Bank Glossary - P

Package deal
Larger nominal sum of shares in a company which is in the hands of a sole proprietor. Trading with the company - outside the stock exchange for the most part - is referred to as package dealing.
Par
Signifies that the market price of a security is the same as its face value. Above par means that the market price is higher than the face value and below par means that the market price is lower than the face value. A security is quoted at par if it is traded at 100 (per cent of its face value).
Par value
see face value.
Parity
In general the exchange relationship between two currencies is described as parity. At the 'exchanges' parity is also used to describe 'price', which when converted gives the quotation for a foreign security on the home exchange in domestic currency.
Partial debenture
Partial debentures are offered for Subscription in series of floatations with a total sum of several million Deutschmarks. For selling, the sum is subdivided into parts. The standard units are DM 100, 500, 1,000, 5,000 and 10,000. If the investor purchases units at a specific amount, he acquires a certified right to a part of the issue equivalent to the sum invested. Shares of this type are known as partial debentures. They are documents in which the issuer is committed to a payment (usually in the form of money) (§§ 793 et seq of the German Civil Code). The partial debenture is a 'bearer paper'.
Partial execution
Partial performance is where a contract which has been awarded could only be partially executed during its term of validity on account of the market situation.
Participating receipt
Participation paper issued by Swiss joint-stock companies, which, although incorporating rights of disposal, nonetheless - in contrast to the share - does not certify any membership rights, particular voting rights. In this way, the company is protected against undesirable influences or excessive foreign influence, with simultaneous injection of new risk-bearing capital. In the legal context, participating receipts are comparable with participation certificates.
Participation certificate
Debenture which guarantees the right to participation in the net profit and/or proceeds from liquidation, particularly in the case of joint-stock companies and limited private companies. The right is certified in the form of a document - the participation certificate. Participation certificates may also be sold but do not have the same status as shares (no voting rights at the stockholders' meeting of a joint-stock company). In stock exchange parlance, participation certificates are known as 'bonuses'.
Payment transactions
In a modern economy many millions of payment transactions are processed each day. They are either cash-based - i.e. involve the payment of bank notes and coins - or cashless. The central banks (Bundesbank) and banks play a decisive role in domestic and cross-border payment transactions, since they provide the economy and population with the necessary cash. Furthermore, they process cashless payments which are made from account to account in the customer order by means of 'transfer', cheque or direct debit. Cashless payment transactions in the Federal Republic of Germany underwent a significant upturn in the sixties with the crossover from cash-based to cashless wage and salary payments; the introduction of eurocheques and EUROCARD brought about a further increase. If, for example, people continue to make payments to the POS terminals of the retail trade (electronic cash) from their own living rooms via Videotex or using EUROCARD (Eurocheque) or with smart cards, the number of cashless payments will increase significantly again.
PCF
The price cash flow is the quotient from cash flow per share and the share price. When determining this indirectly those performance data are included which stem from valuation measures and do not lead to payments similar to the accounting period. The price cash flow as a liquidation-oriented indicator is used to assess the purchasing power of a company in the future and to compare different companies. The increased significance of the PCF can be traced back, among other things, to the fact that it is much less susceptible to balance-sheet related manipulations than the amount of profit shown in the annual accounts. The information-based content regarding the predictability of the development of the company in terms of revenue should thus be considerably improved.
pcRISS
Abbreviation for 'pc-based Rate Information Service System'. Computerised system providing an opportunity to receive, on a PC, real-time price and market information about the German stock exchanges. The information is updated automatically. In addition to source-based information about securities, pcRISS offers chronological price sequences and graphic illustration facilities.
Pension fund
A legally independent retirement pension institution which manages funds entrusted to it for a specific purpose and pays out such funds in the insured event. Pension fund assets are kept separate from company assets and are thus secured in the event of bankruptcy. The employee's legal claim is directed at the pension fund. Contributions to pension funds can be made by the employer and/or employee and contribution amounts are generally variable.

The employer's pension commitment is either based on the principle of Defined benefit or on the Defined contribution model. With defined benefit plans, employees are guaranteed certain predetermined payments. The standard case of a defined benefit commitment is the payment of a (final) salary-dependent company pension. On the basis of actuarial calculations, contributions depend on the expected payment amount as well as on achieved or expected returns on capital investments, and so these are variable. With defined contribution plans, in contrast, it is only the contribution amount that is defined, whereas the resulting retirement pension amount and capital payment are undetermined.

