English

Bonds issued primarily in Great Britain, Spain, Ireland and the U.S. which are secured – by liability of the issuing institution as well as – cover by a special pool of collateral consisting of…

A special option strategy as a combination of buying securities with an option. The writer purchases securities, such as a certain number of shares, and sells a call option on this underlying (the selling…

In general, securities with double protection for the investor, namely – through the liability of the issuing institution and – coverage by a security pool. – In Germany, covered bonds (Pfandbriefe), claims on the…

In general, securities with double protection for the investor, namely – through liability of the issuing institution and – coverage by a security pool. – In Germany, covered bonds (Pfandbriefe), claims on the state…

Purchase of an underlying asset (here mainly: share, currency) with simultaneous writing of a call option on the same reference base. – The prospect of profit in such a transaction is limited to the…

Purchase of an underlying asset (here mainly: share, currency) with simultaneous writing of a call option on the same reference base. – The prospect of profit in such a transaction is limited to the…

A writer of a call who holds a long position in the underlying asset (the covered writer owns the underlying asset, and makes money from the premium paid by other investors who purchase the…

A writer of a call who holds a long position in the underlying asset (the covered writer owns the underlying asset, and makes money from the premium paid by other investors who purchase the…

Operation to secure a contractual forward commitment (the purchase of any asset that had previously been sold short; in doing so, this purchase will close out the position). – The forced settlement of an…

Earlier tax, assessed according to the number of cows. – The tax paid to the landowner for the right to graze cows on his land (agistment, grazing right; to agist = to take cattle…

Unless otherwise defined, on the commodity exchange, the purchase of crude oil futures and the simultaneous sale of gasoline futures or fuel oil futures (in energy futures, the simultaneous purchase of crude oil futures…

Former – and in some places still existing today – charge for the use of a public hoist machine to load goods primarily from land transport onto a ship or vice versa. – In…

Unexpected price collapse in a market – and in synchronization between the individual items in this submarket -, especially in the financial market and here again in the stock market. – In the spring…

In jargon, for a senior staff member in an institute and generally in an entity, who initiated a new project – mostly related to a controversial and labor-intensive undertaking. However, after the whole thing…

In jargon, for a senior staff member in an institute and generally in an entity, who initiated a new project – mostly related to a controversial and labor-intensive undertaking. However, after the whole thing…

Unless otherwise defined, this refers to the Capital Requirements Directive (CRD) and the Capital Requirements Regulations (CRR) in the wake of Basel III. – See capital adequacy ratio, regulatory, Capital Requirements Directive Transposition Group,…

In ECB statistics, all monetary financial institutions. They comprise the – central banks, – credit institutions as defined in EU Community law, and – all other resident financial institutions whose business is to –…

The elaboration and/or market launch of new financial products in the course of financial engineering. – In older financial terminology, also used for the issuance of state papers. – See investment, innovative, behavioral finance,…

Accounting practices that differ from standard accounting practices; they are characterized by unnecessary complication and the use of unusual ways of valuating income, assets or liabilities; broadly speaking: fraudulent financial reporting. – See disclosures,…

In the very broad sense of aggregate money demand theory, all tradable debt instruments and then usually set off against money (money and credit). – In macroeconomic terms, the sum of all liabilities to…

A bank’s policy of taking appropriate measures to eliminate individual risks that restrict its business activities. – Such significant individual risks are, above all, – dependence within the framework of a relationship bank link…

Unless otherwise defined, the fact that when banks lend to less viable companies, they can lend less, or lend on less favorable terms, to companies that are more profitable. – The bad companies suck…

to enquire (credit [enquiry] agency): A company that commercially obtains information about personal and business circumstances and, in particular, assesses creditworthiness. – A special branch of this business is skiptracing: the work of collectors…

Unless otherwise defined, the assessment of a customer’s creditworthiness by the bank. This is an inherent responsibility of the institutions, which they have to perform in a competitive environment. The proposed transfer of credit…

Term from German budget law, widely explained in Section 18 of the Federal Budget Code. The key point is the provision from Article 115 of the Basic Law, according to which revenues from loans…

The credit balance of an account: credits exceeding debits, in older writing often just credits. – Another term for assets. – See M1. Attention: The financial encyclopedia is protected by copyright and may only…

Money accumulated with a building society for the purpose of realizing a construction project. – If a building society savings contract is mature for allocation and the building society saver does not accept the…

The demand that institutions should limit themselves to the management and control of money and assets, but should not be allowed to grant loans. – Such a demand, put forward by anyone – and…

