General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
March 08, 2019

FSB published the key takeaways from its workshop with banks, on implementation of the international standards on compensation. The workshop was held in London in October 2018. Feedback on the topics discussed at the workshop can be provided by May 07, 2019.

The following are the key topics covered in the workshop in relation to the actions being taken by banks:

  • Compensation issues such as the post-crisis change in compensation structures. The changes were most pronounced in the European Union and United States and, in general, in jurisdictions where the dialog with supervisory authorities on compensation policies and practices is continuous.
  • Practical steps taken to implement reforms on compensation practice, including details on which individuals are designated as material risk-takers. Many banks noted that the process for identifying material risk-takers has become more structured and consistent across businesses and between banks, partly as a result of the increased regulatory and supervisory guidance.
  • Steps taken to assess effectiveness of the current compensation policies and practices. Banks are increasingly considering the effectiveness of their compensation regimes; however, finding the right metrics and process for these reviews is not simple
  • Increased focus on conduct risk. Several banks emphasized that there had been a fundamental shift toward incentivizing and rewarding positive behaviors, while embedding the conduct agenda at every level of the employee population. A number of banks cited the importance of having management accountability in place so that, where appropriate, compensation actions can be taken against senior management that were accountable for the relevant business. 
  • Use of technology to ensure effectiveness. A limited number of banks reported increased use of technology as part of efforts to ensure the effectiveness of compensation regimes. This included algorithms for identifying outliers, plus back-testing and regression analysis.

As part of its work to monitor implementation of its Principles for Sound Compensation Practices and their Implementation Standards, FSB engages regularly with firms across financial sectors to assess the extent to which the standards have been effectively implemented.  and challenges and inform the FSB’s biennial progress report on compensation practices. Executives responsible for managing processes related to compensation at 17 large internationally active banks and officials from the FSB Compensation Monitoring Contact Group participated in the workshop. The developments at the workshop will be used as input into the biennial compensation progress report of FSB. This report will be published later in 2019.


Related Links

Keywords: International, Banking, Conduct Risk, Compensation Practices, Governance, Operational Risk, FSB

Related Articles

HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%

HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.

April 16, 2019 WebPage Regulatory News

EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2

The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks.

April 16, 2019 WebPage Regulatory News

FDIC Consults on Approach to Resolution Planning for IDIs

FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.

April 16, 2019 WebPage Regulatory News

EP Resolution on Proposal for Sovereign Bond Backed Securities

The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).

April 16, 2019 WebPage Regulatory News

PRA Seeks Input and Issues Specifications for Insurance Stress Tests

PRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019.

April 15, 2019 WebPage Regulatory News

PRA Finalizes Policy on Approach to Managing Climate Change Risks

PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix).

April 15, 2019 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for April 2019

EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week.

April 12, 2019 WebPage Regulatory News

EIOPA Statement on Application of Proportionality in SCR Supervision

EIOPA published a supervisory statement on the application of proportionality principle in the supervision of the Solvency Capital Requirement (SCR) calculated in accordance with the standard formula.

April 11, 2019 WebPage Regulatory News

FED Updates Form and Supplemental Instructions for FR Y-9C Reporting

FED updated the form and supplemental instructions for FR Y-9C reporting. FR Y-9C is used to collect data from domestic bank holding companies, savings and loan holding companies, U.S intermediate holding companies, and securities holding companies with total consolidated assets of USD 3 billion or more.

April 11, 2019 WebPage Regulatory News

OSFI Finalizes Guidelines on Liquidity Adequacy and NSFR Disclosures

OSFI published the final Liquidity Adequacy Requirements (LAR) guideline and the net stable funding ratio (NSFR) disclosure requirements guideline.

April 11, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2920