Financial glossary EnglishUnderstand the world of finance, plan your futureOpening a bank account is an important thing you can do to guarantee your participation in an economic and social (education, employment) world. It is not only thefirst step in opening up new horizons; it will enable you to realize your plans andyour future. We have put together this glossary of definitions to better understandterms and practices used in the world of finance. This comprehensive dictionary willexplain in everyday language the most important financial terms you might comeacross. You will come to rely on this as a valuable reference for your banking trans actions.This financial glossary is available in German, English and Arabic.We are a cooperative bank; the needs of our members are our main concern.We provide our clients and members with a wide range of banking products andservices at every branch. We are especially committed to fair, transparent and personalized consultation; our cooperative consultation follows the principle of listeningcarefully before offering advice.We’d like to invite you to come in and talk with us, person to person.Volksbank RaiffeisenbankDeutscher Genossenschafts-Verlag eGLeipziger Straße 3565191 Wiesbaden7173262www.vr.de3

What setsus apart:1.4The cooperative idea is based on values such asfairness, transparency and trust. In Germanyalone, over 18 million people are members ofour cooperative banks.2.Together with our partners in the VolksbankenRaiffeisenbanken Cooperative Financial Network,we always find the right financial solution.3.Every fifth person in Germany (20%) is a memberof a cooperative bank, which is democraticallycontrolled by its members.4.To help you achieve your goals and desires, ourcooperative counseling offers personal, fair, andtransparent advice on equal terms.5.6.With our 12,700 branches and 19,600 ATMs, weare where you are in Germany.7.As an independent bank, we understand thesmall and medium size business model. Thismakes us a reliable partner for the SME sector.8.Every year we donate approximately 140 millioneuros for social and charitable purposes and payour taxes in the regions of Germany.We offer our over 160,000 employees a varietyof career opportunities and 4,000 trainees theirentrance into the world of finance.5

ALLOWANCE OR POCKET MONEYAACCOU NTCASHBAN K TRANSFE R OR DE RKONTOThis is a “service contract” between customer and bank. It indicates a customer‘s cash or stock inventories and thechanges these go through by way of incoming and outgoing payments, or credit and debit entries. The term “account”also includes, for example, the giro account, savings account, fixed-deposit account, a credit card account or a loanaccount. Account holders may be natural persons, judicial persons, companies or groups of individuals.Minors may not open an account without the consent of their legal guardians or parents, according to § 107 of theGerman Civil Code. It is however possible for children from age seven years to legal age to open a “first” savings account(Jugendgirokonto) when requested by their parents or other legal representative.ÜBERWEISUNGTransferring money is a very common form of cashless payment. A transfer form is an instruction to the bank issued bythe account holder (bank customer). This instruction order is a request to transfer a sum of money from the customer‘saccount into a third party account. The transfer order is therefore a transfer of an amount of money between two bankaccounts.BAUSPAR KASSE (BU I LDI NG SOCI ETY)BAUSPARKASSEThese building societies are specialized banks to finance construction projects.ALLOWANCE OR POCKET MON EYTASCHENGELDBON D (OR FIXE D-I NTE R EST SECU R ITY)Money, for example, that children receive from their parents for personal spending. An allowance might teach childrenand youths responsible money management, for example how to save money.BBALANCEBonds are instruments issued by any company to raise capital – the public sector also issues bonds (e.g. governmentbonds) in the same way. The price of a bond traded on the stock market is expressed as a percentage of their nominalvalue, which is in contrast to a share price which is expressed at face value.SALDOThis is a bookkeeping term that plays an important role in daily life. It shows up on account statements, invoices andbudget plans. The balance on a bank statement is for instance the difference between the inflow (credit) and outflow(expenditures) of an account. The balance is especially important if you want keep track of your money transactions.If influx exceeds payments, then your balance is in the black (plus). However, if it‘s the other way around, then yourbalance is in the red (minus) and should be taken care of as soon as possible. To keep track of your own finances andto avoid getting into debt, it is a good idea to keep to an inflow-outflow plan.By the way, a Jugendgirokonto (first savings account for children and young people) can not go into the red; it is