The bluffers' guide to banking jargon. . .
BANKERS love jargon almost as much as computer geeks and doctors but, unlike the geeks and consultants who need specific words to describe often complex concepts, most banking is relatively simple.
Most of the jargon is a deliberate smokescreen to confuse and befuddle the shareholders, which in the case of Anglo Irish Bank is you, your family and friends.
While it is a shame that a bank run by an Australian and a Dutchman should indulge in such games, Anglo's results are littered with mumbo jumbo, which merely states the obvious or hides massive losses and mistakes in complex sentences.
Here are some of the choice quotes from the report. . . and what they really mean:
- "Further capital will be required, and while the amount needed is largely dependent on the future direction of commercial property markets, the performance of the wider economy and the level of discounts applied on the transfer loans by NAMA, it is imperative that the proposed restructuring plan is approved and promptly implemented so as to minimise the overall financial burden on the Exchequer." -- Do what we say, although we have no idea how much it will cost you.
- "As a consequence of the losses incurred during the period, the Minister for Finance and the bank agreed to a further recapitalisation to ensure compliance with minimum regulatory capital requirements." -- We were broke, begged Brian Lenihan to stop us going to the wall, and he agreed.
- "The cost of funding, both for customer deposits and wholesale funding, increased materially during the period" -- We have to pay an awful lot more to borrow money these days.
- "Costs incurred relating to restructuring activities, the NAMA process and ongoing legacy issues and external reviews were €14m" -- We are paying quite a bit to our lawyers as the gardai and Office of the Director of Corporate Enforcement snoop around looking for evidence of alleged wrongdoing.
- "The Core Tier 1 ratio was 11.2pc and the Tier 1 ratio was 11.6pc. These ratios include the benefit of derogations granted by the Financial Regulator and the additional capital contribution of €8.58bn." -- We would be closed down if the Financial Regulator hadn't bent the rules.
- "As a result of the transfer of assets to NAMA it is expected that risk weighted assets will decline further" -- Our problems are now your problems.
- "The composition of the bank's funding profile has continued to deteriorate since December 31 2009 with further declines in customers' funding balances and unsecured deposits from market counterparts." -- Customers are pulling out money and we'd be toast without the ECB.