Difference between the credit and debit items of an account, e.g. a current account. A debit balance refers to an account in which liabilities exceed the credit balance, the opposite situation is called a credit balance.
A balance sheet is a summarized, systematic comparison between a company's assets and its capital resources as of a certain reporting date. The assets side of the balance sheet shows how the company has used the capital resources at its disposal. The liabilities side shows where the capital has come from by reporting, on the one hand, details of the company's debts and, on the other hand, the capital attributable to the company's owners.
Bancassurance designates the integration of traditionally separate sectors such as banking insurance and other financial services as well as the result of this process.
Service card issued by the bank to customers for operation of the bank's statement printers and, in conjunction with the personal identification number, for the use of automated teller machines and for cashless payments at commercial electronic cashpoints. Where appropriate, the bank customer card can be used to access other self-service facilities provided by the bank.
The Bank for International Settlements (BIS) is a joint stock corporation headquartered in Basel/Switzerland. It is wholly owned by 55 national central banks. Its tasks comprise the administration of parts of international currency reserves and at the same time the coordination and resolution of problems in international monetary and currency policy. The BIS is therefore considered to be the bank of the world's central banks.
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A bank's contractual obligation to maintain confidentiality on all facts and assessments relating to customers. Bank secrecy is restricted by statutory regulations creating an obligation to provide information, and by the customer himself, who authorises the bank to provide information. In particular, there is an unlimited obligation to provide information relating to criminal proceedings and criminal proceedings concerning tax offences. In the event of death, there are special notification duties towards the decedent's tax office.
The sort code is a number which states a bank's address for certain payment transactions. Through the use of electronic data processing (e.g. OCR-based document sorting, magnetic tape exchange and data transmission) it is intended to facilitate the efficient, fast and fully automated transfer of payments.
Holders of bank customer cards can use these self-service devices at banks to obtain their bank account statements, subject to a corresponding agreement, usually also outside of working hours. For Deutsche Bank customers in Germany, this facility is available at all Deutsche Bank branches throughout the country.
Mostly state supervision of banks with the aim of ensuring that an economy's financial sector continues to function, counteracting problems in the banking sector and avoiding losses to banks' creditors. In Germany, banks are supervised by the Federal Financial Supervisory Authority (BaFin) in cooperation with Deutsche Bundesbank. The legal basis for this is the German Banking Act (KWG).
A banker's acceptance is a bill of exchange drawn on a bank. When the bank adds its acceptance to the bill of exchange, i.e. accepts it, the party drawing the bill of exchange receives an acceptance credit. As a rule, though, the accepting bank stipulates that it should discount the bill so that it earns the discount. The acceptance credit is only granted to firms with first-class creditworthiness. The banker's acceptance gives them access to an excellent and easily disposable form of loan funds.
Contains regulations governing credit institutions' (banks') conduct of business and the supervision of banking. The purposes of the German Banking Act (KWG) are to protect creditors and to safeguard the viability of the banking business.
Paper money issued by central banks, in Germany and other member countries of the European Monetary Union by the European Central Bank (ECB), and which is denominated in a round number of currency units. The banknote is legal tender and not a security. Monetary law provides for no encashment duty. Banknotes, therefore, do not entail a right, but only constitute value. In addition to banknotes, coins are also in circulation.
The interest rate for savings deposits with a statutory period of notice (savings book). The basic savings rate is the benchmark for all other savings interest rates, depending on the type of investment.
General term for one-hundredth of one per cent (1 BP = 0.01 %). Used to designate differences in returns, prices, market prices, etc. A difference of 52 basis points would therefore mean a difference of 0.52 percentage points.
Combination of the purchase of a put option with a higher strike price and the sale of a put option with a lower strike price or of the purchase of a call option with a higher strike price and the sale of a call option with a lower strike price. The combined options must be identical in terms of underlying asset and maturity. This construction can be used for a (restricted) hedge against falling prices of the underlying asset. The opportunities and risks in these combinations are limited.
