ING Direct 2009 Annual Report Download - page 309

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.
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.
2.4 Additional information
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Financial glossary (continued)