we should expect. Are you expecting the same type of attrition as you had last year, or perhaps a bit less or a bit more? How are you trying to motivate and continue to drive the employees to get that top line to continue to tick over? Thank you.
Well, thank you. First of all, the attrition in 2019 was actually better than in 2018. We improved. I think one reason why we improved, and we said it on the investor day, is yes, that we took some harsh and tough decisions, but that stands for nothing else than corporate clarity. People know in which direction we go, and actually they appreciate and support that clarity and that clear way and path ahead. When it comes to compensation this year, we obviously will not yet provide details. That is for a later time. We are steering that we will see a reduction in overall variable comp. The way we have done it, we have clearly seen and looked at the operating performance and the adjusted performance James was outlining before.
We have done everything in order to appreciate and acknowledge the performance, in particular of those colleagues and those businesses, which from an operational point of view have reached their targets. In this regard, it is very much about differentiation. Let me also say, and I've worked here for 30 years, it's also very much about motivation and day-to-day leadership. I do think that we have a management team which has clearly adopted that. We have a very close communication and cooperation with our teams, and by differentiating and clearly looking for the operational performance and balancing the compensation around this one, I'm confident that we will not see a higher attrition in 2020 versus 2019.
Thank you.
Next question is from Anke Reingen from RBC. Please go ahead.
Yeah. Thank you very much for taking my question. Firstly, I wanted to come back to the BNP transaction. Can you just please confirm that it's already out of your risk-weighted assets and leverage exposure? As a result of the different impact on the costs, should we basically expect the cost base at EUR 19.9 billion rather than the EUR 19.5 billion but adjusted EUR 19.5 billion just to understand what number I should be looking for? Then the Investment banking risk-weighted assets. I mean, obviously that came down quite materially in Q4 outside of the operational risk-weighted assets.
Do you think the Q4 level is just seasonally lower, and we should expect it to pick up again? Or is there any structural change outside the op risk-weighted assets that should keep the level lower? Just one follow-up question, please. You made comments about your revenue assumption for most of the divisions.
For the Private Client division, is it fair to summarize you expect revenues to broadly stay flat, or is the assumption actually it can do better? Thank you very much.
On the BNP Paribas transaction, there is literally immaterial RWA still on our balance sheet for that business, pursuant to a structural feature in the transaction that shifts that to BNP Paribas. We do carry leverage exposure on behalf of BNP Paribas, hence we kind of remove that from our leverage ratio targets. Again, it will be gone by the end of 2021. There is leverage exposure on our balance sheet, a portion of it relating to the Prime Finance business. On the expense side, you are absolutely right. All things equal, we would report EUR 19.9 billion of expenses. We want to stick to our target and not be in a position of moving targets. The EUR 19.5 billion is the number that would be if you added back that revenue recapture. You should be looking for the EUR 19.9 billion in the financial statement disclosure.
In terms of revenue assumptions in the business, I think we gave a reasonably complete outlook. I'm not sure I'd want to add to it. Christian talked to the performance that he's expecting. Obviously, the market conditions and the path of interest rates are important. You've heard us talk about the momentum that we saw late last year, especially in Investment banking and Asset Management. You've heard us talk about the efforts that are underway in the Corporate Bank and Private bank to offset the interest rate headwinds. We think the drivers of growth in those businesses are there. Over time, you'll start to see that underlying performance come through.
The next question is from the line of Andrew Coombs from Citi. Please go ahead.
Good afternoon. Two questions, please. One on the transformation charges, and then one just on deposit charging. Firstly, on the transformation charges on slide 11. On software impairments cumulative over 2019 to 2022, I think your original guidance back in the middle of last year was EUR 0.6 billion. They went to EUR 1.2 billion in December, and now stand at EUR 1.5 billion. I'm just interested what's driving the incremental increase there, and just wanted to reaffirm that that does not impact on your capital position. My second question on deposit charging. Back at the Investor Day, you said EUR 20 billion had already been implemented. There were EUR 110 billion of additional deposits under review.
Can you just update us on that situation, please, and whether the EUR 100 million incremental revenues is still the right guidance, and how much of that's already been booked in the 4Q run rate? Thank you.
Sure, Andrew. Thank you for the questions. Look, on the software IT, what has changed is the deeper and deeper we got into what we think of as the application estate within our technology, under Bernd Leukert's leadership and his CIOs, the more we saw that we could take out of the company as we significantly simplify that estate. We see this as a benefit to the company. To the extent that this is the area where there's an expense miss on the total non-interest expense line, we see that as at worst neutral, frankly positive, both in simplifying the company and providing a benefit to future expenses. You're absolutely right. That number walked up over time, and it was based on getting deeper and deeper into our software estate. I would say that the pricing of deposits, we are working on it.
In that exhibit from the Investor Deep Dive, we wanted to describe to you what the addressable balances might be. Obviously, it's a long way to go from EUR 20 billion to EUR 110 billion, and that's a lot of client discussions. Many of our new pricing agreements are now effective essentially January 1, 2020, hence our view that you'll see an increasing amount. I think the guidance we provided for both Corporate Bank and Private bank back in December still applies in terms of what we expect to see from deposit charging. As Stefan and also the Private bank team, I think, said at the time, we've been favorably surprised by the quality of the client dialogue in terms of turning that from a negative conversation about handing them a check to a positive conversation about how they can optimize their liquidity use.
