EU member states will have to implement the finalized EU capital requirements directive (CRD V) by 28 Dec 2020. Until then, CRD IV and current guidelines issued by the European Banking Authority (EBA) — the EU’s regulatory authority — remain in force. The directives include several remuneration principles impacting bankers’ bonus payments and payouts, including malus and clawbacks, bonus deferrals, and a requirement to pay a portion in shares or instruments.
CRD V aims “to promote the sound and effective risk management of institutions by aligning the long-term interests of both institutions and their staff whose professional activities have a material impact on the institution's risk profile (material risk takers).” Highlights of the new directive impacting remuneration include:
─ An institution, subject to European Banking Authority (EBA) guidelines, with assets under €5 billion over the four-year period immediately preceding the current financial year
─ A staff member whose annual variable remuneration doesn’t exceed €50,000 and one-third of the member’s annual total remuneration