Category Archives: Financial Terms

Economy for the Common Good in a nutshell

A very feasible model, indeed

Economy for the Common Good is far more practical and feasible than its somewhat utopian name may suggest. It is not about building castles in the air, it is a really well thought out and down-to-Earth model. Short and plain:
Do you want to produce goods and services flouting labour rights or polluting our planet? No problem: go ahead.
Do you want to sell your products or services in our market, too? All right, just do it.
Just one thing: we will tax your products 20 times higher than any other respectful products, so yours will be way more expensive on the market. Besides by means of a code (similar to a colour barcode), consumers will be able to see at a glance to what extent each product respects a series of ethical and environmental principles.
Isn’t your company transparent? Well, you can’t sell your products or services on our market. Sorry, mate!
Thus, if you want to make a profit, you will necessarily increase the common good in the process.
Result: if these are the new rules of the game, any entrepreneur, no matter how unscrupulous they are, will be willing to comply with the new legal framework so that their products and services are competitive on the market. It is a system that rewards the good businessperson and punishes predators, with the aim of benefiting the whole community. You can get rich, of course, but the only way to achieve it is by making a positive contribution. Economy for the Common Good calls for reevaluating economic relations by, for example, putting limits on financial speculation and encouraging companies to produce socially-responsible products.
So Economy of the Common Good is about changing the rules of the game, not the entire system. It is feasible because it only depends on political will.

So, at the end of the day, It is a model that juggles the legitimate aspiration to prosper and environmental awareness around to fit all human needs in. Furthermore, both liberals and left-wingers could agree upon such principles. How good can you have it?

Yanis Varoufakis on Universal Basic Income

Guaranteed Minimum Income, Universal Basic Income and Universal Basic Dividend

In the midst of the worst global pandemic since the 1918 flu ‚ÄĒ¬†inappropriately named Spanish flu, since it didn’t originate in Spain‚ÄĒ¬† some countries such as the USA are implementing economic emergency measures or, if you like, actions, to prevent millions of citizens from going bankrupt. In a sense, it could be argued that it is similar to a Guaranteed Minimum Income.

Meanwhile, the European Union, to put it mildly, doesn’t cut the mustard and is disappointing everybody once again: uncoordinated, lacking in solidarity, aimless, drifting… In one word: lame.

It is in this context that we should listen to the ones that got it right during the last financial crisis; people like Yanis Varoufakis, an eminent Greek economist, academic, philosopher and politician.

But before going into further details, we should know what we are talking about. First of all, we must distinguish between the Guaranteed Minimum Income (GMI) and the Universal Basic Income (UBI). Afterwards we can tackle the Universal Basic Dividend brought forward by Professor Varoufakis.

Guaranteed Minimum Income (GMI), also called minimum income, is a system of social welfare provision that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions. Eligibility is typically determined by the following: citizenship, a means test, and either availability for the labor market or a willingness to perform community services. The primary goal of a guaranteed minimum income is to reduce poverty. If citizenship is the only requirement, the system turns into a universal basic income.

On the other hand, Universal Basic Income (UBI) is a model for providing all citizens with a given sum of money, regardless of their income, resources or employment status. The purpose of the UBI is to prevent or reduce poverty and increase equality among citizens.

That said, let’s pay close attention to what Professor Varoufakis has to say:

So, according to the renowned economist, the Universal Basic Income shouldn’t come from taxation, since it might become a source of conflicts within the working class. He points out that nowadays capital is socially produced, so he brings forward the idea of a Universal Basic Dividend where a percentage of shares of all companies should go to a public equity trust that works as a wealth fund for society. The dividends should be distributed to every member of society equally, so the income comes from return of capital, not from taxation.

Contrary to what many may think, Varoufakis is for a global governance. He is not against free trade, but he stresses that it should be accompanied by binding rules in order to avoid social dumping.

One thing is for sure: something must be done, asap. Countries can’t just let their people and SMEs go bankrupt overnight. We might be about to face the worst economic crisis since the Great Depression, and this pandemic and its consequent lockdown could take a while. Util we don’t have a vaccine, what can’t be cured, must be endured, and unprecedented economic measures must be put into effect. A more egalitarian society fits everyone, since it means a more stable, safe, human and prosperous society. For once, let’s be smart. We are in this crisis together and we will come out of it together. There is no other way.

