INVESTKREDIT BANK AG - Xetra

THE BANK FOR CORPORATES
Glossary
GLOSSARY OF IMPORTANT TECHNICAL TERMS.
Assessment basis according to the Austrian Banking Act (BWG). Total of the riskweighted assets, off-balance-sheet and special
off-balance-sheet items of the banking book, calculated according to the Austrian Banking Act. See Risk assets.
Asset backed securities (ABS). Documentary evidence of payment entitlements in tradable securities. Asset backed securities arise
through the combination of certain financial assets (securitization).
Associates. Enterprises on whose business policy decisive influence can be exercised. They are accounted for under the equity or the
cost method.
Austrian Banking Act (BWG). The Austrian Banking Act, as amended by Federal Law Gazette BGBl. I 97/2001.
Austrian Commercial Code (HGB). The Austrian Commercial Code as amended by Federal Law Gazette BGBl. I 98/2001.
Available for sale. A category of securities that function as a liquidity reserve.
B2B. Business-to-business. E-commerce transactions between corporates.
B2C. Business-to-consumer. E-commerce transactions between corporates and consumers.
Banking book. Includes all items not attributed to the trading book.
Basel II. Shorthand for the New Basel Capital Accord.
BlS capital ratio. Index of internationally active banks for underpinning their credit risks (risk-weighted assets including off-balancesheet
transactions) and market risks with the capital required under banking supervisory regulations (core capital, supplementary
own funds and Tier 3 capital; capital as defined by the Bank for International Settlements – BIS). The minimum standard for the ratio
of equity capital to risk-weighted assets and the market risk items multiplied by the factor of 12.5 is 8%. A minimum standard of 4%
is prescribed for the ratio of core capital to risk-weighted assets.
Capital adequacy costs. Costs per commitment/credit rating arising under capital adequacy requirements. Like standard risk costs,
they are a fixed element in the calculation of margins.
Capital adequacy directive. EU Directive on the appropriate provision of equity capital, in particular with regard to market risks
arising out of the trading activities of banks and securities firms.
Capital market. Market for long-term investment and borrowing of capital, see also Money market.
Capital resources. Capital resources as defined in the Austrian Banking Act comprise paid-in capital, capital generated as well as
differences and minority interests of other shareholders resulting from capital consolidation (= core capital / Tier 1), supplementary
and subordinated capital (Supplementary elements / Tier 2) and reclassified Tier 2 capital (= Tier 3 capital, chiefly short-term subordinated
liabilities).
Cash flow hedge. Microhedge for the protection of cash flows out of balance-sheet items.
Cash flow statement. Calculation and disclosure of flows of payment resources which a bank has generated or consumed in a
financial year out of current business activity, investment activity and financing activity. In addition, the cash holdings at the beginning
of the financial year are compared with the amount at the end of the year.
Categories of equity investments. Equity investments are classified as fully consolidated enterprises if they are controlled and
significant. If they are not controlled but are significantly influenced and are significant, they are accounted for under the equity
method, while all other equity investments are recognized in the balance sheet at the carrying amount and in the income statement
at the dividend distributed.
Clean price. Price of a financial instrument without provision for deferred interest.
Confidence level. Probability that a potential loss lies within a range that is stated as value at risk; the Investkredit Group calculates
it at 99%.
Core capital (Tier 1). Paid-in capital and capital generated as well as differences arising on capital consolidation, less intangible
assets.
Core capital ratio. Core capital divided by the assessment basis (including 12.5 times the trading book requirement).
Corporate Bond. Securitized form of capital market financing.
Corporate lending. Services of Investkredit in the segments of corporate lending, corporate finance, equity investment financing
and consulting as well as asset management.
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