Victory for the City as EU backs down on banker bonuses
The European Banking Authority has revised its position on capping banker bonuses. Bankers earning over €500,000 (£420,000) a year could be exempted from the cap if they are deemed not be major risk takers. Institutions will need to seek the permission of the EBA to exempt staff members from the cap. The original restriction sought to limit bonus payments to no more than the a bankers fixed salary.
The regulator said in a press release:
For staff with an awarded total remuneration of 500,000 EUR or more, institutions need to notify exclusions to the competent authority. For staff with a total awarded remuneration of 750,000 EUR or for staff included in the 0.3 % of the highest earners, a prior approval of exclusions is required.
For staff with a total awarded remuneration of 1,000,000 Euro or more competent authorities need to inform the EBA about such intended exclusions before the decision is made. Institutions will have to submit the notification or application and demonstrate that the excluded staff on the basis of the business unit they are working in, as well as of their duties and activities have indeed no material impact on the institution's risk profile.
The new rule could see up to 12,000 bankers exempt from the cap, once it comes into effect in 2014.
Some institutions had already been making provisions to avoid the cap. Barclays bank recently told staff that it would be topping up salaries to replace the losses incurred by the new regulation.
In an email to staff seen by CityAM last month, Eric Bommensath told employees “The introduction of Role Based Pay allows Barclays both to comply with the legislation and offer market competitive compensation to employees.”