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Banking and Securities Dictionary, Armando ... - sbancos.gob.pa

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Banking and Securities Dictionary, Armando ... - sbancos.gob.paAND,and

    T R A N S L A T I O N

    GLOSSARY I

    IDENTIFICATION

    Recognition and verification that a person is the same that is supposed to be or the one looked for.

IDENTITY

    Identical quality, absolute equality. Profile, personal characteristics.

IGNORANCE

    Lack of knowledge of something. Lack of news or reports. Lack of ideas about something.

    In Panama, lacking legal knowledge does not absolve you of your responsibility.

ILLEGAL

    Contrary to law.

ILLIQUID

    Anything that cannot be quickly or easily exchanged for money.

ILLIQUIDITY

    Lack of enough money in circulation to ensure the development of normal economic activities.

IMAGE

    The way a company, financial institution or bank is perceived by others or the general public.

For banks and other financial institutions that handle people’s money, giving a good

    image is very important.

IMPORTATION

    Procurement of goods or services from another country. The concept also applies to capital or labor, etc.

IMPORTS

     The volume of goods, services, and capital acquired by a country from one or more countries. Represents the CIF (COST, INSURANCE, FREIGHT) of imported goods, as well as freight and insurance services purchased abroad.

No. Ref: SG-TRAD-2010156 Prepared by: S.L. de Sánchez Date: 22/06/2010

    T R A N S L A T I O N

    IMPUTED INTEREST

    It is that of which is represented by the difference between the purchase price of the financial asset and its selling price, equivalent to a certain interest rate. This type of financial asset is said to be acquired at a discount.

INCIDENT

    The incident is when an unfavorable event occurs under the insurance contract, affecting the assets of the insured; it is the occurrence of risk.

    We can say that the incident is an event that causes actual damages that has been anticipated as covered in the policy, bringing the payment of the appropriate compensation, which requires the insurance company to compensate the losses to the insured or his beneficiaries, based on the insured amount limit established in the contract or policy, subject to its conditions.

INCOME

    All those resources that individuals, corporations or governments get from the use of wealth, manpower or any other reason to increase their wealth.

INCOME TAX

    Contribution that is caused by receiving income from natural or juridical persons that are subjected to the Law on Income Tax.

INCORPORATION AGREEMENT

    A notarized document or record which records the data concerning to the formation of a corporation or association. There are specified the bases, purposes, group members, specific roles of each, authenticated signatures and other essential information of the corporation.

INDEX

    Relate the value of a property to another, so that the change in the value of the latter is automatically reflected in the former.

INDEXING

    System used to compensate the loss of value of long-term liabilities (loans, debts, liabilities, salaries, etc.) due to currency devaluations or inflation. Consists on setting an index (CPI, the value for a good or service, etc) that serves as a reference for determining the performance or development of such item (for example, if the CPI by one year increases by a specific percentage, previous year’s

    wages will increase by the same percentage).

INDUSTRIAL CREDIT

    It is the sale of accounts receivable, previously setting a discount.

INDUSTRIAL PARTNER

    No. Ref: SG-TRAD-2010156 Prepared by: S.L. de Sánchez Date: 22/06/2010

    T R A N S L A T I O N

    In contrast to the capital partner, he is a partner that provides to the company services and technical, scientific or artistic knowledge and as the former has the right to participate in the future distribution of profits.

INFLATION

    Situation affecting the economy generally characterized by a general rise in prices due to an increase of money circulation and drop or stagnant in supply of goods and services.

INFLATION RATE

    Indicator of sustained growth of prices of goods and services expressed as a percentage relative to the period of time.

INSOLVENCY

    It is the inability of a natural or juridical person to meet his debts or liabilities. Insolvency can be definitive when the liabilities are greater than liquid assets, causing the bankruptcy case of a debtor’s business (trader, sole trader or corporation); or temporary, which is equivalent to temporary liquidity shortage resulting in calling a debtor or the approval of the debt relief/grace period.

INSOLVENT

    A natural or juridical person that cannot afford to pay his debts or cannot meet his liabilities because of lack of resources.

    Person unable to meet his debts and obligations./Person having liabilities greater than real assets.

INSURANCE

    Contract whereby an insurance company is obliged to compensate damage or pay a sum of money, by a certain amount of money received as payment (premium), if an accident (theft, fire, etc.) or a pre-agreed circumstance (death, retirement, etc.) occurs.

    In Panama, insurance business is regulated by the Commercial Code, Book I, Title XIX, Chapter I, in Law No. 59 of 20 July 1996.

INSURANCE CONTRACT

    Document or policy issued by the Insurance Company whereby any type of insurance is contracted. In this document are provided the rules that will govern the insured insurance company relationship, specifying their respective rights and obligations.

