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CAGR (Compound Annual Growth Rate) The year by year growth rate applied to an investment or any other part of a company's activities over a multiple-year period. The formula for calculating CAGR is (Current Value/Base Value)^(1/no.of years).
Call option (purchase option) An option contract that gives the holder the right to buy a certain quantity of an underlying asset from the writer of the option, at a specified price (the strike price) up to a specified date (the expiration date).
Capital Asset Pricing Model (CAPM) Model making it possible to determine the "opportunity cost" or the amount of income for the business period necessary to remunerate the cost of capital.
Capital gain Profit on the sale of securities, either through dividends or the selling of securities.
Capital market The market for trading long-term debt instruments (those that mature in more than one year).
Captive Term generically referring to "networks" or companies that operate in the exclusive interest of their parent company or group.
Carbon Dioxide (CO2) Colorless, odourless, non-toxic and non-flammable, present in the atmosphere with a concentration of about 300ppm under normal conditions. It is an essential substance in the life process of animals and plants and is - after water vapour - the main greenhouse gas in the atmosphere (77% of total). It is the greenhouse gas with most harmful effects because it takes a very long time to dissolve. It is used as a reference point to define the global warming potential of all other greenhouse gases. The increase in the concentration of this gas in the atmosphere due to human activity over the past two centuries is primarily responsible for the greenhouse effect.
Cash flow Indicator for the assessment of the financial situation of a company and share valuation. Cash flow is net income plus depreciation and amortization.
Cash flow hedge Coverage against exposure to variability in cash flows traceable to a particular risk.
Cash management A banking service that, in addition to making available to businesses a whole set of information on the status of relations entertained with the bank, provides an operative tool allowing businesses to execute transfers of funds, thus leading to more efficient treasury management.
Categories of financial instruments provided for by IAS 39 Activity of negotiation which includes the following: assets purchased for short-term sale or part of portfolios of instruments managed jointly for the purpose of realising profits in the short-term, and assets that the entity decides in any case to reckon at fair value with variation in value entered under the Profit and Loss Account; assets held full term, non-derivative assets with a fixed term and payments that are fixed or determinable, concerning which there is a real intention and capacity to hold them full term; credits and loans, non-derivative assets with fixed or determinable payments not quoted on the active market; assets available for sale, specifically designated as such, or others not falling under the previous typologies.
CDO - Collateralised Debt Obligation Securities issued within the framework of securitisation transactions, guaranteed by underlying assets in the form of credits, securities or other financial assets.
CDP (carbon disclosure project) The CDP is an initiative of the Rockefeller Foundation Philantrophy Advisors, set up to encourage companies to give more importance to carbon dioxide emissions and, at the same time, to help institutional investors to investigate properly the impact of climate change on the value of their portfolio. The CDP is studying the value of the portfolio in terms of potential risks and opportunities posed by climate change and is a unique and effective method of collecting information useful for the assessment of their impact on the market value of companies.
Central bank A country's main bank whose responsibilities include the issue of currency, the administration of monetary policy, open market operations, and engaging in transactions designed to facilitate business interactions.
Civersity management Diversity Management is a conscious approach to the management of diversity within an organization, such as cultural, ethnic, age, gender, etc., in order to evaluate it as an agent of innovation and performance improvement.
Climate change Long-term change in climatic conditions, in particular the amount of rainfall, temperature and the seasons in which atmospheric phenomena occur. Climate change may be due to: natural factors, such as changes in solar radiation due to minor alterations in the Earth's orbit around the sun; natural processes in the climate system (eg. changes in ocean circulation, such as the so-called phenomenon of "El Niño"); human activities that change the atmosphere's composition (e.g. through burning fossil fuels) and the land surface (e.g. deforestation, reforestation, urbanization, desertification, etc.) and thus albedo. Even if the majority of greenhouse gases is formed naturally, from the onset of industrial revolution at the beginning of 18th century, anthropogenic greenhouse gases (produced by human activity) have been continuously increasing and they can no longer have a natural compensation, resulting in an unusually rapid earth warming. For this reason we normally refers to the greenhouse effect with a negative meaning. The 1990's were the warmest decade of the last 1,000 years. According to the UN climate experts, the average temperature of the planet will increase by 1.4° C - 5.8° C by the year 2100.
