EBA欧洲银行-Implementation-survey-on-CEBSGuidelines-on-Remunerationfinal-_24页_743kb

Summary of the EBA Survey on the Implementation of the CEBS Guidelines on Remuneration Policies and Practices

Core Content

This report presents the findings of an EBA survey conducted in Q4 2011, assessing how European banking supervisors have implemented the CEBS Guidelines on Remuneration Policies and Practices. The survey aimed to evaluate the practical supervision of the Guidelines, the progress made by institutions, and the areas requiring further development.

The CEBS Guidelines were published in December 2010 and are part of the CRD III framework, which seeks to align remuneration policies with the long-term interests of institutions and avoid excessive risk-taking. The survey highlights both the progress and the challenges in implementing these guidelines across the EU.

Main Points and Key Findings

1. Scope of Implementation

• Institutions within scope:

  • The Guidelines apply to all credit institutions and investment firms under CRD III.
  • There are no substantive national exemptions to these requirements.
  • Some jurisdictions extend the scope to include broader financial sectors, such as insurance, investment management, and private pension funds.
  • Neutralization of requirements (i.e., not applying certain provisions) is possible, but varies significantly between countries, often based on the size, complexity, and risk profile of the institution.

• Staff within scope:

  • Institutions must identify "Identified Staff" who have a material impact on the risk profile.
  • There is significant variation in the number of Identified Staff selected, with many institutions choosing very low numbers, which may undermine the effectiveness of the Guidelines.
  • Criteria for identifying staff include both quantitative and qualitative factors such as risk impact, responsibilities, and performance metrics.
  • The "other risk takers" category is particularly challenging to define and implement consistently.

2. Governance

• Remuneration governance has shown considerable progress.
• General principles of corporate governance, the role of management bodies, and the establishment of Remuneration Committees (Rem Co) are widely implemented.
• Weaknesses often arise in the group governance context, due to differences in corporate laws and local regulatory environments.
• There is a need for greater harmonization in the identification process of risk takers, especially within groups, to ensure a level playing field.

3. Risk Alignment

• Risk alignment remains underdeveloped:
  • Supervisors have focused more on the number of Identified Staff than on the principles of risk alignment.
  • Risk-adjusted performance parameters are being used more, but credibility and consistency in their application need further development.
  • Ex ante risk alignment is still limited to high levels of the organization, and transparency in the use of discretionary judgment is lacking.
  • Ex post risk alignment requires more sensitive malus criteria to trigger the forfeiture of deferred variable remuneration.
  • The variable-to-fixed remuneration ratio remains high in many institutions, with unclear criteria for setting these ratios.

4. Instruments for Variable Remuneration

• CRD III requires at least 50% of variable remuneration to be paid in instruments.
• Common shares are not widely used due to practical and dilution concerns.
• Phantom share plans are more frequently used, but they are subject to many open issues, particularly in valuation methods.
• Hybrid tier 1 instruments (as envisaged by CRD III) are not used in practice.
• More guidance is needed for the development and use of such instruments, especially for non-listed institutions.

5. Disclosure Requirements

• Disclosure of remuneration policies and practices is important for enhancing transparency and market awareness.
• The EBA's Guidelines 46 and 47 are expected to improve the tandem between public disclosure and supervisory reporting.
• However, the current level of disclosure is still hampered by the variability in the number of Identified Staff across Member States.
• Ensuring an equal level of disclosure is essential for achieving a level playing field and fostering best practices.

Conclusion

The implementation of the CEBS Guidelines on Remuneration Policies and Practices has made progress in governance and multi-year frameworks, but key areas such as risk alignment, instruments, and disclosure still require further development. The flexibility in scope and neutralization has led to divergences between jurisdictions, raising concerns about regulatory arbitrage and competitive disadvantages. Greater harmonization and clarity in application are needed to ensure consistent and effective implementation of the Guidelines across the EU.