A

ADR, or American Depository Receipt

Depository receipts for shares of non-US-based companies that are traded in the US.

Asset Management

Professional management, including investment funds, of assets of private individuals and institutions aimed at the realisation of an optimal investment result.

AuA, or Assets under Administration

Defined as all clients assets managed by or deposited with a financial services firm for investment purposes, also including wholesale client assets derived from custody, correspondent banking and/or Global Transaction Services.

AuM, or Assets under Management

Defined as all client assets managed by or deposited with a financial services firm for investment purposes.

B

BIS

Bank for International Settlements set up in 1930 with its head office in Basel. Its principal tasks are to promote cooperation between central banks and to assist in international payments. The BIS also issues recommendations to banks and regulatory authorities in the fields of risk management, capital adequacy and the provision of information on financial derivatives.

BIS Tier 1 ratio

Core capital of the bank expressed as a percentage of total risk-weighted assets. The minimum standard set by the BIS and required by the Dutch central bank is 4%.

BIS Total Capital ratio

Total capital of the bank expressed as a percentage of total risk-weighted assets. The minimum standard set by the BIS and required by the Dutch central bank is 8%.

Bookrunner

Head of securities syndicate responsible for arranging the subscription, allotment and after-market for all syndicate members.

C

Capital adequacy

Measure of a company's financial strength, often expressed in equity as a percentage of balance sheet total or - for banks - in the BIS ratio.

Closed-end Fund

A fund that issues shares in a fashion similar to other corporations. The numbers of shares outstanding is relatively fixed unlike open-end funds which tend to have variable shares outstanding.

Commercial paper

Debt instrument issued by large companies with a term of 1 to 12 months.

Convertible Bond

A credit instrument which is convertible into equity. Usually, this conversion is done at the discretion and exercise of the bondholder and not the corporation.

Corporate Bond

Obligations issued by corporations.

Corporate Governance

ABN AMRO views corporate governance as the way it conducts relations between shareholders, Supervisory Board, Managing Board and employees. The Dutch model of corporate governance is characterised by a two-tier system, comprising one body composed solely of non-executive directors (the Supervisory Board) and one body composed solely of management (the Managing Board).

Corporate finance

Activities in fields of mergers, acquisitions, privatisations, advisory services and origination.

Credit rating

Assessment of a credit rating agency expressed in a combination of letters and/or figures indicating the creditworthiness of a country, company or institution.

Currency risk

Price risk relating to exchange rates fluctuations.

D

Derivatives

Financial instruments whose value is derived from the price of one or several underlying assets (e.g. currencies, securities, indexes, etc).

E

Economic profit

Net profit after tax less risk-adjusted cost of capital.

F

Forward exchange contract

Contract where the buyer purchased currency at a predetermined exchange rate on a fixed date.

Fundamental Analysis

The research approach that considers economic and monetary factors.

G

GAAP

Generally accepted accounting principles.

Goodwill

Power of an established business to earn extra profits; it is an intangible asset the value of which is related to the advantage of an established business with respect to market position and/or know-how and organisation.

H

Hedge

Is the act of protecting a position. Hedges can be either Long or Short. Hedges are often done with derivative products.

I

Interest rate risk

Degree to which fluctuations in long and short-term interest rates have a negative influence on the bank's result.

J

Joint venture

Cooperative venture between two or more separate legal entities.

Junk Bond

Refer to non-investment grade debt securities. Sometimes, these issues are called high yield securities. These securities have credit ratings below Baa/BBB-.

L

Loan impairments for losses

Balance sheet provision held against the total of non-performing loans. The loan impairment is increased by the annual provisions and decreased by write-downs (net of recoveries) on non-performing loans.

M

Market risk

Risk relating to fluctuations in stock exchange prices and/or interest rates.

N

Net asset value per share

Value of all the assets of a company less loan capital and divided by the number of shares outstanding.

Non-performing loans

Loans classified as doubtful or a loss.

O

Open-end Fund

Is a mutual fund that offers and redeems its shares on a daily basis.

Options (shares and currencies)

Contractual right to buy (call option) or sell (put option) a specified amount of underlying shares or currency at a fixed price during a specified period or on a specified date.

P

Preference share

Share that receives a fixed rate of dividend prior to ordinary shares.

Private banking

Dedicated to the development and execution of the policy in relation to high net-worth clients and small and medium-sized institutional investors.

Provision for loan loss

Charge to income to cover possible losses on non-performing loans.

R

RWA, or Risk-weighted assets

Total assets calculated on the basis of the risks relating to the various balance sheet terms.

Retail Market

Market for private customers and clients in small- and medium entreprises business. As opposed to the wholesale market.

S

Scenario analysis

Method used to measure and manage the interest rate risk, for instance. Using various assumptions about future interest rate movements, net interest revenue is estimated.

Securitisation

Restructuring credits in form of marketable securities.

Short Selling

Is the act by which a speculator or risk manager sells an instrument at a high price with the intent of purchasing it lower.

T

TRS, or Total return to shareholders

Share price appreciation plus dividend yield.

Technical Analysis

Is the study of market behavior which tries to discern patterns which enhance position taking. Among some of the tools and indicators used are: charts, volume, open interest, put to call ratios, moving averages, and oscillators.

Treasury

Department responsible for all money market and currency operations.

Triple A

Highest credit rating as given out by the rating agencies Moody's and Standard & Poor’s. A Triple A (AAA)

Trust business

Assets are entrusted to a trustee who is responsible for the management of these assets.

V

Venture capital

Investment in risk capital of business for the account and at the risk of the bank.

Volatility

Statistical measure for the degree to which market rates fluctuate over time.