ING Direct 2008 Annual Report Download - page 282

VALUE IN USE
The present value of estimated future cash flows expected to
arise from the continuing use of an asset and from its disposal
at the end of its useful life.
VARIANCE-COVARIANCE
A model to calculate Value at Risk, assuming that changes
in risk factors are (jointly) normally distributed and that the
change in portfolio value is linearly dependent on all risk
factor changes.
WARRANT
A financial instrument that gives the holder the right to
purchase ordinary shares.
WEIGHTED AVERAGE COST OF CAPITAL (WACC)
The weighted average cost of capital is used as the discount
rate for calculating the present value of future cash flows.
SIGNIFICANT INFLUENCE
The power to participate in the financial and operating policy decisions of
an entity, but not to have control over these policies. Significant influence
may be gained by share ownership, statute or agreement.
SUB-PRIME MORTGAGES
Mortgage loans made to borrowers who cannot get a regular mortgage
because they have a bad credit history or limited income.
SUBSIDIARY
An entity that is controlled by another entity.
SURRENDER
The termination of a life or retirement contract at the request of the
policyholder after which the policyholder receives the cash surrender value,
if any, on the contract.
SWAP CONTRACTS
Commitments to settle in cash at a specified future date, based on
differentials between specified financial indices as applied to a notional
principal amount. Generally, no cash is exchanged at the outset of the
contract and no principal payments are made by either party.
TIER-1 CAPITAL
Also referred to as the core capital of ING Bank. It comprises paid up share
capital, reserves excluding revaluation reserves, retained earnings, minority
interests and hybrid Tier-1.
TIER-1 RATIO
Reflecting the Tier-1 capital of ING Bank as a percentage of its total risk
weighted assets. The minimum set by the Dutch central bank is 4%.
TOTAL AND UNDERLYING NET RESULT
The variance between Total and Underlying net result is caused by
divestments and special items.
TRADING PORTFOLIO
Comprises those financial instruments which are held to obtain short-term
transaction results, to facilitate transactions on behalf of clients or to
hedge other positions in the trading portfolio.
TRANSFER RISK
Probability of loss due to currency conversion (exchange) restrictions
imposed by a foreign government that make it impossible to move money
out of the country.
TREASURY BILLS
Generally short-term debt certificates issued by a central government.
Dutch Treasury Certificates are regarded as Dutch Treasury bills.
TREASURY SHARES
An entity’s own equity instruments, held by the entity or other members
of the consolidated group.
VALUE CREATION
Value creation is measured by Economic Profit (regarding non life and asset
management business and banking operations) and Embedded Value
Profit (regarding life and long term health business).
VALUE AT RISK (VAR)
Quantifies, with a one-sided confidence level of at least 99%, the
maximum overnight loss in Net Present Value that could occur due to
changes in risk factors (e.g. interest rates, foreign exchange rates, equity
prices, credit spreads, implied volatilities) if positions remain unchanged for
a time interval of one day.
2.4 Additional information
Financial glossary (continued)
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