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Oct 16, 2014

The EU Bonus Cap and Restrictions on the Use of Role Based Fixed Allowances

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On 15 October 2014 the European Banking Authority (“EBA”) issued a report on the use of role based fixed allowances by various financial institutions within the European Union (“EU”) affected by the EU bonus ratio cap. Role-based fixed allowances are essentially payments based on an individual’s role, responsibilities or seniority which are treated by the institution as fixed rather than variable remuneration for the purposes of the EU bonus ratio cap. The EBA is taking a very strict view as to when such allowances can properly be categorised as fixed remuneration. Assuming that regulatory authorities amend local rules to reflect the EBA's views, financial institutions which have already implemented such allowances may need to revisit the structure of such allowances and make adjustments as necessary. The EBA expects regulators to ensure that institutions have updated their remuneration policies to reflect the report by 31 December 2014.

View full memo, The EU Bonus Cap and Restrictions on the Use of Role Based Fixed Allowances

Authors and Contributors

Sam Whitaker

Counsel

Compensation, Governance & ERISA

+44 20 7655 5954

+44 20 7655 5954

London

Thomas Donegan

Partner

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5566

+44 20 7655 5566

London

Barnabas Reynolds

Partner

Financial Institutions Advisory & Financial Regulatory

+44 20 7655 5528

+44 20 7655 5528

London

Linda Rappaport

Of Counsel

Compensation, Governance & ERISA

+1 212 848 7004

+1 212 848 7004

New York

John J. Cannon III

Partner

Compensation, Governance & ERISA

+1 212 848 8159

+1 212 848 8159

New York