The European Banking Authority (EBA) has issued a public consultation on its Guidelines on sound remuneration policies.

The draft Guidelines complement the EBA Opinion on allowances issued in October 2014 by providing additional details in support of the principles formulated in it, so as to ensure compliance with the bonus cap introduced by the Capital Requirements Directive IV (CRD IV).

In particular the draft Guidelines:

  • clarify the process for identifying those categories of staff whose professional activities have a material impact on the institutions’ risk profile, and do so on the basis of the criteria that were defined in the EBA regulatory technical standard (RTS) on identified staff;
  • provide guidance on how the ratio between the variable and the fixed components of remuneration should be calculated, taking into account specific remuneration elements such as allowances and severance pay;
  • covers pay-out processes and types of instruments used to pay variable remuneration in line with the EBA standards on classes of instruments and the combination of different categories of instruments; and
  • follow the legal reading of the CRD IV as regards the application of proportionality to the remuneration principles, that the requirements on deferral and payment in instruments have to be applied to all institutions. The EBA is of the view that specific exemptions could be introduced for certain institutions that do not rely extensively on variable remuneration and, if confirmed by further analysis, also for identified staff that receive only a low amount of variable remuneration.

Once the draft Guidelines are finalised and in force the CEBS Guidelines on Remuneration Policies and Practices will be repealed.

The deadline for comments on the draft Guidelines is 4 June 2015. A public hearing will take place at the EBA’s premises on 8 May 2015.

View EBA reviews guidelines on remuneration policies, 4 March 2015