Regulatory Alerts2022-02-25
Factsheet – The Regulation of Remuneration in Credit Institutions
The German Federal Bank (Bundesbank), BaFin, and the ECB regulate remuneration systems in credit institutions to prevent excessive risk-taking and financial instability. The framework distinguishes between general requirements for all institutes and stricter rules for significant institutions and risk-takers, mandating alignment with long-term sustainability and risk-adjusted performance. Key measures include a bonus cap, mandatory deferral of variable pay, clawback provisions, and specific restrictions for management, control functions, and sales staff.
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