Featured Product

    EBA Finalizes Standards for Identifying Staff as Material Risk Takers

    June 18, 2020

    EBA published the final draft regulatory technical standards on criteria to identify all categories of staff whose professional activities have a material impact on the risk profile of institutions (also known as risk-takers). Once the final draft standards have been adopted, risk-takers will be identified based on the criteria laid down in the revised Capital Requirements Directive (CRD) 5 and the criteria specified in the regulatory technical standards. The identification process is based on a combination of qualitative and quantitative criteria.

    The EBA consultation on these standards ended in February 2020. Based on feedback received during the consultation phase, the qualitative criteria have been revisited to enhance the application of proportionality. The definition of managerial responsibility has been revised taking into account that institutions of different sizes have different layers of hierarchical levels. The final draft regulatory technical standards also clarify how the criteria should be applied on a consolidated, sub-consolidated, and individual basis. To ensure that all risk-takers are identified, members of staff are identified as having a material impact on the risk profile of an institution as soon as they meet at least one of the criteria, be it the criteria foreseen under the CRD, the qualitative or quantitative criteria in the regulatory technical standards, or, where necessary because of the specificities of their business model, additional internal criteria. 

    Additionally, some flexibility in calculating the amount of remuneration for the application of the quantitative requirements has been introduced. In terms of quantitative criteria, the revised CRD set out a threshold of total remuneration of EUR 500,000 combined with the average of the remuneration of members of the management body and senior management. The final draft regulatory technical standards retain the qualitative criteria that identify the staff at high levels of remuneration as above EUR 750,000. In addition, the 0.3% of staff with the highest remuneration criterion has been amended to be applied only by institutions that have more than 1,000 staff members, to reduce the burden for small institutions. The quantitative criteria are based on the rebuttable assumption that the professional activities of those staff members would have a material impact on the risk profile of institutions. It should be noted that the quantitative criteria set out in the draft standards should be applied to institutions only on an individual level, so that subsidiaries that are subject to specific remuneration requirements can follow those.

     

    Related Links

    Keywords: Europe, EU, Banking, CRD5, Proportionality, Regulatory Technical Standards, Operational Risk, Remuneration, EBA

    Featured Experts
    Related Articles
    News

    BIS Examines Use of Big Data and Machine Learning at Central Banks

    BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community.

    March 04, 2021 WebPage Regulatory News
    News

    APRA Finalizes Reporting Standard for Operational Risk Requirements

    APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.

    March 03, 2021 WebPage Regulatory News
    News

    ECB Publishes Guide for Determining Penalties for Regulatory Breaches

    ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.

    March 02, 2021 WebPage Regulatory News
    News

    MAS Sets Out Good Practices to Manage Operational Risks Amid COVID

    MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.

    March 02, 2021 WebPage Regulatory News
    News

    ACPR Announces New Data Collection Application for Banks and Insurers

    ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.

    March 02, 2021 WebPage Regulatory News
    News

    BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox

    BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.

    March 02, 2021 WebPage Regulatory News
    News

    EIOPA Launches Study on Non-Life Underwriting Risk in Internal Models

    EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.

    March 01, 2021 WebPage Regulatory News
    News

    SRB Publishes Overview of Resolution Tools Available in Banking Union

    SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.

    March 01, 2021 WebPage Regulatory News
    News

    EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR

    EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).

    March 01, 2021 WebPage Regulatory News
    News

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    March 01, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6655