Latest Shake-up of the Remuneration Provisions for Banks and Investment Firms Part 2: Banks and credit institutions

Authors: Mark Ife and Paul Ellerman

After over two years of debate, agreement has finally been reached on the proposed directive amending the Capital Requirements Directive (which is generally being titled CRD5), and the European Council has published its final text.

As detailed in our previous briefing, however, the proposed new prudential regime for investment firms, will remove most investment firms from the scope of CRD5 and subject them to the specific remuneration rules in the new Investment Firms Directive (IFD) and Investment Firms Regulation (IFR). Consequently, the revised CRD5 is likely only to apply to banks and “bank-like” investment firms.

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Latest Shake-up of the Remuneration Provisions for Banks and Investment Firms Part 1: Investment Firms

Authors: Mark Ife and Paul Ellerman

Agreement has now been reached between the European Parliament, the Commission and the Council on the final texts of two Directives which will impact on the remuneration provisions which apply to banks and investment firms. The first is the Investment Firms Directive (IFD), which will introduce a new prudential regime for investment firms. The second is the Directive which contains the fourth set of amendments to the Capital Requirements Directive (which is generally being titled CRD5). The European Parliament will consider both Directives in its plenary sessions between 15 and 19 April 2019.

This briefing sets out details of the remuneration provisions contained in the IFD and the related Investment Firms Regulation (IFR). A subsequent briefing will cover the revised provisions contained in CRD5.

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Corporate Crime update – December 2018

Welcome to the December 2018 edition of our corporate crime update – our round up of developments in relation to corruption, money laundering, fraud, sanctions and related matters.

This month, we would like to wish all of our regular readers a very happy, and hopefully corporate crime free, festive season! 

For the full update on each jurisdiction, please click on the name of the jurisdiction below.  Continue reading

UK: A guide to the PRA’s proposals on the Solvency II remuneration rules

The PRA has issued a draft Supervisory Statement, containing guidance on how Solvency II remuneration rules are to be applied (Draft Guidance).  The Draft Guidance is, in certain respects, materially more onerous than may have been expected.  In particular, it provides that firms must ensure that at least 40% of the variable remuneration of senior staff and other "risk takers" is deferred for at least 3 years, allowing all or part of the deferred element to be withheld.

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EU: ESMA disagrees with the EBA on proportionality: guidelines on remuneration under UCITS V are published for consultation

On 23 July 2015, the European Securities and Markets Authority (“ESMA”) published its draft guidelines on the implementation of the UCITS V remuneration principles for consultation.  In the consultation, ESMA’s approach to the application of proportionality differs from that of the European Banking Authority (EBA) in its consultation on revised CRD IV remuneration guidance, with ESMA suggesting that the co-legislators may have envisaged the possibility that the application of proportionality could lead to the disapplication of certain of the remuneration principles.    Continue reading

EU sanctions update: Russia

Our latest briefing summarises recent developments in the EU’s sanctions imposed against Russia.  In particular, we provide an overview of (a) new measures relating to Crimea and Sevastopol and (b) new European Commission guidance on certain of the financial sector restrictions applied to listed Russian entities. 

For further background on these sanctions, please see our blog.

Bonus cap: PRA and FCA announce details of UK implementation

The Prudential Regulation Authority and the Financial Conduct Authority have each announced their proposed approach to the UK implementation of the cap on variable remuneration, being introduced by the amended capital requirements directive (CRD IV).  The consultation documents give much more certainty as to which banks, building societies and investment firms will (and will not) be subject to the bonus cap.  As expected, banks and building societies will generally have to apply the cap across their entire group.  FCA prudentially regulated investment firms will, however, generally be permitted to disapply the bonus cap.  To read our briefing, click here.

Problem, process and prognosis: the legal challenge to the EU Bonus Cap

Yesterday afternoon it was announced that the UK Government has launched a legal challenge in the Court of Justice of the European Union against the cap on variable remuneration introduced by the new capital requirements directive (“CRD IV”).  Although this may ultimately result in the cap being overturned, the UK may nonetheless have to implement the provisions in the interim, in which case, those affected will be hoping that the decision of the Court of Justice is reached before the 2015 bonus round when the bonus cap is likely to bite.      Continue reading