EBA Guidelines On Notional Discount Rate For Variable Remuneration

On 27 March 2014, the European Banking Authority (the "EBA") published guidelines on the applicable notional discount rate for variable remuneration. Under the Capital Requirements Directive, firms are required to set appropriate ratios between the fixed and variable component of total remuneration for staff whose professional activities have a material impact on the risk profile of the firm. The maximum ratio between the variable and the fixed part of the total remuneration is 100%. However, member states may allow the ratio to be increased to a maximum of 200%. The guidelines apply in member states which have implemented the option of applying the discount rate and to firms which make use of such rate. National regulators in the relevant member states are required to comply with the guidelines. The guidelines apply from 1 June 2014 for calculations of the ratio for remuneration awarded from the year 2014 onwards.