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
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR
The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy
The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.
