European Banking Authority delays bonus cap rules


The European Banking Authority has delayed the implementation of its controversial bonus caps rules to the start of 2017 and says it will take action against member countries that do not comply.

The body will postpone the pay rules in the Capital Requirements Directive for a year to 1 January 2017 in order to give firms more time to prepare.

The EBA says: “The guidelines will come into force on 1 January 2017 to allow sufficient time for institutions to adjust their remuneration policies during 2016.”

The new rules cap bonuses at 100 per cent of salaries, or 200 per cent with shareholder approval. The Bank of England and UK Government have long opposed the rules, saying it places more risk on the table as salaries will increase and cannot be clawed back in the event of wrongdoing.

The EBA says it also wants to exclude small and “non-complex” banking organisations from the rules, as well as staff that only receive a small amount of variable remuneration.

The EBA says it will crack down on those member countries that had granted blanket exceptions for firms.

It says: “Considering the huge diversity of national rules regarding the application of proportionality, including the waiving of requirements, which has led to an uneven playing field between institutions across the EU, the EBA, in its opinion, considers that legislative action should be taken in order to clarify and ensure that the CRD remuneration requirements are applied consistently across the EU.”