EBA Examines Remuneration Data and Use of Large Exposure Exemptions
The European Banking Authority (EBA) published a report that examines the use of certain exemptions included in the large exposures regime under the Capital Requirements Regulation (CRR). Also published is a report on the benchmarking of remuneration practices and the high earners data in banks in the European Union (EU). benchmarking of remuneration practices in European Union banks for the financial years 2019 and 2020, including high earners data for 2020.
The report on large exposures analyzes the use of various exemptions by banks and assesses the quantitative impact of potential removal of those exemptions. The report provides detailed quantitative evidence about the use of the exemptions, as of June 2021, by a sample of 181 institutions from 25 European Union/European Economic Area countries. The report assesses the use of various exemptions in each member state from different perspectives, covering the number of large exposures exempted, the number of institutions that make use of the exemption, and the aggregate amount of exposures exempted. The impact of the removal of the exemptions was also investigated. The report findings show that some of the assessed exemptions that are widely used across the European Union would have a material impact on their removal (for instance, exemptions set out in Articles 400(1)f, g, j and 400(2)/493(3)a, c, g of the CRR) while other exemptions would not have material impact on their removal (for example, exemptions set out in Articles 400(1)i and 400(2)/493(3)i of the CRR). The analysis also suggests that some exemptions are relevant only for some countries or appear to be rarely used. The report will not capture significant effects on individual institutions with specific business models or size and contributes to an informed discussion on any future policy conclusions.
The report on remuneration and high earners reviewed benchmarking of remuneration practices in banks for the financial years 2019 and 2020 and high earners data for 2020. Under Article 75 of the Capital Requirements Directive (CRD), EBA is required to benchmark remuneration trends at the European Union level and to publish aggregated data on those earning more than EUR 1 million in a financial year. The data in this review indicate a reduction of high earners in 2020 and a slight decrease of bonus levels in the context of the COVID-19 pandemic. The number of high earners went down from 1,444 (EU27/European Economic Area) or 4,963 (EU28/European Economic Area) in 2019 to 1,383 (EU27/European Economic Area) in 2020. Additionally, the bonus level for high earners remained relatively stable, though a visible reduction can be observed for risk-takers (identified staff). Regarding all identified staff in the remuneration benchmarking sample for the EU27/European Economic Area, the average ratio of variable to fixed remuneration for identified staff decreased to 49.7% in 2020 (vs 2019, 53.7%). It appears that some banks in EU27/European Economic Area have already adjusted their identification practices due to the changes in the CRD and the revised regulatory technical standards on identified staff for remuneration purposes. The reduction in the number of high earners and bonuses of identified staff is mainly caused by the COVID-19 pandemic and is consistent with the recommendations of the EBA and competent authorities to apply more conservative remuneration policies during the pandemic. Going forward, EBA will continue to benchmark remuneration trends every two years and publish data on high earners annually. EBA will also start to benchmark the application of the derogations from the requirements to pay out a part of the variable remuneration in instruments and under deferral arrangements and the gender pay gap separately for credit institutions and investment firms.
Related Links
- Press Release on Large Exposure Exemptions
- Report on Large Exposure Exemptions (PDF)
- Press Release on Remuneration Report
- Report on Remuneration Benchmarking (PDF)
Keywords: Europe, EU, Banking, Basel, Remuneration Benchmarking, High Earners Data, Large Exposures, CRR, CRD, Regulatory Capital, Reporting, Disclosures, Investment Firms, Operational Risk, Credit Risk, Large Exposure Exemptions, 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
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
