zz Investment Banking Glossary by BNP Paribas 巴黎银行发布投行必备词汇表

Investment Banking Glossary by BNP Paribas 巴黎银行发布投行必备词汇表

glossary

Here's a handy list of investment banking terminology for you to refer to as you browse through our site.

Accretion Reverse of dilution. Accretion is where a corporate action (share buyback or issue of shares in a smaller proportion than the increase in income following a merger or public tender offer, for example) leads to an increase in earnings per share.

ADR (American Depositary Receipt) Negotiable certifi cates representing one or several shares. Their face value is stated in dollars and interest is also payable in dollars. ADRs allow American investors to buy shares in foreign-based companies that are not quoted on an American Stock Exchange.

AMS Asset Management and Services.

Arbitrage Activity that consists of attempting to profit by price differences on the same or similar financial assets. For example, in the case of a takeover bid, where the predator offers a price that exceeds the price at which the target's shares are trading.

Attribution right Right to receive bonus shares issued in connection with a capital increase paid up by capitalising retained earnings. Attribution rights are quoted.

Avoir fiscal Dividend tax credit available to individual shareholders resident in France on the dividends distributed by French companies. The purpose of the tax credit is to avoid double taxation of distributed earnings, in the hands of the company and the shareholder. The avoir fi scal granted to individual shareholders resident in France is equal to one-half of the net dividend. It is deductible from personal income tax. If the avoir fi scal cannot be set off against taxable income, it is refunded by the French Treasury.

B2B or BtoB Business to Business: sales of products or services by one company to another.

B2C or BtoC Business to Consumer: sales of products or services by a company to a consumer.

B2E portal Intranet site for Group employees. The home page includes a browser, links to services and a wealth of information concerning the various functions within the Group, practical information for employees and career information.

Back office Department responsible for all administrative processing.

BNL bc BNL banca commerciale (formerly Banca Nazionale del Lavoro).

Bond/Debenture Debt security whereby the issuer undertakes to pay the lender a fixed capital sum at a specific future date, plus twice-yearly or annual interest payments. Interest payments — generally at fixed rates — may vary over the life of the bond. Debentures are unsecured bonds.

Capital Amount of cash or assets contributed by shareholders, plus any profits, retained earnings or premiums transferred to the capital account. The capital may be increased or reduced during the life of the company.

Capital increase A method of increasing a company's shareholders' equity. The capital may be increased by issuing new shares for cash or in exchange for assets, such as shares in another company. Alternatively, it may be increased by capitalising additional paid-in capital, retained earnings or profits and either raising the par value of existing shares or issuing new shares without consideration. Existing shareholders may have a pre-emptive right to subscribe for the new shares or this right may be cancelled. A capital increase may be carried out to give new investors an opportunity to become shareholders. All capital increases must be authorised in advance by the shareholders, in Extraordinary General Meeting.

Cash flow Cash generated by operations that can be used to fi nance investment without raising equity or debt capital.

CECEI Comité des Établissements de Crédit et des Entreprises d'Investissement: Committee headed by the Governor of the Banque de France responsible for monitoring the proper operation of the French fi nancial and banking system.

CIB Corporate and Investment Banking, one of the BNP Paribas Group's core businesses.

Comité Consultatif des Actionnaires Shareholder Consultation Committee. A group of individual shareholders selected to advise the company on its communications targeted at individual shareholders. The BNP Paribas Comité Consultatif des Actionnaires was set up in the fi rst half of 2000, at the time of the merger.

Consolidated net income Net income of the Group after deducting the portion of the profi ts of subsidiaries attributable
to minority shareholders.

Convertible bond Bond convertible into the issuer's shares on terms set at the time of issue. Corporate governance Series of principles and recommendations to be followed by the management of listed companies.

Coupon The coupon represents the right of he security for a given year.

Custody fee Fee received by a bank or broker to hold and service securities recorded in a securities account. Custody fees are payable annually in advance. They are not refunded if the securities are sold during the year, but no fees are payable on securities deposited during the year until the beginning of the next year.

CVR (Contingent Value Rights Certificate) Financial instrument generally issued in connection with the acquisition of a listed company, guaranteeing the value of the underlying security at a pre-determined date. The CVR entitles the shareholder of the target to receive an amount equal to the positive difference between the offer price and a «reference» price.

