EBA is consulting on the draft regulatory technical standards on the criteria to identify all categories of staff whose professional activities have a material impact on the risk profile of institutions (referred to as "risk takers"). The suggested identification process is based on a combination of qualitative and quantitative criteria. The consultation runs until February 19, 2020. After the finalization of the draft regulatory technical standards, these standards are expected to be submitted to EC in June 2020.
These draft standards have been revised in light of Article 94 (2) of the Capital Requirements Directive (CRD), as amended by the EU Directive 2019/878 (CRD5) that mandates EBA to develop draft regulatory technical standards to set out the criteria to define managerial responsibility and control functions; material business unit and significant impact on the risk profile of the relevant business unit; other categories of staff not expressly referred to in Article 92(3) CRD. The risk takers will be identified based on the criteria laid down in the revised Capital Requirements Directive (CRD) and those specified within the draft regulatory technical standards. The qualitative criteria that were set out in 2014 in the regulatory technical standards on the identified staff have been largely retained in the updated draft regulatory technical standards. The revised qualitative criteria identify staff with managerial responsibilities and with decision-making powers that have a material impact on the institutions risk profile.
In terms of quantitative criteria, the revised CRD sets out a threshold of total remuneration of EUR 500,000 combined with the average of the remuneration of members of the management body and senior management. The draft regulatory technical standards retain the additional quantitative criteria that identify the staff high levels of remuneration above EUR 750,000 and the 0.3% of staff with the highest remuneration, based on the rebuttable presumption that the professional activities of those members of the staff would have a material impact on the risk profile of institutions.
Members of staff are identified as having a material impact on the risk profile of an institution as soon as they meet at least one of the criteria, be it the criteria foreseen under the CRD, the qualitative or quantitative criteria in the draft regulatory technical standards, or, where necessary because of the specificities of their business model, the additional internal criteria, to ensure that all risk takers are identified.
Comment Due Date: February 19, 2020
Keywords: Europe, EU, Banking, CRD5, Operational Risk, Remuneration, Regulatory Technical Standards, EBA
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