EC published the Delegated Regulation 2021/923, which supplements Capital Requirements Directive (CRD IV or Directive 2013/36/EU), with regard to the regulatory technical standards setting out the criteria to define managerial responsibility, control functions, material business units, and a significant impact on the risk profile of a material business unit. Regulation 2021/923 also sets out criteria for identifying staff members or categories of staff whose professional activities have an impact on the risk profile of an institution that is comparably as material as that of staff members or categories of staff referred to in Article 92(3) of that Directive. Regulation 2021/923 shall enter into force on the fifth day following that of its publication in the Official Journal of the European Union.
The regulation states that institutions shall identify staff members or categories of staff as having an impact on an institution’s risk profile that is comparably as material as that of the staff members referred to in Article 92(3) of CRD IV where those staff members or categories of staff meet any of the qualitative or quantitative criteria laid down in Regulation 2021/923. Staff members shall be deemed to have a material impact on an institution’s risk profile where one or more of the qualitative criteria, laid down in Regulation 2021/923, are met. Staff members shall be deemed to have a material impact on the risk profile of an institution where any of the following quantitative criteria are met:
- The staff members have been awarded in or for the preceding financial year a total remuneration that is equal to or greater than EUR 750,000
- Where the institution has over 1,000 members of staff, the staff members are within the 0.3% of staff, which has, within the institution, been awarded the highest total remuneration in or for the preceding financial year on an individual basis
The average total remuneration of all members of the management body and senior management shall be calculated by considering the total of the fixed and variable remuneration of all members of the management body in its management function and supervisory function as well as of all staff that belongs to the senior management as defined in Article 3(1), point (9), of CRD IV. For the purposes of this Regulation, variable remuneration that has been awarded but has not yet been paid shall be valued as at the date of the award without taking into account the application of the discount rate referred to in Article 94(1), point (g)(iii), of CRD IV or reductions in payouts, through clawback, malus or otherwise. All amounts of the variable and fixed remuneration shall be calculated gross and on a full-time equivalent basis. The regulation also stipulates that the remuneration policies of an institution shall set out the reference year for the variable remuneration that they take into account when calculating the total remuneration. That reference year shall be either the year preceding the financial year in which the variable remuneration is awarded or the year preceding the financial year for which the variable remuneration is awarded. Although Regulation 2021/923 repeals the Delegated Regulation 604/2014, the repealed regulation (604/2014) shall continue to apply to investment firms until June 26, 2021.
Related Link: Regulation 2021/923
Effective Date: June 14, 2021
Keywords: Europe, EU, Banking, Investment Firms, CRD IV, Basel, Remuneration, Operational Risk, Material Risk-Takers, Governance, EC
The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.