Glossary

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Glossary
Balance Sheet

Balance Sheet

The balance sheet is a statement that shows the assets and liabilities of a company on a specific date

Book Value

Book value is the sum of the amounts of all the line items in the shareholders’ equity section on a company’s balance sheet. You can also calculate book value by subtracting a business’s total liabilities from its total assets.

QT

QT is an acronym for quantitative tightening – the reverse of quantitative easing. Central banks can shrink their balance sheets through QT, either passively – by allowing bonds to mature and not replacing them – or organically – by selling them.

Green bonds

A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for environmental projects. These bonds are typically asset-linked and backed by the issuing entity’s balance sheet, so they usually carry the same credit rating as their issuers’ other debt obligations.

Minimum Requirement for own funds and Eligible Liabilities (MREL)

Minimum Requirement for own funds and Eligible Liabilities (MREL) is a term used in EU legislation for the loss absorbing capital (LAC) of certain financial institutions. MREL figure comprises the total of a bank’s loss absorption amount and recapitalisation amount. The MREL amounts is the amount of that a bank must have on its balance sheet […]

CoCos

CoCos are contingent convertible bonds issued typically by banks. They convert from debt to capital if a pre-determined event occurs and are a way of a bank shoring up its balance sheet in tough times. Click here to subscribe for free equity research on investment trusts, funds and listed companies.

Quantitative easing

Quantitative Easing, often abbreviated to QE, is a term used to describe the purchase of debt, usually government debt, by central banks (such as the Bank of England, the European Central Bank (ECB) and the Federal Reserve). The idea is that, buy buying this debt from commercial banks, this frees up the commercial bank’s balance […]

SAREB

SAREB is an acronym in Spanish for Sociedad de Gestión de Activos procedentes de la Reestructuración Bancaria. It is a holding bank (a bit like NAMA in Ireland), established in 2012 in Spain that holds property and other assets transferred to it by four nationalised banks to get the bad assets off their balance sheets. […]

Capital structure

Capital structure describes the make up of a company’s balance sheet – i.e. all the sources of finance a company is using including the equity.

Annual Report

The Annual Report is the Board’s main method of communication with a company’s shareholders. The layout and the contents of the report is determined by a variety of rules and regulations which, over the years, have made the report longer and longer and, to most shareholders, more incomprehensible. Usually though the Chairman’s Report near the […]

EPRA NAV

The EPRA NAV is a net asset value per share calculated in accordance with EPRA’s methodology i.e. net assets on the balance sheet excluding the effects of hedges, debt adjustments associated with the hedges and deferred taxation. It also adjusts the share in issue for the potential dilution of shares issuable under employee share schemes Click here to subscribe for […]