The European Banking Authority (EBA) published today its report on benchmarking of remuneration practices in EU banks for the financial years 2015 and 2016 and high earners data for 2016. The data shows that in 2016, the number of high earners in EU banks receiving a remuneration of more than EUR 1 million decreased by 10.6% (from 5 142 in 2015 to 4 597 in 2016). In addition, for high earners, the average ratio between the variable and fixed remuneration continued to decrease from 127% in 2014 to 118% in 2015 and 104% in 2016. The same holds true for the ratio between the variable and fixed remuneration of all other identified staff, which decreased from 65.5 % in 2014 to 62.2 % in 2015 and 57.1 % in 2016. The report is part of the EBA's monitoring activities and focuses on the identification of staff, the application of deferral arrangements, the pay out in instruments and the use of specific remuneration elements, e.g. guaranteed variable remuneration and severance payments.
The lower number of high earners, receiving remuneration of more than EUR 1 million, was mainly driven by changes in the exchange rate between EUR and GBP, which led to a reduction of staff income paid in GBP when expressed in EUR.
The number of individuals whose professional activities have a material impact on an institution's risk profile (‘identified staff') and who are identified in accordance with the criteria set out in the EBA's regulatory technical standards (RTS) on identified staff
, decreased significantly from 67 802 in 2015 to 53 382 in 2016 (-21.3%). In 2016, only 2.00% of staff in institutions were ‘identified staff', which is a significant decrease compared to 2.42% in 2015. The EBA will look into the identification process when reviewing the application of the RTS on identified staff.
Overall, the Report observes that following the introduction of a limitation of the ratio between the variable and the fixed remuneration to 100% (200% with shareholders' approval, where implemented by the Member State), the average effective ratio between the variable and fixed component for all identified staff continued to decrease to 57.1% in 2016 (2015: 62.2% and 2014: 65.5%).
In many institutions, the variable remuneration for all staff is lower than the amount distributed to shareholders. However, some institutions paid out larger amounts of variable remuneration despite the fact that only a relatively low amount was distributed to shareholders.
As in previous years, the Report shows that remuneration practices within institutions were not sufficiently harmonised. In particular, the application of deferral and pay out in instruments differed significantly across Member States and institutions. This is mainly due to differences in the national implementation that in many cases allow for waivers of these provisions when certain criteria are met. To address this issue, the EBA published, already in 2015, an Opinion on the application of proportionality in the area of remuneration .
Legal basis, background and next steps
This Report has been developed in accordance with Article 75 (paragraphs 1 and 3) of Directive 2013/36/EU (CRD IV), which mandates the EBA to use the data disclosed by institutions to benchmark remuneration trends and practices and to collect information on the number of individuals per institution that are remunerated EUR one million or more per financial year (‘high earners') in pay brackets of EUR one million, including the business area involved and the main elements of salary, bonus, long-term award and pension contribution.
This report contains both an analysis of the 2016 data reported for high earners and an analysis of the 2015 and 2016 remuneration benchmarking data, containing information on all identified staff. The analyses have been kept separate. However, in the remuneration benchmarking analysis, a few references to the high earners data are included for analytical reasons.
The EBA will continue to benchmark remuneration trends every two years. For the performance years 2017 and 2018, the EBA will publish a benchmarking Report at the beginning of 2019. The EBA will continue to publish data on high earners annually to closely monitor and evaluate developments in this area. In addition, the EBA will review the application of the RTS on identified staff.