notpossible to overdraw this type of account.BAN K (CR E DIT I NSTITUTE)BUSI N ESS I DE NTI FI E R CODE (B IC)International bank routing number: BIC stands for Business Identifier Code (up until the end of 2010 it meant BankIdentifier Code). It is the international standardized bank code. The BIC, frequently also termed as SWIFT Code,is a second identifier in addition to the IBAN each bank requires to transfer payments.The BIC allows credit institutes all over the world to be uniquely identified. The BIC has either 8 or 11 digits.The fifth or sixth digit identifies the country (for example DE for Deutschland/Germany).The BIC of a bank can be found on any bank statement or on the bank‘s online portal. A recipient‘s BIC is indicatedon every invoice.CALL DE POSIT ACCOU NTTAGESGELDKONTOMoney put into a call deposit or instant access account (Tagesgeldkonto) is accessible with no restrictions; the interestrate is not fixed but flexible.CASHBAN K CAR DBUSINESS IDENTIFIER CODE (BIC)BANK (KREDITINSTITUT)Banks are specialized companies that provide various services related to money, for example, cashless payment transactions, investment, lending, securities services and bonds. They also supply commerce and the public with cash. Banksplay an important role within the monetary and economic cycle, as they provide for a balance of interests acting as anintermediary between investor and borrower. In business terms banks are also referred to as financial intermediaries.CBARGELDBANKKARTEThe bank card enables the cashless execution of different types of payment. It is sometimes called a debit card,or in Germany “giro card”. In Germany it is also commonly referred to as “EC card”.6ANLEIHE (AUCH FESTVERZINSLICHES WERTPAPIER)Banknotes and coins. Banknotes are paper money, coins are embossed pieces of hard metal. Coins supplement thecirculation of banknotes for small payments.7

finanzgruppe.deVOLKSBANKEN RAIFFEISENBANKENCOOPERATIVE FINANCIAL NETWORKCONTR I BUTIONS TO CAPITALEINLAGENAmounts of money that customers put into an interest-bearing account. These can be demand, term or savingsdeposits. There is no limit to the number of deposits into these accounts and the investor can request the money fromthe bank after a period of notice.COOPE RATIVE BAN KSGENOSSENSCHAFTSBANKENThe legal form of a registered cooperative of banking institutions. They are for example (in Germany) the Volksbank,Raiffeisenbank, Sparda-Bank or PSD Bank. They execute all normal banking transactions. Cooperative banks operate asuniversal banks and are an important cornerstone in the German banking sector. The equity capital of a cooperativebank is comprised of every cooperative members’ purchased share capital. In Germany there are around 1,100cooperative banks (Volksbanken, Raiffeisenbanken, Sparda-Banken, PSD Banken and cooperative specialized banks).There are over 18 million people in Germany that bank at a cooperative bank.CR E DIT CAR DKREDITKARTEA bank card for the cashless payment of goods and services, whereas the amount is usually pre-financed. The paymentwill therefore be subtracted at a later date from customer‘s bank account. Major credit card companies are the international card organizations MasterCard and Visa.CR E DIT RATI NG (CR E DITWORTH I N ESS)BONITÄTThe credit rating of a person or a company describes their creditworthiness, or ability and willingness to pay back a loan.For example, the better the credit rating, the more likely the person or company will be able to receive credit.CU R R E NCYWÄHRUNGMonetary system of a nation or territory regulated for the maintenance of monetary stability.COOPE RATIVE CONSU LTATIONGENOSSENSCHAFTLICHE BERATUNGDI R ECT WITH DRAWALThe local cooperative banks (Volksbanken Raiffeisenbanken) are committed to the cooperative values of solidarity,responsi bility, respect, fairness and trust. These values build the foundation of cooperative consultation. The localcooperative banks follow these values and offer their members and customers financial products matching theseaims and requirements. Cooperative consultation takes individual investment philosophies and special needs intoaccount. The local cooperative banks always address their customers and members on equal footing, and as equalpartners.