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cocos contingent convertible capital instrument bonos convertibles

Conceptos financieros: los cocos

Hoy es el turno de unos productos financieros raritos, que se están convirtiendo en uno de los protagonistas de lo que podría ser -esperemos que no- una nueva crisis financiera. Se trata de unos bonos convertibles denominados cocos, creados bajo la normativa Basilea III y que han sido emitidos en cantidades ingentes por muchos bancos y han sido codiciados por inversores institucionales y fondos muy agresivos.

¬ŅQu√© son los cocos?

Los Cocos son bonos convertibles contingentes, es decir, un tipo de convertibles. Los bonos convertibles suelen ser bonos híbridos entre deuda y capital que pagan un interés al inversor y, además, ofrecen la posibilidad de convertirse en acciones. En el caso de los cocos, esta conversión está sujeta a una serie de condiciones, que entre otras cosas implican que el inversor no tenga la facultad de convertirlos en acciones por su cuenta, como pasa con otros bonos convertibles.

coconut icon

Son muy apreciados por las entidades financieras porque les ofrecen una manera relativamente sencilla de mejorar la ratio de capital del banco, reduciendo el nivel de su deuda al convertirlos y aumentando su nivel de capital.

bonos convertibles cocos Deutsche bank

¬ŅQu√© est√° pasando?

El hecho de que el coloso Deutsche Bank haya perdido en una sola jornada un 10% de su cotización, está dando protagonismo a esta especie de bono convertible llamado coco (por su nombre en inglés contingent convertible capital instrument) dirigido a grandes inversores institucionales. Pero los cocos del banco alemán están perdiendo valor.

Estos bonos, emitidos por las entidades financieras para cubrir sus exigencias de capital adicional, han sido muy utilizados por el banco alem√°n durante las √ļltimas d√©cadas. De hecho, los bancos europeos han colocado 90.000 millones de euros de deuda en forma de cocos.

¬°Pero atenci√≥n! Por lo que parece, los raritos¬†cocos, son instrumentos perpetuos; vaya, que no tienen vencimiento, si bien es cierto que ofrecen una alta rentabilidad. Estos bonos se convierten en acciones en caso de que la entidad bancaria no pueda hacer frente a la deuda… Raz√≥n por¬†la cual muchos tenedores de cocos ven la posibilidad de conseguir, a un precio muy bajo, acciones de las entidades que los emiten (en este caso, grandes bancos), por lo tanto, son los primeros interesados en que dichas entidades no puedan hacer frente a sus obligaciones.

As√≠, nos hallamos de nuevo ante un producto extra√Īo, potencialmente da√Īino, que podr√≠a compararse con las preferentes solo que no est√°n destinados a particulares sino a grandes inversores institucionales.

Crucemos los dedos y que no sea nada.

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Mergers and Acquisitions

M & A Mergers and Acquisitions

M&A represent an important part of corporate finance. Every day big investment banks arrange M&A transactions, and it means a lot of documents that must often be translated by specialized translators.

Mergers and acquisitions are both aspects of strategic management, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow quickly,  In fact, mergers and takeovers (or acquisitions) are very similar corporate actions Рthey combine two previously separate firms into a single legal entity.

A merger takes place when two companies join together to form a new one (e.g. Walt Disney and Pixar or Exxon and Mobil, Facebook and WhatsApp…)

A takeover or acquisition takes place when a company buys another one (e.g. Daimler Benz and Crysler, Microsoft and Nokia…)

Proz webinar Financial Translation

So a takeover is the purchase of a company. A takeover is different from a merger, which occurs when the purchaser and the target both cease to exist and instead form a new, combined company.

M&A can be also defined as a type of restructuring in that they result in some entity reorganization with the aim to provide growth or positive value. Consolidation of an industry or sector occurs when widespread M&A activity concentrates the resources of many small companies into a few larger ones, such as occurred with the automotive industry between 1910 and 1940.

Mergesrs and Acquisitions in Spanish: Fusiones y Adquisiciones

Mergers and Acquisitions in French: Fusions-acquisitions


Rating agencies

What is a rating agency?

The companies, countries or regions issuing bonds, known as the issuers (borrowers), are given a credit rating by credit agencies, such as Standard and Poor’s, Moody’s and Fitch. So they are somehow graded, or rated according to its solvency or the risk that the borrower will default.

