EBA Proposes to Revise Guidelines on Sound Remuneration Policies
EBA proposed to revise the guidelines on sound remuneration policies in light of the amendments introduced by the fifth Capital Requirements Directive (CRD V). This review takes into account amendments related to the sound remuneration policies of institutions, including the requirement that the remuneration policies should be gender-neutral. The consultation period ends on January 29, 2021 and the final guideline is expected to be published in the first half of 2021.
All institutions are required to apply sound and gender neutral remuneration policies to all staff. For the variable remuneration of staff, whose professional activities have a material impact on the institution's risk profile (identified staff), additional requirements apply. The revised guidelines specify all those requirements, and the waivers, which apply to institutions based on their total balance sheet and to staff with a low variable remuneration. The waivers only apply to the deferral arrangements and pay out in instruments. The revised guidelines also clarify how the remuneration framework applies on a consolidated basis to investment firms and others financial institutions that are subject to a specific remuneration framework (for example, firms subject to the Undertakings for Collective Investment in Transferable Securities Directive or UCITS, the Alternative Investment Fund Managers Directive or AIFMD, and/or the Market in Financial Instruments Directive or MiFID) and are not any longer subject to the so called bonus cap. The sections on severance payments and retention bonuses have been also revised, based on supervisory experience regarding cases of circumvention.
The principle of equal pay for male and female workers for equal work or work of equal value is laid down in Article 157 of the Treaty on the Functioning of the European Union (TFEU). Institutions need to apply this principle in a consistent manner. In this context, the revised guidelines specify that institutions should implement a gender-neutral remuneration policy. The EBA will follow up on the practices of institutions with a report to be published within two years after the publication of the final guidelines. The EBA guidelines will apply to competent authorities across EU as well as to institutions on a solo and consolidated basis as further specified in the guidelines. Once the revised guidelines will enter into force, the 2015 guidelines will be repealed.
Related Links
Comment Due Date: January 29, 2021
Keywords: Europe, EU, Banking, CRD5, CRD4, Basel, Remuneration, Governance, Operational Risk, EBA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
BOT Circular Introduces Changes to Reduce Bank NPLsRelated Articles
EBA Updates Filing Rules for Supervisory Reporting
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
ECB Amends Guideline on Procedures for Collection of AnaCredit Data
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
EBA Publishes Standards on Disclosure of Investment Policy Under IFR
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
APRA Finalizes Guidance for New Prudential Standard on Remuneration
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
OCC Updated LIBOR Self-Assessment Tool for Banks
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
TCFD Updates Guidance for Financial Disclosures on Climate Risk
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
BCBS Report Examines Progress on Adoption of Basel III Framework
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
ACPR Implements Updates Related to DPM Version 3.1
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
EBA Note Examines Transition Risks of Benchmark Rates
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
