In an attempt to harmonize new bonus cap rules, the European Commission this week approved new standards for determining which employees qualify as “material risk takers” in banks and investment firms in the European Union.
So-called material risk takers are employees whose work has a material impact on an institution’s risk profile. The Regulatory Technical Standards (RTS) adopted by the commission are designed to increase transparency of bankers’ pay and risk profiles by clarifying who is subject to the bonus cap. The standards are intended to augment the Capital Requirements Directive (CRD IV), which contains remuneration requirements that prevent bonuses from exceeding 100 percent of an employee’s salary, or 200 percent with shareholder approval.
