EBA published the final draft regulatory technical standards on criteria to identify all categories of staff whose professional activities have a material impact on the risk profile of institutions (also known as risk-takers). Once the final draft standards have been adopted, risk-takers will be identified based on the criteria laid down in the revised Capital Requirements Directive (CRD) 5 and the criteria specified in the regulatory technical standards. The identification process is based on a combination of qualitative and quantitative criteria.
The EBA consultation on these standards ended in February 2020. Based on feedback received during the consultation phase, the qualitative criteria have been revisited to enhance the application of proportionality. The definition of managerial responsibility has been revised taking into account that institutions of different sizes have different layers of hierarchical levels. The final draft regulatory technical standards also clarify how the criteria should be applied on a consolidated, sub-consolidated, and individual basis. To ensure that all risk-takers are identified, 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 regulatory technical standards, or, where necessary because of the specificities of their business model, additional internal criteria.
Additionally, some flexibility in calculating the amount of remuneration for the application of the quantitative requirements has been introduced. In terms of quantitative criteria, the revised CRD set 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 final draft regulatory technical standards retain the qualitative criteria that identify the staff at high levels of remuneration as above EUR 750,000. In addition, the 0.3% of staff with the highest remuneration criterion has been amended to be applied only by institutions that have more than 1,000 staff members, to reduce the burden for small institutions. The quantitative criteria are based on the rebuttable assumption that the professional activities of those staff members would have a material impact on the risk profile of institutions. It should be noted that the quantitative criteria set out in the draft standards should be applied to institutions only on an individual level, so that subsidiaries that are subject to specific remuneration requirements can follow those.
Keywords: Europe, EU, Banking, CRD5, Proportionality, Regulatory Technical Standards, Operational Risk, Remuneration, EBA
Previous ArticleESAs to Discuss Proposed ESG Disclosure Standards with Stakeholders
Next ArticleBCL Updates Documentation for AnaCredit Reporting
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
The European Commission (EC) has issued two letters mandating the European Supervisory Authorities (ESAs) to jointly propose amendments to the regulatory technical standards under Sustainable Finance Disclosure Regulation or SFDR.
The European Banking Authority (EBA) published its annual report on convergence of supervisory practices for 2021. Additionally, following a request from the European Commission (EC),
The Farm Credit Administration published, in the Federal Register, the final rule on implementation of the Current Expected Credit Losses (CECL) methodology for allowances
The U.S. Securities and Exchange Commission (SEC) looks set to intensify focus on crypto-assets and cyber risk and extended the comment period on the proposed rules to enhance and standardize climate-related disclosures for investors.
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility and issued an update on the operational preparedness for zero and negative market interest rates.
The Commission for the Financial Market (CMF) in Chile published capital adequacy ratios (as of February 2022, January 2022, and December 2021) for 17 banks and for the banking system.
The Prudential Regulation Authority (PRA) issued a statement on the European Banking Authority (EBA) guidelines on management of non-performing exposures (NPEs) and forborne exposures.
The European Banking Authority (EBA) updated the implementing technical standards that specify the data collection for the 2023 supervisory benchmarking exercise in relation to the internal approaches used in market risk, credit risk, and IFRS 9 accounting.
The European Insurance and Occupational Pensions Authority (EIOPA) published a feedback statement on the responses received to the consultation on blockchain and smart contracts in insurance.