Services operating mainly on the Internet that bring together the supply of and demand for loans. If the service is purely an intermediary, no license is required for such a business. However, the German…

In the case of a bank, the total volume of loans. – At the ECB, the granting of loans against appropriate collateral. – See loans, consumer credit, procyclicality, SSS assessment framework, standard loans. Attention:…

The ability of a public or private borrower, whether domestic or foreign, to repay a loan in accordance with the terms of the loan agreement; sometimes also referred to as borrowing power and creditworthiness.…

a card for which the cardholder has used a The card is issued in the form of a delayed debit card, where the service is not charged until after the card has been used,…

In the USA, every citizen had an average of four credit cards in the fall of 2008. Cards were also issued generously to low-income customers with low credit ratings. In the wake of the…

The amount up to which the holder of a credit card is entitled to make purchases with that card (the amount wherein a credit card holder is entitled to spend). This limit can be…

A measure taken by the central bank to restrict credit in a currency area. This can be done in detail by: – ordering banks to reduce the total amount of loans they grant, i.e.…

Unless otherwise defined, this refers to the transmission of a central bank measure to the lending behavior of banks. – A distinction is often made between the bank lending channel, where institution-specific changes in…

A term used in financial journalism to refer to either – a central bank’s policy of restricting or increasing the money supply or – the business policy of institutions to grant loans more or…

In a company or institution, a function that monitors accounts receivable and assesses the collectibility of due receivables. – See bank customer profile, factoring, fact sheet, customer dossier, liquidity management, liability management, risk management.…

The assistance provided by a professional to a household that has fallen into high debt (helping consumers to manage and control their debt load. One of the key tasks of credit counseling is to…

The assistance provided by a professional to a household that has fallen into high debt (helping consumers to manage and control their debt load. One of the key tasks of credit counseling is to…

The fact that certain companies or industries are cut off from the supply of credit by banks. The term became widespread in connection with Basel II, and here primarily in reference to SMEs. –…

Condition in which – an individual company or – the economy as a whole is provided with loans by banks – only very hesitantly (quite hesitant) or – not at all (a general economic…

The empirical fact that aggregate demand for loans is not uniform over time but is subject to sinusoidal oscillations, which are usually dependent on the business cycle (the sequence begins at a certain period…

The transfer of a credit risk to a guarantor in exchange for a correspondingly assessed premium (one party in the swap is a lender who faces credit risk from a third party, and the…

Statistical measure reflecting the premiums actually agreed on the market for CDS, broken down by individual market segments. Since mid-2004, the Dow Jones iTraxx index family has gained in importance. It comprises regional and…

At the end of 2011, banks in the EMU had issued credit default swap insurance worth EUR 178 billion on government bonds issued by the five weak EMU members Portugal, Italy, Ireland, Greece and…

CDSs were considered to be at least partly to blame for the subprime crisis and the financial crisis that followed it. – In spring 2009, the International Swaps and Derivates Association therefore published precise…

If a debtor’s credit rating deteriorates, the value of a CDS rises. Market participants who use CDSs to bet on rising prices therefore have an incentive to badmouth the debtor by spreading unfavorable rumors.…

credit default swap premium differentials): The yield spreads of nominally equal securities, in central bank reports usually referring to government bonds. CDS spreads of government bonds are considered in cross-country comparisons – also within…

A financial product introduced in 1994 to market default risks of bonds or loans (a bilateral over-the-counter contract in which the seller agrees to make a payment to the buyer in the event of…

Transactions involving a credit default swap among counterparties that do not own the underlying asset. Such transactions have been widely prohibited since July 2010. – Cf. 2010 BaFin Annual Report, p. 185. Attention: The…

A credit default swap that relates to the credit relationship with only one debtor. – Here, the protection buyer transfers the reference asset, such as bonds or book credits, to the protection seller (fixed…

In the broadest sense, any agreement by which the credit risk of a loan is shifted to a third party (any agreement by which a credit event such as a default or bankruptcy of…

A loan granted by a bank primarily to stockholding importers to enable them to pay the freight charges demanded by the carrier immediately. After the sale of the stored goods, the stockholder repays the…

Generally, measures taken with the aim of reducing credit risk and improving the credit rating of a security. – A contractual agreement under which the bank retains or assumes a securitization position itself. It…

The provision of additional collateral for – a loan in general and in particular – a special purpose entity with the main aim of improving its rating and thereby reducing the interest payment to…

Generally, a loss event in which a debtor is unable to meet the creditor’s claims arising from the granting of a loan (an occurrence such as a debt default or bankruptcy that will affect…