Rating agency in Spanish: Agencia de calificación

Rating agency in French: Agence de notation

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By financial translator

Asset Management

Asset Management

Asset management, a term commonly used in the financial world, involves any system that monitors and keeps things of value in an entity or group, whether they are tangible assets (such as machinery, gold, buildings or land), intangible assets (such as patents, trademarks, human capital, intellectual property or goodwill) or financial assets (such as stocks or bonds, which can be traded on financial markets).

Asset Management refers to the balancing of costs, opportunities and risks against the desired performance of assets, to achieve the organizational objectives. It usualy describes people (for example fund managers) and companies (for instance, firms that manage the assets of a pension fund) that manage investments on behalf of others.

financial translation webinar asset management proz

Asset Management in Spanish: Gestión de Activos

Asset Management in French: Gestion d’Actifs

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By Financial Translator

How the Stock Exchange works

Stock exchange explained

A stock exchange is an exchange or stock market where stock brokers and traders can buy and/or sell stocks (also called shares), bonds, and other securities. Stock exchanges may also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include stock issued by listed companies (or quoted companies), unit trusts, derivatives, pooled investment products and bonds. Stock exchanges often function as “continuous auction” markets, with buyers and sellers consummating transactions at a central location, such as the floor of the exchange.


Traducción financiera

Traducción de Corralito

Daily Tip – Corralito

La palabra corralito vuelve a sonar hoy con fuerza tras las dificultades financieras en las que primero Chipre y después Grecia se han visto envueltos. Pero de hecho es un fenómeno muy antiguo que tiene su precedente en las eufemísticamente denominadas vacaciones bancarias (Bank holiday) durante la gran depresión que sufrió Estados Unidos.

Corralito, palabra en castellano ya recogida en el Diccionario académico, se suele denominar del mismo modo (corralito) en la prensa anglosajona*. Sin embargo ha aparecido traducida al inglés en algunos textos como ring-fence, bank freeze o deposit freeze. Pero lo más habitual es encontrarla en textos en inglés escrita en la lengua de Cervantes.

Pues bien, éste fue el nombre informal para referirse a las medidas económicas adoptadas en Argentina a finales de 2001 por el ministro de economía , Domingo Cavallo, con el fin de detener una huida de capitales (capital flight) y un pánico bancario (bank run) .

El periodista Antonio Laje fue el primero en utilizar este término para referirse a las restricciones a la libre disposición de dinero en efectivo de plazos fijos (fixed-term), cuentas corrientes (current accounts) y cajas de ahorros (savings banks) impuesta por el gobierno.

Dejando al margen la acepción financiera del término, de todos es sabido que corralito también es el diminutivo de corral, un sitio cerrado y descubierto donde generalmente se guarda el ganado o los animales domésticos. En este sentido en inglés corral es pen, fence o farmyard.


* The corralito risk (The Economist)

What’s the Greek for Corralito? (The New York Times)


By Financial Translator  ·  Traductor Financiero

Financiación mezzanine РMezzanine financing

Daily Tip: Financiación mezzanine РMezzanine financing

La financiación mezzanine (mezzanine financing) se refiere a los valores que se clasifican entre las acciones y los bonos. A menudo se utilizan en las compras apalancadas y para acelerar la expansión del negocio.

Este tipo de financiaci√≥n¬†se encuentra en un lugar intermedio entre la deuda y el capital y de alg√ļn modo¬†complementa a la deuda cubriendo el espacio que los bancos no alcanzan. Al mismo tiempo, permite minimizar el capital invertido por los accionistas, de modo que se optimiza la rentabilidad por la menor diluci√≥n del capital (el mismo valor se reparte entre menos capital).

Es un instrumento flexible que incorpora el pago de intereses capitalizables a vencimiento, cupones periódicos, y participación en la revalorización del capital.

La deuda mezzanine puede adoptar diferentes formas para adaptarse a las necesidades específicas de las empresas en las que se invierte:

  • Deuda mezzanine con warrants
  • Deuda mezzanine sin warrants
  • Instrumentos cup√≥n cero
  • Pr√©stamos participativos
  • Pr√©stamos convertibles
  • Acciones preferentes

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By Financial Translator