Pension transaction
Transaction in which the pension provider transfers assets - such as bills of exchange, receivables or securities - in return for payment of a sum of money, to a recipient of a pension, on the understanding that the pension provider is obliged, or even entitled, to re-transfer the assets on a specific date or on a date yet to be defined. Mostly consists of loan transactions with fixed-interest securities over a fixed period. All the income earned within the pension period remains the property of the recipient of the pension. The agreed rate of interest is composed of the interest revenue accruing to the recipient of the pension during the pension period, plus or minus the difference between the selling price and the redemption price. The latter price is determined when the pension transaction is concluded. The pension provider remains the equitable owner and this has fiscal effects, in particular. A pension transaction is often employed for the purpose of reducing the initial market price of a predated transaction.
PER
In equity research, the price-earnings ratio is calculated from the current market price divided by the (estimated) profit per share. The PER is a measure for assessing the past and future earning power of a 'public limited company' and is used to compare different companies.
Performance
In securities trading, performance signifies the percentage worldwide growth of the assets of an investment company or the further development of a portfolio of securities or of an individual investment.
Personal Identification Number
see PIN
PEX
Index calculated on the basis of 30 synthetic Pfandbriefe with maturities of between 1 to 10 years.
Pfandbrief future
Future on Jumbo Pfandbriefe. Jumbo Pfandbriefe with a AAA rating are available, a nominal volume of at least DM 1 billion and a remaining life to maturity of between 3.5 and 5 years.
Phase-out model
After the introduction of the euro, existing DEM issues will continue to be managed on a DEM basis up to their final maturity. Whereas trading and portfolio management will still be in DEM, interest due and repayments of principle are to be booked in EUR. Initially, DEM and EUR payment flow statements for clients will remain unaffected. This model is particularly suitable for illiquid bonds.
PIN
The Personal Identification Number is issued to the holder of an EC card, a bank customer card or a credit card, in order to enable him to make use of the relevant cashpoint/ATM service, both at home and abroad. Using the EC card or bank customer card, with the Personal Identification Number, cashless commercial payments can be made at electronic cash tills or, outside Germany, at EDC tills. Each card has its own unique PIN, which is known only to the cardholder and to which, in order to prevent fraudulent use, he should not allow access by anyone else (e.g. it should not be kept with the card, should not be noted down, should not be communicated to anyone and should be concealed during input on the cashpoint keyboard.
Placement
The sale (assignment) of securities in public. The more buyers who purchase an issue, the better the placement. The broad distribution is designed to reduce the risk of a slump in prices due to sudden mass selling on the stock exchange.
Placement procedure
Procedure for the placing (placement) of securities. Among the most important placement procedures are book building, the fixed-price procedure, private placement, the tendering procedure, etc.
Point of sale (POS)
POS is the term used to describe the handling site for buying and selling transactions in dealings in goods and services. POS also represents cashless and voucher-less payments at electronic cashpoints, using the EC card or bank customer card. In the context of electronic cash, these payments are guaranteed if the PIN is used. A guarantee does not apply if the PIN is not entered. In such cases, the cardholder authorises a direct debiting mandate with his signature on the cash voucher. The resultant debit advice can be returned unpaid.
Portfolio
Part or entirety of the investment in securities held by a customer or a company (stock of securities). A portfolio is primarily used for the distribution of risk.
POS
Abbreviation for Point of sale
POSPG
Point of sale (POS) without payment guarantee. Official POS procedure operated by the German banking sector in conjunction with electronic cash. With the POSPG procedure, above a predetermined amount, any possible card blocking is verified electronically during the payment process. In the event of return of a debit advice due to lack of cover or misuse on the part of the customer, the payee is notified of the address of the cardholder.
Power of attorney
Ability of an authorised person to represent the principal during the execution of individual (commercial power) or, in principle, all legal transactions (full commercial power of representation, general power of attorney).
Preference share
Shares which do not embody any voting rights - or only limited voting rights - at the stockholders' meeting (in contrast to the equity share or normal share). Under the provisions of the articles of association of the particular joint-stock company; however they can embody special rights, such as an enhanced position in terms of dividends.
Premature redemption
Form of repayment settlement of bond issues. In the case of premature redemption, there is no fixed repayment date; instead, the debtor repays in regular instalments, mostly after several repayment-free years have elapsed but within the term. The numbers to be redeemed are determined as in a lottery. The lot codes usually take the form of the serial letters or the last digits of the debenture bonds.
Premium
Premium, or surcharge, describes the difference between the face value and a higher market price or repayment price. The term agio is also used when a security is traded above its calculated value, as in the case of above-par Subscription right quotations, etc. For the issue of debenture bonds, a premium is seldom selected, whereas an issue price (discount) is frequently the choice. Shares should not be issued at a price below their face values (§ 9 of the [German] Corporation Act); a surcharge is far more common. The premium generated when capital is raised against cash investment must be deposited in the statutory reserve fund (§ 150 of the [German] Corporation Act).
