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E U R O P E A N B A N K I N G A U T H O R I T Y
20
c. The global requirements towards
remuneration and their European
preparation
Following the FSB publication in October 2011
of a thematic review on compensation and its
detailed ongoing monitoring programme in
the European Union, the EBA started monitor-
ing remuneration practices and levels in insti-
tutions across the Member States. A bench-
mark exercise based on remuneration data
collected in accordance with the criteria for
disclosure established in point 15(f) of Part 2
of Annex XII to CRD III was released in 2012.
Twenty-one supervisors participated in the
survey; questions in the survey were mainly
open and of qualitative nature, but for some
aspects, numerical information was asked
for a sample of institutions that represents 60
% of total assets in the banking sector or at
least the 20 largest institutions in a particu-
lar Member State. Answers about practices
in institutions relate mainly to the 2010 remu-
neration cycle (i.e. for performances in 2010),
the first year of application of the CRD III re-
quirements. The findings of the survey showed
a satisfactory implementation of the guide-
lines into the respective legal and supervisory
frameworks and good progress by the indus-
try was reported namely as to the practices
in the governance of remuneration. However,
the scope of the guidelines is one of the ar-
eas for concern as considerable variations
exist in the extent to which the remuneration
requirements are applied beyond the scope of
the CRD. With regard to the identification of
risk takers, the survey highlighted inconsist-
encies across institutions in the criteria used
to identify staff that have a material impact
on the firm’s risk profile. Furthermore, such
criteria have not always proved to sufficiently
grasp the risk impact aspect of the exercise.
Inconsistencies have also emerged in the ap-
plication of the proportionality principle with
practices varying from predetermined fixed
criteria to open case-by-case approaches to
determine if the set of specific remuneration
rules should be applied to the identified staff.
Finally, the survey showed that risk alignment
practices across the industry remain underde-
veloped, namely with regard to the interaction
of parameters used for risk management and
the structure of bonus pools. Following this
survey, the EBA published two sets of guide-
lines on the data collection exercise regarding
high earners and on the remuneration bench-
marking exercise. The objective of these guide-
lines is to streamline the data collection and to
increase the consistency and comparability of
the information collected by national compe-
tent authorities. As a transitional arrangement,
the first set of data was submitted to the EBA at
the end of December 2012 and a report is due
to be published by the first half of 2013.