NATIXIS - 2018 Registration document and annual financial report

ADDITIONAL INFORMATION Glossary

Acronym/Term

Definition

International Accounting Standards International Accounting Standards Board

IAS

IASB IBOR

lnterbank Offered Rate

Internal Capital Adequacy Assessment Process, a practice required under Pillar II of the Basel Accords to ensure that firms have sufficient capital to cover all their risks

ICAAP

Infrastructure Development Finance Company

IDFC IFACI

French Institute of Internal Auditing and Control (Institut Français de l’Audit et du Contrôle Internes). International Financial Reporting Interpretations Committee (IFRIC)—IFRIC 21, adopted by the European Union in June 2014, is an interpretation of IAS 37 “Provisions, Contingent Liabilities and Contingent Assets.”

IFRIC 21

International Financial Reporting Standards

IFRS

International Monetary Fund

IMF

The capital requirement intended to cover issuers’ credit migration and default risks for a period of one year for fixed income and loan instruments in the trading book (bonds and CDS). The IRC is a 99.9% value-at-risk measure; i.e. the greatest risk after the elimination of the 0.1% worst-case scenarios. Encompasses asset and liability risks (interest rate, valuation, counterparty and forex risk) as well as risks related to the pricing of mortality risk premiums and the risks associated with life and non-life insurance, including pandemics, accidents and natural disasters (such as earthquakes, hurricanes, industrial accidents, acts of terrorism and military conflict). A long-term rating of a counterparty or underlying issue awarded by a rating agency, ranging from AAA/Aaa to BBB-/Baa3. A rating of BB+/Ba1 or below is considered non-investment grade. Internal-ratings based, referring to the Internal Ratings-Based Approach, the measurement of credit risk on the basis of credit ratings as defined by EU regulations.

Incremental Risk Charge (IRC)

Insurance risk

Investment grade

IRB

Incremental Risk Measure

IRM

Interest Rate Risk in the Banking Book. IRRBB designates the current or future risk to which the bank’s capital and profits are exposed due to adverse interest rate fluctuations influencing positions in the banking book.

IRRBB

Information system

IS

International Swaps and Derivatives Association

ISDA

Wealth Tax (Impôt Sur la Fortune)

ISF ISP

Investment service provider

8

Independent wealth management advisor

IWMA

Joint Venture

JV

Loans and receivables

L&R LBO LCR

Leveraged buyout

Liquidity coverage ratio

The leverage effect accounts for the rate of return on equity based on the after-tax rate of return on invested capital (return on capital employed) and the cost of debt. By definition, it is equal to the difference between the rate of return on equity and the return on capital employed.

Leverage effect

Financing through debt

Leverage/leveraged financing

Loss given default, a Basel 2 credit risk indicator corresponding to loss in the event of default. It is expressed as a percentage (loss rate).

LGD

London Interbank Offered Rate

LIBOR

In a banking context, liquidity refers to a bank’s ability to cover its short-term commitments. Liquidity also refers to the degree to which an asset can be quickly bought or sold on a market without a substantial reduction in value. A measure introduced to improve the short-term resilience of banks’ liquidity risk profiles. The LCR requires banks to maintain a reserve of risk-free assets that can be converted easily into cash on the market in order to cover its cash outflows minus cash inflows over a 30-day stress period without the support of central banks.

Liquidity

Liquidity coverage ratio (LCR)

A mechanism that warns of loss

Loss alert

See LGD

Loss Given Default

Total losses paid to settle claims divided by premiums paid

Loss ratio

575

Natixis Registration Document 2018