Public consultation on impacts of maximum remuneration ratio under Capital Requirements Directive 2013/36/EU (CRD IV), and overall efficiency of CRD IV remuneration rules
Justice and fundamental rights, company law
Who can reply to this consultation?
All citizens, organisations and public authorities are welcome to contribute to this consultation
Period of consultation
From 22 October 2015 until 14 January 2016
Purpose of the consultation
On 26 June 2013, the new regulatory and capital requirements package for banks and investment firms was adopted ("CRD IV"). The package composed of a Directive (CRD) and a Regulation (CRR) lays down re-enforced principles and rules for remuneration policies of institutions.
These implement international principles and standards at Union level. They aim at aligning remuneration policies with the risk appetite, values and long-term interest of credit institutions and investment firms, in order to remedy regulatory loopholes, which induced a number of managers, especially before the financial crisis, to an excessive risk-taking approach. In CRD, rules on remuneration are set out in Articles 74 to 76, Articles 92 to 96, Article 104, Article 109, Article 162(3) and in recitals 62 to 69. In CRR, Article 450 and recital 97 cover rules on remuneration.
One of the novelties in CRD IV was the introduction of a rule according to which the variable remuneration of institutions’ staff whose professional activities have a material impact on their employer's risk profile cannot exceed 100% (or 200% with shareholders' approval) of the fixed remuneration ("the "Maximum Ratio Rule"). This Maximum Ratio Rule is meant to avoid excessive risk taking, learning the lesson of the financial crisis, when regulatory loopholes in this field were at the origin of huge losses for financial institutions and ultimately for investors. You can find further details on this rule in Article 94(1)(g) of CRD IV and in the Consultation Paper that was recently published by the European Banking Authority ("EBA") on the draft revised guidelines on remuneration, while the RTS on Identified Staff sets the criteria which institutions must use to identify the staff to whom the Maximum Ratio Rule applies.
The Commission is called upon to review and report on the application and the impact of the remuneration rules in CRD IV by 30 June 2016.
The purpose of this consultation is firstly to obtain information and views from stakeholders on paragraph (b) of Article 161(2) CRD IV, namely on the possible impact of the Maximum Ratio Rule on: (i) competitiveness, (ii) financial stability, and (iii) staff in non-EEA countries. Secondly, it seeks stakeholders' views on the overall efficiency of the remuneration provisions of CRD and CRR.
The responses will be taken into account in the Commission’s assessment and report required under Article 161(2) CRD, in parallel with information received from EBA, the results of an external study carried out for the Commission and other information available.
Results of the public consultation
Responsible service: European Commission, Directorate-General for Justice and Consumers, Company Law Unit (JUST.A.3)
Data Protection Disclaimer
Received contributions, together with the identity of the contributor, will be published on the Internet, unless the contributor objects to publication of the personal data on the grounds that such publication would harm his or her legitimate interests. In this case the contribution may be published in anonymous form. Otherwise the contribution will not be published nor will, in principle, its content be taken into account.
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