This is a stock or bond payable to the person possessing it, i.e. its rights (interest, redemption) are not tied to a certain (specifically named) person. In Germany, this is the most common form of security. Bearer shares or bonds can be freely sold, given away, bequeathed or otherwise disposed of without meeting any formal requirements. Proof of entitlement is not required. Ease of handling makes bearer instruments particularly suitable for stock exchange dealings.
In asset management, a benchmark is a type of yardstick used to measure how the value of a portfolio has developed. Bond or share indices are often used as benchmarks. In active portfolio management, portfolio managers try to outperform or "beat" the relevant benchmark.
Beta (beta factor) states the extent to which the price of a share follows the performance of an index - i.e. whether the share is outperforming or underperforming the market. A share with a beta of more (less) than one reacts overproportionally (underproportionally) to changes in the index. With a beta factor of 1.5, a rise (fall) of 10 percent in the index would lead to a rise (fall) of 15 percent in the share price; with a beta of 0.8, the rise (fall) in the share price would be lower at 8 percent than the change in the index. In a bull market, shares with a beta of more than one offer overproportional profit opportunities; in a bear market, shares with a beta of less than one promise smaller losses. It is assumed here that the beta factor of the previous period will remain valid in future.
The "Bank Identifier Code" (BIC) is an internationally standardized bank code used for the clear identification of financial institutions. It is used worldwide in cross-border payments and in the international exchange of messages between banks.
In securities trading this is generally understood to be the highest price at which a market participant is willing to buy. In Germany the price addendum G stand for bid (demand), meaning that despite demand for the paper, no seller was found at the given price. Opposite: ask price.
Difference between the best bid price and the best ask price for a security at any given time. The bid-ask spread shows the extent to which available bid and ask offers vary. The lower the spread, the greater the consensus between participants with respect to the value of the share in question. Narrow spreads represent a high degree of market liquidity and low transaction costs.
The drawn bill of exchange, or draft, is an order by which the drawer instructs the debtor (drawee), without stating the reason for the debt, to pay a fixed amount of money to the payee specified in the bill of exchange or to his order, whereby the drawer is liable for acceptance and redemption. In contrast, the negotiable bill of exchange (promissory note) is an undertaking to pay by which the drawer, without stating the reason for the debt, himself undertakes to pay a fixed amount of money to the payee specified in the bill of exchange or to his order. The rights represented by a bill of exchange can only be claimed by a person who can prove his right of ownership of the document.
Mathematical formula for pricing options and warrants, named after the American economists Fischer Black and Myron Scholes. The formula integrates the five most important factors that influence the price of an option: share price, strike price, remaining maturity, interest rate and volatility.
Any larger (not precisely defined) amount of the shares of a specific company in the ownership of an individual person or another company. The purchase or sale of a block of shares - mostly over the counter - is called a block trade.
A bank with strong capital resources acquires a substantial equity position in a listed company at a fixed price from the seller and tries to place the securities with investors as quickly as possible. Block trades permit the fast monetization of large shareholdings. The shares are only offered to institutional investors. Placement is therefore possible without the need for a prospectus and with the simultaneous reduction of the risk of influencing the market price over the long term.
Minority stake in a company that can be used to prevent important management decisions, e.g. changes to a company's articles of association. For joint stock companies, the blocking stake is 25%.
A stock market term used worldwide for the shares of high-turnover joint stock corporations with considerable market capitalizations. As a rule, these are the shares of large, international, well-known and highly reputed companies with strong creditworthiness. Blue chip shares are listed worldwide on the principal stock exchanges. The development of their prices is often taken as the basis for calculating indices. Blue chips are included, for example, in the DAX®, the Euro Stoxx 50 and the Dow Jones Industrial Average.
The Bobl future is a standardized futures contract on a medium-term note of the Federal Republic of Germany. The Bobl future is traded on the Eurex. The basis of the contract is a notional instrument, calculated on a basket of deliverable notes, with a coupon of six percent. The residual term to maturity of the deliverable note is between 4.5 and 5.5 years. The contract value is € 100,000.
A fixed-income security that certifies the right to purchase shares through a warrant that can be separated from the bond. The shares can be drawn at previously specified conditions by presenting the warrant. The bond cum warrant itself is not exchanged, but rather it continues until it is redeemed. For bond cum warrants, there can be up to three different exchange quotes: one price for the bond cum warrant ("cum"), for the bond without warrant ("ex") and for the warrant alone. Also called a bond with warrant or a warrant-linked bond.
