The EBA publishes the report on the application of derogations to the deferral and pay out in instruments under CRD

The European Banking Authority (EBA) today published a report on the application of derogations to the requirements to pay out a part of the variable remuneration for identified staff under deferral arrangements and in instruments that are available to small and non-complex institutions and for identified staff receiving only a relatively small amount of variable remuneration. This report forms part of the EBA’s contribution to the review to be performed by the European Commission.

The report aims to assess the implementation and application of derogations within the EU and their impact on the costs, risk alignment of variable remuneration to the risk profile of the institution as well as on the ability to recruit and retain staff.

Notably, prior to the explicit introduction of CRDV derogations, the national implementations of the CRD permitted small and non-complex institutions and staff receiving relatively low variable remuneration, to waive specific requirements based on proportionality grounds. Consequently, assessing the impact of CRDV changes remains challenging as it is limited to marginal changes to the regime that today applies with more harmonised thresholds.

Legal basis and next steps

Article 94(6) of Directive 2013/36/EU mandates the European Commission, in close cooperation with the European Banking Authority (EBA), to review and report on the application of derogations under Article 94(3) and (5) CRD regarding the requirements to pay out the variable remuneration of identified staff partly under deferral arrangements and in instruments.

The EBA has submitted the review report to the European Commission and stands ready to provide further input into the development of the report to be submitted by the Commission to the European Parliament and the Council.