(VOLKSBAN KE N RAI FFE ISE N BAN KE N) COOPE RATIVE FI NANCIAL N ETWOR KGENOSSENSCHAFTLICHE FINANZGRUPPE VOLKSBANKEN RAIFFEISENBANKENThe Volksbanken Raiffeisenbanken Cooperative Financial Network consists of various central and specialized financialservice providers. These are around 1,100 independent cooperative banks and 11 autonomous specialized banks. Dueto the cooperative principle, every Volksbank Raiffeisenbank can rely on the varied financial services, products andknowledge of their partnered companies: for example, real estate savings and financing plans, private and voluntaryinsurance, private pension schemes and private investing.COOPE RATIVE SHAR EGENOSSENSCHAFTSANTEILLASTSCHRIFTThe direct withdrawal method allows a payment recipient (creditor) to withdraw payment from the account of a debtor(payer). Direct withdrawal is especially practical for regular payments such as telephone bills, newspaper subscriptionsand rent.DAn automatic transfer using this direct withdrawal method requires the prior authorization (direct debit order ormandate) of the payer. This authorization can be set up by the payer, either through his or her bank or with thepayment recipient.Currently there are two essential direct withdrawal methods in Germany, these involve: SEPA-based direct debiting transactions (direct debit mandate is the SEPA-Lastschriftmandat) for all bank customers and S EPA business-to-business direct debiting transactions (direct debit mandate is the SEPA-Firmenlastschrift-Mandat),which are restricted to corporate customers.DIVI DE N DDIVIDENDEThe dividend is the portion of annual profits a stock company pays to its shareholders, or a registered cooperative to itsmembers. The amount of the dividend is determined by the general shareholders‘ meeting, or the general or representative assembly of a registered cooperative. In Germany, dividend payments are usually paid out only once a year.The cooperative share is a calculated quantity which determines to what extent a member of a cooperative mayparticipate. The cost of a cooperative share is established in the articles of association.CR E DITKREDITA loan is granted for a limited time period with repayment at an interest rate. An agreement is entered into that statesthe amount of the loan made available to the customer and all other terms. The borrower agrees to repay the amountplus the agreed interest.89

EUROEuro area: EU Member States that haveadopted the euro as their currency(As of: January 2016)Euro areaEU Member StatesCountries not in the EUEE U ROG I RO BAN K ACCOU NTEUROCommon currency of the countries of the European Monetary Union.EXCESSIVE DE BTÜBERSCHULDUNGPayment transactions are executed by banks through special bank accounts. One well-known and useful bank accountform is the ”giro” account. The giro account allows both cash and non-cash payments such as transfers, direct debits andcredit card payments. Payment transactions between bank and customer are recorded and reported in the giro bankstatement. Incoming payments are credited to the customer, outgoing payments are subtracted.A long-term condition in which timely payment obligations can not be met after deducting the money required forbasic living needs. In effect, expenditures exceed income. Individuals of all ages, companies or even countries can beaffected.The difference between the credit entry and the debit entry constitutes the balance of an account. A negative balance( liability to the bank) is when debits exceed credited entries. A positive balance ( receivables from the bank) is viceversa.The most common causes for personal indebtedness are, according to the Institut für Finanzdienstleistungen e.V. are: unemployment, reduced working hours divorce / separation consumer behavior failed business sicknessThe term ”giro” stems from the Latin and means “circulation”, which describes the constant movement of an accountbalance due to additions and withdrawals.Debt counseling offers support to individuals to help them find their way back to a debt-free life. It is best to get intouch with creditors as soon as financial difficulties start, to work out feasible solutions with them as early as possible.Another possibility is to get in touch with the Deutschland in Plus ( foundation. They alsooffer help to end financial problems. Various cooperative bank initiatives run financial education projects which dealwith debt prevention.EXE M PTION OR DE R FOR CAPITAL GAI NSFREISTELLUNGSAUFTRAGAn exemption order for capital gains allows individual bank customers to authorize their bank to apply a tax exemptionon capital gains up to a certain amount ( 801 for singles / 1602 for marrieds). Spouses may choose to issue individualexemption orders or to apply jointly. When married couples apply jointly, at the end of a tax year a loss compensationprocess is conducted on both spouses with the 1,602 euros offset jointly against their taxes. The only requirement isthat the couple is not legally separated and living apart.The rules for spouses apply equally for life partners.FGIROKONTOFOR E IG N NOTES AN D COI NSSORTENI NSU RANCEVERSICHERUNGHaving insurance lessens the financial risk that may arise due to unexpected circumstances such as sickness, accidents,disability or unemployment.GIThere are two different types of insurances: those that are required by law and those that are taken out voluntarily.Social insurance is mandatory insurance covering the following: pension health insurance long-term care unemployment insurance accident insuranceThe benefits are defined by law. They are financed for the most part by employee and employer contributions. Oneexception is accident insurance. This is solely financed