Breaking Down Banking Speak: The Financial Jargon Cheat Sheet
Sometimes, they crop up as quickly as the crisis itself. Some fade away into acronymity, while others stick. They may make you LOL or even scream AYKM! (that’s Are You Kidding Me for the uninitiated text messager).
What’s clear is that banks (like us) and the finance industry as a whole are in love with acronyms. We use them all the time and we pass them on to our unsuspecting readers, clients and colleagues with abandon. They typically appear during a major event (or crisis) like the GFC (think ABS, TARP, GREXIT and the GFC – Global Financial Crisis itself).
While the economy itself is a cycle, acronyms are a beast unto themselves and rarely fade away with the bear market they morphed from. They may lie idle for awhile, but ever so often, when we feel like you need to know about what’s going on with the Asia-10 and how it’s linked to what the ECOFIN says, we throw it in by the EOD. That’s our BAU.
On any given day here at DBS@MBFC, you may hear about our KPIs (key performance indicator) sorted out. We may not always clarify our acronyms in every copy, but here’s the DBS CIO (that’s Chief Investment Office, not Chief Information Office) jargon cheat sheet.
- Asia-10: A self-styled, DBS-created grouping used to describe the basket comprising China, Hong Kong, South Korea, Taiwan, Singapore, Malaysia, Thailand, the Philippines, Indonesia and India. Our six major markets are included in this basket.
- ROE: Sadly, we’re not referring to ikura or tobiko at your sushi counter. A good Return on Equity – what a shareholder earned for their investment - can however, mean more than your fair share of raw fish. A higher percentage could be equal to more empty plates and satisfied stomachs at your local sushi outlet. If your investment goes beyond equities, then we’d be talking ROI, your Return on Investment.
- PIIGS: Once a much-used acronym to describe the debt-laden euro area nations of Portugal, Italy, Ireland, Greece and Spain, the “boars” decided that, after too much (s)wine, that they want to hog this one and end its widespread use. It appears as though they have succeeded.
- BRICs: Coined in 2001 by former Goldman Sachs chief economist Jim O’Neill, BRIC lumps Brazil, Russia, India, and China – all large nations at a similar stage of development, and this has been used to describe the changing balance of power. Mr. O’Neill, also called one of the world’s foremost currency gurus, also coined MINT (Mexico, Indonesia, Nigeria and Turkey). His retirement from Goldman Sachs has left the rest of us market watchers waiting for next big FAM (Financial Acronym Creator). From the last example, it’s obviously not us.
- EAGLEs and CIVETS: Among the early front-runners for the title vacated by Mr. O’Neill: Spanish bank BBVA, who coined the Emerging and Growth Leading Economies (EAGLEs). We’re still waiting for EAGLE to fly, and we’re also still waiting for HSBC’s CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) to bite. All it means is that we’re just trying to guess where the next big change and driver is coming from.
- DMs and EMs: DM isn’t a dungeon master or direct marketing. When we talk DMs, we mean Developed Markets. If you “deep dive” into this, you’d find there are several organisations with their own classifications including FTSE, MSCI and the S&P. DBS follows the MSCI definition of a DM, but it was FTSE which began to classify economies based on size, wealth, quality, depth and breadth of markets. Singapore, Hong Kong, Australia, the United States all qualify as DMs. For Emerging Markets (EMs), they began life as “less developed” than the US, Europe or Japan in the 1970s. These so-called “frontier” markets were then perceived to have more profit potential, but ultimately carried more risk. There are several economic lists, including those from MSCI, FTSE, S&P, Dow Jones and the IMF.
- FOMC, BOJ, BOE and ECB: These four acronyms are some of the most common at the Chief Investment Office and they describe the most powerful moneymen on the planet from the DMs. The Federal Open Market Committee, the policymakers at the US Federal Reserve, is tasked with making some of the most-watched financial decisions on the planet and is helmed by Janet Yellen. The BOs are from Japan and England while the Super Mario is in charge at the European Central Bank, the last of the big 4 to jump into easing into a big, big way.