The U.K. Financial Services Authority will meet with senior executives at banks by the end of the year to discuss bonus- and pay-rule compliance, the agency’s director for U.K. banking supervision said in a letter to chief executives of lenders.
The watchdog will discuss matters including the effect of pay packages on banks’ level of capital reserves as well as “the ratio between fixed and variable remuneration” with senior executives and members of lenders’ compensation committees, Andrew Bailey said in the letter. The FSA will approve pay plans before they are announced to staff.
“We will check for compliance against the code’s requirements and, provided that compliance is confirmed, indicate to you that you may announce and distribute the awards,” Bailey told the executives.
The FSA is clarifying bonus guidelines introduced in December and seeking input on them from financial institutions. The agency applied the guidelines from the European Union to its revised bonus rules and separated financial firms into four groups based on their size.
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