GLOSSARY
EBA: The European Banking Authority (EBA) is an independent authority of the EU that works to ensure an efficient and consistent level of prudential regulation and surveillance throughout the entire European banking sector. Its primary objectives are to maintain financial stability in the EU and to guarantee the integrity, efficiency and proper functioning of the banking sector.
CIB: Contrary to retail banking, which concerns the general public, Corporate Investment Banking (CIB) offers its services exclusively to large firms, financial institutions and public institutions.
IFRS 9: Standard set up by the International Accounting Standards Board (IASB) in response to the financial crisis. It applies to financial instruments (accounting and valuation) for financial years begun on 1 January 2018. The IFRS seeks to resolve issues related to IAS 39, another standard covering a broad array of instruments.
P&L: ‘Profit and Loss’ is a way of modelling a project or a given transaction in order to show the margin that can be drawn from it.
CET1 Capital: Set up by the Basel Committee after the financial crisis, Common Equity Tier 1 Capital or CET1 represents the core equity of financial institutions. It is constituted mainly of ordinary shares held by a bank or other financial institution.
CET1 ratio: One of the three levels of ratios of Common Equity Tier A (CET1).
*Unphased CET1: Equity in unphased Basel III is calculated by taking into account the following changes compared to 31 December 2013 in Basel 2.5: elimination of the majority of prudential filters; deduction of CET1 from deferred tax assets dependent on future income linked to losses carried forward; deduction of CET1 from negative sums due to a shortfall in provisions in relation to expected loss (EL); deduction of CET1 from deferred tax assets dependent on future income linked to temporary differences beyond the deductible limit of 17.65%; deduction of CET1 from CET1 instruments held in financial investments greater than 10% over the deductible limit of 17.65%; restriction of category 1 and category 2 equity to hybrid debt instruments which meet the eligibility criteria for Basel III; value adjustments resulting from the prudent evaluation defined in the prudential regulations.
RWAs: ‘Risk-Weighted Assets’ are management ratios within the scope of the Basel II and III mechanism that correspond to the minimum capital requirement for banks and other financial institutions according to their level of risk.
This document has no pre-contractual or contractual value. It is provided to its recipient for information purposes only. It includes analyses or descriptions prepared by Lazard Frères Gestion SAS on the basis of general information and historical statistical data from public sources. The opinion expressed above is up to date as of the time of this presentation but may change. This information is provided for indicative purposes only and is under no circumstances a guarantee of future performance. These analyses or descriptions may be subject to interpretations according to the methods used. The analyses and/or descriptions in this document should not be interpreted as advice or recommendations from Lazard Frères Gestion SAS. This document does not constitute a recommendation for a purchase or a sale or an incentive to invest in the instruments or stocks mentioned herein. Any management method presented in this document is not an exclusive approach and Lazard Frères Gestion SAS reserves the right to use any other method it deems appropriate. These presentations are the intellectual property of Lazard Frères Gestion SAS. Document completed on December 3rd 2018.