INSURANCE INSTITUTIONS

    Company duly organized according to the General Law of Institutions and Mutual Insurance Companies, which insures risks of others and are dedicated to one or No. Ref: SG-TRAD-2010156 Prepared by: S.L. de Sánchez Date: 22/06/2010

    T R A N S L A T I O N

    more of the following insurance: life, accidents, illness and injuries in some of the following items: third party liability and professional risks, maritime and transportation, fire, agriculture, vehicles, credit, miscellaneous and special.

INSURED

    Strictly speaking, it is the person itself or its assets or economic interests is at risk and that under such has hired an insurance company.

INSURED AMOUNT

    This may be defined as the value set forth by the owner of the insurance contract, to the property covered by the policy and which is the maximum liability amount that the Insurance Company is obligated to pay, in case of incident.

INSURED VALUE

    It is the evaluation of the insured property, subject to security in an insurance policy.

INSURER

    It is the juridical person, by concluding an Insurance Contract, assumes the harmful consequences caused by the completion of an event whose risk is under coverage.

INTERBANK DOLLAR CASH

    U.S. dollar cash.

INTERBANK MEXICAN PESO/U.S. DOLLAR EXCHANGE RATE

    United States dollar price in term of Mexican pesos to be used for wholesale transactions in dollars, between the exchange desks of banks. There are three types: same day rate (cash), 24-hour rate, and 48-hour rate (spot).

INTERBANK RATE

    It is the interest rate at which banks are willing to buy and sell among themselves their excess reserves.

INTEREST

    Price paid for the money borrowed. Revenue, profit rate or capital gain, which usually results or is payable based on a percentage of the capital and in connection with the time that is available. It is simply the price paid for the use of loanable funds.

    It is the income generated from the granting of credit, commercial and other credits.

    In a free and simple economy, interest rates, as all other prices must be subject to the law of supply and demand. When there are more borrowers that lenders, interest rates rise, when there are more lenders than borrowers, rates go down.

No. Ref: SG-TRAD-2010156 Prepared by: S.L. de Sánchez Date: 22/06/2010

    T R A N S L A T I O N

    Moreover, interest is directly related to the risk. When the greater the potential risk (of not recovering the borrowed capital); the greater the interest. For that reason, interest on long-term loans should be higher than that for short-term loans.

    It is generally accepted as true that longer a loan, the greater the risk incurred by the creditor.

INTEREST CAPITALIZATION

    When the interest on a one-year term deposit is payable monthly, quarterly or semiannually, the customer may choose between cash them (withdrew them) to each term or leave them in that account (i.e. capitalized) until the maturity of the deposit.

INTEREST RATE

    This is the valuation of the cost involved in the possession of money from a loan. There are lending rates and deposit rates.

    It is the revenue that causes an operation, over time, and is expressed in percentage respect to the capital that produces it.

It is the price paid for the use of loanable funds.

Percentage applied to calculate the interest.

    It is regulated by the Superintendency of Banks through Agreement No. 3-2002 of 27 March 2002.

Percentage applied to calculate the interest.

INTEREST RATE RISK

    In economic theory, when differences or changes in interest rates may affect the value or solvency of the investment.

INTEREST TO MATURITY

    Calculation of the average return rate of securities until their expiry date.

INTERMEDIATE GOODS

    They are those material resources, goods, and services used as intermediate products during the production process, such as raw materials, fuel, office supplies, etc. Purchased for resale or used as supplies or raw materials for production and sale of other goods.

INTERNATIONAL LICENSE BANK

    It is the one engaged, from an office established within Panama, transactions that are perfected, consummated or have their desired effect outside the territory of the No. Ref: SG-TRAD-2010156 Prepared by: S.L. de Sánchez Date: 22/06/2010

    T R A N S L A T I O N

    Republic of Panama, and to carry out whatever other activities that may be authorized by the Superintendency of Banks.

INTERNATIONAL MONETARY FUND (IMF)

    Institution established by the Conference of Bretton Woods, New Hampshire, in 1994, whose purpose is to serve as guardian of the World Monetary System. Although the regulations and the organization of the IMF are very complex, essentially its primary function is to establish exchange rates for world currencies. It is the obligation of member countries to register their exchange rate, in U.S. Dollars, with the IMF, and maintain it. So, the IMF is the primary component of the system of dollar-exchange standard and the system of fixed exchange rates for everyone. The IMF’s own funds, given by member counties, which may be lend to countries to help them develop temporary difficulties in their payment balance. Furthermore, in the late 60’s, the IMF began to issue a new type of reserve unit, the Special Drawing Rights. At that time these units were given the new name of “gold paper” as they were accounting units defined in terms of gold, which could be used

    to settle debts on the same basis as gold.

