Glossary of terms

CDO - Collateralised debt obligation (CDO) is a type of structured asset-backed security (ABS). Originally developed as instruments for the corporate debt markets.

LIBOR - The London Inter-Bank Offered Rate is an interest rate average calculated from estimates submitted by the leading banks in London.Each bank estimates what it would be charged were it to borrow from other banks. It is the primary benchmark.

LOLR – Lender of Last Resort - the discretionary provision of liquidity to a financial institution (or the market as a whole) by the central bank in reaction to an adverse shock which causes an abnormal increase in demand for liquidity which cannot be met from an alternative source.

NBV - Net book value refers to the historical value of a company’s assets or how the assets are recorded by the accountant. NBV is calculated using the asset’s original cost – how much it cost to acquire the asset – with the depreciation, depletion, or amortization of the asset being subtracted from the asset’s original cost.

NRAM – Northern Rock (Asset Management)

Short Selling - Short selling occurs when an investor borrows a security (like a stock) and sells it on the open market, with the intention of repurchasing it later at a lower price. In essence, short sellers bet on and profit from a drop in a security’s price.

UKAR - UK Asset Resolution Ltd (UKAR) is wholly owned by HM Treasury (HMT) whose shareholding is managed by UK Government Investments (UKGI).

UKAR is responsible for meeting the contractual obligations and managing the remaining liabilities and other strategic matters arising out of the Government’s former ownership of NRAM Ltd (NRAM), Bradford & Bingley (B&B), Mortgage Express (MX) and their respective subsidiaries.

UKFI - UK Financial Investments Limited. It is a company that manages the UK government’s investments in several financial institutions. Specifically, UKFI oversees the government’s holdings in the following entities:

1. Royal Bank of Scotland (RBS): UKFI manages the government’s investments in RBS.

2. Lloyds Banking Group (Lloyds): UKFI also oversees the government’s investments in Lloyds.

3. UK Asset Resolution Ltd (UKAR): Additionally, UKFI manages investments related to UKAR, which holds the residual assets of NRAM plc and Bradford & Bingley