CO2 equivalent The CO2 equivalent emissions represent the emissions of any greenhouse gases weighted according to their contribution to the greenhouse effect compared with CO2, which is the reference parameter with value 1. For example, methane has a greenhouse potential 21 times greater than CO2, and thus one ton of methane is accounted for as 21 tons of CO2 equivalent.
Code of ethics It is a sort of constitutional charter of the company, which, starting from the shared values, outlines the principles of conduct relating to the relationship with each stakeholder. It is an official document, approved by the Management Board, which commits senior management and all employees and extends the corporate governance rules from the sphere of traditional relations with shareholders and investors to the most comprehensive with all stakeholders.
Cogeneration Cogeneration is the simultaneous production (in the same plant and from a single fuel) of electricity and heat, which implies significant energy savings compared to the traditional separate production as well as a reduction in emissions.
Collective assessment of performing credits With reference to a homogeneous group of financial assets with a steady performance, the collective assessment defines the degree of credit risk potentially associated with the same, even though it is not yet possible to identify it with a specific position.
Commercial paper Short-term notes issued in order to collect funds from third-party underwriters as an alternative to other forms of indebtedness.
Confidi Collective Loan Guarantee Consortia.
Consensus The forecast for a given company, taken in aggregate, for all analysts who follow that company.
CONSOB (Commissione Nazionale per le Società e la Borsa) Italian Securities and Exchange Commission, founded in 1974.
Consolidated non-financial statement The Consolidated Non-financial Statement is a document whose publication has become compulsory since 2017 for large enterprises (with more than 500 employees and a balance sheet of 20 million or total net sales revenue and benefits of 40 million) in compliance with the requirements of Legislative Decree 254/2016. The Italian law implements Directive 2014/95/EU of the European Parliament and of the Council and provides an annual report on environmental, social, personnel-related issues, and issues regarding respect for human rights, the fight against active and passive corruption. A description of the business model for the management and organization of the Company's activities, the policies practised, the main risks, generated or sustained, related to the topics indicated, are required.
Consumer credit Short-term loans to the consumers for the purchase of goods.
Core Business Primary area of business constituting the focal point of a company's strategies and policies.
Core Tier 1 ratio Indicates the ratio of basic (Tier 1) assets, not including preference shares, to total weighted-risk assets. Preference shares are innovative capital instruments normally issued by foreign subsidiaries and included in the basic assets if they have characteristics guaranteeing the capital stability of the banks. The Tier 1 ratio is the same ratio that, in the numerator, includes the preference shares.
Corporate Segment of customers corresponding to medium- and large-sized firms (mid-corporate, large corporate).
Corporate bonds Debt obligations issued by companies.
Corporate governance The manner in which an organisation is governed and how it deals with the various interests of its customers, shareholders, employees and society at large.
Corporate governance The manner in which an organisation is governed and how it deals with the various interests of its customers, shareholders, employees and society at large.
Corporate Social Responsibility The Green Book of the European Commission "Promoting a European framework for Corporate Social Responsibility" defines corporate social responsibility as the "voluntary integration of corporate social and environmental concerns in their commercial operations and in their relations with the parties concerned. [...] To be socially responsible - the Green Book states - does not only mean to fully meet the applicable juridical obligations but also to go beyond this by investing in human capital, in the environment and in the relations with the related parties".
Corporate social responsibility The European Commission's Green Paper "Promoting a European framework for Corporate Social Responsibility" defines CSR as “a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. [...] Being socially responsible means not only fulfilling legal expectations, but also going beyond compliance and investing ‘more’ into human capital, the environment and the relations with stakeholders”.
Corporate welfare Corporate welfare means the range of traditional and innovative solutions in response to specific areas of needs and interests of employees, providing them with services, initiatives and projects to enhance their wellbeing and also to improve the quality of life of their families.
Cost/income ratio A measure used to analyse management efficiency. It is equal to total operating expenses divided by total revenues.
Country risk The risk that a foreign government will not fulfil its obligations, due to political and/or financial events in the given country.
Covered bond Special bank bond that, in addition to the guarantee of the issuing bank, can also benefit from the guarantee of a portfolio of mortgage loans or other high-quality loans granted for the purpose to a special vehicle company.
CR01 Referred to a credit portfolio, it indicates the value variation it would undergo as a consequence of an increase of 1 basis point of the credit spreads.
