Glossary

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S

SAFEGUARDS, consumer

see Consumer safeguards

SAVINGS ACCOUNTS

Unlike a current account, which is used to make everyday purchases, a savings account is used to save money. As a result, it offers only a few basic services, such as the direct deposit of pension benefits or the issuing of a debit card. In addition, this type of account does not offer an overdraft facility. With each deposit, the customer entrusts the bank with a sum of money in exchange for interest; the bank must return the amounts deposited at the end of the contract or upon the customer's request.

Customers are given a passbook which is either made out to the account holder, who has exclusive access to the funds, or to the bearer, in which case the funds may be withdrawn by the person in possession of the passbook.

SCA (Strong Customer Authentication)

Strong customer authentication, i.e. a security procedure based on the use of at least two security elements to access an online payment account or to make online payments via a credit transfer or using a card.

SECCI SECCI FORM

The SECCI form (Standard European Consumer Credit Information) contains all the key information a consumer needs to assess a loan's contractual conditions in a transparent manner. This form must be provided before the consumer signs a loan contract.

SECURITIES

Financial instruments that can be categorized as either debts (bonds) or equities (shares/stocks). Securities create more or less certain expectations of periodic returns, typically in the form of interest in the first case and of dividends in the second, or alternatively, of a profit gained by re-selling the securities on the secondary market.

SECURITIES ACCOUNT

A special type of account only used for 'holding' the proceeds from the trading of financial instruments, such as government securities, investment fund units, stocks and bonds, and for carrying out the related transactions, including selling and buying. A securities account is linked to a current account, from which the applicable taxes and fees are deducted and in which profits such as dividends and coupon payments are deposited.

SECURITIZATION COMPANY (special purpose vehicle or SPV)

A company whose sole purpose is the purchase of loans or other financial assets sold by banks or other intermediaries and which, in light of these transactions, issues marketable securities. SPVs submit reports to the Central Credit Register (CR) on the loans and guarantees that they have purchased so long as these loans and guarantees were already reported by the bank or financial company that sold them. This means that, if your loan has been sold, the CR will contain a report under your name made by the special purpose vehicle that purchased the loan, and not one submitted by the bank that originally granted you the loan. In this case, the customer does not deal with the special purpose vehicle, but with the 'servicer', a specialized intermediary hired by the special purpose vehicle to collect the loan. To request information or file a complaint, the customer can contact the servicer or the special purpose vehicle.

SEN

Amartya Sen won the Nobel prize in 1998 for his contribution to welfare economics.

SEPA

SEPA is the acronym for the Single Euro Payments Area, where users of payment instruments - citizens, businesses, general government entities, and other financial actors - can make and receive non-cash payments in euros both domestically and across borders based on common rules, operating procedures and market practices, regardless of the user's place of residence.

SEPA Direct Debit (SDD)

The technical definition for European direct debits. A SEPA Direct Debit is a payment service offered by banks, usually associated with a current account, which can be used to automatically pay firms or individuals offering goods or services under a contract that provides for recurring payments on a predetermined due date.

This service may be offered to holders of payment accounts or credit cards. Typically, this service is used to pay utility bills (electricity, gas, telephone, etc.) or loan payments. To make payments by means of a SEPA Direct Debit, customers must authorize the company providing the utility or service by signing a mandate. The bank, upon each payment due date, carries out the payment by debiting the amount from the customer's account without asking for consent each time. In the account statement, the acronym 'SDD' used to indicate amounts that were directly debited.

SERVICES FOR THE PUBLIC

The Bank of Italy directly provides a number of services for the public.

Among other things, it deals with complaints filed by the public, it manages the Banking and Financial Ombudsman’s technical secretariats, it works on? and promotes financial education, and it publishes information on unauthorized banking and financial intermediators in Italy and other news in the public interest. The Supervision Department also carries out analyses of the banking and financial system.

The Bank of Italy also manages the Central Credit Register and the Interbank Register of Bad Cheques and Payment Cards. You can make requests or reports relating to the Central Credit Register, the Interbank Register of Bad Cheques and Payment Cards, complaints, whistleblowing, and how banking and financial services work, by accessing the Bank of Italy's 'Online Services for the Public' platform.

SHARES (Stocks)

Financial instruments that represent a fraction of the share capital of a company and that confer on the investor the status of shareholder and the associated property (for example, profits) and/or administrative (for example, voting rights in shareholders' meetings) rights. The return on shares is based on the performance of the issuing company. Shares can be traded on regulated markets.

Based on their characteristics, they can be:

  • ordinary shares, which confer the right to vote in ordinary and extraordinary shareholders’ meetings, and the right to receive dividends and to obtain reimbursement of capital in the event of liquidation in order of priority after shares with special property rights (preference and savings shares);
  • preference shares, which grant shareholders a greater share of the profits than ordinary shares (the amount of the preference is determined by the company and is stated in its bylaws) in addition to the right of priority in capital repayment (after savings shares). The advantages received in terms of dividends and priority in general come at the cost of limited participation in the company’s decision making;
  • savings shares, which confer priority in the distribution of profits and capital repayment, but carry no voting rights. Savings shares are only issued by companies listed on regulated Italian and European Union markets.