INTERNET

    Internet is the name given to a vast network of powerful computers interconnected.

    The Internet, sometimes called simply “The Net”, is a worldwide system of computer networks, a set composed of the different networks in each country of the world, through which a user on a computer can, in case of having all the appropriate permissions, access information from another computer and even have a direct communication with other users on other computers.

INTERVENED BANK

    Credit institution supervised by any government agency because of irregularities in the operation or maladministration.

INTERVENER

    Person who intervenes and pays a bill of exchange when the drawee or acceptor refuses to pay on the due date.

    “Employee who authorizes and oversees for the transactions to be made in accordance with the rules.”

INTRINSIC VALUE

    In the stock market, value that scholars or analysts give to a share. It is obtained through the survey of the data reflecting the economic activity of the company, this means, the balance sheets, income statements, and future prospects.

INVENTORY TURNOVER

    Number and investment recovery times during an exercise.

No. Ref: SG-TRAD-2010156 Prepared by: S.L. de Sánchez Date: 22/06/2010

    T R A N S L A T I O N

    INVESTMENT

    Using an amount of money for the purchase of durable goods or securities. Expenses incurred to keep running or expand the productive equipment of a company. Goods and services produced but not consumed.

    Remaining amount of money, which is intended to gaining revenue through financial or banking instruments.

INVESTMENT BANK

    Most investment banks are not really banks, at least in the classical sense of the word. Indeed, its main activity is pure intermediation in the capital markets in the medium and long term.

    Rather than taking and lending funds on their own, they prefer to put on investors and policy-money operations, transferring credit risk to their clients. They are also engaged in financial advisory, advising their investor clients, and providing technical assistance in the purchase and sale of companies and mergers. In some countries, Investment Bank is part of the same bank as a department.

INVESTMENT COMPANY

    Juridical person whose purpose is the acquisition of securities and instruments selected in accordance with the principle of risk diversification, with funds from the placement of shares representing its capital from the investing public. Limited corporation duly authorized by the State to receive public funds and invest them in a variety of securities in order to offer investors, especially medium and small ones, the opportunity to participate in the stock market and thus diversify their risks.

INVESTMENT SCHEME

    Set of guidelines and limitations established by the authority to define financial instruments and maximum and minimum limits in which to invest.

INVESTOR

    Person providing to another the necessary funds to carry out his economic activities. Also, it is used to call the person that buys securities or invest his money in some project to get a profit from it.

INVOICE

    Document issued to indicate a sale, in which is registered the date of the transaction, the buyer, the seller, their Federal Taxpayer Registry, agreed terms, quantity, description, price and total amount of goods sold.

IRREGULAR DEPOSIT

    Generically, the one set up on consumables and specific things about money in which the depositary is obliged to return as much of the same kind and quality.

No. Ref: SG-TRAD-2010156 Prepared by: S.L. de Sánchez Date: 22/06/2010

    T R A N S L A T I O N

    IRREVOCABLE

    Something that cannot be annulled without the previous consent of all concerning parties.

    This term is often used in connection with documentary credits, due to the irrevocable status as one of its most important features.

    Most commercial and financial contracts are irrevocable, except under certain circumstances, which must be clearly specified in the text thereof.

    Payment orders may be irrevocable, but usually are not. The possibility of revoke them, however, lasts only until the moment of execution. Once payment has been made, in cash or credited to the beneficiary’s account, the order cannot be revoked.

    The term is somewhat paradoxical, since any irrevocable commitment may actually be revoked if, as noted above, all parties agree to do so.

ISSUER

    The issuer of a document is the person that prepares it, fills it, and signs it first. He can issue the document on behalf of another person or being himself the beneficiary. Indeed, the promissory note (for example) is usually signed by the issuer to a creditor. But the bill, for example, is issued by a debtor to accept it on behalf of the issuer.

    At the same time, in case of a documentary credit, the issuer is usually the importer’s bank, and the credit is issued in favor of the exporting beneficiary.

    ---------------

    Sources: Decree Law No. 9 of 26 February 1998 and its by-laws Commercial Code Encyclopedic Dictionary, Guillermo Cabanellas Dictionary of Financial and Banking Terms, Robert Marcuse Banking and Securities Dictionary, Armando Ibarra Hernández, Ed. Porrúa. Dictionary of Business and Economics, Arthur Andersen, Ed. Espasa Calpe

No. Ref: SG-TRAD-2010156 Prepared by: S.L. de Sánchez Date: 22/06/2010

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