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ABI (Associazione Bancaria Italiana)

The subject matter and scope of the guidelines are sufficiently clear.
The selection criteria of the institutions for the benchmarking exercise – performed by the competent authorities – is clear and confirms what was provided for in the 2012 guidelines.
Compared to previous guidelines, the communication process for intermediaries involved in the exercise was given in detail, anticipating the transmission, by the competent authorities, of only the changes compared to the previous year.
We agree it would be appropriate to ensure that the sample of businesses used for the reporting be as uniform as possible.
We agree with provision 3.5 “If the subsidiary is included in the scope of consolidation of an institution included in the EBA’s benchmarking exercise, the competent authority should ask the EBA to remove the subsidiary from the list of institutions so that data for this subsidiary is only submitted as part of the consolidated data collected”.
The scope of consolidation for the data to be reported is sufficiently clear and confirms the 2012 guidelines.
The annexes to be drafted shall be updated taking into account the provisions introduced with the regulation 575/2013 and anticipating the greater granularity of the information.
The granularity proposed is excessively onerous for the businesses and that it could create a lack of uniformity of organisation among the different intermediaries, thereby not favouring the quality of the information gathered. For example, among the Corporate functions those departments, such as Human Resources, which bear responsibility for the entire company, are included. These, however, in some cases could be included in the “independent control function”. Even in the case of the MB, the Supervisory function and the Management function distinction could create uncertainty (see below).
Therefore, it is requested that the structure proposed be simplified or that the breakdown by business areas in the 2012 guidelines be confirmed. For example, while reporting separately the “Independent control functions”, for coherence and simplicity it would be advisable to report together the “Corporate functions” and “All other”.
Only the variable “number of heads” should be considered, eliminating the variable FTE, as provided for High Earners.
If the current information breakdown is confirmed - for the purposes of proper compilation and to ensure uniformity at a European level - it would be necessary to specify what is meant by management body in its oversight function and governance body in its managerial function.
Members of the Board of Auditors (or Oversight Committee for those who adopt a dual regime) should be included in the MB Supervisory Function and members of the Board of Directors (or Management Committee) in the MB Management Function. In addition, as concerns the management body in its management function it should be specified that only executive administrators are included.
It is necessary to specify the meaning of Corporate function: for example, Human Resources and IT are indicated in the notes. For a banking group, the group's Human Resources and IT departments act all across the entire group, whilst those departments in companies that are a part of the group are transversal for each individual company. Are these to be nevertheless included within the scope of Corporate function?
In the document provision 5.4 was inserted, which permits the competent authorities to gather additional data for its own national exercises. If the objective is that of ensuring comparability of the information on a European level, the information requested must be the same as what is requested by the EU. It is felt that the provision that the national authorities add to the requests would be an additional burden, generating disparity of treatment and would not further the creation of a level playing field on a European level.
For the purposes of personnel allocation among the different aggregates it is requested that it be specified - as provided for in the high earners consultation - that if personnel are assigned to more than one function then it should be that person’s prevalent function or activity that is referred to. Each employee shall be indicated only once and the remuneration components shall be allocated to the same area where that employee is employed and they shall not broken down into the scope of different areas. As concerns members of the management bodies, it should be clarified that the reference is to the person (“head”) and not to the position held in the different management bodies. When considering positions held, consistency with the data published in fiscal year financial statements could be compromised.
As concerns the “number of members (Headcount)” the temporal reference should be specified, as provided for the determination of the “total number of staff in FTE (year end numbers)”, hoping that it will nevertheless be possible to simplify by counting only the “heads”.
Total remuneration indicate the gross values, including all costs for the institutions except for social security contributions and comparable schemes.
It should be specified, in a note in the table, that variable remuneration concerns the reporting year.
It should be clarified the definition of “independent control functions” especially as regards the concept of “independent” (and in light of this request, within the scope of reporting on high earners, where it seems to have a different meaning from “control functions”).
