The bonus cap will receive no exemptions.
European Union regulators have drawn the line between fixed and variable pay: the bonus cap will receive no exemptions, and cash allowances will be closely scrutinized to avoid a circumvention of the rule.
Bloomberg News reports that the European Banking Authority has issued its final guidelines on remuneration Monday. While the London-based standard-setter for EU banking supervision gave leeway to smaller banks and operators through a handful of waivers, it makes it clear that the ban on bonuses of more than twice fixed pay will be enforced.
The guidelines ensure ‘that institutions calculate correctly and consistently the so-called bonus cap by setting out specific criteria for mapping all remuneration components into either fixed or variable pay and detailing how specific remuneration elements such as allowances, sign-on bonuses, retention bonuses and severance pay are to be recognized’, the regulator said in a statement.
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