The European Banking Authority (“EBA”) recently approved draft regulations (referred to in Europe as “regulatory technical standards” or “RTS”) greatly expanding the number of EU bankers that would be impacted by the EU banker bonus cap. The banker bonus cap passed the EU Parliament last month and is set to go into effect on January 2014, applicable to bonuses tied to performance after the effective date.
The cap will limit bonuses for employees’ 2014 performance year at the level of the employee’s salary, or at twice the employee’s salary if shareholder approval is obtained. The EBA’s draft RTS greatly expands the definition of banks’ material risk takers subject to the cap to include all employees whose total remuneration is greater than €500,000.
This FS Regulatory Brief discusses the timing and the impact of the banker bonus cap.