entire - Deutsche Bank Annual Report 2012

Deutsche Bank 05 – Supplementary Information 404
Financial Report 2010 Glossary
FICO Scores
FICO is an acronym for the Fair Isaac
Corporation, the creators of the FICO score.
Using mathematical models, the FICO
score takes into account various factors in
each of these five areas to determine credit
risk: Payment history, current level of indebtedness,
types of credit used, length of
credit history, and new credit. A FICO score
will range between 300 and 850. In general,
a FICO score above 650 indicates that the
individual has a very good credit history. For
scores below 620 it will often be more difficult
to obtain financing at a favorable rate.
Futures
Forward contracts standardized with respect
to quantity, quality and delivery date,
in which an instrument traded on the money,
capital, precious metal or foreign exchange
markets, is to be delivered or received at an
agreed price at a certain future time. Cash
settlement is often stipulated for such contracts
(e.g. futures based on equity indices)
to meet the obligation (instead of delivery or
receipt of securities).
G
German Solvency Regulation
German regulation governing the capital
adequacy of institutions, groups of institutions
and financial holding groups which,
adopted the revised capital framework of
the Basel Committee from 2004, widely
referred to as Basel II, into German law.
Goodwill
An asset representing the future economic
benefits from assets acquired in a business
combination that are not individually
identifiable. Goodwill is recognized as the
positive excess amount between the fair
values of the consideration transferred by
the acquirer and the identifiable assets and
liabilities of the acquired business.
H
Hedge Accounting
Financial reporting of agreements in a
hedging relationship which is subject to
certain conditions. The relationship between
the agreements is based on opposite terms
which cause financial risks that can be
compensated in whole or part due to the
terms of these agreements. One agreement
is usually referred to as underlying transaction
– i.e. the contract that causes the risk –
the other is referred to as hedging contract,
which mitigates the risk.
Hedge Fund
A fund whose investors are generally institutions
and wealthy individuals. Hedge funds
are part of alternative investments. They
are subject to less stringent or no regulatory
obligations and can therefore employ strategies
which mutual funds are not permitted
to use, e.g. strategies involving short selling,
leveraging and derivatives. Hedge funds
offer chances for high profits but also bear
the risk of losing invested capital, thus their
returns are uncorrelated with traditional
investment returns.
High Yield Debt
Fixed income securities where the issuer
has a low credit rating. They offer a higher
return than investment-grade securities but
also entail greater risks.
I
IFRS (International Financial Reporting
Standards)/previously IAS (International
Accounting Standards)
Financial Reporting Rules of the International
Accounting Standards Board designed
to ensure globally transparent and
comparable accounting and disclosure.
Main objective is to present information that
is useful in making economic decisions,
mainly for investors.
Investment Banking
Generic term for capital market-oriented
business. This includes primarily the issuance
and trading of securities and their
derivatives, interest and currency management,
corporate finance, M&A advisory,
structured finance and private equity.
L
Leveraged Financing
Financing of an investment which typically
includes a very high amount of external
debt (leverage) in the purchase price
financing.
Leverage Ratio
The ratio of total assets to equity.
Liquidity Risk
The risk arising from the Group’s potential
inability to meet all payment obligations
when they come due or only being able to
meet these obligations at excessive costs.
Loan-to-value (LTV) Ratios
Ratio of amount of loan to value of property.
Loss Given Default (LGD)
The likely loss intensity in case of a counterparty
default. Its estimation represents,
expressed as a percentage, the part of the
exposure that cannot be recovered in a
default event and therefore captures the
severity of a loss.
M
Market Risk
The risk that arises from the uncertainty
concerning changes in market prices and
rates (including interest rates, equity prices,
foreign exchange rates and commodity
prices), the correlations among them and
their levels of volatility.
Mark-to-market Valuation
Valuation at current market prices. Applies,
for instance, to trading activities.