18 June 2020
The European Banking Authority (EBA) published today its final draft Regulatory Technical Standards (RTS) on the criteria to identify all categories of staff whose professional activities have a material impact on the institutions’ risk profile (“risk takers”). The objective of these RTS is to define and harmonise the criteria for the identification of such staff and to ensure a consistent approach across the EU. The identification process is based on a combination of qualitative and quantitative criteria.
“Risk takers” will be identified based on the criteria laid down in the revised Capital Requirements Directive (CRD) and those specified in the RTS, once the final draft have been adopted. To ensure that all risk takers are identified, members of staff are identified as having a material impact on the institution’s risk profile as soon as they meet at least one of the criteria, be it the criteria foreseen under the CRD, the qualitative or quantitative criteria in the RTS or, where necessary because of the specificities of their business model, additional internal criteria.
Following the feedback received during the consultation phase, the qualitative criteria have been revisited to enhance the application of proportionality. The definition of managerial responsibility has been revised taking into account that institutions of different sizes have different layers of hierarchical levels. The final draft RTS also clarify how the criteria should be applied on a consolidated, sub-consolidated and individual basis. Finally, some flexibility in calculating the amount of remuneration for the application of the quantitative requirements has been introduced.
In terms of quantitative criteria, the revised CRD set out a threshold of total remuneration of EUR 500 000 combined with the average of the remuneration of members of the management body and senior management.
The final draft RTS retain the qualitative criterion that identify the staff high levels of remuneration above EUR 750 000. In addition, the 0.3% of staff with the highest remuneration criterion has been amended to be applied only by institutions that have more than 1 000 staff in order to reduce the burden for small institutions. The quantitative criteria are based on the rebuttable assumption that the professional activities of those staff would have a material impact on the institutions risk profile.
The EBA has been mandated under Article 94 (2) of CRD as amended by Directive (EU) 2019/878 (CRD5) to developed these final draft RTS to set out criteria to define (a) managerial responsibility and control functions, (b) material business unit and significant impact on the relevant business unit’s risk profile and (c) other categories of staff not expressly referred to in Article 92(3) CRD whose professional activities have an impact on the institution’s risk profile comparably as material as that of those categories of staff referred to therein.