Derivatives Contracts whose value is based on the performance of an underlying financial asset, index or other investment, used to hedge or profit from future changes in the value of the underlying.

Dilution Impact on the rights attached to a share of the issue of securities (in connection with a capital increase, a merger, a stock-for-stock tender offer or the exercise of rights), assuming that there is no change in the total income of the issuer.

Dividend Portion of net profit that the Annual General Meeting decides to distribute to shareholders. The amount of the dividend is recommended by the Board of Directors. It represents the revenue on the share and the amount can vary from one year to the next depending on the company's results and policy.

EONIA Euro OverNight Index Average.

EUREX A derivatives market.

EURIBOR (European InterBank Offered Rate) The most commonly used money-market rate in the eurozone.

Euroclear Formerly Sicovam. Clearing house for securities transactions.

Euronext SA Company that operates the Paris, Brussels and Amsterdam Stock Exchanges. Euronext SA establishes market rules, decides to accept or reject listing applications and manages all trading technologies.

FCP (Fonds Commun de Placement) Fund invested in stocks, bonds and/or money-market securities. An FCP is similar to a SICAV, but is not a separate legal entity. FCPs are generally smaller than SICAVs and are easier to manage. They are subject to less restrictive regulations and can be more specialised.

FRB French Retail Banking.

Free cash flow Cash available after fi nancing operations and investments, available to pay down debt.

Free float The amount of capital which is not under the control of stable shareholders. In other words, capital that can be freely bought and sold and is therefore available to investors, excluding for example shares held by the State, or shares that are subject to shareholders' pacts and so on. On 1 December 2003, the stocks that make up the CAC 40 index became weighted according to their free floats, as opposed to their market capitalisations. This change was born out of a desire to be consistent with the major world market indexes which already function in this manner, and to ensure greater comparability between industries and shares. BNP Paribas has a free fl oat of 95% – one of the highest on the Paris stock market.

Gain/loss on securities Positive/negative difference between the sale price of a security and the purchase price.

Goodwill Difference between the cost of shares and the Group's equity in the fair value of the underlying net assets.

Hedge funds Funds that take both long and short positions, use leverage and derivatives and invest in many markets.

IAS International Accounting Standards

IFRS International Financial Reporting Standards.

IFU (Imprimé Fiscal Unique) French tax return issued by a bank or broker, listing all the securities transactions carried out on behalf of the taxpayer and all the coupon payments made to the tax payer.

Institutional investor Financial institution which, by definition or by virtue of its articles of association, is required to hold a certain proportion of its assets in stocks and shares. Examples include insurance companies and pension funds.

Investment club A variable- or split-capital company, which enables its members to jointly manage a portfolio of marketable securities formed from an initial investment and/or regular capital contributions. Clubs benefit from a favourable regime in respect of capital gains tax. The FNACI (National Federation of Investment Clubs), which is located at 39, rue Cambon, 75001 Paris, provides on request all the information required for the launching and smooth running of these clubs.

IRFS International Retail Banking and Financial Services. Abbreviation replaced by IRS in 2008.

IRS International Retail Services. Abbreviation that replaces IRFS.

ISIN code The new identifi cation number for securities listed on the stock market. The ISIN code replaces the well-known Sicovam code which had since become the Euroclear code. On 30 June 2004, Euronext Paris put an end to its existing system for identifying securities and replaced it with a system that uses ISIN codes. Having already been adopted by a number of European stock markets including Amsterdam, Brussels, Lisbon and Frankfurt, the new system gives a unique identity to each share and therefore facilitates cross-border transactions between investors, primarily by improving harmonisation within Euronext. The ISIN code comprises 12 characters: 2 letters to indicate the issuing country (e.g., FR for France and US for the United States) and 10 fi gures. BNP Paribas's ISIN code is FR0000131104.

LBO Leveraged Buy Out. Company acquisition financed primarily by debt. In practice, a holding company is set up to take on the debt used to finance the acquisition of the target. The interest payments due by the holding company are covered by ordinary or exceptional dividends received from the acquired target.

LIFFE London International Financial Futures and Options Exchange.