A term that emerged around 2002 to describe a specialized service provider that reviews the mass of small-sized loan applications and often makes a (preliminary) decision on whether to grant a loan. – Credit…

Noticeable pauses in bank lending, measured against a long-term trend. Such breaks are considered a measure of leverage for the economy as a whole (credit gaps provide a measure of leverage for the economy…

The rules applicable within a bank for granting loans. These mainly consist of written or unwritten rules, in particular with regard to – the type of loan an institution considers desirable and not desirable,…

Pursuant to Section 53b (1) KWG, credit institutions may, within the framework of the EU freedom to provide services in Germany may also operate across borders without a local branch. In this case, supervision…

The assignment of counterparty risk to an insurer in return for the payment of a premium. – Worldwide, the number of such policies is minimal because – the insurance industry, i.e. insurance and reinsurance…

Unless otherwise defined, measures taken by the central bank to limit the volume of credit in a currency area. – See credit ceiling. Attention: The financial encyclopedia is protected by copyright and may only…

The credit limit granted to an economic entity by the bank, sometimes also called credit limit and credit facility. Until this limit is reached, loans can be drawn from the bank at any time…

The loss incurred by a bank due to the insolvency of a borrower. The exact amount is only known to the bank after the settlement period. This period can vary depending on the loan…

Losses incurred by banks when granting loans due to the fact that some loans are not repaid at all or only partially. – Banks attempt to hedge such risks by securitization or by using…

An office set up by the German government in spring 2010 for an initial period of two years, to which small and medium-sized enterprises can submit complaints about loan applications rejected by banks. Regional…

A document issued by the seller to the buyer in case the buyer returns the purchased goods. This document specifies all circumstances essential for a possible return (a document issued by a seller to…

Unless otherwise defined, in the broadest sense, money that enters the economic cycle from someone other than the central bank, usually through loans granted by banks to their customers (money that is backed by…

Unless otherwise defined, the total loans granted by a bank to the individual customer groups, broken down under Basel II into – corporates, – government and public sector, – banks, – households, and small…

Unless otherwise defined, this refers to the creditworthiness of a bank’s borrowers as a whole, usually measured by the allowance for doubtful accounts receivable. – See credit risk, credit default swap, investment grade, credit,…

The assessment of the solvency of a business partner based on certain characteristics. – See creditworthiness, reputation, rating, scoring. Attention: The financial encyclopedia is protected by copyright and may only be used for private…

Unless otherwise defined, the assignment to a credit rating category made by a rating agency. A credit rating merely measures the probability of default. However, it should not be confused with a price or…

The publicly announced classification of a company, a fund or a state by major international rating agencies on the basis of a specific, transparent grid. A downgrade means that the debtor has to pay…

Banks that take on very high and/or unusually long-term debt to the central bank have obviously disregarded the Golden Banking Rule. They are considered to be unsound, which leads to a lower classification of…

All measures taken by a debtor to improve its lowered creditworthiness (practice of improving or rehabilitating one’s financial reputation, the creditworthiness) – In the context of securitizations, defined for regulatory purposes as a contractual…

Unless otherwise defined, this refers to the variables requested from banks in the course of the Bank Lending Survey. In addition to the terms and conditions of the loan, these include features such as…

In general, the risk of loss due to unfavorable changes in the creditworthiness of counterparties (customers, suppliers, brokers, insurers). – In the case of a bank, the risk that a counterparty will not be…

Regulatory term for the possibility of recognizing individual collateral, such as credit insurance, in banks’ risk management. Basel II specifies the relevant options in detail. – See assets, illiquid, retrocession, risk transformation, banking, basic…

The risk add-on (risk premium) on a bank’s loans, which depends on the creditworthiness of the respective borrower and is measured in rating classes. An increase in the premium indicates that the risk has…

Supply and demand of placed risk positions by banks, especially in connection with loans in leveraged buyouts and securitizations. Triggered primarily by the subprime crisis, this market has expanded considerably; and the individual instruments…

A risk assessment method used primarily for personal loans, but also for small-scale enterprises (petty traders). In this process, certain characteristics – such as address, age, gender, nationality, marital status, number of children, level…

Purchase of shares not in cash, i.e. against immediate cash payment, but by borrowing, usually from a bank. – In times when loans are available at very low interest rates and at the same…

Unless otherwise defined, this refers to the difference in yield between a corporate fixed-interest bond and a government bond with the same maturity and in the same currency (yield spread between a corporate bond…