Barclays 2010 Annual Report Download - page 284

Glossary of terms
continued
‘Monoline’ An entity which specialises in providing credit protection to
the holders of debt instruments in the event of default by a debt security
counterparty. This protection is typically held in the form of derivatives
such as credit default swaps (CDS) referencing the underlying exposures
held. See Risk Management section – Barclays Capital Credit Market
Exposures.
‘Monoline Wrapped’ Debt instruments for which credit enhancement or
protection by a monoline insurer has been obtained. The wrap is credit
protection against the notional and principal interest cash flows due to the
holders of debt instruments in the event of default in payment of these by
the underlying counterparty. Therefore, if a security is monoline wrapped
its payments of principal and interest are guaranteed by a monoline
insurer. See Risk Management section – Barclays Capital Credit Market
Exposures.
‘Mortgage Backed Securities (MBS)’ Securities that represent interests
in a group of mortgages. Investors in these securities have the right to
cash received from future mortgage payments (interest and/or principal).
See Risk Management section – Credit Market Exposures.
‘Mortgage vintage’ The year the mortgage was issued.
‘Mortgage related securities’ Securities which are referenced to underlying
mortgages. See RMBS, CMBS and MBS.
‘Net Asset Value per Ordinary Share’ Computed by dividing shareholders’
equity excluding non-controlling interests by the number of issued ordinary
shares.
‘Net Interest Income’ The difference between interest received on assets
and interest paid on liabilities including the interest income on Group
equity.
‘Net Interest Margin’ The margin is expressed as annualised net interest
income for Global Retail Banking, Absa, Barclays Corporate and Barclays
Wealth divided by the sum of the average assets and average liabilities for
those businesses.
‘Net Investment Income’ Includes the net result of revaluing financial
instruments designated at fair value, dividend income and the net result
on disposal of available for sale assets.
Net Stable Funding Ratio (NSFR)’ The ratio of available stable funding to
required stable funding over a one year time horizon, assuming a stressed
scenario. The ratio is required to be over 100% with effect from 2015.
Available stable funding would include such items as equity capital,
preferred stock with a maturity of over 1 year, or liabilities with a maturity
of over 1 year. The required amount of stable funding is calculated as the
sum of the value of the assets held and funded by the institution,
multiplied by a specific required stable funding (RSF) factor assigned to
each particular asset type, added to the amount of potential liquidity
exposure multiplied by its associated RSF factor.
‘Net Trading Income’ Income arising from trading positions which are held
at fair value, including market-making and customer business. The
resulting gains and losses are included in the income statement together
with interest, dividends and funding costs relating to trading activities.
‘New Markets’ See Barclays Corporate.
‘Non-asset backed debt instruments’ As used in Note 41 ‘Fair value of
financial instruments’, these products are debt instruments. This category
includes government bonds; US agency bonds; corporate bonds;
commercial paper; certificates of deposit; convertible bonds; corporate
bonds and issued notes.
‘Non-investment grade’ A debt security, treasury bill or similar instrument
with a credit rating measured by external agencies of BB+ or below.
‘Non-performing loans’ A loan that is in default or close to being in default
because interest or capital payments are not made on time.
‘Other credit products’ As used in Note 41 ‘Fair value of financial
instruments’, these are products linked to the credit risk of a referenced
entity, index or a basket. This category includes collateralised synthetic
obligations (non-asset backed CDOs) and OTC derivatives. The OTC
derivatives are namely, CDS single name; CDS index; CDS index tranche
and Nth to default basket swaps (in which the payout is linked to one in
a series of defaults, such as first-, second- or third-to-default, with the
contract terminating at that point).
‘Over the counter derivatives (OTC)’ Contracts that are traded (and
privately negotiated) directly between two parties, without going through
an exchange or other intermediary. They offer flexibility because, unlike
standardised exchange-traded products, they can be tailored to fit
specific needs.
‘Own Credit’ The effect of the Group’s own credit standing on the fair value
of financial liabilities.
‘Performance costs’ The accounting charge recognised in the period for
performance awards. For deferred incentives and long-term incentives the
accounting charge is spread over the relevant periods in which the
employee delivers service.
‘Performance awards’ Annual performance incentives (including deferred
incentives), long-term incentive awards and commission payments.
A detailed description of the Group’s incentive plans is provided in the
Directors’ Remuneration Report.
‘PCRL Coverage ratio’ Impairment allowances as a percentage of total CRL
(credit risk loan) & PPL (potential problem loan) balances. See CRL and PPL.
‘Portfolio MTM LTV’ The ratio of the total outstanding balance to the
current value of the security, which is estimated using one or more external
house price indices, i.e. total outstanding balance divided by total current
property value (mark to market).
‘Potential Credit Risk Loans (PCRLs)’ Comprise the outstanding balances
to Potential Problem Loans (defined below) and the three categories of
Credit Risk Loans (defined above).
‘Potential Problem Loans (PPLs)’ Loans where serious doubt exists as to
the ability of the borrowers to continue to comply with repayment terms
in the near future.
‘Prime’ Loans of a higher credit quality and would be expected to satisfy
the criteria for inclusion into Government programmes.
‘Principal Investments’ Private Equity Investments.
‘Prior year compensation deferrals’ The accounting charge recognised for
service delivered in the current period in respect of deferred incentives and
long-term incentives previously awarded.
‘Private equity investments’ As used in Note 41 ‘Fair value of financial
instruments’, private equity is equity securities in operating companies not
quoted on a public exchange. Investment in private equity often involves
the investment of capital in private companies or the acquisition of a public
company that results in the delisting of public equity. Capital for private
equity investment is raised by retail or institutional investors and used to
fund investment strategies such as leveraged buyouts, venture capital,
growth capital, distressed investments and mezzanine capital.
‘Private-label securitisation’ Residential mortgage-backed security
transactions sold or guaranteed by entities that are not sponsored
or owned by the government.
282 Barclays PLC Annual Report 2010www.barclays.com/annualreport10