As concerns Note 10 annexed to the table, a clarification is requested on what is meant by “mandatory contributions by the institutions to social security and comparable schemes,” which are excluded from total remuneration, for the purpose of avoiding differences of interpretation on a European level.
For the purpose of avoiding differences in interpretation, please, detail as far as possible, the items to be considered for the determination of the total remuneration.
As concerns the “number of members (Headcount)” it should be specified the temporal reference, as provided for the identification of the “total number of staff in FTE (year end numbers)”.
The Identified Members in senior management positions represent, pursuant to Article 3 (1) point 9) top management", the physical persons who exercise executive functions in an entity and who are responsible for daily management of that entity and who answer to the management body; it should be necessary to clarify the criteria for the identification of this staff.
Please, clarify what is intended by “Total amount of variable remuneration deferred in year N” – meaning the confirmation that it refers to the deferred part of the incentive awarded for year N (therefore part of “Total variable remuneration” above) or, alternatively, that it refers to the previous years deferrals vesting in year N.
A new variable has been introduced concerning deferred remuneration assigned in previous years, which shall be indicated separately. Is deferred remuneration, pertaining to previous years but paid within the year, within the scope of this variable?
It is also requested that an item be provided for that records the deferred value from previous years paid within the year separately.
There is no indication whatsoever of the deferred remuneration for at least 5 years paid in instruments to which it is possible to apply the discount rate; it is requested that an item be inserted wherein this component is indicated in order to assess the application of the provision contained in the Directive.
In notes 10 and 11, “proportionate regular pension contributions”, is mentioned; what precisely is meant by this? Is this the company contribution to the corporate pension fund? It would be appropriate to request a clarification of this meaning."
A note should be inserted in the Annex 3 that details the reference to end-of-year data to identify the “number of members (Headcount)”.
The reporting period and the specific amounts to be reported are clearly detailed.
The indications provided in this paragraph should be transformed into notes of the tables, so that the figures to be recorded are more clearly detailed.
Regarding 6.2, it should be better specified what is meant by “do not revolve on an annual basis”; it is assumed that this has to do with systems where the new multi-year plan begins only when the previous plan ends.
Then for the other multi-year plans (“revolve on an annual basis”) the remunerations shall be recognised proportionally over the different fiscal years to which they pertain.
The document provides that the data be transmitted to the competent authorities by 31 August 2014 and to the EBA by 31 October 2014.
The timeframe available to the intermediaries is too short to enable reporting under the new provisions.
The consultation ends on 7 May 2014. The EBA will then publish the consultation findings and guidelines. Then the competent national authorities shall introduce the guidelines in their own country, identifying the companies who will receive the reports.
The time left to the intermediaries for preparing the reporting is quite limited and insufficient for gathering such granular information and for making changes in their information reporting procedures.
Therefore, it is hereby requested that the new reporting be prepared for the first time with regard to the 2014 fiscal year, still keeping the 31 August 2014 deadline for the transmission of the 2013.
In addition, it should be noted that the public disclosure provided by many businesses in their 2013 financial statements (published in early 2014), was set out based on previous legislative provisions, using the forms from the 2012 Guidelines. It would therefore be appropriate to avoid duplication of the burdens for 2013.
The changes introduced in the consultation document stem from the new provisions in the Regulations and the Directive. To these will be added the interventions that the EBA deems necessary considering the experience of gathering the same data in the previous two-year period. The EBA considers that the increased granularity of the information improves the quality of the information gathered and possibly will reduce the costs for reporting.
The burdens introduced by the increased granularity of the information represents a one-off cost for implementation of the system; an ongoing cost for reclassification has been highlighted in the event that the personnel change position or job title. An additional one-off cost regards the relative evaluations of the new definitions of the requested remuneration data. For example, Notes 10 and 11 in Annex 2 are different from those found in the 2012 EBA Guidelines (where the CEBS text of December 2010 was referred to) and the impact arising from the innovations introduced could incur initial system implementation costs.
Pietro Scabellone
A