12 April 2012

EBA survey on the implementation of the Guidelines on remuneration policies and practices

The European Banking Authority's survey findings indicate that in most countries the Guidelines came into force on 1.1.2011, and that supervisors have actively assessed remuneration policies requiring (where needed) interventions in the remuneration structures and payouts of the variable component.

The findings of the survey have shown a satisfactory implementation of the Guidelines into the respective legal and supervisory frameworks, and good progress by the industry has been reported, namely as to the practices in the governance of remuneration.

However, the scope of the Guidelines is one of the areas for concern, as considerable variations exist in the extent to which the remuneration requirements are applied beyond the scope of the CRD.

With regard to the identification of risk takers, the survey has highlighted inconsistencies across institutions in the criteria used to identify staff that has a material impact on the firm’s risk profile. Furthermore, such criteria have not always proved to grasp the risk impact aspect of the exercise sufficiently.

Inconsistencies have also emerged in the application of the proportionality principle with practices varying from predetermined fixed criteria to open case-by-case approaches to determine if the set of specific remuneration rules should be applied to identified staff.

Finally, the survey has shown that risk alignment practices across the industry remain underdeveloped, namely with regard to the interaction of parameters used for risk management and the structure of bonus pools.

In light of the shortcomings identified by the survey, it is welcomed that the Danish Presidency, in its January compromise text on the CRD IV package, has proposed to widen the scope of the mandate for the EBA to elaborate criteria to identify categories of staff whose professional activities have a material impact on the institution’s risk profile.

Press release

Survey

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