Loan loss

A loss made by a bank when money it has lent is not paid back

Non-performing loan

Non-performing loan (NPL) is loan on which the borrower is not making interest payments or repaying any principal.

Collateralised Loan Obligation

A form of securitised debt where a portfolio of loans, usually to businesses, is packaged together and then sold off in tranches. The highest ranking tranche (the one that gets repaid first) may be rated as AAA or equivalent; that is to say, in the opinion of a rating agency, the chances of losing money […]

Convertible Unsecured Loan Stock

A debt instrument that is convertible into the ordinary shares of a company at a fixed price at a date or within a range of dates in the future. Convertible Unsecured Loan Stocks are a bit like debt and a bit like equity. They have a value based on the value of their debt (see […]

Loan To Value

Loan To Value or LTV is a ratio of a company’s debts to its total assets. It differs from gearing, which is a measure of a company’s debts to its net assets. For example, if my company has assets of £100 and them borrows another £100 it now has total assets of £200. Its Loan […]

Amortising

Amortising is the process whereby a loan is paid off gradually by making additional payments to the lender in addition to interest payments. Loans can amortise to zero or amortise to a balloon payment.

SOFR

SOFR is an acronym of Secured Overnight Financing Rate. It is a replacement for US LIBOR and represents the cost of overnight borrowing for a loan that is collateralised by US Treasury Securities. You can read a more technical explanation here.

warehousing – in finance

Warehousing – This is a catch-all name for a specific financing activity. Warehousing is where an asset manager takes a number of different assets, usually loans, and gathers them together before either packaging them up up into a vehicle such as a CLO or CDO and passing them on or creating a portfolio from them. […]

Additional Tier 1 or AT1

Additional Tier 1 or AT1 In addition to a bank’s core capital or Tier 1 capital, it may also use other additional forms of capital to ensure its capital adequacy. Tier 1 capital is used to describe the capital adequacy of a bank and is the core capital that includes equity capital and disclosed reserves. […]

Core Capital

Core capital or Tier 1 capital is the reserves that a bank has to back its business activities. It composed of disclosed reserves and common stock/ordinary shares. It can also include non-cumulative, non-redeemable preferred stock. As well as core capital, banks also use instruments to accumulate Tier 1 capital, such as preference shares and CoCos. […]

NPL

NPL is an acronym for non-performing loan

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Loan loss