Glossary

  • ABI (Associazione Bancaria Italiana)

ABI (Associazione Bancaria Italiana)Italian banking association, representing, protecting and promoting the interests of the banking and financial system in Italy (www.abi.it).

  • Assets under management (AuM)

The value of money held in managed savings products, comprised of mutual funds, managed fund and share portfolios, life insurance policies and administered assets. In the case of Banca Generali, the reported value of assets under management refers to the money managed via the company’s three networks of financial advisors.

  • Assogestioni

The association of Italy’s fund- and asset-management companies (www.assogestioni.it).

  • Assoreti

The Italian association of brokerages and banks that sell financial, banking and insurance products to the public via financial advisor networks (www.assoreti.it).

  • Basel II

A set of recommendations, issued by the Basel Committee on Banking Supervision, that seek to set an international standard as regards how much capital banks have to put aside to protect against financial and operational risks.

  • Black-out period

Time during which, under Italian stock-market rules, corporate insiders are prohibited from buying and selling company shares. The rule applies for 30 days before board meetings called to approve annual and semi-annual results and 15 days before board meetings called for first- and third-quarter earnings.

  • Board of directors

The board of directors is a group of individuals who govern the affairs of a company. Board members in most legal jurisdictions have specific fiduciary duties whereby they must act for the benefit of the company. A board is either self-perpetuating or elected by the members of the company. In the case of a joint-stock company, the board is almost always elected by the owners (shareholders) of the company. The main duties of the board are to choose the chief executive officer and other officers to run the day-to-day operations of the corporation and to exercise high-level oversight. Typically corporate boards are involved in issues of ownership, strategy, financing and mergers and acquisitions.

  • Cash flow

Financial flow generated in a company in a given period of time. More precisely, it is the amount by which income (revenue from business not on credit) exceeds financial outlays (running costs for the period which have required cash payment).

  • CESR

The Committee of European Securities Regulators is an independent committee of European securities regulators, with mainly consultative rather than regulatory functions. It aims to improve coordination among regulators and help with the implementation of community legislation in European Union states.

  • Consob

Consob is the authority responsible for oversight of Italy’s market for financial products, aiming to protect investors and promote efficiency, transparency and market development (www.consob.it).

  • Corporate governance

A set of rules with which to oversee and regulate management and control of companies. Through the institution and operation of internal bodies (board of directors, shareholders' meeting, board of statutory auditors) and external controls (Consob and auditing companies) the corporate governance system defines the division of roles and rights among the participants in company life by assigning duties, responsibilities and decision-making powers.

  • Cost/income ratio

A measure of efficiency at financial companies and banks. It is calculated based on the following formula: (total administrative expenses + other expenses – other Income) / total income.

  • Discretionary portfolio management GPF and GPM

Also referred to as a managed or controlled accounts, this involves the discretional and personalized management of investment portfolios, including one or more financial instruments, on the basis of a mandate delegated by clients.Discretionary portfolio management in Italy is divided into GPFs (gestioni patrimoniali in fondi) and GPMs (gestioni patrimoniali mobiliari).
GPFs invest in collective investment undertakings (mutual funds, investments and open-ended mutual funds/Sicavs).
GPMs invest directly in transferable securities (shares and/or bonds). They can also invest in collective investment undertakings (mutual funds and open-ended mutual funds/Sicavs).

  • Dividend

The dividend is the remuneration distributed annually to shareholders by a company, in return for capital invested. The notion of dividend is closely connected to that of profit for the period. Once a resolution has been passed on the earnings, shareholders become entitled to the payment of the dividends. The dividends can be made up of the available profits for the period and the reserves.

  • Earnings per share

Net earnings divided by the number of shares representing the share capital.

  • Financial advisor

The person that must be used by companies including investment firms, asset-management providers and banks when offering financial instruments or investment services and activities outside of their own offices. The financial advisor carries out this professional role as an employee or agent of the company. The financial advisor is exclusively bound to work with only one provider and must be signed up with a specific register.

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  • IAS/IFRS

The IAS (International Accounting Standards) are issued by the International Accounting Standards Board (IASB). The standards issued after July 2002 were known by the acronym IFRS (International Financial Reporting Standards).

  • ISIN code

The International Securities Identification Number is a 12-character alphanumerical code that identifies a security (bond, stock, warrant or commercial paper). The numbering system is standardized by ISO 6166.

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  • MiFID

The Markets in Financial Instruments Directive (MiFID) is the European directive 2004/39/CE that came into effect on 1 November 2007.
This legislation derived from the need to lay out a coherent legal framework for Europe to cope with the increasing complexity of markets, number of investors, services and financial instruments.

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  • OICR

The Italian acronym for collective investment undertakings (organismi di investimento collettivo del risparmio) such as open and closed-end mutual funds and Sicavs (see Sicav).

  • Open architecture

In finance, the policy of offering consumers a choice of third-party, rather than proprietary, products and services. It has emerged as a cost-effective and flexible means to access a wide range of investment vehicles without restricting fund selection to one provider.

  • Payout ratio

The amount of dividends paid expressed as a percentage of net income.

  • Private banking

This term generally refers to the offering of personalized and high-quality financial services to a limited number of clients with significant wealth and complex financial needs.

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  • Return on equity (ROE)

A measure of profitability, measuring the rate of return for the company’s common shareholders, the only providers of capital who do not have a fixed return. It expresses net income divided by equity capital.

  • Risk management

The process of analyzing exposure to risk and determining how to best handle such exposure.

  • SGR

The Italian acronym for asset management companies (Società di Gestione del Risparmio), which are authorized to carry out collective management of savings products (the promotion, creation and organization of mutual funds and/or managed accounts investing in collective investment undertakings set up by itself or others). The SGRs manage the assets in funds, choosing which securities to buy and sell, how much to hold in cash, the composition of each portfolio and the division between more or less risk. In addition to such collective management products, the can also provide management services on an individual basis for third parties (portfolio management). Italian asset management companies must receive an authorization from the Bank of Italy, which gives its approval in consultation with Consob.

  • Share

This term is used to indicate the minimum and virtual part into which the corporate capital of a joint stock company can be broken down, the corporate interests and the document that incorporates those interests.

  • Shareholders' equity

Includes share capital, capital reserves, accumulated earnings and residual earnings for the year.

  • Sicav

The Italian acronym (standing for Società di Investimento a Capitale Variabile) indicating companies that have as their sole purpose the investment of their assets, which are gathered through a public offer of their own shares. They are known as investment companies with variable capital (in the UK) or open-ended mutual funds (in the US). Sicavs differ from mutual funds in that a fund’s assets are separate from those of the asset-management company (SGR) and investors buy units of the fund. In the case of Sicavs, however, investors are shareholders in the company and buy shares of the investment company. Each Sicav can be divided into sub-funds specialized in certain types of investments (for example, in stocks or bonds).

  • SIM

The Italian acronym for brokerage companies (Società di Intermediazione Mobiliare), which are authorized to provide investment services such as the distribution of financial products, securities trading (its own or client accounts), to handle orders and carry out trading directly. To operate outside their own offices, they must use financial advisors. Italian brokerages must be registered with Consob.

  • Stock grant

A form of remuneration under which key managers are awarded shares in the company, usually related to strategic and economic performance.

  • Stock option

The right to acquire or sell a share at a certain price within a set period. This tool is widely used as an incentive and compensation to employees, especially the top managers of large companies, linking remuneration to the performance of the company share.

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  • Vesting period

The time before shares are unconditionally owned by an employee in an stock-option plan. Typically the entire grant does not vest at one time. Specific percentages of the grant vest at designated periods of time over the life of the grant.

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