SIGNATURE

When a customer opens a current account, they must deposit their signature with the bank. The signature is needed to verify whether the transaction, especially payment transactions, are actually being carried out by the account holder. If the current account is held by two or more persons, each one must deposit their signature.

The contract must specify the transactions that require the signature of all account holders and those which may be carried out with only one signature. This means that a current account may be opened by more than one person, and that each person may use the account in an independent manner.

SIMON

Herbert A. Simon won the Nobel Prize in 1978 for his pioneering research on the decision-making process in business organizations.

Single Resolution Mechanism (SRM)

The Single Resolution Mechanism was launched in January 2016 with the main purpose of ensuring an orderly resolution of failing banks with minimal costs to taxpayers and to the real economy. It consists of the national resolution authorities and the Single Resolution Board, the EU-level resolution authority. The Bank of Italy is the Italian national resolution authority. When all other solutions have been exhausted, the Single Resolution Fund, financed by contributions from the banking sector, can be used to cover the costs of resolution actions. The SRM, along with the Single Supervisory Mechanism (see Single Supervisory Mechanism - SSM), is one of the two pillars of the Banking Union.

Single Supervisory Mechanism (SSM)

The Single Supervisory Mechanism (SSM) is an EU-level system for the supervision of credit institutions, which is composed of the European Central Bank (ECB) and the national supervisory authorities of the participating EU Member States. Its key objectives are to ensure the safety and soundness of the European banking system, to increase financial integration and stability, and to ensure consistent supervision. Together with the Single Resolution Mechanism (see Single Resolution Mechanism - SRM), it is one of the two pillars of the Banking Union.

SPECIAL PURPOSE LOAN

A special purpose loan is a consumer loan for the purchase of a good (car, television) or service (training course, holiday). Typically, the lender transfers the money directly to the provider of the good or service, instead of depositing the money in the borrower's current account.

SPREAD

In finance, spread is a generic term that indicates a difference between the prices, yields, or interest rates of two financial instruments. More specifically, the spread on Italian government bonds is the difference between the yield of an Italian government security, a BTP with a 10-year maturity, and the yield of a German government security, a Bund with the same maturity. It is a measure of the risk associated with investing in Italian government securities, and of the reliability of our country: the higher the spread, the greater the risk. In the case of mortgages, the spread is the difference between the actual interest rate applied and the benchmark rate (e.g. Euribor or Eurirs).

STABILITY

The Bank of Italy is responsible for safeguarding the stability of the national financial system. The Bank of Italy performs this task both through the exercise of supervision of banks, of financial intermediaries (see Financial intermediaries) and of some markets (see Markets), and by implementing macroprudential policies oriented to the financial system as a whole. The Bank of Italy’s participation in the Financial Stability Board (FSB) ensures the necessary coordination between the Bank of Italy and the other European and international authorities. In fact, the FSB coordinates the work of the national financial authorities and international bodies to promote the implementation of regulatory and supervisory policies that encourage international financial stability.

STATEMENT (BANK STATEMENT)

The document that the bank produces at periodic intervals listing the movements in the current account in chronological order. For each movement, the bank statement typically indicates:

  • the date on which the transaction debiting or crediting the account is carried out;
  • the date on which interest in either charged or credited;
  • a description of the transaction; and
  • the amount of the transaction, and the relevant plus or minus sign.

Bank statements for current accounts to consumers contain a synthetic cost indicator.

STATEMENT OF FEES

This is a document, based on a standardized European template, provided by banks to account holders free of charge at least once a year, alongside their bank statement and summary document. The statement of fees lists all expenses incurred, as well as information on any interest that may have been paid or earned during the period indicated. The statement of fees indicates the Comprehensive Costs Indicator (ICC) outlined in the fee information document (FID) for the same type of account. This helps in comparing the total amount of the expenses actually incurred and the hypothetical estimate provided by the ICC, in order to check whether the type of account chosen is actually the most suitable for your needs.

STOCK INDEX

A stock index is a hypothetical portfolio of stocks used as an indicator of the price movements of a group of stocks, such as the stocks of a country, a sector, the largest companies, or smaller ones, etc. The value of the index moves up or down, reflecting the prices of the component stocks. The performance of broader indices, based on the number and value of the companies that have issued the underlying stocks, summarizes the overall trend of the stock markets. Stock indices are also used as benchmarks to compare and evaluate the returns of investments in stocks and equity funds and to assess the managers' skills, i.e. their ability to outperform the benchmark in active management or to replicate benchmark returns in passive management.

STONE

Richard Stone won the Nobel Prize in 1984 for making fundamental contributions to the development of systems of national accounts and hence greatly improving the basis for empirical economic analysis.

SUMMARY DOCUMENT

The Summary Document is an attachment to the contract, which contains the personalized financial terms and conditions based on those advertised in the information sheet for a particular type of transaction or service. If an advertised type of transaction or service cannot be tailored to a specific customer, the Summary Document may not be provided. The Bank of Italy's rules on transparency oblige banks and financial intermediaries to provide their customers with the Summary Document as part of the pre-contractual information. The Bank has also made available a standard template for this type of document.

SURETY

A commitment to personally pay the debt of another party to the lender. The guarantee is personal because the lender can claim against all the guarantor's assets.