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 Once the revised guidelines will enter into force, the 2015 guidelines will be repealed.
Comment Due Date: January 29, 2021
Keywords: Europe, EU, Banking, CRD5, CRD4, Basel, Remuneration, Governance, Operational Risk, EBA
Previous ArticleBOT Circular Introduces Changes to Reduce Bank NPLs
EC published the Implementing Regulation 2021/763 that lays down implementing technical standards for supervisory reporting and public disclosure of the minimum requirement for own funds and eligible liabilities (MREL).
EBA published a report that examines the convergence of prudential supervisory practices in 2020 and offers conclusions of the EBA college monitoring activity.
APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.
The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).
Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.
EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).
The Sustainable Finance Taskforce of IOSCO held two roundtables, with global stakeholders, on the IOSCO priorities to enhance the reliability, comparability, and consistency of sustainability-related disclosures and to collect views on the practical implementation of a global system architecture for these disclosures.
Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA
ESMA published the final guidelines on outsourcing to cloud service providers.
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.