NATIXIS_REGISTRATION_DOCUMENT_2017

8 ADDITIONAL INFORMATION Glossary

Acronym/Term

Definition

A ratio indicating the share of net revenues used to cover operating expenses (the company’s operating costs). It is calculated by dividing operating costs by net banking income.

Cost/income ratio

Coverage in terms of client support.

Coverage

A bond for which the reimbursement and payment of interest is backed by returns on a high-quality asset portfolio, often a portfolio of mortgage loans, which serve as collateral. The issuer often manages the payment of cash flows to investors ( obligations foncières in France, Pfandbriefe in Germany). This product is mainly issued by financial institutions. Commercial paper. In the United States, commercial paper is a negotiable debt instrument issued by corporations on the money market.

Covered bond

CP

Consumer Price Index

CPI

Credit Portfolio Management

CPM CRD

Capital Requirements Directive (EU Directive)

An EU Directive under which the proposals of the Basel Committee were enacted into French law in July 2010 and enacted as of December 31, 2011. In July 2009, the Basel Committee published a new set of proposals known as Basel 2.5 on the topic of market risk. The aim was to better account for default and credit migration risk on assets in the trading book (both tranched and untranched assets) and to reduce the procyclicality of value at risk. A European Directive that enacts the proposals of the Basel 3 framework into French law. The risk of loss from the inability of clients, issuers or other counterparties to honor their financial commitments. Credit risk includes counterparty risk related to market transactions and securitization. A bilateral financial contract whereby the protection buyer periodically pays a premium to the protection seller, who in turn promises to compensate for any losses on a reference asset (a bond issued by a government, financial institution or company) upon the occurrence of a credit event (bankruptcy, default, deferred payment or restructuring). It is a mechanism to protect against credit risk. A financial product whose underlying asset is a credit obligation or debt security (bond). The purpose of the credit derivative is to transfer credit risk without transferring the asset itself for hedging purposes. One of the most common forms of credit derivatives is the credit default swap (CDS). Credit valuation adjustment, i.e. the expected loss related to counterparty’s default risk. The CVA aims to account for the fact that the full market value of the transactions cannot be recovered. The method for determining the CVA is primarily based on the use of market inputs in connection with the practices of market professionals. A reduction in banks’ use of leverage, achievable by various means but primarily by a reduction in the size of the balance sheet (by selling assets or slowing down new lending) and/or an increase in equity (through recapitalization or retaining earnings). This financial adjustment process often has negative implications for the real economy, particularly due to the narrowing of the credit channel. A financial security or financial contract whose value changes based on the value of an underlying asset, which may be either financial (equities, bonds, currencies, etc.) or non-financial (commodities, agricultural products) in nature. This change may coincide with a multiplier effect (leverage effect). Derivatives can take the form of either securities (warrants, certificates, structured EMTNs, etc.) or contracts (forwards, options, swaps, etc.). Exchange-traded derivatives contracts are called futures. The Dodd-Frank Wall Street Reform and Consumer Protection Act, more commonly known as the Dodd-Frank Act, is the US law on financial regulation adopted in July 2010 in response to the financial crisis. It is an extensive piece of legislation covering numerous subjects including the creation of the Financial Stability Oversight Council, the management of systemically important financial institutions, the regulation of the highest-risk financial activities, a framework for derivatives markets and reinforced regulation of rating agencies. US regulators (Securities and Exchange Commission, Commodity Futures Trading Commission, etc.) are currently developing precise technical standards with regard to these various provisions. The lower tier of the US federal judicial system. Deferred tax assets, arising from temporary or timing differences between accounting expenses and tax liabilities. Debit Valuation Adjustment, which is symmetrical to the CVA and represents the expected loss, from the counterparty’s perspective, on liability valuations of derivative financial instruments. It reflects the impact of the entity’s own credit quality on the valuation of these instruments. Exposure at default, i.e. the value of exposure to the risk of the debtor defaulting within one year. The company’s net income (excluding returns on hybrid securities recognized as equity instruments) divided by the weighted average number of shares outstanding. European Banking Authority, established by EU regulation No. 1093/2010 of November 24, 2010. It began operating on January 1, 2011 in London, superseding the Committee of European Banking Supervisors (CEBS). This new body has an expanded mandate. It is in charge of harmonizing prudential standards, ensuring coordination among the various national supervisory authorities and performing the role of mediator. The goal is to establish a Europe-wide supervision mechanism without compromising the ability of the national authorities to conduct the day-to-day supervision of credit institutions. Comprehensive Risk Measure Capital Requirement Regulation (EU regulation) US Department of Justice.

CRD III

CRD IV

Credit and counterparty risk Credit default swap (CDS)

Credit derivative

CRM CRR CVA

Deleveraging

Derivative

District Court Dodd-Frank Act

DOJ

DTAs

DVA

EAD

Earnings per share

EBA

492

Natixis Registration Document 2017