EBA Releases Report on Benchmarking of Remuneration Practices in Banks
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.
Related Links
Keywords: Europe, EU, Banking, Remuneration Practices, CRD IV, Operational Risk, Benchmarking Exercise, High Earners Data, Governance, 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
EBA Launches Study on Cost of Compliance with Supervisory ReportingRelated Articles
EBA Launches Stress Tests for Banks, Issues Other Updates
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