by the employer. Contributions for statutory social insurance aredetermined according to the solidarity principle: those with more, pay a higher proportion of their income, up to aspecified limit. This helps support those who do not earn much and therefore pay less. Payments into pension, sick payand unemployment benefits however observe the principles of equivalence; higher contributions justify higher benefits.There are however also voluntary insurances.They cover those risks that the statutory social insurance does not cover. An insurance policy is a written contract whichdetermines which risks are covered.A German term, always in the plural, referring to foreign currency in its physical form.For example, personal accident insurance covers risk of injury outside the workplace, as accidents happen most whenpursuing hobbies.FU N DI NGFINANZIERUNGAn umbrella term for all financial sector measures involving the acquisition and repayment of financing. Also known as“financing“. Financing can come from outside sources (external financing) into a company or from internal reserves.The latter is referred to as internal or self-financing.All monetary and tangible assets are recorded in a financial plan.10Personal liability insurance protects against claims resulting from damage caused by the policy holder. It offers protectionfrom many different types of legal claims which can have very, very long settlement periods. Children up to age 18 areprotected by their parent‘s liability insurance, and even older if they are still in college, university or vocational training.Damages caused by pets are not covered by liability insurance; owners have to take out private pet owner liabilityinsurance.11

INTERNATIONAL BANKACCOUNT NUMBER 10PrüfzahlCheckINVESTMENT OF MONEY(FINANCIAL le liability insurance is an acceptation. Since paying for the consequences of an accident can be long-term andfinancially overwhelming, vehicle insurance is mandatory for those who own a moped, motorcycle or car.In order to save for retirement and to close the gap between the last earned income and a statutory pension, it is agood idea to consider contributing into a private pension plan or opening an endowment policy. The latter not onlyserves as a pension plan, but also insures family members.MAR KET PR ICEKURSPrice or percentage value of the nominal amount of a security or a currency on the stock exchange; formation is basedon the principle of supply and demand.M E M B E RSH I P (OF A COOPE RATIVE BAN K)I NTE R ESTZINSPrice for borrowed capital the debtor pays the creditor.I NTE R NATIONAL BAN K ACCOU NT N U M B E R (I BAN)INTERNATIONALE KONTONUMMER (IBAN)IBAN stands for International Bank Account Number. It is a standardized international bank account number. The IBANconsists of an international country code and a verification number, as well as a number of digits that is determined byeach country. For Germany up until now these were the bank routing code and the account number. An IBAN consistsof a maximum of 34 alphanumerical digits. The length of an IBAN differs from country to country.The number of alphanumerical digits is however standardized within a country. In Germany the IBAN consists ofa total of 22 letters and figures.MMITGLIEDSCHAFT (IN EINER GENOSSENSCHAFTSBANK)Membership is the basis of the cooperative corporate constitution. The following elements comprise the three dimensions of membership: co-ownership, investment and profit-participation. As co-owners, members and investors simultaneously participate in the profits. Each member receives – irrespective of the amount of their equity contribution –one vote in the cooperative‘s general meetings. As a customer of the bank, you are allowed to make use of your bank‘sproduct and service range. More than half of the approximately 30 million customers of the local cooperative banks(Volksbanken und Raiffeisenbanken) are also members of their bank.(see also Cooperative Bank)MOB I LE BAN KI NGMOBILE-BANKINGMobile banking refers to the use of a smartphone or tablet device with internet access to perform online banking tasks.A customer‘s IBAN is found on his or her bank statement or bank card. The IBAN is also stated on every invoice.MOB I LETAN (TRANSACTION AUTH E NTICATION N U M B E R)I NVESTM E NT FU N DSINVESTMENTFONDS (AUCH FONDS)(Special assets) funds are the pooled contributions of investors applied according to the specific (e.g. securities, bankdeposits, real estate) strategy of the fund. Investment funds are managed by an investment company, the investorreceives fund shares.Similar to SmartTAN plus, this is another way to create the transaction authentication number (TAN), which is necessaryfor online banking transactions. The transaction number is sent via text message (SMS) to the account holder‘s mobilephone or smartphone. Due to the principles of “two channel authorization”, the same device transacting the onlinebanking task can not be used to receive the TAN.MON EYI NVESTM