The European Banking Authority . The agency plans to postpone the pay rules in the Capital Requirements Directive (CRD) until 2017 to allow firmshas published its final guidelines on remuneration policies with more time to prepare for the new remuneration policies. The delay will allow “small and non-complex” banking organizations and individuals who receive a small amount of variable remuneration from the full suite of rules.
Under the proposal, smaller banks will no longer have to pay out bonuses into cash or defer them over several years.
“The guidelines ensure that institutions calculate correctly and consistently the so called ‘bonus cap' by setting out specific criteria for mapping all remuneration components into either fixed or variable pay,” the EBA said in a statement. “In particular, the Guidelines set out the governance process for implementing sound remuneration policies across the EU and clarify the process for identifying those categories of staff to whom the specific remuneration provisions of the CRD apply.”
Moreover, the EBA said, “The so called ‘bonus cap’ should not be subject to any exemption,” which means that from large financial institutions to smaller brokerages will have to comply with the new remuneration policies. For example, a cap will be placed across the financial sector on bonuses that are two times an employee’s salary.
The 2017 delay will allow banks that are using current EU rules to continue doing so for another year. “The scope of these waivers differs significantly, in terms of both the institutions which may benefit from them and the remuneration principles to which they apply,” the EBA said.