Liquidity Ratio between the volume of shares traded and the total number of shares in issue.

LME London Metal Exchange.

M & A Mergers & Acquisitions.

Market capitalisation Value attributed to a company by the stock market. Market capitalisation corresponds to the share price multiplied by the number of shares outstanding.

Market-maker/ Market-making contracts Market-makers commit to maintaining fi rm bid and offer prices in a given security by standing ready to buy round lots at publicly-quoted prices. Market-making contracts generally concern mid-cap stocks and are intended to enhance the stocks' liquidity. In France, market-making contracts (contrats d'animation) are entered into between Euronext, the issuer and a securities dealer.

MONEP (Marché d'Options Négociables de Paris) Paris traded options market, including CAC 40 index options and equity options.

OAT (Obligation Assimilable du Trésor) French government bonds.

OCEANE (Obligation Convertible En Actions Nouvelles ou Existantes) Bond convertible for new shares or exchangeable for existing shares of the issuer.

OPA (Offre Publique d'Achat) French acronym for a public tender offer for cash.

OPE (Offre Publique d'Échange) French acronym for a public stock-for-stock tender offer.

OPF (Offre à Prix Fixe) French acronym for a public offering of securities at a set price.

OPR (Offre Publique de Retrait) French acronym for a compulsory buyout offer (fi nal stage in a squeeze-out).

OPRA (Offre Publique de Rachat d'Actions) French acronym for an offer to buy out the minority shareholders of a company that already largely controlled (first stage in a squeeze-out).

Option Contract giving the buyer the right (but not the obligation), to purchase or sell a security future date, at a price fi xed when the option is written (exercise price), in exchange for a premium paid when the option is purchased. Options to purchase a security are known as calls options to sell a security are known as puts.

OPV (Offre Publique de Vente) French acronym for a public offering of securities at a set price.

ORA (Obligation Remboursable en Actions) French acronym for equity notes, representing bonds redeemable for shares.

P/E Price/Earnings ratio. Ratio between the share price and earnings per share. The P/ serves to determine the multiple of earnings per share represented by the share price.

Par value The par value of a share is the portion of capital represented by the share.

PEA (Plan d'Épargne en Actions) French name for personal equity plans. Savings products designed to promote private share ownership, invested in shares of companies that have their headquarters European Union country or in units in qualifying unit trusts. Revenues and capital are exempt from personal income tax and capital gains tax provided that the savings left in the plan for at least five years. Investments in PEAs are capped at EUR 120,000 individual.

PEE (Plan d'Épargne Entreprise) French name for employee share ownership plans. Payments into the plan and reinvested interest are exempt from personal income tax provided that they are left in the plan least five years (with early withdrawal allowed in certain specific cases). Surrender are also exempt from personal income tax.

Pre-emptive subscription rights When a company issues shares for cash, each shareholder has a pre-emptive right subscribe for a number of new shares pro rata to the number of shares already held. right can be traded on the stock market. Companies can ask the General Meeting to cancel shareholders' pre-emptive subscription rights to facilitate certain operations or the company to open up its capital to new investors.

Preference shares Preference shares are shares that pay dividends at a specifi ed rate and have a preference over ordinary shares in the payment of dividends and the liquidation of assets. They not carry voting rights.

Price guarantee When a company acquires control of a listed target, it is required to offer the target's minority shareholders the opportunity to sell their shares at the same price as that received by the sellers of the controlling interest. The offer must remain open for at least fi fteen trading days.

Primary market Market where newly-issued securities are bought and sold.

Prime brokerage Activity consisting of providing a wide range of services to hedge funds, including nancing, securities settlement/delivery, custody, securities lending/borrowing, etc.

Public tender offer Offer to buy shares of a company, usually at a premium above the shares' market price, for cash or securities or a combination of both. Where only a small proportion of the company's shares are traded on the market and the offer is followed by a compulsory buyout, the process is known as a «squeeze-out».

Quorum General Meetings can take place only if there is a quorum. For Ordinary General Meetings, on first call there is a quorum if the shareholders present and represented hold at least 1/4 of the voting rights. There is no quorum requirement on second call. For Extraordinary General Meetings, the quorum corresponds to 1/3 of the voting rights on first call and 1/4 on second call. For Combined Meetings, the quorum requirements depend on whether the resolutions are "ordinary" or "extraordinary".

