EBA published a report on the benchmarking of remuneration practices in banks in EU. The report analyzes the 2018 data reported for high earners as well as the 2017 and 2018 remuneration benchmarking data, with information on all identified staff and an overview of the number of institutions where shareholders approved higher ratios of the variable to fixed remuneration than 100%. As in previous years, the report shows that remuneration practices in institutions were not sufficiently harmonized. The application of deferral and payout in instruments differed significantly across member states and institutions. This is mainly due to differences in the national implementation of the Capital Requirements Directive (CRD) IV that in many cases allow for waivers of these provisions when certain criteria are met. Following the amendments of CRD IV, which will apply as of the end of 2020, a higher degree of harmonization is expected.
All 28 member states of the EU and three additional European Economic Area member countries participated in the benchmarking data collection. The data show that, in 2018, the number of high earners in EU banks receiving a remuneration of more than EUR 1 million increased slightly by 1.58%, from 4,861 in 2017 to 4,938 in 2018. The number of identified staff decreased significantly from 53,382 in 2016 to 47,596 (–10.83%) in 2017 and 47,154 in 2018 (–0.93%). In 2018, overall only 1.73% and, in 2017, only 1.76%, of all staff in institutions were identified staff, which represents a material reduction compared to 2.00% in 2016. After an increase from 57.09% in 2016 to 66.62% in 2017, the average ratio of variable to fixed remuneration decreased to 62.84% in 2018. The average remuneration for identified staff increased by 12.59% from 2016 to 2017 and by 0.28% from 2017 to 2018. The strong increase in 2017 goes hand in hand with the reduction of the number of identified staff in a few institutions that resulted in an overall more senior composition of identified staff. Overall, there was an increase in the number of institutions where shareholders had approved the use of ratios for the variable to fixed remuneration of above 100%.
EBA highlights that it plans to review the guidelines on the data collection on high earners and the guidelines on benchmarking of remuneration, taking into account the entry into force of the Investment Firms Directive (2019/2034/EU) and the mandates for EBA to develop a separate set of guidelines for investment firms. In addition, EBA will continue to benchmark remuneration trends every two years and to publish data on high earners annually to closely monitor and evaluate developments in this area.
Keywords: Europe, EU, Banking, Remuneration Practices, CRD IV, Operational Risk, Benchmarking Exercise, High Earners Data, Governance, EBA
Previous ArticleEBA Launches Study on Cost of Compliance with Supervisory Reporting
HKMA has published a circular that sets out the regulatory and reporting treatment for loans that participating authorized institutions may grant to eligible borrowers under the 100% Personal Loan Guarantee Scheme.
ECB published the results of the assessment of internal models that banks use to calculate risk-weighted assets for credit, market, and counterparty credit risks.
PRA published a statement on the regulatory treatment of retail residential mortgage loans under the Mortgage Guarantee Scheme, or MGS.
FCA is consulting, via CP21/7, on the second phase of proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR).
HM Treasury and BoE announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential central bank digital currency in UK.
EIOPA published an opinion to set out its expectations on the supervision of the integration of climate change risk scenarios by insurers in their Own Risk and Solvency Assessment (ORSA).
Bundesbank published two circulars on AnaCredit reporting requirements. Circular 27/2021 covers changes to the reporting of branches, additional attributes to be reported for investment funds from August 01, 2021, and updates to the list of international organizations.
EC published the Implementing Regulation 2021/622 that lays down implementing technical standards for reporting of the minimum requirement for own funds and eligible liabilities (MREL).
BCBS has set out the strategic work priorities, as part of its the work program for 2021-22.
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.