Glossary of terms
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Source
Term
Explanation
BIS-ratio
Regulatory capital divided by risk-weighted assets.
Cash flow
Inflows and outflows of cash and cash equivalents.
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Community banking
As part of a commitment to the community, making a positive impact on local communities by
providing banking products and services.
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Core tier 1 capital
Tier 1 capital exclusive of hybrid capital instruments.
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Core tier 1 ratio
Tier 1 capital exclusive of hybrid capital related to risk-weighted assets.
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Equity capital ratio
Retained earnings and Rabobank Member Certificates related to risk-weighted assets.
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Funding
Funds used by the bank to finance its lending operations.
Gil PS countries
Greece, Ireland, Italy, Portugal and Spain.
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Hybrid capital
Capital including components of equity and liabilities, forming part of the bank's tier 1 capital.
Liquidity ratio
The ratio of the remaining assets to the liabilities that will probably be or still are in the
statement of financial position afterassumed and precisely defined stress scenarios have
materialised.
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Liquidity risk
Liquidity risk is the risk that a bank will not be able to fulfil all its payment and repayment
obligations on time, as well as the risk that it will at some time be unable to fund increases in
assets at a reasonable price, if at all.
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Liquidity
The extent to which a company is able to meet its payment commitments.
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Loan-to-deposit ratio
Ratio of lending to due to customers.
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OECD (or non-OECD)
Organisation for Economic Co-operation and Development. This is a collaborative arrangement
between countries to discuss, examine and coordinate social and economic policies.
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Regulatory capital
Tier 1 and tier 2 capital, being the bank's total capital treated as risk capital by the supervisory
authority.
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Return on equity
Net profit in relation to tier 1 capital as at 31 December of the previous financial year.
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Risk-weighted assets
The assets of a financial institution multiplied by a weighting factor, set by the regulatory
authorities, reflecting the relative risk relating to these assets. The minimum capital requirement
is calculated based on the risk-weighted assets.
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Solvency
A company's ability to meet its obligations.
Under engagement
The active use of investors' rights to influence companies' policies.
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Value at Risk (VaR)
Value at Risk (VatR) is used in calculating market risk, indicating the maximum loss to be
incurred 'overnight' subject to a confidence level of 97.5%. The level of Value at Risk reflects
market developments and the positions taken by the bank itself. As VatR is calculated on the
basis of recent historical data, with the past twelve months being the reference period, VatR
provides an indication under (fairly) normal market conditions.
150 Annual Report 2013 Rabobank Group