Quotation The quotation determines the price of a security on the market at a given point in time. Prices are generally quoted on a continuous basis throughout the day (from 9:00 a.m. to 5:30 p.m.), providing a real-time indication of the prices at which the security concerned is changing hands. Continuous quotation allows market players to closely track market trends. Quotations for securities with a low trading volume are made once a day.

Rating/rating agencies A rating represents an assessment of the default risk on debt securities. The rating awarded to an issuer has a direct impact on the issuer's borrowing costs. Changes in ratings also have a significant impact on the issuer's share price. The main rating agencies are Standard & Poor's, Moody's and Fitch.

Report On the Euronext Paris market, transaction allowing an investor to carry forward a buy or sell position from one deferred settlement date to the next.

ROE Return on Equity. Ratio between consolidated net income and consolidated shareholders' equity.

Secondary market Market where securities are bought and sold subsequent to their issue.

Settlement Monthly date when transactions with deferred settlement (Service de Règlement Différé) are unwound (or extended). This date corresponds to the fi fth trading day before the last trading day in the month.

Share A share is a transferable security representing a portion of the capital of a limited company or a partnership limited by shares. Ownership of shares is evidenced by an entry in the issuer's share register (registered shares) or in a securities account kept in the holder's name by a bank, stockbroker or other accredited intermediary (bearer shares). Shares quoted on the stock exchange are also referred to as "equities".

SICAV (Société d'Investissement à Capital Variable) Variable capital investment company that manages a portfolio of securities on behalf of its shareholders. Shares may be purchased or redeemed at any time. The shares are not listed but their value (corresponding to the company's net asset value per share) varies each day based on changes in the value of the securities held in the portfolio.

SICOVAM (Société Interprofessionnelle pour la Compensation des Valeurs Mobilières) Now renamed Euroclear France. Organisation responsible for clearing securities trades, centralising all stock market transactions and facilitating the transfer of securities between member institutions.

SPVT (Spécialiste en Pension des Valeurs du Trésor) Primary dealer in French government bond repos.

SRD (Service de Règlement Différé)
French market where the main French and foreign equities are traded. Equities or bonds purchased with deferred settlement are purchased on credit. The buyer is required to settle the purchase price and the seller is required to deliver the securities on the next settlement date, unless one or other of the parties asks for the transaction to be carried over to the next settlement date (report).

Subscription right Right to participate in a share issue for cash.

TBB (Taux de Base Bancaire) Interest base rate.

TMO (Taux Mensuel de Rendement des Emprunts Obligataires) Interest rate corresponding to the monthly bond yield.

TPI (Titre au Porteur Identifiable) Procedure allowing issuers to obtain information about the identity of holders of bearer shares from Euroclear.

Trade Centre Specialised sales force set up by BNP Paribas to partner its corporate customers' international development. The Trade Centres offer importers and exporters a wide range of customised services based on the "one-stop-shopping" principle.

Treasury shares Shares held by the issuer. Treasury shares are stripped of voting and dividend rights and are not taken into account in the calculation of earnings per share.

TSDI (Titre Subordonné à Durée Indéterminée) French acronym for perpetual subordinated notes.

TSR Total Shareholder Return: corresponding to return on the capital invested by shareholders, including dividends and unrealised gains on the shares.

UCITS Undertaking for Collective Investment in Transferable Securities. Term covering unit trusts and variable capital investment companies.

Voting right Right of a shareholder to vote in person or by proxy at General Meetings.

Warrant Certificate issued on a stand-alone basis or strippable from another security (share, bond) giving the holder the right to acquire securities (share, bond). Warrants issued by financial institutions acting as market-maker give the holder the right to purchase (call warrant) or sell (put warrant) various underlyings (interest rate, index, currency, equities) at a fixed exercise price during a fi xed exercise period. Although these warrants constitute options, they cannot be sold short.

Work flow Process automation technology allowing the sequential transmission of digital documents and files to the various people responsible for processing the data.

Yield Indicator of the return on an investment, expressed in percent. For shares, the yield corresponds to the ratio between the last dividend paid and the last share price.