entire - Deutsche Bank Annual Report 2012

Deutsche Bank 05 – Supplementary Information 402
Financial Report 2010 Glossary
Glossary
A
Alternative A (Alt-A)
Used as a term to categorize U.S. mortgages
representing loans with a higher
expectation of risk than prime but still
lower than subprime. In order to determine
Alt-A industry standards including
FICO scores and loan-to-value ratios
are applied.
Alternative Assets/Investments
Direct investments in private equity,
venture capital, mezzanine capital, real
estate capital investments and investments
in leveraged buyout funds, venture capital
funds and hedge funds.
Asset-backed Securities
Particular type of securitized payment receivables
in the form of tradable securities. These
securities are created by the repackaging of
certain financial assets ( securitization).
Auction Rate Securities
Debt instrument with a long-term nominal
maturity (usually 20 to 30 years) with a
variable interest rate. The interest rate is
regularly reset through an auction.
Average Active Equity
The Group calculates active equity to facilitate
comparison to its peers. The Group
uses average active equity to calculate
several ratios. However, active equity is not
a measure provided for in IFRS and
therefore the Group’s ratios based on average
active equity should not be compared
to other companies’ ratios without considering
the differences in the calculation. The
items for which the average shareholders’
equity is adjusted are average unrealized
net gains on assets available for sale,
average fair value adjustments on
cash flow hedges (both components net of
applicable taxes), as well as average dividends,
for which a proposal is accrued on a
quarterly basis and for which payments
occur once a year following the approval by
the annual general meeting.
B
Backtesting
A procedure used to verify the predictive
power of the value-at-risk calculations
involving the comparison of hypothetical
daily profits and losses under the buy- andhold
assumption with the estimates from the
value-at-risk model.
Basel II
Recommendations for international capital
adequacy standards adopted by the Basel
Committee on Banking Supervision, widely
referred to as Basel II capital framework,
which aligns capital requirements more
closely with the underlying risks.
Basel III
Revision of the international capital adequacy
standards adopted by the Basel
Committee on Banking Supervision, which
was endorsed by the G-20 summit in November
2010. Aim of the revision is to
strengthen global capital and liquidity rules
promoting a more resiliant banking sector.
During a transition period until 2019 the
revised standards not only increase the
minimum capital requirements for banks but
also introduce an additional capital conservation
buffer as well as a bank specific
countercyclical capital buffer. Basel III will
also introduce an internationally harmonized
liquidity framework for the first time with
strict short- and long-term ratios. The new
rules will be adopted into German law by
means of the German Solvency Regulation.
Book Value per Basic Share
Outstanding
Book value per basic share outstanding is
defined as shareholders’ equity divided by
the number of basic shares outstanding
(both at period end).
Broker/Brokerage
Brokers accept orders to buy and sell securities
from banks and private investors and
execute them on behalf of the customer. For
this activity, the broker usually receives a
commission.
Business Combination
A transaction in which an acquirer obtains
control of a business. This includes the
acquisition of stocks of a company or its net
assets, and may also involve the expansion
of an existing equity interest ( step acquisitions).
Often present in a business combination
is the recognition of goodwill.
Business Risk
Risk that arises from potential changes in
general business conditions, such as market
environment, client behavior and technological
progress, which can affect the
Group’s earnings if the Group is unable to
adjust quickly to them.
Buy-out
Purchase (in full or in part) of a company or
specific corporate activities.
C
Cash Management
Refers to the management of liquid assets
in dollars, euro and other currencies for
companies and financial institutions to
optimize financial transactions.
Clearing
The process of transmitting, reconciling and,
in some cases, confirming payment orders.
Collateralized Debt Obligations (CDOs)
Asset-backed securities based on a
portfolio of assets that can include bonds,
loans or derivatives.
Commercial Mortgage-backed Securities
(CMBS)
Mortgage-backed securities (MBS), which
are backed by commercial mortgage loans.
Compensation Ratio
Compensation and benefits as a percentage
of total net revenues, which is defined
as net interest income before provision for
credit losses plus noninterest income.