Price fixing
see Stock exchange quotation
Price stability
A Member State must show continuous price stability and an average rate of inflation measured during the last year before inspection which is not more than 1.5 percentage points above the mean value of the three most price-stable EU countries.
Price supplements and references
These indicate to what extent the buying and selling orders for securities, limited to the fixed market price, can be executed. Under the terms of § 33 of the Stock Exchange Order of the Frankfurt Securities Exchange, the following price supplements and references apply:
Primary market
Also referred to as the issue market. Market for the floatation of securities. The opposite to the primary market is the secondary market.
Prime rate
Interest rate in the USA, which the major American banks charge for loans to prime addresses. It performs a type of key interest rate function, on which the other debtor interest rates depend. The prime rate is that interest rate which the large American banks calculate for short-term loans to the very first industrial customers. It represents a form of key interest rate on which the entire structure of borrowing rates is built. The expression 'prime rate' is now also used in Germany as an interest rate for loans to the best customers.
Priority notice of conveyance
Priority notice to safeguard a claim to change of registration of ownership in the Land Register. It is based upon § 883 of the German Civil Code and, as a general rule, it is incorporated into property purchase agreements, in favour of the particular purchaser. If other arrangements are made after a priority notice has been entered, they will be invalid with respect to the person entitled to the priority notice if they frustrate or adversely affect the claim to be safeguarded. That is why the owner no longer has the property at his disposal. The priority notice of conveyance is entered in Section II of the Land Register.
Private placement
Not actually part of the issuing business, since the securities are not offered publicly. With private placement, the bank of issue has the task of approaching large investors, such as institutional investors or investment trusts and placing large parts (tranches) of the flotations with these organisations. The advantage of private placement is elimination of the cost of producing a prospectus and introduction to the stock exchange; it also means that funds can be raised quickly, since, with private placement, there is no requirement for any stock exchange pre-verification and admission procedures or for compliance with any legal deadlines.
Private trading
Trading in securities, financial instruments, foreign currency and precious metals (trading result) conducted in the name an on behalf of the bank.
Profit / share
The profit per share is an important indicator for assessing the earning power of a business which shows what proportion of the total business profit is allotted to a share.
Profit and loss account
see Annual statement of accounts
Profit taking
Specialist stock market definition used when securities, which were bought at lower market prices, are sold while market prices are rising. Participants in the market take profits (in this way), before any possible fall in market prices.
Project finance
Project finance is a form of loan extension in which the interest payments and repayments in respect of the funds are made largely or exclusively from the earnings of the investment project concerned.
Promissory note bond
Loan which is certified in the form of a promissory note (document in which the debtor undertakes to make a specific payment, generally for the payment of interest and repayment of a specific sum of money). Promissory note bonds are floated by industry, as well as by central/local government, special credit institutions and supranational borrowers. The principal lenders are insurance companies, real-estate credit institutions and savings banks. The advantage for both sides is in the easy handling; it is also advantageous that companies which are not qualified to issue shares are allowed access to the capital market. An additional positive aspect for the lender is that, at present, there is no necessity for marking down in the event of a rise in capital market interest rates.
Property fund
Investment fund in which the assets of the fund consist of immovable property. The funds are subdivided into - open property funds - with an unlimited number of purchaser; they invest the money deriving from the investors on the basic principle of risk-sharing in land, buildings and internal building projects principally used for commercial purposes. - closed property funds, where the number of investors is limited; as a general rule, this concerns a specific item of property. The fund is termed closed when the target capital has been subscribed.
Prospectus
see Stock exchange prospectus
Proxy voting power for deposited shares
see Proxy voting right
Proxy voting right
(Also known as commission voting right) Every shareholder can empower a third party (credit institution, commercial shareholder's representative or other authorised person) to exercise his voting right at the stockholders' meeting. In many cases, the depositary banks authorise their own shareholders to exercise their voting rights where this is expedient; this gives rise to the inaccurate term 'proxy voting rights for deposited shares'.
Publicity
Joint-stock companies are required by law to publish specific information about their activities. As a general rule, joint-stock companies voluntarily divulge additional information (research, development, financial statements, revenue, asset structure, purchases, sales, investments, etc.), in order to create an atmosphere of trust, with particular regard to their shareholders.
Purchase price
The actual price paid for purchase of a Security. The purchase price level has an influence on the return.
Put option (sales option)
Term used in option dealing. An option contract which entitles the purchaser to sell a specific number of basic securities at a fixed market price by a specific date or on a specific date (physical delivery), or to receive the difference between the preferential price of the option and the close-of business valuation price up to a fixed date (cash settlement). The opposite of a put option is a call option.