EUROPE: The European Banking Authority publishes final draft technical standards on classes of instruments used for variable remuneration

Thursday February 20 2014

The European Banking Authority (EBA) has published its final draft Regulatory Technical Standards (RTS) on classes of instruments that can be used for the purposes of variable remuneration. These RTS are part of the Single Rulebook aimed at enhancing regulatory harmonisation in the banking sector in the European Union.

The aim of these draft RTS is to ensure that instruments for variable remuneration reflect the credit quality of an institution and incentivise prudent risk-taking, hence making them appropriate for this purpose. They prescribe that the institutions` long-term interests be reflected in the classes of instruments used for variable remuneration -including additional Tier 1, Tier 2 and other instruments.

In particular, these draft RTS specify the classes of instruments that can be used for variable remuneration and introduce specific requirements for additional Tier 1, Tier 2 and other instruments. They define the write-down, write-up and conversion mechanisms for Tier 2 and other instruments.

Click on the above link for further details.