corporate banking Articles

EBA Publishes Final Guidelines on Sound Remuneration Policies under CRD IV

The European Banking Authority (EBA) published its final guidelines on sound remuneration policies under CRD IV (Guidelines) on 21 December 2015. Following a strong industry response to the first draft of the Guidelines that was published in March 2015, there have been changes to the original text. Most notably, proportionality is not addressed in the Guidelines; instead a separate Opinion that is addressed to the European Commission (EC), European Parliament and Council has been published. The EBA’s Opinion on proportionality confirms that the EBA will provide guidance to the EC on potential changes to the text of the Directive to clarify how proportionality is to apply.

Corporate Titles: An outdated concept or a building block for excellence?

As we look across a set of industries—Financial Services, Technology, Fin Tech, and Consulting—we see dramatically different approaches to job architecture in general, and the use of corporate titles in particular.

EBA Consults on Draft Remuneration Guidelines for Sales Staff

On December 22 2015, the European Banking Authority (EBA) published a consultation paper on its Draft Guidelines on remuneration policies and practices for staff offering and providing retail banking products and services.

EBA Consultation on Guidelines on Sound Remuneration Policies

On 4 March 2015, the European Banking Authority (EBA) published a consultation paper on draft guidelines on sound remuneration policies. These guidelines seek to clarify how firms and regulators should interpret the remuneration rules in CRD IV. The proposed text updates guidelines previously published by the Committee of European Banking Supervisors (CEBS – the forerunner to the EBA) about pay regulation under CRD III.

Restoring the Culture / Reward Link

Firms are trying to do more with less regarding compensation but two powerful, conflicting forces are affecting how they manage reward. Diminished business performance is increasingly driving firms to customized solutions, with the focus less on conforming to market practice, and more on what is optimal for survival. Regulation is a powerful force in driving firms toward more standardization. Even firms that are operating outside the regulatory crosshairs are influenced by what they are seeing in the larger, more regulated marketplace around compensation. In the midst of trying to tailor plans to be unique and practical, as well as aligned with regulatory guidelines, the linkage between a firm's culture and reward is often falling by the wayside.

The Impact of CRD IV on Compensation

The Capital Requirements Directive, CRD IV, is poised to restrict incentive compensation for an important segment of banking employees. As a result, a number of firms are struggling to structure attractive reward packages so they can continue to compete effectively for talent with firms that will not be covered by this legislation. Should CRD IV be implemented as currently drafted, code staff bonuses will be capped at 1x fixed pay. There is still a chance that shareholders will vote for an exceptional cap of 2x fixed pay which would improve the ability to compete but would still leave European firms at a substantial disadvantage to non-EU peers for staff outside of Europe.

New Banks: License to Skill

​For the majority of 2012 and 2013, the Reserve Bank of India (RBI) has seemed reluctant to take decisive action on policy issues and monetary mechanisms. It finally managed to rouse the banking industry in India, by giving the go-ahead for corporates and non-banking finance companies (NBFCs) to apply for new banking licenses. This decision has been long debated and even longer awaited, coming after a hiatus of 10 years.  The RBI had issued only two licenses in the early 2000s and prior to that its last activity was in 1993-94.

Middle Market Horizontal Review: Potential Impact

The nation's largest banks recently received letters from the Federal Reserve related to a horizontal review of Commercial Lending, which for most clients will impact their Middle Market and Specialty Lending practices.

Constraints, Caps & Clawbacks: The New Compensation Paradigm for Bankers

It has been a crazy five years for United States banks. So much has changed and yet so little progress has been made. The three key groups of stakeholders in financial industry pay are regulators, shareholders and staff. While all the stakeholders will no doubt agree that change has occurred, the real debate starts when we consider whether or not the sum of the changes have produced better or worse results.

Will There Be a Lasting Reset in Pay Levels?

As banks begin to make their year-end pay decisions, it is clear that incentive pay for employees across investment banking, equities and fixed income will decrease at most firms, particularly the largest ones. Veterans of compensation management know that pay tends to be cyclical and closely aligned to business performance, and that it takes a discerning eye to differentiate between a typical cyclical variance and an actual reset, which is far less common.

Holistic Risk and Competitive Review of Incentive Plans

In McLagan’s previous Alert, “What Do They Mean by Unreasonable Risk?”, we considered the challenge of defining unreasonable risk and who should decide that after the fact the risks taken were unreasonable.

Aon Names Ray Everett Global President of McLagan

Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, today announced it has named Raymond Everett as global president of McLagan. In this role, Everett is responsible for leading a team of experts who provide compensation, performance and talent intelligence to companies in the financial services and insurance industries. He leads the McLagan executive committee and is a member of Aon’s Talent, Rewards & Performance executive committee.

Managing Compensation in a Downturn

It seems like we are in for a rocky ride in 2016. While underlying economies of many countries and the financial performance of many companies still appear solid, numerous firms are preparing for a tough year ahead.

Infographic: Elevate People Performance in Financial Services

It's no secret that times have changed for the financial services industry. When times were good, soaring revenue and profits covered up human capital challenges and issues lurking beneath the surface. Today, firms are emerging from the human capital bubble and need to position themselves to select, engage, and develop their most critical resource - people. In our latest infographic, get key insights and actionable tips your firm needs to rise above.

Captive Finance: Gaining Competitive Advantage

Headline news can be a distraction. Evolving geopolitics and potentially disruptive economic and political outcomes block our field of vision from the deep connectivity of our world. Our technology, goods, and services are globally integrated on a massive scale. Everything, from children’s toys to shampoo to bulldozers, is part of a global supply chain that links people and resources to produce outcomes that would be unachievable without cooperation.

The Rise of Islamic Banking

Islamic finance is the fastest growing sector in global banking and its potential for further growth is only increasing by the minute. As Islamic banks continue to expand in both their traditional market and into the West, what will be their key to success and what does this mean for longstanding global banks?