The European Banking Authority (EBA) launched today a public consultation on revised Guidelines on sound remuneration policies. This review takes into account the amendments introduced by the fifth Capital Requirements Directive (CRD V) in relation to institutions’ sound remuneration policies and in particular the requirement that those remuneration policies should be gender neutral. The consultation runs until 29 January 2021.
The principle of equal pay for male and female workers for equal work or work of equal value is laid down in Article 157 of the Treaty on the Functioning of the European Union (TFEU). Institutions need to apply this principle in a consistent manner. In this context, the revised Guidelines specify that institutions should implement a gender-neutral remuneration policy. The EBA will follow up on institutions’ practices with a report to be published within two year after the publication of the final guidelines.
All institutions are also required to apply sound and gender neutral remuneration policies to all staff. In particular, for the variable remuneration of staff, whose professional activities have a material impact on the institution's risk profile (identified staff), additional requirements apply. The revised Guidelines specify all those requirements, and the waivers, which apply to institutions based on their total balance sheet and to staff with a low variable remuneration. The waivers only apply to the deferral arrangements and pay out in instruments.
The revised Guidelines also clarify how the remuneration framework applies on a consolidated basis to investment firms and others financial institutions that are subject to a specific remuneration framework (for example, firms subject to the Undertakings for Collective Investment in Transferable Securities Directive (UCITS), the Alternative Investment Fund Managers Directive (AIFMD) or the Market in Financial Instruments Directive (MiFID)) and are not any longer subject to the so called bonus cap.
Finally, the sections on severance payments and retention bonuses have been revised based on supervisory experience regarding cases of circumvention.
The EBA invites comments solely on the proposed amendments to the EBA Guidelines on sound remuneration policies as shown in the tracked changes version. Comments to this consultation can be sent to the EBA by clicking on the "send your comments" button on the consultation page. Please note that the deadline for the submission of comments is 29 January 2021.
A public hearing will take place on 13 January 2021 from 14: 00 to 15:30. All contributions received will be published following the end of the consultation, unless requested otherwise.
Legal basis and next steps
These draft Guidelines have been developed on the basis of Article 74 and 94 of Directive 2013/36/EU, which mandate the EBA to further specify and harmonise institutions’ remuneration policies.
The EBA Guidelines will apply to Competent Authorities across the EU, as well as to institutions on a solo and consolidated basis as further specified in the guidelines. Once the revised Guidelines will enter into force, the 2015 Guidelines will be repealed.