We also, from just a deposit outflow perspective, I think, continue to feel we're outperforming our assumptions. Frankly, again, if you like, an upside surprise in this process is we've actually had improvements in what we think of as the liquidity quality of the deposit base that remains with us.
Early days, but frankly, good signs across the businesses of the impact there.
Thank you for that. Can I just confirm the software IT impairment doesn't impact on capital?
Sorry. Yes, absolutely. It does not. It's already disregarded from CET1 capital, so no impact.
Right. Thank you very much.
Next question is from Jeremy Sigee from Exane BNP Paribas. Please go ahead.
Hi there. Just a couple of follow-ups, please. One was if you can talk a bit more about the advisory revenues within the Investment bank, which were quite a lot weaker in the quarter, as you touched on. As they were for a number of people, we know that completions were lower. Other firms have talked about pipelines being a lot stronger coming into this year, and I wondered if you can sort of echo a similar sort of picture that gives you confidence for why that revenue stream remains intact and viable. If you could talk about that a bit more, that would be great. The second question was really just continuing on the question around the EUR 19.5 billion or EUR 19.9 billion cost target. Are there any dependencies in hitting that number?
Are there any events that you need to happen to do it, whether it's agreeing more headcount cuts or getting a step down in CRU costs or anything like that?
Let me take the first question. You're right. We have seen a kind of a softness in the fourth quarter, has nothing to do that this is something structural. If we look at our pipeline, if I look at the market response and also the mandates which we get, I do think that we have a very stable franchise here, and where I'm not nervous that the kind of partial softness we have seen in the fourth quarter is a directional guidance for 2020. We also have very strong performances in the origination advisory business. In particular, we have been very happy with the performance of our debt origination, both in the investment grade as well as in the high yield. We cannot see that this is stopping. This is, in our view, a core business to Deutsche Bank, which we obviously will pursue.
We are confident that we will show satisfactory results and revenues going forward.
On the 19.5 cost target, I would just say many things need to continue to happen across the organization as we continue on our cost discipline, and this sort of run rate decline that we've exhibited for the past eight quarters. I will say, with the appointment of Fabrizio Campelli as Chief Transformation Officer, we get a new partner at the Management Board table, along with all of the business leadership and Frank Kuhnke focusing on a variety of issues, but importantly, cost management. In many respects, it is a role that includes helping on the implementation of cost measures, and we've identified many cost measures across the organization, which we will then partner closely, that is finance with the Transformation Organization under Fabrizio to execute on.
Thank you.
The last question comes from Stuart Graham from Autonomous Research LLP. Please go ahead.
Hi. Thanks for taking my question. I had two, please. First on FICC. Christian, you talk of having stabilized the franchise, yet I see ongoing market share losses. From your answer to Jernej's question, maybe I shouldn't be worried about FICC market share losses at this stage. I guess my question is how are you defining that stabilization, please? The second question is you talked back in July about the benefits from lower funding costs. I think the figure out to 2022 was something like EUR 500 million or so. How much of that's already been achieved at the Q4 stage, what do you expect for 2020, please? Thank you.
Thanks, Stuart. I said to the question from Jernej that obviously the U.S. competitors have shown very strong FICC numbers in the fourth quarter. There is no doubt. I said that if we compare quarter-over-quarter, fourth quarter over the third quarter, I think we can compare ourselves well with our competitors, number one. Number two, I really think that we should wait for all financial institutions coming in now, also our European peers, to finally validate where we stand from a market share. Number three, my positive comments on the fixed income is that it's not only on the credit business, but that across our offerings we see a momentum. The nice thing, Stuart, about this one is on the back of client flow. Clients are re-engaging. Clients reach out to us.
The handover between Corporate Bank and Investment bank is working very well in all kind of segments, be it the rates business or the FX business. Hence, we think it's a solid foundation with the first time a year-over-year growth. Hence, we feel positive about the momentum and the underlying growth we see. Again, let's wait for all the peers coming in, and then we can see finally on the market shares.
How do you know if that's your value add or just the market environment? I get it that both of them are good, obviously one's better than the other.
Well, I can also see it with the number of clients coming in reengaging with us. That is always a good signal that we had through the years, clients who did not engage with us who are clearly coming back. That is not only the favorable market, which I agree, we had more favorable markets in the fourth quarter 2019 than in 2018, no doubt at all. I also said that in the media conference. With clients coming back and being very active with us, that is, for me, one of the major positive signals.
Okay.
Stuart, on the funding costs, one thing I'd point you to is the net interest margin disclosure that we now provide in the financial data supplement. I can't give you a Euro number of how much of the EUR 500 million has come through at this point off the top of my head. There are elements of the things we've been talking about for a while that are entering into the margin and helping support the margin. You'll see that the history is of an increasing margin. That's obviously difficult to sustain in the interest rate environment that we're in. I think the various items, whether it was putting together an investment portfolio in treasury, significant de-leveraging in the form of pay-down of long-term debt that has already flown in at least in part. It sort of bled in, if you like, to the P&L over time.
Some of the other things that we've talked about, like taking advantage of greater hedging tools to manage our interest rate risk and also sort of balance sheet productivity, that's really only just getting started. I would see over time a very slow build to that number in 2022. Hopefully helps us sustain a margin relative to what are otherwise typically pressures on the margin, in addition to loan growth and some of the other structural improvements on the balance sheet.
Okay. Thank you.
There are no further questions at this time, and I would like to hand back to James Rivett for any closing comments. Please go ahead.
Thank you very much for your time. We can see there are some more questions. The IR team will reach out to you in due course.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.