Bonus is the term used to describe a one-off payment made to shareholders in addition to the dividend after particularly successful trading years, when exceptional profits have been earned (e.g. in the case of high book profits from the sale of property) or on special occasions (such as company anniversaries).
This terms refers to balances in customers' favour on giro or current accounts (demand deposits) with a bank. These funds can be withdrawn at any time without any restriction. Book money enables banks to create money by granting credit. The opposite of book money is "cash".
Placement procedure (placement) in which investors are directly involved in the pricing process. The investors' entire subscription wishes (subscription), including their price proposals, are electronically recorded, both quantitatively and qualitatively, by the lead manager in a central 'book'. The information obtained in this book-building process is then incorporated in real time into the pricing and allocation of the shares. Book-building is a widely-accepted procedure specifically designed to establish a fair balance of interests between issuer and investor with regard to the size of the issue price. Since the mid-90's, book-building has predominated as the preferred syndication and placement procedure for securities. A special form of this method is "accelerated book-building".
The term "Brady bonds" refers to bonds issued by public debtors for the restructuring of bank loans. The idea goes back to former US Treasury Secretary Nicholas F. Brady, who in 1989 proposed a catalogue of measures to solve developing countries' debt problems. The creditor banks were to forgive part of the debtor countries' liabilities. The debt service was reduced by exchanging loans for longer-term fixed-income securities which had a discount from face value and/or bore interest at lower-than-market rates. The quality of the bonds was enhanced by guarantees.
For options or warrants, the break-even price is that price of the underlying asset as from which the option can be exercised at no loss, even after taking the paid option premium into account. In the case of a call option, the break-even price is above the strike price, and below it in the case of a put option.
Venture capital financing instrument. Bridge financing involves the provision of funds to companies for the preparation of an IPO, in particular to improve the company's equity capital ratio. In other words, bridge capital "bridges" the time until the company obtains new equity capital from the IPO.
Brokers are securities traders on a stock exchange in the USA or UK. They advise investors in the investment decisions, execute buy and sell orders and receive a commission, called brokerage, for doing so.
Fee to be paid to the broker when a securities trade is concluded on the stock exchange. It is charged by the bank instructed to settle the trade. The size is determined as a percentage of market value in the case of equities or nominal value for bonds.
The rise in the market prices of securities on the stock exchange; synonymous with cyclical upswing and a booming economy. The general 'rise in prices' usually lasts for some time. Frequently restricted to individual market sectors. A bull market operator is someone who speculates on a rising market. The opposite of a bull market is a bear market.
Combination of the purchase of a call option and the sale of a call option with a higher strike price or of the purchase of a put option and the sale of a put option with a higher strike price. The combined options must be identical in terms of underlying asset and maturity. This construction can be used as a (restricted) hedge against rising prices of the underlying asset. The opportunities and risks in these combinations are limited.
Also: Euro-Bund-Future. This is a futures contract traded on Eurex based on a notional Federal Treasury bond bearing a nominal interest rate of 6% and a residual term to maturity of 8.5 to 10.5 years. The nominal value of a contract is € 100,000. The maturities are determined in accordance with Bund Future delivery months available at the same time. These are always the nearest three months in the cycle March, June, September and December.
Mostly experienced entrepreneurs who support young firms in the start-up phase with capital and their many years of management experience. As a rule, their commitment is rewarded with shares in the company. Business angels are often organized in networks. In Germany, there are roughly 40 such networks, in many cases with regional character. They serve as contact points for companies seeking capital and provide access to suitable business angels.
Program by which a corporation buys back its own shares on a stock exchange. In Germany, companies can buy back up to 10 percent of their own shares on the stock exchange. Share buybacks must be approved by shareholders at the company's General Meeting. Companies buy back their own shares when they wish to invest excess capital or avoid a hostile takeover. Share buybacks typically boost the share price as earnings per share rise due to the lower number of shares outstanding. Share buybacks generally send a positive signal to the capital markets.