Banking Terms - Set 6 (Cash Dividend, SEPA for Mobile, Full Call, Partial Call/Draw, Cash Merger)

Cash Merger

Merger is a Corporate Action, in which two (or) more entities are collaborated as a means to facilitate rapid growth. Now, in Cash Merger, the acquiring firm buys the target firm's stock by paying cash to the latter's stakeholders. Usually, in Cash Merger the target firm's stakeholders are removed from the picture and the target (company) comes under the control of bidder's shareholders.

E.g. Company A has a market value of $1M with stocks counting to 100,000. Hence, the stock price will be $10 each; whereas the market value of the same is at $12. Now, company B has decided to acquire company A by paying $13 per share. So, company B will end up paying $1.3M to acquire company A.

Partial Call/Draw

A Corporate Action in which a Company/Firm is calling back a portion of its bonds that it has floated in the market. The company will be paying the principal amount as cash to stake holders and in some cases interest also will be paid. A portion of the holdings of the stakeholders will be bought back by the company in this event.

E.g. Company A has 10000000 bonds in market. It announces a Partial call for calling back 500000 bonds with a principal rate of Rs 10000 per 1000 bonds and an interest rate of Rs 100 per 1000 bonds.

Full Call

A Corporate Action in which a Company/Firm is calling back all its bonds that it has floated in the market. The company will be paying the principal amount as cash to stake holders and in some cases interest also will be paid. This is a mandatory event and stakeholders have to participate in the action. All the holdings of the stakeholders will be bought back by the company in this event.

Eg. Company A has 10000000 bonds in market. It announces a Full call with a principal rate of Rs 10000 per 1000 bonds and an interest rate of Rs 100 per 1000 bonds.

SEPA for Mobile

The European Payments Commission (EPC) has created a Strategy and Roadmap on Mobile-Payments that aims to enable more efficient and faster adoption of payments via the Mobile Channel while leveraging existing SEPA instruments:

• Mobile Contactless Payment (SEPA card-based): handset interacts (contactless) with Point Of Sale (POS) terminal to perform payment transaction ("Tap-and-Go")
• Mobile Remote Payment (SEPA card or SEPA Credit Transfer-based): handset can be used to purchase goods and services via internet/web browser, telephone voice/data call or to perform account to account payments. 

Cash Dividend

When a corporation earns a surplus profit, it might decide to share a percentage of the profit with the shareholders and distribute the same equally among its shareholders. In stock dividend, Dividend is paid as Cash.

E.g. Company A has 10000 shareholders and it earns a surplus profit decides to give dividend of $1 per share. Then each holder will get a cash dividend of Re 1 for every share they hold.