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CAD
Capital adequacy
The measure of the sufficiency of a bank to meet its business and regulatory obligations.
Capital Adequacy Directive
The 1993 European Directive (93/6/EEC) expanding the Basel regime to Investment Firms as well as introducing regulatory capital requirements for market risk.
Capital Assessment Process
Capital Charge
The amount of regulatory capital that must be assigned for credit risk, market risk and operational risk. This must not exceed eligible Tier 1, Tier 2 and Tier 3 capital.
Capital Ratio
The ratio of an institution's own capital resources to its risk weighted assets.
Capital Requirements Directive
The proposed for the amendment of the Consolidated Banking Directive (2000/12/EC) and the Capital Adequacy Directive (93/6/EEC), under which the revised Basel Accord will be implemented in the EU..
Capital Resources Requirement
The amount of regulatory capital resources that a firm must hold. Synonym for Capital Charge.
CCF
CEBS
Ceiling
Maximum. On a sliding scale, the ceiling would be the maximum percentage or amount that would apply.
CFP
Collateralised transaction
A transaction for which the borrower provides assets (physical or financial) as security against part, or the whole value, of a loan. The assets would become the property of the lender should the borrower fail to repay the loan; for example a mortgage, in which the property provides the collateral.
Comitology
The delegated authority process under which the technical provisions of a European directive can be amended.
Committee of European Banking Supervisors
Advisor to the European Commission on banking policy issues and responsible for promoting convergence of supervisory practice throughout the European Union. The Committee also fosters common implementation and consistent application of Community legislation.
Consolidated supervision
The requirement to calculate capital requirements for an entire financial group rather than for an individual bank. This process is to ensure that the group as a whole has capital adequate to cover the risks in its regulated and unregulated entities.
Contingency Funding Plan
A plan of contingency measures for managing and preserving liquidity in various adverse situations.
Core capital
Also called Tier 1 capital. The equity (share capital) and retained earnings of a financial institution.
Corporate lending
Lending by a financial institution that is made to an incorporated company rather than to an individual.
Council Working Groups
Groups of Member State officials. Chaired by the EU Presidency and set up to discuss specific European legislative proposals before discussions by Council..
Counterparty
The party to which a financial institution has loaned money, offered an overdraft, accepted a deposit etc.
CRD
Credit Conversion Factor
The weighting applied to off-balance sheet items to determine their exposure value (based on the type of exposure) under the Standardised Approach to credit risk, before applying credit risk weightings.
Credit derivatives
Products such as futures, options and swaps, which derive their values from the movement in price of the underlying bank assets on which they are secured.
Credit Institution
An undertaking that receives deposits or other repayable funds from the public and grants credits from its own accounts e.g. bank, building society or investment firm (from the Banking Consolidation Directive).
Credit risk
The risk that a borrower (counterparty) will not repay a loan.
Credit Risk Mitigation (CRM)
Techniques to reduce the credit risks to which a financial institution is exposed. Exposures may be collateralised, they may be guaranteed by a third party, or an institution may purchase a credit derivative to offset various forms of credit risk. Additionally they may agree to net loans owed to them against deposits from the same counterparty.
CRCR
Credit Risk Capital Requirement. The capital charge (or capital resources requirement) for credit risk.
CRR
Default
The failure by a party to fulfil its obligations on a loan repayment, future or options contract when they fall due (for regulatory purposes, if the obligor is unlikely to pay or is more than the specified number of days overdue on a repayment).
Defined Liquidity Group
A group of entities which the FSA has agreed a particular firm may rely upon for liquidity support or that rely upon the firm for liquidity support.
Disclosure requirements
The requirements under Pillar 3 for a financial institution / group to disclose information demonstrating how they meet their capital requirements.
DLG
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