E NT OF MON EY (FI NANCIAL I NVESTM E NT)GELDANLAGE (GELDANLAGE)Paying into an investment has the purpose of generating asset growth or profit. Examples are: putting money into asavings account or savings bonds; purchasing an investment fund; shares or bonds. Each example differs in yield, liquidity(availability) and risk.Well-known and accepted medium for trade and payment. Money is in circulation in the physical form of coins andbanknotes. Today money on an account (bank account) and electronic money (balance on a money card) play importantroles in everyday life.ON LI N E BAN KI NGL12LIQU I DITYSYSTEM tion of an asset which allows it to be quickly converted into capital, such as cash.This is the performance of online banking activities via computer, smartphone, tablet or other internet accessible device.Also called “Home Banking”. Online banking does not involve face-to-face contact with bank branch staff. With onlinebanking, a customer is not restricted to bank business hours but can perform banking transactions around the clock atwill. Customers can, for example: transfer money set up a standing order issue direct debit mandates access information on investment opportunities complete simple credit transactionsO13

PAYMENT TRANSACTION access loan information buy or sell securitiesPE NSION SCH E M EFor the sake of banking security, all banking transactions require a transaction authorization number (TAN) after loggingin with a password and entering a PIN. At local cooperative banks (Volksbanken und Raiffeisenbanken), this is called theSmartTAN plus.The two-channel authorization still applies; meaning online banking and the TAN procedures have to be executed ontwo difference devices.Mobile banking is a sub-category of online banking.OVE R DRAFT PROTECTIONDISPOSITIONSKREDITIf you have a regular income then you can apply to the bank for overdraft protection for your “giro” account.This means that the bank account can be overdrawn to a certain amount. The bank does not stipulate a fixed paybackdate. With regular income to the account the inflow is meant to eventually offset (in whole or in part) the overdrawnamount.It is however recommended you take advantage of this line of credit only when your lack of funds is temporary.To ensure very large financial needs, other forms of credit, such as personal consumer loans, are more appropriate andmuch less expensive. By the way, you are allowed to restrict or expand your own line of overdraft protection with priorapproval from your bank. A “first” bank account (Jugendgirokonto) for children and young people does not allowoverdraft protection, as these are savings accounts that cannot be overdrawn.PPASSBOOK OR BAN KBOOKSPARBUCHThis is a paper book to record deposits that went into the savings account of the holder. At present these are usuallyissued as a single sheet of paper commonly referred to as a savings account bank statement. Bank statements document account activity.PAYM E NT TRANSACTIONZAHLUNGSVERKEHRProviding or receiving payment. Payment is defined as the transfer of money in any form. Transfer of payment completes the transaction. Acquisitions are paid for with physical money or through cashless payment.PE NSIONPENSIONALTERSVORSORGEA pension scheme or system is a long-term plan to ensure a person‘s standard of living upon retirement, in other wordsto secure an income after regular wages cease. There are three pillars to the German pension scheme: The statutory pension plan The company pension plan The private pension planFor this reason the system is also called the three-pillar model.The statutory pension plan is a branch of the statutory social insurance scheme and is therefore compulsory. Bothemployee and employer contribute into the statutory pension plan. In order to receive a pension an employee musthave reached a certain age and have worked a certain number of years at a job that pays into the German statutorypension scheme.The company pension plan is an important supplement to the statutory pension scheme and the second pillar of thethree-pillar model. Every employee paying into the statutory pension scheme may request that their employer put apart of his or her salary into the company pension plan. Currently there are five types of company pension plans: directinsurance (Direktversicherung), pension insurance funds (Pensionskasse), pension funds (Pensionsfonds), direct commitment (Direktzusage) and support funds (Unterstützungskassen). With these an employee can also benefit from taxadvantages and social insurance contribution reductions. However, an employee must take the initiative and request thisfrom his or her employer.In order to have enough money to maintain the same standard of living beyond retirement, it is becoming increasinglyimportant to plan and invest for your own retirement. A private pension plan is the third pillar in the model that canhelp close the gap between salaried income and statutory pension benefits. The idea is for