EU Seeks Details on Banker Pay as It Readies Fresh Rules

Banks will have to submit more detailed reports to regulators on how they pay their highest earners as the European Union’s top banking regulator readies an update to its bonus code to take account of so-called allowances.

The reports, to be completed by lenders and sent by national regulators to the European Banking Authority by the end of November, must include details of the “job responsibilities of high earners” as well as signing bonuses and severance payments, the EBA said in a statement on its website today. The new requirements build on rules that already require banks to submit data on the number of employees earning more than 1 million euros ($1.4 million).

“This will allow the EBA to analyze the development of remuneration policies in light of the changes introduced” by EU rules capping bonuses at no more than twice salary, the London-based regulator said.

Lawmakers last year backed a toughening of EU banker bonus curbs in a bid to clamp down on the gambling culture they blamed for triggering the 2008 financial crisis. Some lenders with U.K. operations responded by giving employees cash allowances depending on seniority, known as role-based pay, to evade the restrictions. Banks consider these allowances as part of salary, and so not affected by bonus caps.

The updated EBA guidelines require more data to be submitted on the job specifics of high earners and on their fixed pay, the EBA said.

‘Granular’ Data

The collection of “more granular” pay data for people earning more than 1 million euros a year will ensure “a high level of transparency regarding the remuneration practices within the union and will be used to benchmark remuneration trends and practices,” the EBA said.

The increased data will feed into annual reports the EBA produces on banker pay.

“Additional information concerning fixed remuneration and the instruments in which it was paid will be collected to analyze remuneration practices,” the EBA said. The agency will use the data to zero in on changes in banks’ pay practices in response to the new bonus limits, it said.

The EU ban on bonuses of more than twice fixed pay is set to apply starting next year.

Andrea Enria, the EBA’s chairman, has said that it will issue guidelines by the end of this year on the treatment of allowances under the EU bonus rules.

The EBA, which was set up in 2011 to harmonize banking rules across the EU, said earlier this year it may restrict such role-based payouts for senior bankers, citing “concerns that these practices do not conform to the requirements” set out in the rules capping bonuses, the EBA said in a report published on its website.

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