Brussels, 15/10/2014 (Agence Europe) - In a report published on Wednesday 15 October, the European Banking Authority (EBA) expresses the view that most new forms of premiums ('role-based' or 'market value' allowances) paid to their senior staff by 39 banks do not constitute fixed remuneration.
According to the European authority, in order to be considered fixed remuneration, “these role-based allowances should have the following specific characteristics: - be permanent (…); pre-determined, in terms of conditions and amount; non-discretionary; - non-revocable; transparent to staff”. “Findings in the report showed that most of the allowances which were the subject of the EBA investigation did not fulfil the conditions for being classified as fixed remuneration, namely with respect to their discretionary nature, which allows institutions to adjust or withdraw them unilaterally, without any justification”, it stresses.
The EBA calls on banks which use this system, allowing them to circumvent the European rules bringing in a cap on banking bonuses, to change their remuneration policy as a consequence and on the supervisors to enforce its opinion at national level, by the end of this year. By the middle of 2015 at the latest, it will produce a detailed handbook on remuneration policies in the banking sector.
Commissioner for the Single Market Michel Barnier welcomed the opinion returned by the European agency. “To be clear, there is no third category of pay: either it is fixed or it is variable”, he said in the statement. He recommended that the supervisors and banks take full account of the opinion, as the next Commission and the EBA have been called upon to follow developments in the situation.
The United Kingdom, which has never accepted the bonus caps secured by the MEPs during the legislative process, has brought the matter of banking bonuses before the Court of Justice (EUROPE 11150). (MB)