every individual to puttogether a private pension package fitting his or her current life situation. This could include investment products suchas bank savings plans, mutual funds, stocks or endowment policies and life insurance plans.In contrast to the statutory pension scheme, in which contributions are paid into over many years by employees,company pensions and private pension schemes operate on a funded basis. In this system contributions are paid intoa personal account during the contracted term to a prescribed amount. The amount in the end includes interest,compound interest and as the case may be any policy-based surpluses generated by the insurance company. When aninsurance policy has matured, the insurance benefit may be paid out either in one lump sum by the due date or asa monthly pension.Government initiatives have also become available for private pension plans since the German pension reform of2001/2002. One example is the so-called Riester insurance policy. This can be a useful addition to the personalretirement package.RENTEPI N (PE RSONAL I DE NTI FICATION N U M B E R)A pension means regular payments to beneficiaries that are carried out until the end of a beneficiary‘s life. Beneficiarieswill have made regular payments into a pension plan they will then claim upon retirement. These contributions ofteninvolve other contributions, for instance those made by employers.Pensions are divided into three different basic categories: Pensions from the public pension system, for example in the form of a retirement pension or disability pension; pensions from a private pension scheme; and pensions from an occupational pension scheme.14PINEntering a PIN authorizes the customer to perform a transaction, such as payment by giro card.PR ICEPREISExchange or equivalent amount for goods, services or assets – expressed in monetary units.15

SHAREPROTECTION SCH E M E OF BU N DESVE R BAN D DE R DE UTSCH E N VOLKSBAN KE N U N D RAI FFE ISE N BAN KE N (BVR)(NATIONAL ASSOCIATION OF G E R MAN COOPE RATIVE BAN KS) SICHERUNGSEINRICHTUNG DES BVRCustomer deposits at all the banks affiliated with the Bundesverband der Deutschen Volksbanken und Raiffeisenbankene. V. (BVR) are fully protected under this scheme. Bearer bonds issued by member banks are also protected. Protection isunlimited and to the full amount. In this sense the Volksbanken Raiffeisenbanken Cooperative Financial Network goesfar above and beyond minimum protection as required by law. The Protection scheme of Bundesverband der DeutschenVolksbanken und Raiffeisenbanken (BVR) (National Association of German Cooperative Banks)has been successfully implemented for more than eight decades. Allocation phase: After the saver has accumulated the minimum balance, the account enters into the allocationphase. At this point the saver has the legal right to withdraw the accumulated and interest-bearing savings as wellas receive the loan. This essentially consists of the collective deposits of those in the bauspar community that havenot yet reached the allocation phase. Loan phase: In this phase the loan is repaid at the interest rate determined by the contract.SAVI NGS PLANSPARPLANSavings plans are defined as regular contributions of a certain amount of money for the purpose of accumulation.Savings plans come in a variety of forms such as bank savings plans or investment fund savings plans.RRAI FFE ISE N BAN KE NRAIFFEISENBANKENCooperative banks (savings and loan associations) motivated by Friedrich Wilhelm Raiffeisen to help the rural population.Raiffeisenbanken joined with the Volksbanken in 1972 to form a central association – the Bundesverband derDeutschen Volksbanken und Raiffeisenbanken e.V. (BVR). Raiffeisenbanken and the Volksbanken are universal banks.R EG ISTE R E D COOPE RATIVEGENOSSENSCHAFTThe registered cooperative (German: eG) is a legal form.They operate under the principle of promoting their members while observing self-help, self-management andselfreliance. At least three persons have to participate in the establishment of a legally registered cooperative.R ETU R N ON I NVESTM E NTRENDITESE PA (SI NG LE E U RO PAYM E NTS AR EA)SEPA EINHEITLICHER EURO-ZAHLUNGSVERKEHRSRAUMSEPA stands for single euro payments area. SEPA began as an initiative of the European Union for euro payments.SEPA is an instrument of the internal market of the EU following the implementation of the euro monetary system.This currently involves 34 countries comprised of the current 19 EU member states (as of January 2015), and all otherEU member states including the European Economic Area (Iceland, Liechtenstein and Norway) plus Monaco,San Marino and Switzerland.This new SEPA standard was gradually put

Raiffeisenbank, Sparda-Bank or PSD Bank. They execute all normal banking transactions. Cooperative banks operate as universal banks and are an important cornerstone in the German banking sector. The equity capital of a cooperative bank is comprised of every cooperative members’ p