Consultation

Draft Guidelines on Remuneration Policies and Practices (CP42)

Start Date: 08/10/2010 | Deadline: 08/11/2010

The Committee of European Banking Supervisors (CEBS) has published today its draft guidelines on Remuneration Policies and Practices.

CEBS had already published a set of High-level Principles for Remuneration Policies (Rem. HLP) on 20 April 2009 aimed at assisting in remedying unsound remuneration policies. These principles also built on the remuneration work carried out by other bodies, namely the Financial Stability Board and the European Commission. An extensive implementation study regarding the national implementation of the High-level principles was carried out by CEBS in the first semester of 2010 and served as an input to the current guidelines.

Under the revised CRD III, as agreed upon by the European institutions, CEBS is required to elaborate and issue guidelines on sound remuneration policies in the financial sector in order to facilitate the compliance of the remuneration principles included in the amended Annex V of the CRD.

Article 22 of the revised CRD lays down the fundamental principle whereby institutions are required to ensure that their remuneration polices and practices are consistent with their organisational structure and promote sound and effective risk management. The remuneration requirements included in the CRD are divided into three blocks:

― Governance (Annex V)
― Risk alignment (Annex V)
― Transparency (Annex XII).

Proportionality is key in this domain and applies to the three blocks, both to the general as well at to the specific requirements of the CRD III. For every principle, guidance is given to both institutions and supervisors so as to ensure that the new risk-related philosophy on remuneration in the financial sector is promptly translated into action. Finally, the current guidelines do not only address high-level remuneration policies in institutions, but also the day-to-day practices of remuneration decisions and procedures through which the policy is implemented.

CEBS would like to draw attention to a number of areas where it would particularly welcome views. These include: retention period, as outlined in paragraph 125 onwards where comments on the appropriate retention period are sought; and minimum portion of instruments and their distribution as outlined in paragraph 130, where it is CEBS understanding that it is the EU legislators' intention that the 50% minimum threshold for instruments applies equally to the non-deferred and the deferred parts.

CEBS submits its initial views for a public consultation which starts today and runs until 8 November 2010. Comments received will be published on CEBS' website unless respondents request otherwise. Please send your comments to the following email address: CP42@c-ebs.org.

The consultation is open to all interested parties, including supervised institutions and other market participants. A public hearing will take place on 29 October 2010 at the CEBS's premises in order to allow all interested parties to present their comments.

Responses

  1. European Association of Co-operative Banks (EACB) [PDF, 71.7KB]
  2. Association for Financial Markets in Europe (AFME) [PDF, 248.3KB]
  3. Alternative Investment Management Association (AIMA) [PDF, 232.9KB]
  4. Alternative Investment Management Association (AIMA) [PDF, 232.9KB]
  5. Associazione Bancaria Italiana (ABI) [PDF, 155.8KB]
  6. Austrian Federal Economic Chamber [PDF, 107.5KB]
  7. British Private Equity and Venture Capital Association (BVCA) [PDF, 679.5KB]
  8. Chris Barnard [PDF, 110.8KB]
  9. European Banking Federation (EBF) [PDF, 171.7KB]
  10. Guido Ferrarini - University of Genoa [PDF, 139.3KB]
  11. McLagan [PDF, 63.8KB]
  12. Nordic Financial Unions (NFU) [PDF, 35KB]
  13. Northern Trust [PDF, 23.3KB]
  14. UniCredit Group (UCG) [PDF, 19834.3KB]
  15. Zentraler Kreditausschuss (ZKA) [PDF, 248.8KB]
  16. Association of Foreign Banks in Germany (VBA) [PDF, 53.8KB]
  17. Association of British Insurers (ABI) [PDF, 30.7KB]
  18. Allen & Overy [PDF, 113.2KB]
  19. Artemis Investment Management LLP [PDF, 229.7KB]
  20. Association of Private Client Investment Managers and Stockbrokers (APCIMS) [PDF, 136.7KB]
  21. Austrian Bankers' Association (ABA) [PDF, 42.4KB]
  22. British Bankers' Association (BBA) [PDF, 934.8KB]
  23. French Banking Federation (FBF) [PDF, 114.8KB]
  24. European Forum of Securities Association (EFSA) [PDF, 181.5KB]
  25. European private equity and venture capital industry (EVCA) [PDF, 143.2KB]
  26. ICAP [PDF, 45.6KB]
  27. Managed Funds Association (MFA) [PDF, 79.8KB]
  28. Febelfin [PDF, 2,823.8KB]
  29. The Bank of New York Mellon [PDF, 190.2KB]
  30. Investment Management Association (IMA) [PDF, 92.0KB]
  31. The City of London Law Society [PDF, 732.3KB]
  32. European Fund and Asset Management Association (EFAMA) [PDF, 124.7KB]
  33. ICMA Asset Management and Investors Council (AMIC) [PDF, 124.1KB]