Credit default swap/option Contract under which one party transfers to another the credit risk of a loan or security, against payment of a premium, at such a time when some event has caused a downgrading of the debtor's credit rating (in the case of an option, the right must be exercised by the purchaser).
Credit derivatives Derivative contracts that cause the transfer of credit risks. These products allow investors to perform arbitrage and/or hedging on the credit market mainly by means of instruments other than cash, to acquire credit exposures diversified in their maturity and intensity, to modify the risk profile of a portfolio and to separate credit risks from other market risks.
Credit enhancement Techniques and instruments used by issuers to improve the rating of their issues (constitution of sureties, granter of cash credit lines, etc.).
Credit risk The risk that the borrower will not be able to pay its debts.
Credit spread option Contract under which the protection buyer reserves the right, against payment of a premium, to collect from the protection seller a sum depending on the positive difference between the market spread and that fixed in the contract, applied to the notional value of the security.
Credit-linked notes Similar to bonds issued by the protection buyer or a vehicle company whose holders (protection sellers) - in exchange for a yield equal to the yield of a bond with the same maturity plus the premium received for credit risk hedging - take the risk of losing (in whole or in part) the maturing capital and the related flow of interest, upon occurrence of a specific event.
Credit/emerging markets (Funds) Funds that invest in securities with credit risk exposure, inasmuch as issued by financial or corporate issuers located in emerging countries.
CreditVaR Value that indicates an unexpected loss in connection with a credits portfolio at a time of confidence in a given period. The CreditVaR is assessed through distribution of the values of the losses and represents the difference between the average distribution value and the value corresponding to a certain percentile (usually 99.9%), which reflects the Bank's degree of willingness to take risks.
Cross-selling Activity designed to increase customer loyalty through the sale of integrated products and services to them.
Default Failure to make timely payment of interest or principal on a debt security.
Deficit An excess of liabilities over assets, of losses over profits, or of expenditure over income.
Delta-Gamma-Vega (DGV VaR) Parametric model for calculation of the VaR, able to assess risk factors having both a linear and non-linear trend.
Derivatives Financial instruments, including futures, options and swaps, whose value is based on an underlying asset, index or reference rate.
Desk It generally refers to an operating unit where a particular activity is mainly carried on.
Directional (Funds) Funds that invest in financial instruments that profit from market movements of a directional type, sometimes tied to analyses of a macroeconomic type.
Disclosure The revelation of a fact or a condition in a report or other financial document. The same term is used to indicate banking confidentiality under certain circumstances established by law.
Dividend That part of a company's profits after tax which is distributed to shareholders.
Dividend yield The yield a company pays out to its shareholders in the form of dividends. It is calculated by dividing the amount of dividends paid per share over the course of a year by the stock price.
Domestic Currency Swap Contract settled in euros, whose economic effect is equal to that of a time purchase or sale of a foreign currency in exchange for domestic currency. As it falls due, the differential between the time exchange as per the contract and the current cash exchange is settled in euros.
Dow Jones Sustainability Index Launched in 1999 and based on the cooperation of Dow Jones Indexes and SAM, the Dow Jones Sustainability Indexes are the first global indexes tracking the financial performance of the leading sustainability-driven companies worldwide. They include only the leading companies in each sector according to various sustainability parameters. Each year SAM invites the biggest 3000 companies in the world, subdivided into 24 sectors, to refer on their sustainability performance. The result of the Corporate Sustainability Assessment provides a detailed analysis of the economic, environmental and social achievements, as well as of corporate governance, with particular attention paid to specific risks and opportunities in all sectors.
Due diligence Process carried out by accountants and lawyers when a company is about to acquire another. It involves verifying a company's liabilities and financial performance.
Duration Constitutes an indicator of interest rate risk a security or securities portfolio is subject to. In its most frequent form, it is calculated as a weighted average of the due dates of interest and principal payments associated with a security.
Dynamics of provision Sum of deposits in a current account (free current accounts and bank drafts), returnable deposits upon prior notice (free savings deposits), time deposits (time savings deposits, certificates of deposit), repo agreements and bonds (including subordinate loans). Each technical form, with the exception of bonds, is shown for clientele residing in Italy, except for the central Administration, in euros and other currencies of reference. Bonds refer to the overall value of the documents of debt, independently of the place of residence and sector of the holder.
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